UNIT 5: Property Insurance Flashcards
A___ peril policy insurance property against perils specifically listed in the policy
Named: A named peril policy insures property against the perils specifically listed in the policy
Bryan and Steven are co-owners of the bagel shop. Both are listed in the declarations of the policy that insurers the business with Steven’s name appearing first. The decorations also list first State Bank, which has an outstanding loan on the business.
Who are considered a named insured on the policy?
Who is the first named insured?
Who are considered an additional insured?
The named insured is the person, business, or other entity named in the declarations to whom the policy is issued.
When there is more than one person insured listed on the policy, the policy may assign a higher level of duties or right to the first person named/listed first on the declarations page
In some circumstances, another individual or business may be listed on the declarations as an additional insured. And example is a mortgage company that has an outstanding loan on the property.
When a plane hit Daryl’s house he and his family had to stay in a hotel for a week while repairs were made. Hotel bill was $500.
What was the direct loss?
What was the indirect loss?
Select plane crash or hotel bill
Plane crash: A direct loss is a financial loss resulting directly from a lost property. In this example, damage to the house that occurred when he was struck by an airplane is a direct loss.
Hotel bill: An indirect loss columns as a result or consequence of the original loss. In this example, additional living expenses that are resulted from the damage to the house are an indirect loss.
It will cost Gary $10,000 to put a new roof on his home after the old one was destroyed in a tornado. Assume the roof depreciated $300 per year and the roof was 10 years old when the loss occurred. If this loss is valued on an actual cash value basis how much will Gary’s insurance policy pay for the loss? Assume the loss is within policy limit
$7000. Depreciation on the roof is $3000. $300 per year for 10 years; replacement cost is $10,000. $10,000 $-3000 equals $7000
Linda sofa, television set, and entertainment center were destroyed in a fire. The total amount of loss is $5000; the actual cash value of the items is $3000 if this loss is valued on a replacement cost basis, how much will Linda’s insurance policy pay for the loss?
$5000. When a loss is paid on a replacement cost basis, no deduction is made for depreciation
Renada’s home is demolished in a fire that started when a neighbor Mr. acted the fireworks he said off to celebrate the Fourth of July. We’re not his insurance company pays for the damage and then file suit against the neighbor to recover the amount paid for the loss. This is an example of the application of what policy condition…
A) liberalization
B) subrogation
C) abandonment
Subrogation: The subrogation condition transfers the insureds right to collect from a responsible third-party to the insurance company.
Beaver sells his car to his friend but does not notify his insurance company. Assuming that beavers policy will transfer to her automatically the friend doesn’t buy insurance for the car. When the car is stolen the friend files a claim with beavers Former insurer. The insurer denies the claim. This is an example of the application of what policy condition?
A) assignment
B) no benefit to Bailee
C) coinsurance
Assignment: the assignment condition specifies that a policy may not be transferred anyone else without the written consent of the insurer, except in the event of the death of the named insured
Heavy snowfall causes the roof over and his living room so I collapse. The insurance company asked her to move her belongings out of the living room to protect them from further damage and put a tarp over the roof until it can be repaired. It also asks her to complete a proof of loss form listing the items that were damaged. This is an example of the application of what policy condition?
A) appraisal
B) arbitration
C) duties after loss
Duties after loss: most insurance policies include conditions that specify what the insured and insurer must do when a loss occurs.
The insured’s responsibility after a loss include giving notice of claim to the agent or company, protecting property from further damage, and completing a proof of loss form
Ryan has two insurance policies on his $100,000 home. Each policy has a $100,000 limit. Ryan has a $50,000 loss head is covered by both policies. How much would each policy pay for this loss if company A’s policy is primary and Company B’s is excess?
Company A pays $50,000. Company B pays zero dollars. The loss was already paid by the primary policy.
When 2 or more coverages for policies apply to the same loss, the primary policy is the one that pays first, up to its limit of liability or the amount of the loss, whichever is less.
Three policies apply to a $30,000 loss.
Policy A’s limit of insurance is $100,000.
Policy B’s limit of insurance is $50,000.
Policy C’s limit of insurance is $150,000.
Use the pro rate a method to determine how much each policy will pay for the loss
Company A): $10,000.
100,000÷300,000 = .33
$30,000 X .33 = $10,000
Company B): $5000.
$50,000 divided by $300,000 equals .16
$30,000 times .16 equals $5000
Company C): $15,000.
150,000÷ 300,000 equals .50
$30,000 times .50 equals $15,000
Following are two excerpts from sample declarations. On the basis of the language in the excerpt, decide whether the policy provides specific or blanket coverage.
1999 Toyota Camry
Business property located at address
Specific: Toyota Camry. Specific coverage means that property is specifically listed in the declarations and covered for a specific amount.
Blanket: business address. Blankey coverage insurers more than one item of property at a single location or one or more items of property at multiple locations
Which of the following would normally be excluded under a property contract?
A). Catastrophic losses B) non-accidental losses C) losses to personal property D) losses controllable by the insured E) extra hazardous perils
A, B, D, and E. Property insurance policies typically exclude
A) Catastrophic losses
B) non-accidental losses
D) losses controllable by the insured
E) extra hazardous perils
nonaccidental losses, losses controllable by the insured, any extra hazardous perils, catastrophic losses, and property covered in other policies
The policy period In an insurance policy…
A) specifies the date and time coverage begins and ends
B) may be set by state law
C) both A and B
D) neither A nor B
Both A and B: just insurance policies specify the date and time, including where and in what time zone, coverage begins and ends. This is known as the policy Period in some states, this is the exact time of day policy start and stop by law to maintain uniformity between companies and to prevent gaps in coverage when an insured changes Insurance companies
And indirect loss is…
A) The cause of a direct loss
B) A type of loss that results from a direct lost
C) and insignificant property loss
D) not a type of property loss
A type of loss results from a direct loss.
An indirect loss is one that comes as a result or consequence of the original loss.
Ladies homeowner policy has an 80% coinsurance condition. Her homes value is $125,000. What is the minimum amount of coverage she must carry to be indemnified for losses up to the policy limit?
$100,000: a coinsurance condition requires an insured to carry a certain amount of insurance, which is expressed as a percentage of the properties value. In this case lady must carry insurance equal to 80% of the homes value, Or $100,000
