Flashcards in Section 3A Deck (92):
0
Real property
Building structure
1
SFP never covers
Theft, Liability, or Money!
2
Endorsement
A form added to the policy that changes the policy's provisions for better or worse, usually for an extra premium
3
Declarations
States NAAPP:
Named insured and ins. Co,
Address of Property,
Amount of Coverage,
Premium,
Policy Period
4
Insuring Agreement
Contains CECE PAID:
Consideration Clause,
Effective Time,
Company Options,
Effective Location,
Perils Covered (or Excluded)
ACV limitation,
Insurable Interest,,
Direct versus Indirect Losses
5
Conditions
Conditions apply to both insured and insurer.
(Duties)
Insured must notify the company immediately and protect the property from further damage
6
Exclusions
Specify losses not covered by the policy
7
SFP Declarations
First page of the policy
Company =first party named
Insured=second party named
Policy period= 1 year
8
SFP Insuring Agreement
Consideration clause (insured's answers on app and premium and insurer's agreement and pays covered claims.)
Removal=5 days
9
Consideration
Is required to make a valid contract
10
Effective time
Policy starts and ends at 12:01 a.m. on the inception and expiration dates shown in the dec.
11
Effective Location
Policy takes effect at 12:01 am at the location of the property insured
12
Policy Limit
The policy will never pay more than the policy limit that is indicated in the dec
13
ACV (Actual Cash Value)
In the event of a claim, the policy will pay the insured the policy limit or the ACV, whichever is less.
ACV is R/C minus depreciation or
Current Value minus depreciation
14
SFP
ACV
15
Company's Options: The insurance co. always has the option of paying the claim or repairing the property with materials of like kind and quality,
Whichever is best for the company
16
The SFP only covers direct losses. Ex: fire
Indirect losses
Are not covered
Ex: loss of business income
17
Insurable interest must exist
At the time of the loss
18
Peril
Cause of Loss
Ex: fire,lightning, and removal
19
Named peril policy
If the peril is not listed in the insuring agreement, it's not covered.
20
Peril of Removal
All-Risk
DP-1= 5 days
DP-2 and DP-3= 30 days
CPP=10 days???
21
For the peril of removal to apply to your policy, you must list
The contents coverage desired in the declarations and pay an extra premium to cover it
22
Conditions apply to
both the insured and the insurer
23
An 'exclusion' is
Something that is never covered.
24
The policy is void if the insured
Willfully conceals or misrepresents any material fact concerning the insurance.
25
Representation
Answers to the application (the truth to the best of your knowledge)
26
Concealment
Omits (fails to disclose) a material fact
27
Money is never covered on a fire policy, although there may be
Some coverage (up to $200) on a homeowners policy
28
Hazard
Something that increases the risk
29
Risk
Chance or uncertainty of loss
30
Coverage is suspended
While the structure is vacant or unoccupied beyond 60 consecutive days
31
There is no coverage for explosion or riot, unless fire ensues, and in that event
Only the loss caused by the fire is covered
32
If you cnx the company, the refund is always
Short rate, with the company keeping some of your money as a penalty.
33
If the company cnxs you, the refund is always
Pro-Rata, and you will get back the entire unearned premium.
34
Cancellation for nonpayment of premium only
Requires 10 days' advance notice
35
Collateral Security
Bank's insurable interest position in the property
36
The company will pay ACV or the policy limit
Whichever is less
37
Other insurance aka pro-rata liability clause states that in the event that there is more than one policy in force on a structure at the time of loss,
The loss will be shared by the various insurance companies on a pro-rata basis, whether collectible or not.
Premium/ Total Premium
38
Right of Appraisal
If insurer and insured fail to agree on the amount to be paid in the event of a loss, each side hires an appraiser. The two appraisers choose a disinterested umpire. A decision will be made when 2 of the 3 decide.
Each side pays 1 1/2
39
Negligence
Failure to act as a reasonable person.
40
One of the purposes of Subrogation is
To keep the insured from collecting twice, from the co. and from the negligent party.
41
Negligence
Failure to act as a reasonable person
42
SFP may be used to insure either
A dwelling structure up to four units (four-plex) or a commercial structure (office bldg or apt house)
43
SFP is never sold by itself. Endorsements must be added to describe the type of property to be covered and to
Broaden the policy's coverage. These endorsements are the dwelling property forms.
44
Three dwelling property forms
DP-1 basic
DP-2 broad
DP-3 special
45
If SFP is being written to insure a commercial structure instead of dwelling , then the insurance company would add a form called
The commercial building and personal property form, instead of the dwelling property form.
46
Time-Element Coverage
Loss of income will occur over a period of time (until the dwelling is repaired).
47
Consequential loss
Aka time-element coverage
Consequence of a direct loss
48
Deductible in Dwelling
Often $250
49
Proximate Loss
The result; rain damage
50
Proximate Cause
Cause; wind blowing roof tiles off
51
ECE
Extended Coverage Endorsement
WHARVVES
52
WHARVVES
Wind
Hail
Aircraft
Riot
Volcanoes
Vehicles
Explosion
Smoke
53
VMM (optional)
There's no coverage for this unless the insured declares it on the Declarations page and pays an extra premium for it
54
V&MM
Does not over glass (windows)
55
Any coverage for vandalism is excluded if the structure has been vacant
For a period in excess of 60 days before the loss.
If structure burns down after 60 days of vacancy, there is coverage. But for V&MM perl, after 60 days, there is no coverage.
