Unit 4 Basics of Property Insurance

Question 1

an open peril policy insures against all risks of direct physical loss except those specifically included in the policy. These open peril policies are sometimes referred to as ____ and ____

Answer 1

1. All risk
2. Comprehensive coverage

Question 2

Covers only perils listed

Answer 2

Name/Specified Peril

Question 3

What are the 3 types of property insurance?

Answer 3

Basic, Broad, and Special

Question 4

The ____ form was introduced in 1986 by the ____

Answer 4

Basic cause of loss, Insurance Services Office (ISO)

Question 5

What are the 3 perils covered under Basic Coverage?

Answer 5

Fire, Lightning, and Internal Explosion

Question 6

Name the 9 perils known as the Extended Coverage (EC) perils. Think WCSHAVVERR

Answer 6

1. Wind
2. Civil commotion
3. Smoke
4. Hail
5. Aircraft
6. Vehicles
7. Volcanic eruption
8. Explosion
9. Riot

Question 7

____ is damage caused by willful and malicious actions, it usually involves a crime

Answer 7

Vandalism and Malicious Mischief (V and MM)

Question 8

Name the 9 Broad Coverage perils. Think BIGAFFECT

Answer 8

1. Burglary
2. Ice, sleet, and snow (weight of)
3. Glass
4. Accidental discharge of water
5. Freezing objects
6. Falling objects
7. Electrical current
8. Collapse
9. Tearing asunder (sudden and accidental tearing apart, cracking, or burning of HVAC, water heaters, sprinklers, etc.)

Question 9

The weight of ice, snow, or sleet that causes damage to these 11 items is not covered under the broad peril coverage

Answer 9

1. awnings
2. fences
3. patios
4. pavement
5. swimming pools
6. foundations
7. retaining walls
8. bulkheads
9. piers
10. wharves
11. docks

Question 10

The accidental discharge or overflow peril does not include (2)

Answer 10

1. Continuous or repeated leakage or seepage, freezing, or damage to the system or appliance itself
2. Flooding from a natural water source (lake, river, etc)

Question 11

The burglary and accidental discharge perils are not covered if the building has been vacant for more than ____ consecutive days

Answer 11

60

Question 12

True or False, the vehicles peril covers damage to fences, driveways, and walkways when the vehicle is driven by the insured?

Answer 12

True

Question 13

True or false, does the smoke peril include loss caused by fireplace smoke?

Answer 13

True

Question 14

Name the 6 most common perils excluded in Special (Open)

Answer 14

1. Flooding,
2. Earthquake
3. Intentional damage caused by the insured
4. Losses due to enforcement of building codes
5. Damage caused by power interruption occurring off premises
6. Government seizure

Question 15

What are the three ways that policy limit is known?

Answer 15

1. Limit of insurance
2. Limit of liability
3. Limit of coverage

Question 16

What are the 6 classes of property construction?

Answer 16

1. Frame
2. Joisted masonry
3. Noncombustible
4. Joisted Combustible
5. Modified
6. Modified Fire resistive
7. Fire Resistive

Question 17

____ and claims settlement are synonymous terms

Answer 17

Loss valuation

Question 18

Loss valuations/claims settlements are sometimes contained in the valuation or ____ condition.

Answer 18

How losses will be paid

Question 19

Loss valuation: Insured to collect lesser of ____ (5)

Answer 19

1. Insurable interest
2. Policy limits
3. Actual cash value (ACV)
4. Cost to repair
5. Replacement cost

Question 20

____ is the current cost of replacing an asset that is damaged or destroyed property with an identical or comparable asset MINUS accumulated depreciation and obsolescense

Answer 20

Actual cash value (ACV)

Question 21

Does Replacement Cost and Functional Replacement cost factor in depreciation?

Answer 21

No

Question 22

Loss Valuation____: At the time of loss the insurer will pay the lesser of the amount stated on the declarations page or actual cash value - whichever is less.

Answer 22

Stated amount (Value)

Question 23

Pair or set calculation method

Answer 23

value of the pair/set - the value of what remains

Question 24

Name the 6 methods of calculation value.

Answer 24

1. Replacement cost
2. Functional replacement
3. Market value
4. Agreed amount
5. Stated amount
6. Pair and set

Question 25

The class of building construction is determined by the types of materials used in the building and ___.

Answer 25

The roof of the insured structure.

Question 26

The Appraisal Condition involves ____ appraisers and an ____.

Answer 26

1. Two
2. Umpire

Question 27

____ is used for disagreements outside of the loss in value. (used before legal action)

Answer 27

Arbitration

Question 28

____ requires the insured to carry a minimum amount of insurance (called insurance to value). The requirement is usually ____% of the replacement cost.

Answer 28

Coinsurance, 80%

Question 29

If the insured does not carry enough insurance when a loss occurs, the company will pay only a percentage of what full contract reimbursement would otherwise have been. The amount not paid by the company is sometimes called the ____.

Answer 29

Coinsurance penalty

Question 30

True of false, the coinsurance penalty applies to total losses?

Answer 30

False

Question 31

Coinsurance penalty formula: ____

Answer 31

insurance carried/insurance required X loss = claim payment - deductible

Question 32

Is a mortgagee a lender or a borrower?

Answer 32

Lender

Question 33

True or false, nothing the insured does, not even acts of dishonesty, can prevent a listed mortgageee from being paid( for example the insured burns the house down via arson).

Answer 33

True

Question 34

The ____ specifies the rights and duties of the mortgagee under the policy.

Answer 34

Standard mortgage clause

Question 35

Personal property, such as cars and boats, have a lien that is owed to a lender rather than a mortgage. The ____ clause protects the lender and is similar to the standard mortgage clause

Answer 35

Loss payable

Question 36

A ____ is a person or organization that has temporary possession of some else’s personal property.

Answer 36

Bailee

Question 37

The ____ condition states that the bailee is not covered under the property owner’s policy while the bailee has posession of the property. Property in the bailee’s posession would be covered by their bailee policy.

Answer 37

No benefit to bailee

Question 38

Which policy type insures a property against all perils specifically listed in the policy?

Answer 38

Named peril policy

Question 39

Which of the following terms describes a single limit of insurance that applies to all items of that property type?
A. Specific
B. Personal
C. Scheduled
D. Blanket

Answer 39

Blanket

Question 40

Which of the following is an extended coverage peril?
A. Weight of ice, snow, or sleet
B. Freezing of plumbing
C. Falling objects
D. Wind

Answer 40

Wind

Question 41

____ - Sudden and accidental tearing apart, cracking, or burning of steam or hot-water heating, air-conditioning, or automatic fire protective sprinkler system and water heaters.

Answer 41

Tearing Asunder