Unit 4 - Basics Of Property Insurance

Question 1

2 Types of Property

Answer 1

•Real Property - buildings
•Personal Property - moveable contents

Question 2

Covered Property

Answer 2

•Specific/Scheduled-detailed list of covered items
•Blanket-All of a certain type of property
-Single limit of coverage
-No detailed list

Question 3

Limits of insurance

Answer 3

Maximum coverage limits
•listed on declarations page

Question 4

Insured Perils

Answer 4

•Named Peril-only perils on the list are covered
•Open (special) Perils-covers all perils except those specifically excluded

Question 5

Basic Perils

Answer 5

•Fire, lightning, and internal explosion
•Extended coverage
-WCSHAVVER
-Vandalisim and malicious mischief (V&MM)

Question 6

Broad Perils

Answer 6

All of basic
(fire, lightning, and internal explosion)
+
extended perils (WCSHAVVER and V&MM)
+
BIG AFFECT

Question 7

BIG AFFECT

Answer 7

B-Burglary damage
I-Ice, sleet, and snow (weight of)
G-Glass breakage
A-Accidental discharge or water
F-Freezing objects
F-Falling objects
E-Electrical current
C-Collapse
T-Tearing asunder

Question 8

Actual Cash Value (ACV)

Answer 8

•Replacement cost based on today’s cost-not what was originally paid for them
-cost to resolve it now!

ACV= replacement - depreciation

Question 9

Replacement cost

Answer 9

Current replacement cost, no depreciation (smaller kind and quality)

Question 10

Appraisal

Answer 10

Disagreement on the amount of the loss

•company and assured 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 11

Arbitration

Answer 11

Disagreement about other areas of the loss

Question 12

Coinsurance

Answer 12

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

Question 13

Coinsurance equation

Answer 13

Step 1: Determine insurance required
Step 2: Do they carry at least this amount?
Step 3: If no, apply the following formula.

Insurance carried/insurance required x loss=
Claim payment - deductible

Question 14

Vacant

Answer 14

No property or people present at time of loss

•May affect covered perils and claim value

Question 15

Unoccupied

Answer 15

No people present at time of loss

•Does not affect covered perils and claim value

Question 16

Standard Mortgage or Loss Payable Clause

Answer 16

•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 17

No Benefit to Bailee

Answer 17

•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 18

Functional replacement

Answer 18

Replace with modern construction

Question 19

Market Value

Answer 19

Selling price; seldom used

Question 20

Agreed amount

Answer 20

Value of loss is determined before the policy is issued

Question 21

Stated amount

Answer 21

Insured up to this amount

Question 22

Pair and set

Answer 22

Value of the pair or set before the loss minus value of what remains

Question 23

G

Answer 23

G