Unit 4 - Basics Of Property Insurance Flashcards
2 Types of Property
•Real Property - buildings
•Personal Property - moveable contents
Covered Property
•Specific/Scheduled-detailed list of covered items
•Blanket-All of a certain type of property
-Single limit of coverage
-No detailed list
Limits of insurance
Maximum coverage limits
•listed on declarations page
Insured Perils
•Named Peril-only perils on the list are covered
•Open (special) Perils-covers all perils except those specifically excluded
Basic Perils
•Fire, lightning, and internal explosion
•Extended coverage
-WCSHAVVER
-Vandalisim and malicious mischief (V&MM)
Broad Perils
All of basic
(fire, lightning, and internal explosion)
+
extended perils (WCSHAVVER and V&MM)
+
BIG AFFECT
BIG AFFECT
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
Actual Cash Value (ACV)
•Replacement cost based on today’s cost-not what was originally paid for them
-cost to resolve it now!
ACV= replacement - depreciation
Replacement cost
Current replacement cost, no depreciation (smaller kind and quality)
Appraisal
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
Arbitration
Disagreement about other areas of the loss
Coinsurance
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
Coinsurance equation
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
Vacant
No property or people present at time of loss
•May affect covered perils and claim value
Unoccupied
No people present at time of loss
•Does not affect covered perils and claim value
Standard Mortgage or Loss Payable Clause
•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
No Benefit to Bailee
•Bailee is a person or business that has temporary control of the insured’s property
•Bailee cannot benefit from the property owner’s policy
Functional replacement
Replace with modern construction
Market Value
Selling price; seldom used
Agreed amount
Value of loss is determined before the policy is issued
Stated amount
Insured up to this amount
Pair and set
Value of the pair or set before the loss minus value of what remains
G
G
