Chapter2

Question 1

Tell me the two components in a two party contract

Answer 1

The insured and the insurer

Question 2

A sudden, unforseen, unintended and unplanned event from which loss or damage results

Answer 2

Accident

Question 3

An accident includes contiunous or repeated exposure to the same general harmful conditions

Answer 3

Occurance

Question 4

Cancellation

Answer 4

The termination of an insurance policy before its experiation date. There is no coverage after and either party can cancel

Question 5

Define Pro Rata Cancellation

Answer 5

A proportionate cancellation of insurance that refunds premium to the insured based on the percise number of days coverage was in effect.

Question 6

Short Rate Cancellation

Answer 6

A cancellation that incurs a financial penalty. Insurer retains a portion.

Question 7

Flat Cancellation

Answer 7

A cancellation of insurance that is retro active to the effective date of the policy. No coverage provided, insurer must refund policy premium. cancelled on the effective date.

Question 8

Non renewal

Answer 8

A termination of a policy at the expatriation of its term.

Question 9

Proximate cause

Answer 9

The primary cause of loss having the most impact on the damage.

Question 10

A fire that burns outside its intended boundarires.

Answer 10

Hostile Fire

Question 11

A fire that was intentionally set and stays within its inteded boundaries and results in smoke damage.

Answer 11

friendly fire

Question 12

A quality within a property that causes it to damage or destroy itself

Answer 12

Inherent Vice

Question 13

A legal agreement issued by an insurance company that provides temporary proof of insurance until the insurer is able to issue an insurance policy.

Answer 13

Binder

Question 14

Process whereby a disputed claim is decided by a neutral third party.

Answer 14

Arbirtration

Question 15

Rights of Salvage

Answer 15

Right of the insurer to take possession of damaged property after paying for its loss.

Question 16

The amount for which property can be sold at the end of its useful life

Answer 16

Salvage Value

Question 17

A policy form that alters to or adds provisions of a property and casualty insurance contract

Answer 17

Endorsement

Question 18

A principle holding that when two perils simultaneously cause a loss, the insurer must pay the loss even if one of the perils is excluded by the policy.

Answer 18

Concurrent Causation

Question 19

The existance of two or more policies covering the same exposures, having the same policy periods and same coverage triggers

Answer 19

concurrency

Question 20

The existance of two or more policies covering the same exposures, that do not have the same policy periods and same coverage . Coverage gaps may occur

Answer 20

Non cocurrency

Question 21

Define Deductible

Answer 21

The specified amount of each loss that the insured must bear.

Question 22

What is a bailee?

Answer 22

A person or organization to which property has been entrusted, usually for repairs, servicing or storage.

Question 23

What is a bailor?

Answer 23

A person or organization that entrusts property to a bailee

Question 24

Primary Insurance definition

Answer 24

Any type of coverage that responds to loss before all other coverage respond

Question 25

What is the point of excess insurance?

Answer 25

It provides protection against certain perils or causes of loss ONLY after loss or damage exceeds a stated amount.

Question 26

A property that contains personal property but has no occupants

Answer 26

Unoccupancy

Question 27

A provision in property policy that eliminates or limits coverage for buildings that don't contain sufficent personal property to support intended occupancy or use.

Answer 27

Vacancy

Question 28

Define Burglary vs Robbery vs theft

Answer 28

Burglary is to home, robbery is to person, theft is any act of stealing.

Question 29

Mysterious disappearance

Answer 29

Loss of property when the cause of loss is not known.

Question 30

What is the benefit to the insured of a higher deductible?

Answer 30

lower premiums

Question 31

What are the two types of property loss?

Answer 31

Direct loss and indirect loss

Question 32

Define direct loss

Answer 32

A loss that causes direct damage to a property without an intervening cause

Question 33

Define Indirect loss

Answer 33

A loss that is not the direct result of a peril, came from direct loss

Question 34

What are the two types of perils?

Answer 34

Named Peril and Open Peril

Question 35

This type of property coverage only provides insurance for the cause of loss, or perils.

Answer 35

Named Peril

Question 36

This type of property coverage provides insurance for all causes of loss that are not specifically excluded under the policy.

Answer 36

Open Peril

Question 37

What is actual cash value?

Answer 37

The cost to repair or replace property at its replacement value minus depreciation

Question 38

What is agreed value?

Answer 38

The insured and insurance comapny agreeing to the specific value before the policy is issued. if a total loss occured, the insurer will pay the agreed value.

Question 39

what is the stated value?

Answer 39

a valuation method that states the value of a particular property on the declarations page, buyt provides for the insurer to pay the lesser stated value.

Question 40

What policy will pay the full face value in the event of a total loss, regardless of actual cash value.

Answer 40

Valued policy

Question 41

The cost to replace property with another property that performs the same function with similar efficiency

Answer 41

Functional Replacement value

Question 42

Market price

Answer 42

The price a willing buyer would pay for a property purchased from a willing seller.

Question 43

Define Frame in construction

Answer 43

a building that has a roof, floor and supports of combustible material.

Question 44

Joisted masonry

Answer 44

Buildings with exterior walls of masonry or fire-resistive construction rated for not less than one hour, with combustible floors and roofs.

Question 45

Noncombustible

Answer 45

Buildings and its walls, floors and structural framework made of noncombustible materials.

