Unit 4- Basic of properties insuranc eactivities

Real property

physical property such as land and buildings

Personal properties

movable properties such as car and other personal belongings

Specific (Scheduled) Coverage

-detailed list of covered items

ex: coverage for a diamond ring described with a jeweler's written appraisal

Blanket Coverage

Policy which provides a single limit of insurance for all property falling within a specific class

Policy Limits of Coverage

- maxium coverage limits

-listed in declerations page

Open-perils policy (special coverage policy)

all losses are covered except those losses specifically excluded

Named Peril Policies

covers only perils listed

Basic Perils

Fire, lightning, and internal explosion

Broad Perils

All of basic (fire, lightning, and internal explosion) plus extended perils (WCSHAVVER and V&MM) plus BIG AFFECT

Special Perils (Open)

Coverage insures against all risks of direct physical loss unless they are specifically excluded (common exclusions include: flooding, earthquake, intentional damage, losses due to enforcement of building code, government seizure)

Direct vs. Indirect Loss

A direct loss is a financial loss that results from the physical damage, destruction, or theft of the property, such as fire damage to a home

An indirect or consequential loss is a financial loss that results indirectly from the occurrence of a direct physical damage or theft loss, e.g., the additional living expenses after a fire

Basic Types of Construction

Class 1 - Frame

Class 2 - Joisted Masonry

Class 3 - Noncombustible

Class 4 - Masonry Noncombustible

Class 5 - Modified Fire Resistive

Class 6 - Fire Resistive

Loss Valuation

how the insurance company determines appropriate amount of loss to be paid

Actual Cash Value (ACV)

Cost to replace property with new property of like kind and quality less depreciation.

Repair Cost

The cost to fix a damaged or destroyed item of property; may be the basis of reimbursement for a loss.

Replacement Cost

the cost to replace an inventory item in its identical form

Functional Replacement Cost

The cost to replace damaged property with less expensive and more modern construction or equipment.

Market Value

the price at which property would sell

Agreed Amount

The insurer and the insured agree on the value at the time of application rather than the time of loss.

Stated Amount (Value)

allows insured to determine value of that property

Pair or Set

If one part of a set is lost only the lost part is replaced.

appraisal

disagreement on the amount of the loss.

- The company and insured pay their own appraiser.

-Appraisers get an umpire if they can't agree.

- agreement of any two of the three determines the amount

Arbitration

disagreement about other areas of the loss

Coinsurance

a type of insurance in which the insured pays a share of the payment made against a claim.

vacancy

an empty area or space

Unoccupancy

A property that contains personal property but has no occupants.

STANDARD MORTAGE CLAUSE

Specifies the rights and duties of the mortgagee under the policy

Loss Payable Clause

Specifies how the policy protects the interests of a loss payee. A loss payee has insurable interest in personal property.

No Benefit to Bailee

-Bailee is a person or business that has temporary control of the insured's property

-Bailee cannot benefit from the property owner's policy