2A

Question 1

Declarations

Answer 1

personalize the property to the insured. lists: the insured, property covered, coverage limits, policy period and territory

Question 2

Named Insured

Answer 2

individuals or entities

Question 3

First Named Insured

Answer 3

individual authorized on behalf of the Named Insured

Question 4

Additional Insured

Answer 4

lender or additional family members, etc

Question 5

Real property

Answer 5

buildings and structures

Question 6

Personal property

Answer 6

contents and other property

Question 7

Coverage Limit

Answer 7

policy limit or limit of insurance or limit of liability

Question 8

Policy Period begin and end at 12:01am

Answer 8

to prevent gaps in coverage

Question 9

Insuring Agreement

Answer 9

addresses the coverages provided and perils insured against

Question 10

Policy Coverages

Answer 10

Basic, Additional, Extensions and Optional

Question 11

Basic Coverages

Answer 11

coverage for direct loss of property. (ie the dwelling and its contents)

Question 12

Additional Coverages

Answer 12

for specified exposures (ie debris removal) w/o additional premium charge

Question 13

Coverage Extensions

Answer 13

1. may override a general exclusion providing limited coverage for specified types of property
2. may extend coverage to a newly acquired premises

Question 14

Optional Coverages

Answer 14

added by endorsement and additional premium applies (ie. earthquake coverage)

Question 15

Endorsement

Answer 15

changes the policy in some way. needs to be accepted by insurer, signed by exec officer and attached to policy

Question 16

Named Peril

Answer 16

lists the specific perils that it will cover

Question 17

Named Peril Examples

Answer 17

riot and civil commotion, volcanic eruption, explosion, smoke and theft

Question 18

Open Peril

Answer 18

covers everything not excluded from coverage review of exclusions is as important than reviewing what is covered

Question 19

Friendly Fire

Answer 19

burns where it is intended to burn, not insurable

Question 20

Hostile Fire

Answer 20

burnes but where it is not intended to burn, covered cause of loss

Question 21

Direct Damage Example

Answer 21

smoke from a fire, eligible for coverage

Question 22

Direct Loss

Answer 22

occurs directly through an unbroken chain of events as a result of an insured peril (ie. property loss due to fire)

Question 23

Indirect Loss

Answer 23

involves loss of use (ie loss of income during restoration)

Question 24

Proximate Casue

Answer 24

action that produces the loss (lightning strikes a tree which falls on home)

Question 25

Common Exclusions

Answer 25

1. non accidental losses: wear and tear
2. extra hazardous perils earthquake, flood & war
3. loss controlled by insured: intentional
4. property covered by other insurance

Question 26

Conditions

Answer 26

rights and duties of insurer and insured

Question 27

Legal Actions Provisions in Property

Answer 27

insured can’t bring legal action against the insurer unless they are in compliance w policy conditions

Question 28

Deductible

Answer 28

a form of risk retention or self-insurance: used to avoid minor claims

Question 29

Replacement Cost

Answer 29

amount of settlement needed to replace damaged property with one of like kind. “new for old”

Question 30

Actual Cash Value

Answer 30

Replacement Cost - Depreciation

Question 31

Coinsurance

Answer 31

condition applies to replacement cost contracts. requires insured to carry insurance at a stated percentage of the full replacement cost (generally 80%) to receive ful replacement

Question 32

Functional Replacement Cost

Answer 32

damaged property is repaired using common construction methods. (ie used on older homes)

Question 33

Market Value Replacement

Answer 33

minimum amount an insured would be reimbursed in the event of damage (ie. agricultural products, commodities)

Question 34

If claim hasn’t been made w/in a specific period under Functional Replacement

Answer 34

settled at the LESSER of the limit, cost to replace with like materials or the market value at the time of loss

Question 35

Agreed Value

Answer 35

coverage for hard to value items. not going to change. need appraisal with annual updates

Question 36

Stated Amount

Answer 36

based on what insured states value to be

Question 37

Loss to Pair or Set

Answer 37

insurer has option to replace or repair any part to restore pair/set to its value b4 loss

Question 38

Pro Rata Settlement

Answer 38

each policy pays proportionately based on amount of insurance coverage compared to the total amount of insurance carried

Question 39

Concurrent

Answer 39

each policy pays proportionate share

Question 40

Nonconcurrent

Answer 40

if one policy doesn’t cover loss, the other is limited to their pro-rata amount

Question 41

Loss Payment

Answer 41

written notice in 30 days and losses payable in 60 days

Question 42

Primary vs. excess

Answer 42

primary is exhausted before excess is paid

Question 43

Vacancy

Answer 43

unfurnished building not being used as a dwelling or for a business

Question 44

Unoccupancy

Answer 44

furnished building but not used as a dwelling or for business

Question 45

Vacant building for 60 days

Answer 45

theft, vandalism and glass breakage will not be covered

Question 46

Right of Salvage

Answer 46

when an insurance co replaces damaged property, they have a right to the damaged property.

Question 47

Abandonment

Answer 47

insured cannot abandon property to insurer. it is insurer’s option to repair, replace or pay for damaged property

Question 48

Subrogation

Answer 48

“transfer of right of recover”: right of the insurer to take legal action against a third party responsible.

Question 49

Appriasal

Answer 49

either party may demand one. each party pays own appraiser and shares cost of umpire

Question 50

Arbitration

Answer 50

used for disagreement not involving value of loss

Question 51

Insurer cancellation

Answer 51

pro rata return premium

Question 52

Insured cancellation

Answer 52

short rate return premium

Question 53

Assignment

Answer 53

insured cannot assign the policy to another person w/o insurer’s written consent