Unit 4

Question 1

market value

Answer 1

selling price
seldom used
market conditions

Question 2

stated amount

Answer 2

• insured up to this amount
• appraisal required
• cover an item for less than it is worth in exchange for a lower premium

Question 3

agreed amount

Answer 3

value of loss is determined before the policy is issued

• maybe a one of a kind item
• items that are hard to determine value

Question 4

pair and set

Answer 4

value of the pair or set before the loss minus value of what remains
e.g. diamond earrings if one is lost the replacement cost wouldn’t be half, it would be the value of one

Question 5

appraisal

Answer 5

• disagreement on the amount of the loss
• company and insured pay their own appraisers
• appraisers get an umpire if they can’t agree (cost shared)
• agreement of any two of the three determines the amount

Question 6

arbitration

Answer 6

disagreement about other areas of the loss

Question 7

coninsurance

Answer 7

requirement is normally 80% of the replacement cost. if the minimum required amount is carried, then claims are paid in full up to the policy limits. if the minimum is not carried, partial losses are not paid in full

1. determine insurance required
2. do they carry at least that amount?
3. insurance carried/insurance required X loss - claim payment - deductible

Question 8

vacant

Answer 8

• no property or people present at the time of loss

- may affect covered perils and claim value

Question 9

unoccupied

Answer 9

no people present at the time of loss

does not affect covered perils and claim value

Question 10

standard mortgage or loss payable clause

Answer 10

• allows lender to pay the premium
• lender entitled to receive notice if policy is to be canceled
• lender can file a claim
• lender protected from negligent or dishonest acts of the insured
• lender only entitled to receive payment up to the amount of the debt

Question 11

standard mortgage

Answer 11

• the rights and duties of the mortgage under the policy
• mortgages may be named in the declarations if they have an insurable interest in real property
• mortgages rights and duties include: filing proof of loss if the insured fails to do so
  paying the premium if the insured fails to do so

Question 12

no benefit to bailee

Answer 12

bailee is a person or business that has temporary control of the insured’s property
bailee cannot benefit from the property owner’s policy

Question 13

functional replacement

Answer 13

replace with modern construction

Question 14

actual cash value (ACV)

Answer 14

replacement cost based on today’s cost - not what was originally paid for the item
cost to replace it now
ACV = replacement - depreciation

Question 15

replacement cost

Answer 15

current replacement cost; no depreciation

similar kind and quality

Question 16

loss valuation

Answer 16

• how the insurance company determines appropriate amount of loss to be paid
• deductible reduces any amount after loss has been valued
• insured to collect lesser of, insurable interest, policy limits, ACV, cost to repair, replacement cost

Question 17

classes of construction

Answer 17

how the building is made

Question 18

class one

Answer 18

frame

Question 19

class two

Answer 19

joisted masonry

Question 20

class three

Answer 20

noncombstible

Question 21

class four

Answer 21

masonry noncombustible

Question 22

class five

Answer 22

modified fire resistive

Question 23

class six

Answer 23

fire resistive

Question 24

indirect loss

Answer 24

• loss over time as a result of the direct loss
• loss of income a business suffers when the building burns
• cost of a rental car because someone ran into your car
• additional living expenses while the home is bring repaired

Question 25

direct loss

Answer 25

the immediate damage caused by the peril

Question 26

special/open peril coverage

Answer 26

all risks of direct physical loss except those specifically excluded
- common exclusions: flooding, earthquake, intentional damage, losses due to enforcement of building codes, damage caused by a power interruption occurring off premises, government seizure

Question 27

broad peril exclusions

Answer 27

• weight of ice, snow, or falling objects on awnings, fences, patios, swimming pools, docks, and retaining walls
• accidental discharge over water from continuous leaking
• flooding from a river or lake
• burglary if property vacant more than 60 consecutive days

Question 28

BIG AFFECT

Answer 28

Burglary damage
Ice, sleet and snow
Glass breaking
Accidental discharge of water
Freezing objects
Falling objects
Electrical current
Collapse
Tearing asunder (apart)

Question 29

broad perils

Answer 29

all of basic perils - fire, lightning, and internal explosion
extended perils of WCSHAVVER & V and MM
BIG AFFECT

Question 30

V & MM

Answer 30

vandalism & malicious mischief
damage caused by willful and malicious actions
usually involves a crime
can only be written with extended coverge

Question 31

WCSHAVVER

Answer 31

Wind
Civil commotion
Smoke
Hail
Aircraft
Vehicles
Volcanic eruption
Explosion
Riot

Question 32

basic perils

Answer 32

fire, lightning, and internal explosion

Question 33

open perils / special

Answer 33

covers all perils except those specifically excluded

Question 34

named peril

Answer 34

only perils on the list are covered

- not listed - not covered

Question 35

limits of insurance/ coverage

Answer 35

maximum coverage limits

listed on declarations page

Question 36

blanket

Answer 36

all of a certain type of property
single limit of coverage
no detailed list

Question 37

specific / scheduled

Answer 37

detailed list of covered items

Question 38

personal property

Answer 38

moveable contents

Question 39

real property

Answer 39

buildings and structures

permanent