Ch5: Characteristics of Property Policies

Question 1

Describe “Property Insured”

Answer 1

personal property policies insure private non-business use property

Question 2

Describe the two types of coverages available

Answer 2

1. Named Perils
2. Broad Form

Question 3

Describe the role of Named Perils

Answer 3

insures losses by perils listed on policy

Question 4

Describe the role of broad form

Answer 4

insures against all direct physical losses not excluded on policy

Question 5

Define “Direct Loss”

Answer 5

Insured property is damaged by peril

Question 6

Define an “Indirect Loss”

Answer 6

result of a direct loss
must purchase indirect damage coverage
only defined property and locations are covered

Question 7

What are the 2 types of exclusions

Answer 7

1. Perils excluded
2. Property excluded

Question 8

Define “Deductible”

Answer 8

Cost the insured is required to pay per loss

Question 9

Define the “Standard Mortgage Clause”

Answer 9

side agreement between insurer and mortgagee

Question 10

Define “Warranty”

Answer 10

promise that something is true and will remain true

Question 11

Define “Condition”

Answer 11

Requirement to do or not to do something

Question 12

A statutory condition…

Answer 12

is legally required by law

Question 13

A policy condition is….

Answer 13

stated on the policy, created by insurers

Question 14

Describe the Pair & Set / Parts Rule

Answer 14

insurance will only cover the item lost NOT the full set

Question 15

Describe the Indemnity Agreement

Answer 15

how much the insurance company will reimburse you

Question 16

Actual Cash Value is

Answer 16

replacement cost minus depreciation

Question 17

Define “Replacement Cost”

Answer 17

what it costs to repair or replace with materials/objects of like kind, quality, or usefulness (w/o depreciation)

Question 18

Describe “Valued Policies”

Answer 18

limits are established by appraisal
(alternative to replacement cost)