Unit Four Basics of Property Insurance

Question 1

What are the two types of property?

Answer 1

Real property
Personal property

Question 2

What is real property and what his personal property

Answer 2

Real property is buildings
Personal property is movable contents

Question 3

What is specific covered property?

Answer 3

Detailed list a covered items
Ex: jewelry 

Question 4

What is blanket covered property?

Answer 4

A single limit of coverage that applies to all items of a certain property type such as personal property

Question 5

Where is the limits of insurance listed and what is it?

Answer 5

It is listed on the declarations page and it is the maximum coverage limits.

Question 6

What is a named peril?

Answer 6

Covers only perils listed

Question 7

What is an open peril?

Answer 7

All risk of direct physical loss unless specifically excluded

Question 8

What are the three basic perils?

Answer 8

Fire
Lightning
Removal

Question 9

List the nine additional perils known as the extended coverage (EC) perils
Think about the 2 acronyms

Answer 9

WCSHAVVER
Wind
Civil commotion
Smoke
Hail
Aircraft
Vehicles
Volcanic eruption
Explosion
Riot

Vandalism and malicious mischief (V&MM)

Question 10

What is covered in a broad peril?

Answer 10

All of the basic perils coverage (fire lightning and removal) plus extended perils (WCSHAVVER and V&MM)

Plus BIG AFFECT:

Burglary damage
Ice sleet and snow
Glass breakage
Accidental discharge of water
Freezing water
Falling objects
Electrical current
Collapse
Tearing asunder

Question 11

List the four broad peril exclusions

Answer 11

•Weight of ice, snow or falling objects on awning, fences, patio, swimming pools, docs, and retaining walls
•Accidental discharge of water from continuous leaking
•Flooding from river or lake
•Burglary if property vacant more than 60 consecutive days 

Question 12

What does special perils coverage insure against?

Answer 12

It insures against all risk of direct physical loss unless they’re specifically excluded.

Question 13

List the exclusions in a special payroll coverage

Answer 13

•Flood
•Earthquake
•Intentional damage caused by an insured
•Losses due to enforcement of building codes
•Damage caused by power interruption occurrence off premises
•Government seizure

Question 14

List the two types of losses and what they are

Answer 14

• direct loss- the immediate damage caused by the peril
• Indirect loss-loss overtime as a result of the direct loss

Question 15

How many classes of construction are there?

Answer 15

6

Question 16

Class one of construction contains?

Answer 16

Frame

Question 17

Class two of construction contains?

Answer 17

Joist and masonry

Question 18

Class three of construction contains?

Answer 18

Noncombustible

Question 19

Class for construction contains?

Answer 19

Masonry noncombustible

Question 20

What does class five of construction contain?

Answer 20

Modified fire resistance, two hours or less

Question 21

What does classics of construction contain?

Answer 21

Fire resistance, two or more hours

Question 22

What is loss valuation?

Answer 22

How the insurance company determines appropriate amount of loss to be paid

Question 23

What does a deductible do?

Answer 23

A deductible reduces any amount after loss has been valued

Question 24

What is actual cash value(ACV)?

Answer 24

Replacement cost based on today’s cost not what was originally paid for the item

Question 25

How is ACV calculated?

Answer 25

ACV= replacement - depreciation

Question 26

What are the methods of calculating value?

Answer 26

• replacement cost
• functional replacement
• market value
• agreed amount
• stated amount
• Pair and set

Question 27

What are the two alternative dispute methods?

Answer 27

Appraisal and arbitration

Question 28

When is an appraisal required?

Answer 28

Disagreement on the amount of the loss in each party gets their own appraiser

Question 29

What is arbitration?

Answer 29

Disagreement about other areas of the loss

Question 30

What is the coinsurance clause meant to encourage?

Answer 30

Property owners to purchase full or nearly full coverage and review their policy periodically to verify that their coverage is adequate

Question 31

What is vacant and what happens after 60 days of vacancy?

Answer 31

Vacant means an empty building there are no people or contents
If the properties vacant for 60 days, the insured is penalized

Question 32

What is an occupied in? Do they have coverage?

Answer 32

An occupied means there are no people, but they’re contents remain and there will be no loss of coverage

Question 33

What does no benefit to Bailee mean?

Answer 33

Bailee is a person or business that is temporary control of the insured property. A Bailee cannot benefit from the property owners policy.