Insurance Property Basics

The part of a property policy that gives basic information such as the named insured, a description of the property, the location of the property, and the amount of premium involved, is known as the: A. Declarations B. Insuring Agreement C. Conditions D. Policy Provisions

A declarations

When a loss occurs as a result of two perils, one of which is excluded and the other of which is insured against, the situation is known as: A. Concurrent Causation B. Proximate Causation C. Bilateral Causation D. Supplemental Causation

A. Concurrent Causation - Concurrent Causation is the legal doctrine that states that when a property loss is due to two causes, one that is excluded and one that is covered, the loss is covered.

The rules and procedures to be followed by the insured and the insurer are found in which section of an insurance policy? A. Conditions B. Definitions C. Declarations D. Insuring Agreement

A. Conditions

If your barbeque pit begins to rust and fall apart or maybe a historic document turns yellow and fades away, these are both losses that would be excluded from coverage because they are considered to be predictable losses that are commonly called a(n): A. Inherent Vice B. Concurrency C. Concurrent Causation D. Proximate Cause

A. Inherent Vice

The insured is not required to do which of the following in the event of a property claim? A. Notify police, whether or not a law has been broken B. Protect property from further damage C. Cooperate with the insurance company D. Give notice of loss as soon as possible

A. Notify police, whether or not a law has been broken - police are only notified if a loss is result of theft or other criminal activity.

Which of the following is the broad term for an accident that also includes a continuous and repeated exposure? A. Occurrence B. Incident C. Disaster D. Exposure

A. Occurrence

When coverage applies to a property loss by all perils except those specifically excluded, the policy is written on which basis? A. Open Perils B. Named Perils C. Agreed Value D. Valued Policy

A. Open Perils

The action, which in a natural and continuous sequence, produces a loss is known as the: A. Proximate cause B. Inherent cause C. Direct cause D. Primary cause

A. Proximate cause

Which of the following is not included in the Declarations of a Property Policy? A. The perils that are not insured against B. The expiration date of the policy C. The amount of premium D. The amount of coverage

A. The perils that are not insured against

An insured may not transfer rights of ownership or interests in an insurance policy to another party: A. Without the insurer's written consent B. Without the written consent of the policyowner C. Without the insured's written consent D. Without the written demand by a court of law

A. Without the insurer's written consent - describing assignment condition; whereby an insured may not transfer rights of ownership or interest in a policy to another party without the insurer's written consent.

Property Insurance Terminology

Accident - a sudden, unforeseen, unintended, and unplanned event from which loss or damage results. Occurrence - An event that results in a loss. An accident includes continuous or repeated exposure to the same general harmful conditions. Cancellation - The termination of an insurance policy before its expiration date. Once cancelled, a policy provides no coverage. A policy may be cancelled by the insured or insurer. Pro Rate Cancellation - A proportionate cancellation of insurance that refunds premium to the insured based on the precise number of days coverage was in effect. The earned premium is the premium charged and retained by the insurer for the number of days coverage was in place; the unearned premium is the premium refunded to the insured for the number of days coverage was not in place. Short Rate Cancellation - A cancellation of insurance that incurs a financial penalty. Sometimes when the insured cancels the policy before its expiration date, a short-rate cancellation is issued. The insurer retains a portion of the unearned premium to cover costs. Flat Cancellation - A cancellation of insurance that is retroactive to the effective date of the policy. No coverage is provided and the insurer must refund the policy premium paid by the insured. Non-renewal - The termination of a policy at the expiration of its term. The policy does not renew and no coverage is provided after the expiration date. Inherent Vice - A quality within property that causes it to damage or destroy itself. Examples include rust, rot and fading of paint. Inherent vice is not covered by a property policy. Proximate Cause - The primary cause of a loss. If only one peril caused the loss, the proximate cause is the first event in the unbroken chain of events that resulted in loss. If more than two perils caused or contributed to the loss, the proximate cause is the peril having the most significant impact in generating the loss or damage. Example: A fire that causes a subsequent explosion or smoke damage; without the fire there would not have been a subsequent explosion or smoke damage. Hostile Fire - A fire that burns outside its intended boundaries, or becomes uncontrollable. Examples of a hostile fire include a wildfire or a fire that damages a home when a spark from a fire in the fireplace ignites a nearby area rug. Friendly Fire - A fire that was intentionally set and stays within its intended boundaries (e.g., a fireplace) and results in smoke damage to the inside of a fireplace. Property insurance does not cover damage from a friendly fire. Binding or Temporary Insurance Agreement - A legal agreement issued by an insurance company or a producer that provides temporary proof of insurance until the insurer is able to issue an insurance policy. Binders are issued for specific time periods. Arbitration - Process whereby a disputed claim is decided by a neutral third party. The disputing parties choose the impartial third party and agree in advance to accept the final decision of the arbitrator, who makes a decision after a hearing where both parties offer evidence. Right of Salvage - The right of the insurer to take possession of damaged property after paying for its loss. The salvage belongs to the insurer. Salvage Value - The amount for which property can be sold at the end of its useful life. In property insurance, the salvage value is the scrap value of damaged property. Endorsement - A policy form that broadens and restricts - or alters or adds to the provisions of a property and casualty insurance contract. Concurrent Causation - A principle holding that when two perils simultaneously cause a loss (I.e., they are both considered the proximate cause of loss), the insurer must pay the loss even if one of the perils is excluded by the policy. Example: A policy that excludes earth movement will still pay a loss due to fire or explosion that ensues directly from the earth movement. Concurrency/Concurrent Policies - The existence of two or more policies covering the same exposures, having the same policy periods, and the same coverage triggers. For example, if an auto policy and an umbrella policy are written with the same policy dates, they are considered to be concurrent. Example: A building is covered for a total of $500,000. company A provides $250,000 of the total, Company B provides $250,000 of the total, and the building sustains a $100,000 covered loss. Company A would pay $50,000 of the loss and Company B would pay $50,000 of the loss. Non-Concurrency/Non-Concurrent Policies - The existence of two or more policies covering the same exposures that don't have the same policy periods. Non-concurrency may create a coverage gap when underlying liability policies and an umbrella policy are non-concurrent because if an underlying liability policy exhausts its

