Key Words Flashcards
(45 cards)
Actual Cash Value
the amount equal to the replacement cost, minus depreciation of damaged or stolen property at the time of loss.
Agreed Value
an “upfront agreement” between the insured and the insurance company on the fixed value of property
Agreed Value Provision
an insurance provision through which the insurer agrees to waive the coinsurance requirement; insurers will require a Statement of Values—signed by the policyholder—as a condition for activating or including this in a policy
Bailee
the party to whom personal property is delivered and entrusted (without transfer of ownership) for a specific purpose
Blanket Insurance
a property insurance policy with a single limit that covers more than one type of property at the same location; the same kind of property at multiple locations; or multiple kinds or property at two or more locations
Building
includes the building structure, along with any completed additions, fixtures, permanently installed equipment, as well as any personal property used to maintain the premises
Business Income
the net income (net profit or loss before taxes) that would have been earned or incurred, plus continuing normal operating expenses (including payroll)
Business Personal Property
includes furniture and fixtures, equipment, stock, the cost of labor, and any improvements or betterments
Causes of Loss Forms
policy forms which define the covered perils to which insurance applies; three types of Causes of Loss forms apply to commercial property insurance: the Basic Form, the Broad Form, and the Special Form
Coinsurance Clause
a property insurance provision that penalizes the insured’s loss recovery if the limit of insurance purchased by the insured is not equal to or greater than a specified percentage (commonly 80 percent) of the value of the insured property
Concurrent Causation
when a loss is caused by two perils
Concurrent Causation Exclusions
holds that if a loss is caused by two perils, one of which is clearly excluded and one of which is not excluded, the policy must pay for the loss caused by the peril that is not excluded
Conditions
policy terms which outline the provisions that control how a policy operates
Coverage Territory
the geographical area within which insurance coverage applies
Declarations
the front page (or pages) of a policy that specifies the named insured, address, policy period, location of premises, policy limits, and other key information that varies from insured to insured; also known as the information page
Deductible
an amount the insurer will deduct from the loss before paying a claim up to its policy limits
Depreciation
an accounting method of allocating the cost of a tangible or physical asset over its useful life or life expectancy; represents how much of an asset’s value has been used up
Dependent Properties
other enterprises upon which the insured business depends in order to remain operational at normal levels; four classifications include: contributors, recipients, manufacturers, and leaders
Direct Loss
loss incurred due to direct physical damage to property, as opposed to time element or other indirect losses
Endorsements
policy provisions that modify the basic policy to either add, delete, or exclude certain types of coverage
Extra Expense
the additional costs, in excess of normal operating expenses, that an organization incurs in order to continue operations while its property is being repaired or replaced after having been damaged by a covered cause of loss
First Named Insured
the person or entity listed first on the policy Declarations page as an insured; this primary or first named insured is granted certain rights and responsibilities that do not apply to the policy’s other named insureds
Functional Replacement Cost
the cost of acquiring another item of property that will perform the same function with equal efficiency, even if it is not identical to the property being replaced
Indemnity
when the insured is protected from loss by the insurer; to “make whole again”
