Ch.5- Property insurance policies- Common characteristics

Question 1

Personal property Insuance

Answer 1

for property having person, non business use

Question 2

Types of personal property policies (6)

Answer 2

1. Tenant
2. homeowners
3. Mobile Home
4. Condo Insurance
5. Secondary dwelling
6. Seasonal dwelling

Question 3

Commercial Property Insurance

Answer 3

• property having business use

Question 4

Attributes of Property policies (8)- list (NIICE DCS)

Answer 4

1. No standard policy
2. indentify property insured + location
3. insures direct damage only
4. Conditions + warranties
5. Exclusions
6. Deductible clause
7. Claims payment
8. Standard mortgage

Question 5

1. No standard policy

Answer 5

• Plociy may be limited to a few perils or a variet
• Named Peril policies : name periols insured
• all risks policies: Perils not named, all causes of loss insured UNLESS excluded

Question 6

2. Identify property + insured location

Answer 6

• Coverage resteicted to location stated in policy and
• only for items where an amount of insurance indicated

Question 7

3. Insure direct damage only

Answer 7

• property insurance insures direct damage only
  
  • damaged/destroyed by insured peril​
  • examples:​

Question 8

4. Conditions and Warranties

Answer 8

• Conditions: req insured to do or not to do something
  
  • ​2 common:
    
    • statutory conditions: in statute + legally binding
    • Policy conditions: developed by insurers
• Warranties: a promise by insureds that certain facts are true + will stay that way
  
  • breach warranty = contract nullified

Question 9

5.Exclusions

Answer 9

in property polcies- 2 types of exclusions:

1. ​Property Excluded:
   
   • evideces of debt
   • securities
   • watercraft
   • aircraft
   • money
   • other motor vehicles
   • books of account
   • vacant property
2. Perils excluded:
   
   • ​​Earthquake
   • flood
   • smoke due to agricultural smudging/insudtrial ops.
   • rust/corrosion
   • war
   • nuclear incident
   • increaed cost of repair/constructom
   • sewer backup

Question 10

6. Deductible clause

Answer 10

• INC IN ALL PROPERTY POLICIES
• Deductible: amount insured req to pay for each loss BEFORE gets any payment from insurer
  *

Question 11

7.Claims payment

Answer 11

• (i) Pair/set
• (ii) Parts
• LEAST OF 3:
  
  • Step 1: ACV at time of loss
  • Step 2: Interest of insured
  • step 3: Limit of insurance
• Other basis of settlement:
  
  • replacement cost basis
  • Valued policies

Question 12

(i) Pair/set

Answer 12

• Loss/damage to 1 item of pair/set DOES NOT = loss damage to whole thing
• other half still has value (deducted from claim amount)

Question 13

(ii) Parts

Answer 13

• loss to only 1 part of property that has several parts
• (Parts clause) basis of settlement is value of lost/damaged part + cost to install

Question 14

8. Standard Mortgagee clause

Answer 14

• mortgagees req their interest to be protected w/ insurance
  *

Question 15

Personal property-> Homeowner forms

Answer 15

• Dwelling bldg
• detached private structures
• personal property

Question 16

Commercial Property Forms

Answer 16

• Building
• Stock
• Equipment

Question 17

INDIRECT damage

Answer 17

• Loss of food in a freezer when motor damaged by lightening
• loss of rental income after major fire
• Loss of profit from biz after tornado destroyed bldg

Question 18

What deductibles accomplish?

Answer 18

• helps keep insurance affordable
• higher deductible = lower premium
• pick deductible they can afford if there is a loss
• amount of deductible is amt insured retains/contributes to loss settlement

Question 19

Actual cash value (ACV)

Answer 19

• Replacement cost - Depreciation

Question 20

Factors influencing Depreciation- (CORN)

Answer 20

• Conditio n
• Obselescence
• Resale Value
• Normal Life expectancy

Question 21

Replacement cost-Buildings

Answer 21

Provisions:

• Replacement shall be effected by insureds w/ due diligence and dispatch
• replacement shall be on the same site or an adjacent site
• settlement will be made only when replcement has actually been effected

Question 22

Replacement cost- Property

Answer 22

Insureds req to show that:

• prepoerty was useable for original purpose at time of loss
• property was repaired or replaced promptly

Question 23

Meaning f replacement cost

Answer 23

replacing lost/damaged item with new one- NOT used one

Question 24

Types of property normally insured by valued policies and basis of settlement

Answer 24

• Types of property:
  
  • propertyb that cant be replaced
  • i.e: original art, family jewellery, furs, antiques
• Basis of settlement:
  
  • agreed on by insured and insurer
  • req valuation by qualified appraiser

Question 25

Mortgagee

Answer 25

Mortgagee: anyone w/ insurable interest in the property

banks, trusts, groip pf ppl

Question 26

Guarantees to Mortgagees (2)

Answer 26

• Guarantee of pmt when insured breaches any policy conditions (neglect, ommssion/misrep.
• Guaranteed Insurer will not reduce coverage to the prejudice of mortgagee NOR terminate policy w/o providing it with same notice req to insured