Flashcards in Property Insurance Basics Deck (17)
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.
Property that includes contents inside blgd as well as presumed outside (patio furniture is not inside the bldg)
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.
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.
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.
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.
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.
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.
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