Unit 5 Introduction to property insurance

Question 1

Who is the Named insured ?

Answer 1

PErson whose name is on policy

Question 2

Who is the first name insured?

Answer 2

person listed first on the dec page who has the ultimate say in what goes on

Question 3

Who is the additional insured?

Answer 3

ex. a mortgage company. someone who has some degree of investment in it

Question 4

“When the porperty in insured” is know as what?

Answer 4

the policy period

Question 5

“How much a property is insured for” is what?

Answer 5

the limits on a policy. how much the insurance company will pay out

Question 6

For certain “hard to value items”, what does the insurance company do?

Answer 6

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.

Question 7

Named peril contracts only do what?

Answer 7

protect against perils named or specified in the policy

Question 8

what is difference between named (specified) peril and an open peril

Answer 8

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

Question 9

what is a direct loss?

Answer 9

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

Question 10

indirect loss? what is it aka?

Answer 10

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

Question 11

what are some losses not covered? in the exclusions or limitation section? 4 things

Answer 11

1. loss controllable by insured. ex. guy dropping tv or cracking computer
2. extra hazardous perils - ex. earthquake or flood
3. catastrophic losses. ex. losses from war or nuclear disasters
4. property covered in other policies

Question 12

what are the insured responsibilites after loss?

Answer 12

1. give notice of clai,
2. property proerty from mroe damage
   give detailed proof of loss
3. make property abilable for inspection

Question 13

insurance comapnies must create valuation or how losses will be paid. in egeneral the insured can collect the lesser of…. all to restore what

Answer 13

insurable itnerest
2. policy limits
3. actual cash value
4. cost to repair
5. replacement cost

… indmentifcation or making things the same as before

Question 14

most losses are replaced by what and how is it calculated? explain it?

Answer 14

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.

Question 15

what is repair cost for paying an insured?

Answer 15

sometimes the insured may be reimbursed on the basis of the item’s repair cost when the amount is less than the ACV

Question 16

what is replacement cost?

Answer 16

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

Question 17

what is functional replacement cost

Answer 17

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

Question 18

what is coninsurance condition?

Answer 18

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

Question 19

what is the conisnurance penalty?

Answer 19

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

Question 20

what is agreed value or stated amount (in relation ot coinsurance)

Answer 20

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

Question 21

what is the purpose of a deductible?

Answer 21

to eliminate small claims

Question 22

what is the pair or set condition?

Answer 22

appears in property contracts.

Question 23

what is pair or set condition

Answer 23

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

Question 24

what is subrogration?

Answer 24

U and W coverage. they can go after the people who arent insured with it

Question 25

what is the appraisal condition? breifefly know

Answer 25

provides that either party may demand an appraisal of a loss (someone to do an estimate)

Question 26

what is arbitration condition? breifely know