Study 3 Part 2 Flashcards
What is a WILDFIRE?
An ‘uncontrollable or destructive fire, especially in a forest.’ It’s covered under the FIRE peril in property policies.
Are TORNADOES covered under named-perils or all-risks forms?
YES, under the WINDSTORM or HAIL peril.
What does the COLLAPSE peril commonly involve?
Loss or damage from structural collapse, e.g., from snow load on a roof; NOT covered in named-perils but covered in all-risks (unless otherwise excluded).
When is GLASS BREAKAGE covered under named-perils?
Typically INCLUDED as a named peril.
What is EARTH MOVEMENT in insurance terms?
Movement like EARTHQUAKE, LANDSLIDE, or SNOWSLIDE, usually EXCLUDED unless added by endorsement (e.g., IBC 1149 Earthquake Endorsement).
How does the IBC 1149 EARTHQUAKE ENDORSEMENT affect coverage?
It adds coverage for earthquake-related perils and has its own higher deductible.
What causes SEWER BACKUP within a dwelling?
Often due to a clogged or blocked sewer system, leading to water entering the home from drains (can be covered by endorsement).
When is SEWER BACKUP considered a FLOOD?
If external FLOOD WATERS touch any part of the insured property, sewer backup is then classified as FLOOD.
What is a SUMP SYSTEM?
A system that removes ground water around a foundation, preventing basement flooding (excluded unless added by endorsement).
What does IBC 1142 LIMITED SEWER BACK UP ENDORSEMENT cover?
Loss from sewer backup ONLY if no flood waters are on the premises within 72 hours.
What is the IBC 1148 EXTENDED WATER ENDORSEMENT?
An endorsement that covers FLOOD, SEWER BACKUP, and other water-related risks, removing the 72-hour flood limitation.
Define FLUVIAL FLOODING.
Flooding due to a river or watercourse overflow (e.g., riverbanks breaching after heavy rain). EXCLUDED from standard coverage.
Define PLUVIAL FLOODING.
Flooding caused by heavy rainfall overwhelming drainage systems, leading to water accumulation. EXCLUDED from standard coverage.
Is ICE DAMMING covered by default in property insurance?
NO, it’s excluded but can be covered by IBC 1144 ICE DAM ENDORSEMENT.
What is ICE DAMMING?
Water damage from ice or snow blocking eaves or gutters, leading to leaks in the roof.
Is WATER SEEPAGE covered under property insurance?
NO, it’s a maintenance issue, defined as continuous or repeated leakage.
What is MOULD DAMAGE and when is it covered?
Damage from mould or fungi, covered only if it directly results from an insured peril (e.g., sudden water damage).
What types of technology do insurers use to manage NON-STANDARD PERILS?
Satellite imagery, machine learning, and geospatial analysis to monitor, predict, and model risk.
How can MACHINE LEARNING assist insurers with non-standard perils?
By analyzing historical data and environmental factors to estimate potential losses from events like wildfires or floods.
What does GEOSPATIAL ANALYSIS allow insurers to assess?
The proximity of insured assets to potential catastrophe zones, improving risk assessment accuracy.
Why is EARTHQUAKE INSURANCE less common than it should be in high-risk areas?
Some buyers assume government support or are unaware it’s excluded in standard policies.
What is an ALL-RISKS policy?
A policy that covers all perils except those specifically excluded, often providing broader coverage than named-perils forms.
How does the IBC 1144 ICE DAM ENDORSEMENT help homeowners?
It provides coverage for water damage caused by ice build-up on roofs and gutters.
What is a ‘maintenance issue’ in property insurance?
An issue due to lack of upkeep, like continuous water seepage, which is typically excluded from coverage.
Why might SUMP PUMP FAILURE lead to uncovered losses?
Because water damage from groundwater rising into a basement is excluded unless an endorsement is added.
Define SUDDEN AND ACCIDENTAL DAMAGE.
Unexpected, unintended damage from a specific event, as opposed to ongoing wear or gradual damage, which is often excluded.
What are NON-STANDARD PERILS in insurance?
Perils NOT NAMED in the IBC habitational forms but commonly insured under ALL-RISKS property insurance (e.g., wildfire, hurricane).
