Chapter 16 - Intro to Property & Liability Insurance Flashcards
Real Property
Land and anything that is growing on it, erected on it, or affixed to it, and the bundle of rights inherent in the ownership
Personal Property
An asset, other than real property, that is subject to ownership
Mortgage Clause
A provision in property insurance policies that protects a lender’s insurable interest in real property. If a covered loss occurs, the lender receives payments to the extent of its insurable interest, even if a policyowner’s claim is denied
Loss Payable Clause
A provision in property insurance policies that protects a lender’s insurable interest in personal property. If a covered loss occurs, the lender receives payment to the extent of its insurable interest.
Actual Cash Value
A method of valuing property. Usually, it is defined as replacement cost minus depreciation but in some cases is defined as fair market value.
Replacement Cost
The cost to repair or replace damaged or destroyed property with new property of like kind, and quality, with no deduction for depreciation.
Agreed Value
A method of valuing property in which value is determined before loss and the agreed value is paid in the event of a total loss
Stated Amount
An approach to valuing property found in some property insurance policies. At the time of the loss, the insurer will pay the least of the stated amount, the actual cash value, or the cost to repair or replace the property.
Valued Policy Law
A law in a few states that requires insurers to pay the full coverage amount when real property is totally destroyed by certain perils
Named-Perils Coverage
An insurance contract that covers only losses that arise from one of a series of listed perils. If the peril is not listed, it is not covered by the policy.
Open-Perils Coverage
An insurance coverage that covers all types of losses except those that are specifically excluded by the policy’s terms
Other Insurance Clause
A provision in property and liability insurance policies that specifies how losses are shared if more than one policy covers a loss
Coinsurance (Property Insurance)
A provision whereby a property owner must share in a loss if the amount of insurance carried is less than a specified percentage of the property’s insurable value
Compensatory Damages
Damages designed to financially compensate or reimburse a claimant who has suffered a loss for which another party is legally responsible
Punitive Damages
Damages awarded in addition to bodily injury or property damage when a defendant’s behavior is so severe that the legal system feels an example should be made of the behavior.