Question 46

Masonry noncombustible

Answer 46

Buildings with exterior walls of masonry (at least 4 inches thick) or made of fire restive construction

Question 47

Fire resistive

Answer 47

entire building and roof are constructed of reinforced concrete and steel

Question 48

Modified fire resistive

Answer 48

Materials used in the walls, floors and roof of a structure must have a fire resisting rating of at least 1 hour, but less than 2 hours.

Question 49

What are the 3 methods of writing property insurance limits?

Answer 49

specific, scheduled and blanket.

Question 50

Define specific limit

Answer 50

Insures a single item of property for a singel limit of insurance.

Question 51

Define Scheduled limit

Answer 51

Insures one or more items of a property on a single policy and the amount of insurance applying to each item is shown on a schedule.

Question 52

Define Blanket Limit

Answer 52

Insures property located at more than one location or more than one type of property at the same location, OR both.

Question 53

WHAT IS DICE?

Answer 53

a way to remember structure of a standard property insurance policy, D(eclerations) I(nsuring Agreement) C(onditions) and (E)xclusions.

Question 54

What does the declarations page describe about the policy?

Answer 54

who, what, where, when and how much

Question 55

What is the purpose of the insuring agreement?

Answer 55

It states the company's promise to pay the insured.

Question 56

Define policy period

Answer 56

Specifies that coverage only applies to losses occurring when it was in force.

Question 57

Define the conditions in relation to concealment or fraud

Answer 57

Specifies taht coverage will not apply if an insured amkes a material concealment or misrepresentation or fraud.

Question 58

Specifies that if the insurer broadens coverage with no increase in premium, that broadening of coverage will apply to existing policies without the need for an endorsement.

Answer 58

Liberalization clause

Question 59

Rights, such as the insured's term for cancellation, or the duties, such as the insured's duties in the event of a claim, are found in the _______ section of the insurance policy.

Answer 59

Conditions.

Question 60

_____ Addresses the requirements o the insurer if it elects to not renew a policy.

Answer 60

nonrenewal

Question 61

_____ specifies taht the insured may not transfer rights of ownership without the insurers prior written consent.

Answer 61

Assignment

Question 62

____ States that the insured must transfer to the insurance company its right of recovery against any party causing a loss after it accepts payment from the insurere for a loss. _____ also allows the insurer to recover from the party that caused a loss any amouns paid to an insured.

Answer 62

Subrogation

Question 63

Subrogation ultimately __________________

Answer 63

holds the responsible third party accountable for the loss

Question 64

Any _____ to the policy must be made in writing by the insurer.

Answer 64

Changes

Question 65

What ensures that the insurer will not be responsible for payment loss in an amount greater than the financial interest of an insured?

Answer 65

Insurable interest and limit of availability

Question 66

What specifies the sum and circumstances under which an insurer charges the insured to restore a policy to its initial face value?

Answer 66

Restoration/ Nonreduction of limits.

Question 67

What are some duties in the event of a loss?

Answer 67

Giving prompt written notice to the insurer, including a complete description of how, when, and where the loss or damage occurred Notifying the police if a theft occurred Cooperating with the insurer in the investigation and settlement of the loss Protecting property from further damage Preparing an inventory of the damaged property Allowing the insurer to inspect any damaged property and examine books and records Submitting proof of loss to the insurer

Question 68

What kind of proof of loss to the insurer must you submit?

Answer 68

Time and cause, any other insurance that may cover it, and any receipts, evidence or affidavits to support loss

Question 69

_____ specifies which loss valuation method will apply to the property insured under the policy.

Answer 69

Loss Settlement

Question 70

___ addresses disuptes about the amount of a loss.

Answer 70

Appraisal.

Question 71

______ specifies how the insurer will make payment for loss and any applicable time frames that must be honored when submitting proof of loss and other claim doccuments.

Answer 71

Loss Payment

Question 72

True or false, the insurer is not obligated to accept any property abandoned by an insured.

Answer 72

true

Question 73

The __________ specifies how the policy protest the mortgagees financial interest.

Answer 73

Mortgage clause

Question 74

How many days does the insurer have to provide the mortgage holder advance written notice before cancelling or nonrenewing coverage?

Answer 74

10

Question 75

____ condition specifies that in the event of the named insured's death, the insurer will extend coverageto the legal rep of decseased.

Answer 75

Death

Question 76

Where are perils that are NOT covered by the policy listed?

Answer 76

Exclusions

Question 77

Give me 2 examples of property exclusions:

Answer 77

Law, earth movement, war, utility failure that originates off premise, nuclear hazard, fungus, neglect, intentional loss.

Question 78

___________ are automatically included in property policies without an additional premium.

Answer 78

Additional Coverages

Question 79

What are the 4 types of insured?

Answer 79

name insured, insured, first name insured and additional insured.

Question 80

____ receives the broadest coverage of all persons or organizations protected by a policy.

Answer 80

Named insured

Question 81

When does coinsurance apply?

Answer 81

in the event of a partial loss.

Question 82

What ecnourages the insured to purchase insurance to value?

Answer 82

Coinsurance provisions

Question 83

The _____the conisinurance percentage, the ___ rate.

Answer 83

Higher, lower

Question 84

What is the coinsurance formula?

Answer 84

DID over Should x loss = amount paid

Question 85

The part of an insurance policy that states where the risk is located is the __________.

Answer 85

Declarations

Question 86

Which insurance provision prevents the insured from collecting twice for the same loss?

Answer 86

Subrogation