Unit 4: Basics of Property Insurance

Question 1

Permanent structures and buildings

Answer 1

Real Property

Question 2

Furniture, appliances,clothing, tools and other moveable property

Answer 2

Personal property

Question 3

Detailed list of covered items

Answer 3

Specific/Scheduled Coverage

Question 4

No detailed list of items. All the items in your house are covered

Answer 4

Blanket Coverage

Question 5

Represents the maximum amount the insurance company will pay for a loss

Answer 5

Limits of Insurance

Question 6

Insures against all risks of direct physical loss except those specifically excluded in the policy

Answer 6

Open peril policy/ Special

Question 7

Covers only perils listed

Answer 7

Named Peril

Question 8

Coverage for perils including Fire, Lightning, and Internal Explosion

Answer 8

Basic Perils

Question 9

The nine additional perils, included in most state policies,
Wind, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot, Vandalism + Malicious Mischief

Answer 9

Extended Coverage Perils

Question 10

Burglary damage
Ice, sleet, and snow ( weight of )
Glass breakage
Accidental discharge of water
Freezing objects
Falling objects
Electrical current
Collapse
Tearing asunder

Plus WCSHAVVER + V&MM

Answer 10

BIG AFFECT = Broad Perils

Question 11

Weight of ice, snow or falling objects on awnings, fences, patios, swimming pools, docks, and retaining walls. Accidental discharge of water from continuous leaking, flooding from river/lake, burglary if property vacant more than 60 consecutive days…

Answer 11

Broad peril exclusions

Question 12

Flooding, earthquake, intentional damage caused by an insured, losses due to enforcement of building codes, damaged caused by a power interruption occurring off premises, government seizure….

Answer 12

Special peril exclusions

Question 13

Property loss caused by an unbroken chain of events covered under an insurance policy….

Answer 13

Direct loss

Question 14

A result, or consequence, of the original loss.

Answer 14

Indirect/consequential loss

Question 15

Structures have outside support walls, a roof, and floors constructed of wood or other combustible materials. The exterior walls may be covered with stucco or brick veneer…

Answer 15

Class 1 - Frame

Question 16

Structures have outside support walls made of noncombustible masonry materials (such as concrete, brick, hollow concrete block, stone, or tile) and a roof and floor made of combustible materials ( such as wood )

Answer 16

Class 2 - Joisted Masonry

Question 17

Structure is one whose exterior walls, floors, and roof are constructed of and supported by materials such as metal, asbestos, or gypsum…

Answer 17

Class 3 - Noncumbustible

Question 18

Structures in this construction class have exterior walls constructed of materials and a roof and floor made of metal or other non-combustible materials…

Answer 18

Class 4 - Masonry Noncumbustible

Question 19

Buildings that are modified fire resistive have exterior walls, floors and a roof constructed of masonry or fire resistive material with a fire resistance rating of 2 hours or less.

Answer 19

Class 5 - Modified Fire Resistive

Question 20

These structures are constructed of masonry or fire resistive material with a fire resistance rating of 2 hours or more

Answer 20

Class 6 - Fire Resistive

Question 21

Classes of construction

Answer 21

Frame
Joisted Masonry
Noncombustible
Masonry Noncombustible
Modified Fire Resistive
Fire Resistive

Question 22

How the insurance company determines appropriate amount of loss to be paid…

Answer 22

Loss Valuation

Question 23

The current cost of replacing an asset that is damaged or destroyed property with an identical or comparable asset minus accumulated depreciation and obsolescence….

Answer 23

ACV - Actual Cash Value

Question 24

Current replacement cost; no depreciation - similar kind and quality

Answer 24

Replacement cost

Question 25

Replace with modern construction

Answer 25

Functional replacement

Question 26

Selling price; seldom used

Answer 26

Market value

Question 27

Value of loss is determined before the policy is issued

Answer 27

Agreed amount

Question 28

Insured up to this amount

Answer 28

Stated value

Question 29

Value of the pair/set before the loss minus value of what remains

Answer 29

Pair and set

Question 30

Disagreement on the amount of the loss.

Answer 30

Appraisal

Question 31

Disagreement about the other areas of the loss

Answer 31

Arbitration

Question 32

Requires the insured to carry a minimum amount of insurance. Insurance carried divided by Insurance required x Loss = claim payment - deductible

Answer 32

Coinsurance Clause

Question 33

Empty building - no people/contents. Insured penalized after 60 days…

Answer 33

Vacant

Question 34

Contents remain but no people; no loss of coverage

Answer 34

Unoccupied

Question 35

Specifies the rights and duties of the mortgagee under the policy.

Answer 35

Standard mortgage clause

Question 36

Personal property, such as cars and boats, have a lien that is owed to a lender rather than a mortgage….

Answer 36

Loss payable clause

Question 37

A person/organization that has temporary possession of someone else’s personal property…

Answer 37

Bailee

Question 38

Bailee cannot benefit from the property owner’s policy…. Ex. Dry cleaners and storage facilities

Answer 38

No benefit to Bailee