Unit 5 Introduction to property insurance Flashcards
Who is the Named insured ?
PErson whose name is on policy
Who is the first name insured?
person listed first on the dec page who has the ultimate say in what goes on
Who is the additional insured?
ex. a mortgage company. someone who has some degree of investment in it
“When the porperty in insured” is know as what?
the policy period
“How much a property is insured for” is what?
the limits on a policy. how much the insurance company will pay out
For certain “hard to value items”, what does the insurance company do?
comes up with a “valued or agreed amount contract” … essentially the specific items are listed at a price at the inception of the contract and if a loss were to occur they go based on that listed price.
Named peril contracts only do what?
protect against perils named or specified in the policy
what is difference between named (specified) peril and an open peril
Named or specified only protects you against what is listed while an open peril policy protects you against everything except what is listed as excluded from protection. meaning if you don’t
what is a direct loss?
financial loss bc of a direct loss to the property
ex. hosue being damaged in a wind storm or a valuable piece of jewelry stolen
indirect loss? what is it aka?
consequential loss (as a result of): comes as a result of the original loss. ex. hotel burns down and in the rebuild the hotel loses 2 million in revenue. that loss is indirect or consequential
what are some losses not covered? in the exclusions or limitation section? 4 things
- loss controllable by insured. ex. guy dropping tv or cracking computer
- extra hazardous perils - ex. earthquake or flood
- catastrophic losses. ex. losses from war or nuclear disasters
- property covered in other policies
what are the insured responsibilites after loss?
- give notice of clai,
- property proerty from mroe damage
give detailed proof of loss - make property abilable for inspection
insurance comapnies must create valuation or how losses will be paid. in egeneral the insured can collect the lesser of…. all to restore what
insurable itnerest
2. policy limits
3. actual cash value
4. cost to repair
5. replacement cost
… indmentifcation or making things the same as before
most losses are replaced by what and how is it calculated? explain it?
Actual cash value or ACV
ACV is calculated by determing the replacement cost (what it would cost to buy a replacement) minus the amount of depreciation.
Replacement cost - depreciation = ACV
the insured isn’t reimbursed replacement cost of the home because the insured alreadu had use of the property. if the full amount were reimbursed so the insured could replace it with a new item, the insured would be better off after the loss than before.
what is repair cost for paying an insured?
sometimes the insured may be reimbursed on the basis of the item’s repair cost when the amount is less than the ACV
what is replacement cost?
when the insurance company agrees to automatically pay the replacement cost for covered losses, with no allowance for depreciation, if the insured meets certain things
what is functional replacement cost
where damged roperty is repaired or replaced with less expensive, but functional equivalent materials
when they replace materials with cheaper ones that strictly get the job done and functionw
what is coninsurance condition?
mans that insured can’t have less than 80% of the value of the property covered. msut have at least 80 percent of it insured. if they meet that requirement if a loss occurs insurance will pay full amount
what is the conisnurance penalty?
if they dont have at least 80% of their home covered the insurance company will only pay a percentage pf wht full contract reimbursement is
what is agreed value or stated amount (in relation ot coinsurance)
long as the meet or exceed the certain value specific to the policy they agreed on to cover coinsurance then they wont have a penalty
what is the purpose of a deductible?
to eliminate small claims
what is the pair or set condition?
appears in property contracts.
what is pair or set condition
ex. if a burgular stole a pair of diamond earnings and drops one has he leaves and it is found . according to this condition the insured would be entitled to reimbursement for the stolen earing as a fair proprtion of the pairs full value
what is subrogration?
U and W coverage. they can go after the people who arent insured with it
what is the appraisal condition? breifefly know
provides that either party may demand an appraisal of a loss (someone to do an estimate)
what is arbitration condition? breifely know
