Property Policies Flashcards
Homeowners, Dwelling & Coinsurance
What is the purpose of property policies?
To pay for losses due to direct damage caused by covered perils (e.g., fire, hail).
What are the 4 main components of property policies?
- Structure: Walls and roof.
- Personal Property: Belongings like furniture, clothing, etc.
- Loss of Use: Costs incurred when the property is uninhabitable (e.g., hotel expenses).
- Liability: Protection against legal claims for injuries or damages.
What are direct losses?
Physical damage to the property (e.g., fire, hail damage).
Includes proximate losses (e.g., water damage from fire extinguishment).
What are indirect losses?
Consequences of direct losses (e.g., additional living expenses).
Covered only if the direct loss is covered.
What are perils in property policies?
Causes of loss (e.g., fire, flood).
What is a Named Peril Policy?
Covers only listed perils.
Levels: Basic (fewer perils) and Broad (more perils).
What is an Open Peril Policy?
Covers everything unless explicitly excluded.
Types: Special or Comprehensive.
What are covered perils?
Trigger the policy to provide coverage (e.g., fire).
What are excluded perils?
Never covered (e.g., flood, earth movement).
What are the major coverages in property policies?
- Coverage A: Main structure (walls and roof).
- Coverage B: Detached structures (e.g., garage, shed).
- Coverage C: Personal property (optional for dwelling policies).
- Coverage D: Fair rental value (compensation for lost rental income).
- Coverage E: Additional living expenses (if owner-occupied).
What is the key difference between dwelling and homeowners policies?
Dwelling policies do not require owner occupancy; homeowners policies do.
What do homeowners policies cover?
All 4 main components (structure, personal property, loss of use, liability).
Who typically purchases dwelling policies?
Typically purchased by landlords.
What does a DP1 (Basic) policy cover?
Covers 3 perils: Fire, lightning, internal explosion.
Optional: Extended Coverage Perils (ECP) and Vandalism/Malicious Mischief (VMM). Payout: Actual Cash Value (ACV). Excludes trees and certain coverages unless endorsed.
What does a DP2 (Broad) policy cover?
Covers all basic perils + additional perils (e.g., burglary, ice damage).
Trees covered up to $500 per tree. Better coverage than DP1.
What does a DP3 (Special) policy cover?
Open peril policy covering all perils unless excluded.
Theft of property directly servicing the home (e.g., lawnmower) is covered. Larger exclusion list than DP1 or DP2.
What are common exclusions across all policies?
Water Damage/Flood and Earth Movement (e.g., earthquakes).