56
DP-1 exclusions
Ordinance or law
Earth movement
Water damage
Power failure off premises
Neglect, war, nuclear hazard, intentional loss
Any losses to lawns, plants, shrubs, or trees outside of the structure
57
Liberalization clause
Gives insurance company permission to broaden (make the policy better) without notifying the insured, as long as the change applies to all policyholders and no additional premium is charged.
58
DP-1 claims are still adjusted on a
Depreciated value (ACV) basis on both structure and contents
59
DP-1 is really three forms in one:
Dwelling property form,
ECE,
V&MM
60
SFP + DP-2 covers
Ordinance or law
Improvements, alterations, and additions (10% of C)
Collapse
Glass (unless dwelling vacant >60 days)
Fire department service charge ($500 in addition to limits, no ded.)
Coverage E-Additional Living Expense
61
DP-2
Coverage E-Additional Living Expense is
A form of time-element coverage (like rental value) that covers the insured's costs incurred by staying in a hotel in the event his or her insured property was damaged by an insured peril.
62
DP-2 covers trees, shrubs, plants, and lawns (max $500 per each)
If named peril, not theft.
Damage done by vehs covered unless veh operated by insured or tenant
63
DP-2 building damage paid
Without any deduction for depreciation (R/C coverage)
64
Purpose of the 80% clause, aka co insurance, is
To require the insured to purchase adequate policy limits
65
If you do not carry 80% of current replacement cost at the time of a loss, you are subject to one of two possible penalties:
The co-insurance penalty (did/should x loss)
Or
Payment based on the ACV (R/C- depreciation)
The ins. co. pays whichever of these is higher.
66
DP-2 additional perils covered:
Damage done by burglars
Falling objects
Weight of ice, snow,or sleet
Water leakage
Sudden explosion of steam or hot water heating system or an appliance for heating water
Freezing of plumbing
Power surge
Volcanic eruption
67
DP-2 exclusions:
Flood
War
Nuclear radiation
Glass breakage is generally covered unless dwelling has been vacant for more than 60 consecutive days
68
DP-3 special form offers
Open-Peril (all-risk) coverage on Cov A (the dwelling) and Cov B (the other structures).
Unless it is excluded,it is covered.
69
DP-3 excludes
Theft of any property (unless it is built-in)
Wear and tear
Deterioration
Rust
Dry rot
Industrial smoke
Pollutants
Mech breakdown
Settling
Shrinking
Expansion
Vermin
Rodents
Insects
Domestic animals
70
Big advantage of DP-3 is the
All-risk coverage on bldg structures while contents are still named peril and ACV.
71
Building structures are covered on R/C basis
If the insured carries at least 80% insurance-to-value
72
Inflation guard endorsement
Added at no additional charge (usually)
This is when the policy limits are increased automatically along with the rate of inflation in the geographical area where the dwelling is located
73
SFP is a named-peril policy. The named perils are
Fire
Lightning
Removal
Covers direct losses only!
74
SFP never
Covers theft, liability, or money
75
ACV is
Replacement Cost minus depreciation
Or
Current Value minus depreciation
76
DP-1 basic form
Worst named peril
77
DP-2
More named perils;
R/C if co-ins 80% is met
78
DP-3 special form
Open peril (all risk) on the dwelling
R/C if co- ins if 80% clause is met (most exclusions)
Contents are always named peril
79
DP-1
Cov A-dwelling
House and attached garage includes building equipment, outdoor equipment, and materials
(Declare a limit)---> most paid is limit
ACV on dwelling
80
DP-1
Cov. B=Other Structures
Detached garage
10% of Cov A
81
DP-1
Cov. C= Personal Property
Pay a premium and Declare a limit
Must be on dec page to be covered
Off-Premises= 10% of Cov C
82
DP-1
Cov D= Fair Rental Value
Indirect loss/Consequential Loss
20% of Cov A
83
DP-1 is SFP+ECE
Fire
Lightning
Removal
ECE=WHARVVES
Wind
Hail
Aircraft
Riot
Volcanoes
Vehicles
Explosion
Smoke
Dwelling has a deductible!!!
84
V&MM is optional on
A DP-1 but built in the DP-2 and covered by the DP-3 unless vacant more than 60 days.
Pay extra on a DP-1
Never covers glass (a proximate cause)
85
DP-1
No coverage for...
Ordinance or law
Earthquake
Flood, tidal wave, sewer backup
Power failure off premises
Neglect
War
Nuclear hazard
Intentional loss
Trees, grass, shrubs, lawns
86
DP-2 Broad Form
More named perils
R/C (if 80% clause met)
It stacks
87
DP-2
Covers:
Ordinance or law
Collapse
Glass (unless vacant more than 60 days)
Fire dept. service charges
Additional living expenses (new coverage)
Trees, shrubs, lawns, plants $500
Damage caused by burglars
Falling objects
Weight of ice, sleet, snow
Water leakage from plumbing , heating, or A/C system
Explosion
Freezing of plumbing (if heat left on)
Power surge
Volcanic eruption
88
DP-2
Cov A=Dwelling
Declare a limit
Cov B=Other Structures
10% of Cov A
Cov C=Contents
Pay premium; declare a limit
(Off premises 10% of Cov C)
Cov D= Fair Rental Value
Cov E= Additional Living Expenses
(Policy covers the difference- extra
costs)
D&E (Total 20% of A)
89
DP-3
Special Form
R/C
Stacking
Open Peril (All-Risk) on the dwelling
No coverage for...
Theft of contents
Wear and tear
Deterioration
Dry rot
Rust
Industrial smoke
Mechanical breakdown
Vermin
Rodent
Insects
Domestic Animals
Settling
Shrinking
Expansion
Pollutants
90
Inflation Guard Endorsement
Free; as inflation in economy, the premium goes up.
91