Unit 4: Basics of Property Insurance Flashcards
Permanent structures and buildings
Real Property
Furniture, appliances,clothing, tools and other moveable property
Personal property
Detailed list of covered items
Specific/Scheduled Coverage
No detailed list of items. All the items in your house are covered
Blanket Coverage
Represents the maximum amount the insurance company will pay for a loss
Limits of Insurance
Insures against all risks of direct physical loss except those specifically excluded in the policy
Open peril policy/ Special
Covers only perils listed
Named Peril
Coverage for perils including Fire, Lightning, and Internal Explosion
Basic Perils
The nine additional perils, included in most state policies,
Wind, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot, Vandalism + Malicious Mischief
Extended Coverage Perils
Burglary damage
Ice, sleet, and snow ( weight of )
Glass breakage
Accidental discharge of water
Freezing objects
Falling objects
Electrical current
Collapse
Tearing asunder
Plus WCSHAVVER + V&MM
BIG AFFECT = Broad Perils
Weight of ice, snow or falling objects on awnings, fences, patios, swimming pools, docks, and retaining walls. Accidental discharge of water from continuous leaking, flooding from river/lake, burglary if property vacant more than 60 consecutive days…
Broad peril exclusions
Flooding, earthquake, intentional damage caused by an insured, losses due to enforcement of building codes, damaged caused by a power interruption occurring off premises, government seizure….
Special peril exclusions
Property loss caused by an unbroken chain of events covered under an insurance policy….
Direct loss
A result, or consequence, of the original loss.
Indirect/consequential loss
Structures have outside support walls, a roof, and floors constructed of wood or other combustible materials. The exterior walls may be covered with stucco or brick veneer…
Class 1 - Frame
Structures have outside support walls made of noncombustible masonry materials (such as concrete, brick, hollow concrete block, stone, or tile) and a roof and floor made of combustible materials ( such as wood )
Class 2 - Joisted Masonry
Structure is one whose exterior walls, floors, and roof are constructed of and supported by materials such as metal, asbestos, or gypsum…
Class 3 - Noncumbustible
Structures in this construction class have exterior walls constructed of materials and a roof and floor made of metal or other non-combustible materials…
Class 4 - Masonry Noncumbustible
Buildings that are modified fire resistive have exterior walls, floors and a roof constructed of masonry or fire resistive material with a fire resistance rating of 2 hours or less.
Class 5 - Modified Fire Resistive
These structures are constructed of masonry or fire resistive material with a fire resistance rating of 2 hours or more
Class 6 - Fire Resistive
Classes of construction
Frame
Joisted Masonry
Noncombustible
Masonry Noncombustible
Modified Fire Resistive
Fire Resistive
How the insurance company determines appropriate amount of loss to be paid…
Loss Valuation
The current cost of replacing an asset that is damaged or destroyed property with an identical or comparable asset minus accumulated depreciation and obsolescence….
ACV - Actual Cash Value
Current replacement cost; no depreciation - similar kind and quality
Replacement cost
Replace with modern construction
Functional replacement
Selling price; seldom used
Market value
Value of loss is determined before the policy is issued
Agreed amount
Insured up to this amount
Stated value
Value of the pair/set before the loss minus value of what remains
Pair and set
Disagreement on the amount of the loss.
Appraisal
Disagreement about the other areas of the loss
Arbitration
Requires the insured to carry a minimum amount of insurance.
Insurance carried divided by Insurance required x Loss = claim payment - deductible
Coinsurance Clause
Empty building - no people/contents. Insured penalized after 60 days…
Vacant
Contents remain but no people; no loss of coverage
Unoccupied
Specifies the rights and duties of the mortgagee under the policy.
Standard mortgage clause
Personal property, such as cars and boats, have a lien that is owed to a lender rather than a mortgage….
Loss payable clause
A person/organization that has temporary possession of someone else’s personal property…
Bailee
Bailee cannot benefit from the property owner’s policy…. Ex. Dry cleaners and storage facilities
No benefit to Bailee
