Study 4 Flashcards
(40 cards)
What are the three main sections of most personal property policies?
Declarations or Coverage Summary, Policy Wordings, Endorsements or Floaters added to the policy
Define package policy.
Any insurance policy that covers two or more lines or types of insurance in the same policy. Also known as a multi-peril policy.
Define non-package policy.
An example is the Residential Basic Form, for those who prefer policies simpler or more modest than the popular packages of property and liability insurance.
Define subscription policy.
A single policy covering a risk that is divided among a number of insurers; issued by the lead company and signed by all participating companies.
Define multi-limit policy.
A policy in which an amount of insurance is shown for the dwelling and a separate amount is shown for the personal property.
Define single-limit policy.
Shows one amount of coverage encompassing both the building and personal property.
What are the 3 key IBC Homeowners forms?
Homeowners Basic Form, Homeowners Broad Form, Homeowners Comprehensive Form
How do the 3 main IBC Homeowners Forms differ?
They differ in property perils coverage.
What do the 3 main IBC Homeowners Forms have in common?
Include personal liability insurance, similar organization of coverage, same method for determining coverage amounts and premium calculation.
Which 3 clauses are common to most property policies?
Deductible Clause, Coinsurance, Special Limits of Insurance
What are additional interests?
Parties not listed as named insured but who would be financially prejudiced by loss or destruction of insured property.
Explain rateable contribution.
Applies when more than one policy covers the same interest at the time of loss.
What are the steps to reading a policy?
Review definitions, property covered, perils insured/excluded, claim settlement, duties after loss, and statutory conditions.
What is included in the first section Declarations or Coverage Summary?
Information from the application, coverage amounts, location, insured name, and property details.
What is included in the Policy Wordings?
Preamble, definitions, coverages, exclusions, claim settlement, additional and statutory conditions.
What is included in the wording for Floaters and Endorsements?
Additional insurance for items limited, excluded, or not covered in the policy contract.
Define adverse selection.
When higher-risk individuals purchase more insurance than lower-risk ones, causing imbalance.
Why is the deductible clause important?
Reduces small frequent claims, lowering insurer expenses and policy premiums.
What ways may deductibles be applied?
Separately to each item, by occurrence, or paid in full if above deductible amount.
Explain the Coinsurance Clause.
Requires insured to maintain minimum insurance (usually 80% of property value) or share partial loss.
Explain Special Limits of Insurance.
Limits insurer exposure to specific property types under the blanket limit for personal property.
What are the two groups of Special Limits?
Covered for any peril (e.g. business property) and only by theft (e.g. jewellery, collectibles).
Explain loss payee.
Someone other than the named insured who receives insurance proceeds, usually a lender.
What is a chattel mortgage?
Conveys interest in property other than land/buildings as debt security.
