Property Basics Flashcards
Accident
A sudden event from which loss or damage results. Unintended.
Occurence
An accident includes continuous exposure to the same harmful conditions.
Pro Rata Cancellation
Cancellation of insurance that refunds premium to the insured based on the exact number of days coverage was in effect.
Short Rate Cancellation
A cancellation that incurs a financial penalty.
Flat Cancellation
A cancellation that is retroactive to the effective date of the policy. No coverage is provided and the insurer must refund the premium paid.
Proximate Cause
If two or more perils contributed to a loss, the proximate cause is the one causing the most damage/loss.
Binder
Max length is 60 days.
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Contains name of the insurer, the amount, and type of insurance, and the perils insured against.
Arbitration
Process whereby a disputed claim is decided by a neutral third party.
Concurrent Causation
A principle holding that when two perils simultaneously cause a loss (both perils are considered proximate cause), the insurer must pay the loss even if one peril is not covered.
Non-Concurrency
Two or more policies covering the same exposures that don’t have the same policy periods.
Difference between Bailee and Bailor?
Bailee - A person or any organization to which property is entrusted. Mechanic, valet, etc
Bailor - A person that entrust property to a bailee.
Functional Replacement Value
The cost to replace property with other property that performs the same function, although it is not identical. Typically used with older homes (victorian).
Specific Limit
Insures a single item of property for a single limit of insurance.
Scheduled Limit
insures one or more items of property on a single policy and the amount applying to each is shown on a schedule.
Example: One farm policy insures the home for $100k and the barn for $200k
Blanket Limit
Insures property located at more than one location OR more than one type of property at the same location OR both.
Example: I got a fat mansion in Gville and a small crib in Ocala. It covers both as well as the business personal property contained in each building.
What is the standardized policy structure?
Hint: 4 Parts
D - Declarations
I - Insuring Agreement
C - Conditions
E - Exclusions
Additional coverage and endorsements.
What’s stated on the Declarations Page?
Who, What, Where, When, How much.
What’s stated by the insuring agreement?
It is the insurance company’s promise to pay the insured.
What is stated in the conditions section?
States the obligations of the parties to the contract, as well as any other conditions of coverage.
Liberalization Clause
The insurer can broaden coverage with no increase in premium, without an endorsement.
What are the 4 types of Insured?
Named Insured - Insured - First Named Insured - Additional Insured
Named Insured
If insuring a property, the named insured should be the owner, same with vehicles.
First Named Insured
The person whose name appears on the declarations first. They are granted rights and responsibilities by the policy that are no granted to other insureds.
Additional Insured
Under property policy’s, an additional insured is often a co-owner of real property.
