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Flashcards in Property Insurance Basics Deck (17)
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Land and most things attached to the land. ie: buildings and vegetation (growing crops attached to the soil). "Land" includes surface of the Earth AND everything above and beneath it. Theoretically includes airspace above and soil below.

Real Property


Property that includes contents inside blgd as well as presumed outside (patio furniture is not inside the bldg)

Personal Property


Four basic construction types

Frame, masonry veneer, masonry and superior (noncombustible or fire-resistive)


A building with an exterior wall of wood or other combustible material. ie: wood, stucco on wood, or aluminum/ plastic siding over frame. "Flex" in earth movements.

Frame Construction


A building with inerior walls of combustible construction with an outside layer of brick.

Masonry Veneer or Brick Veneer


Building with exterior walls of adobe, brick, concrete, gypsum block hollow concrete block or stone. With a floor and roof of combustible construction. More susceptible to earth movement.

Masonry Construction


Noncombustible. Exterior walls, floors and roof constructed of and supported by metal, asbestos, gypsum, cement etc.
Masonry non-combustible: exterior walls are masonry, floors and roof are metal or other noncombustible. Fire resistive
Usually Commercial blgs.

Superior Construction


Cost for staying in a hotel or operating business out of temp. facility while repairs are made.

Indirect Costs or Consequential Loss


Financial harm suffered by person from a loss that the insurance covers. Must exist at the time of the loss. NOT life insurance.

Insurable Interest


Most common valuation provisions:

Replacement cost, actual cash value (ACV), functional replacement cost (not identical but same function), market value, stated amount (all are indemnity) and agreed value (valued contract, art).


ACV is defined as

replacement cost minus physical depreciation.


Amount it would cost to repair or replace dmgd bldg with less costly common construction materials and methods.

Functional Replacement Cost


Amount property could be sold if the buyer and the seller are under no unusual pressure. Used to to establish ACV for cars, not property because replacement of bldg would not include the land or location.

Market Value


A list of covered items and their values



The approach where the insurer agrees to pay the lowest of three amounts if the covered property is dmgd or stolen.

Stated Amount


The 3 amounts defined by Stated Amount

1) Property's ACV at time of loss
2) Cost to repair or replace the property with similar
3) Dollar amount of insurance specified in the policy schedule


Value of each item is listed in schedule. Insurer agrees to pay the dollar amount in the schedule if the item is stolen or destroyed.

Agreed Value