Are WILDFIRES covered under named-perils or all-risks property policies?
YES, under the FIRE peril.
Under which peril are HURRICANES covered?
WINDSTORM or HAIL peril (covered in both named-perils and all-risks policies).
Is COLLAPSE covered under NAMED-PERILS?
NO, it’s excluded (unless directly caused by a named peril like FIRE).
When is ACCIDENTAL BREAKAGE of property covered under ALL-RISKS?
If NOT FRAGILE or BRITTLE (otherwise, only if damaged by specific events like accidents involving vehicles).
Are EARTH MOVEMENTS (e.g., earthquakes) covered under named-perils or all-risks?
NO, generally EXCLUDED (but can be added by IBC 1149 EARTHQUAKE ENDORSEMENT).
How does the IBC 1142 LIMITED SEWER BACK UP ENDORSEMENT work?
Covers sewer backup WITHOUT FLOODING; excludes coverage if flood waters touch insured’s property within 72 hours.
Is SUMP PUMP FAILURE covered under all-risks or named-perils?
NO, but can be covered by the SAME ENDORSEMENT as SEWER BACKUP (IBC 1142).
Does IBC cover DAMAGE from FLOODING (e.g., rivers, tsunamis)?
NO, flood damage is EXCLUDED unless added by IBC 1148 EXTENDED WATER ENDORSEMENT.
What does the IBC 1144 ICE DAM ENDORSEMENT cover?
Damage from water entering via ICE DAMMING (accumulated snow or ice on roof).
Is CONTINUOUS SEEPAGE of water (e.g., a leaky roof) covered?
NO, considered a MAINTENANCE issue, not sudden or accidental.
When is MOULD covered under property insurance?
Only if resulting from an INSURED PERIL (e.g., water from a burst pipe).
How do INSURERS use TECHNOLOGY to manage risk from non-standard perils?
Through DATA (satellite imagery, weather sensors), MACHINE LEARNING, and RISK MODELS to assess and predict catastrophic events.
What is a HAZARD in property insurance?
A HAZARD is an attribute of the property or its surroundings that increases the likelihood or severity of a PERIL, which may lead to a LOSS.
How does a HAZARD affect the likelihood of a PERIL?
The greater the HAZARD, the greater the likelihood that a PERIL will occur or cause more severe DAMAGE.
What are the THREE types of HAZARDS in property insurance?
PHYSICAL HAZARD, MORAL HAZARD, and MORALE HAZARD.
What is a PHYSICAL HAZARD?
A PHYSICAL HAZARD concerns the property itself, such as its CONSTRUCTION TYPE, location, or available PROTECTION (e.g., FIRE DEPARTMENT, BURGLAR ALARM).
What is an example of a PHYSICAL HAZARD?
An above-ground OIL TANK is a PHYSICAL HAZARD because it could leak or explode if struck by a vehicle.
What is a MORAL HAZARD?
A MORAL HAZARD occurs when a person INTENTIONALLY causes DAMAGE or injury, often involving CRIMINAL or FRAUDULENT ACTS.
What is an example of a MORAL HAZARD?
A DISGRUNTLED EMPLOYEE pouring GASOLINE into a machinery’s WATER-INTAKE VALVE to cause a fire is an example of a MORAL HAZARD.
What is a MORALE HAZARD?
A MORALE HAZARD occurs when damage or injury is caused by CARELESSNESS or lack of concern, not INTENTIONAL harm.
What is an example of a MORALE HAZARD?
A caretaker leaving a pile of SAWDUST in a workshop, which later causes a FIRE or a SLIP-AND-FALL ACCIDENT, is an example of a MORALE HAZARD.
What are KEY PERIL HAZARDS in property insurance?
KEY PERIL HAZARDS include FIRE, LIGHTNING, WATER PERILS, WIND, HAIL, ROOF COLLAPSE, and EARTHQUAKES.
Why is FIRE a significant hazard in property insurance?
FIRE is one of the most EXPENSIVE PERILS for insurers, even though it is not the most frequent. It is often SEVERE and can cause major DAMAGE.
What role do SMOKE DETECTORS play in FIRE hazards?
SMOKE DETECTORS are essential to detect FIRE in its early stages, allowing it to be EXTINGUISHED before it becomes severe.