Which statement is correct? A. Blanket coverage is commonly written when insuring property at a single location B. A spark that jumps from a fireplace and ignites a nearby rug would be deemed a hostile fire C. Most property policies include inherent vice as a covered peril D. Loss of profits resulting from a fire is a direct loss

B. A spark that jumps from a fireplace and ignites a nearby rug would be deemed a hostile fire

Which statement is correct? A. Most property policies include inherent vice as a covered peril B. A spark that jumps from a fireplace and ignites a nearby rug would be deemed a hostile fire C. Blanket coverage is commonly written when insuring property at a single location D. Loss of profits resulting from a fire is a direct loss

B. A spark that jumps from a fireplace and ignites a nearby rug would be deemed a hostile fire

An unforeseen and unintended event that happens at a known time in a known place is defined as which of the following? A. Proximate cause B. Accident C. Inherent Vice D. Occurrence

B. Accident - all accidents are considered to be occurrences but not all occurrences are to be considered to be accidents. Accidents are unintentional

D does not agree with the insurance company's value of his property damaged as a result of his recent property loss. Which of the following establishes the procedure D and the insurance company must use to settle this issue? A. Definitions Clause B. Appraisal Clause C. Loss Payable Clause D. Claim Settlement Clause

B. Appraisal Clause

What is the name for the termination of an insurance policy before the expiration date? A. Abandonment B. Cancellation C. Nonrenewal D. Subrogation

B. Cancellation

Once an insurance company has restored the insured following a covered loss, which of the following has the right of salvage of the destroyed property? A. Both answers B. Insurer C. Neither answer D. Insured

B. Insurer

The loss of property when the cause of loss is not known is considered: A. Robbery B. Mysterious disappearance C. Burglary D. Theft

B. Mysterious disappearance

Which provision specifies that no coverage applies if the loss benefits a person who has care, custody, or control of the insured's property? A. Assignment B. No Benefit to Bailee C. Claim Settlement D. Appraisal

B. No Benefit to Bailee

What is the term used to describe an insurance company terminating an insurance relationship at the end of the policy period? A. Grace Period B. Nonrenewal C. Cancellation D. Reinstatement

B. Nonrenewal

Which of the following describes actual cash value? A. Current replacement cost B. Replacement cost - depreciation C. Replacement cost + depreciation D. Stated value - depreciation

B. Replacement cost - depreciation

The transfer of the right of recovery from the insured to the insurance company is called: A. Assignment B. Subrogation C. Indemnity D. Hold harmless

B. Subrogation

All of the following statements regarding coinsurance are true, except: A. Coinsurance applies only in the event of a partial loss B. The coinsurance clause increases the policy's deductible amount C. The purpose of coinsurance is to encourage one to carry insurance to value D. The higher the coinsurance percentage, the lower the premium

B. The coinsurance clause increases the policy's deductible amount

Which of the following statements about a property policy is false? A. Named perils policies cover only stated perils B. The coinsurance clause makes the policy more costly C. Open perils policies cover all perils, except those excluded D. The purpose of coinsurance is to encourage the insured to carry insurance to value

B. The coinsurance clause makes the policy more costly - Generally, the higher the coinsurance, the lower the rate.

Short rate cancellation occurs when: A. An insurer cancels the policy mid-term B. The insured cancels the policy mid-term C. A policy is flat cancelled D. The policy is non-renewed

B. The insured cancels the policy mid-term

Which of the following is stated in the insuring agreement? A. The perils excluded by the policy B. The perils insured against C. The Other Insurance provision D. The location of insured property and the named insured's mailing address

B. The perils insured against

Actual Cash Value is best defined as which of the following? A. Appraised value B. Today's current price, minus depreciation C. Market value D. Replacement cost

B. Today's current price, minus depreciation

Which of the following is a correct definition of coinsurance? A. A situation where there are 2 causes resulting in a loss and 1 cause is excluded while the other cause is not excluded B. The portion of the policy that both the insured and the insurer share in the loss, with the insurer bearing the greater potion of the loss C. A requirement that the insured carry insurance equal to a specified percentage of the property's value to qualify for replacement cost coverage under the policy D. A condition that permits the insurer to go after the party that caused the damage and seek recovery of some or all of the damages

C. A requirement that the insured carry insurance equal to a specified percentage of the property's value to qualify for replacement cost coverage under the policy - The coinsurance condition encourages policyholders to insure property for a specified percentage of the full value of the property. If maintained and a loss occurs, the insured is usually allowed the replacement value of the destroyed property.

If the insured and insurer do not agree on the value of a property loss, what condition would apply? A. Abandonment B. Arbitration C. Appraisal D. Subrogation

C. Appraisal

The condition that provides a means to settle the amount of a loss when the insured and the insurance company cannot agree is the: A. Claim settlement condition B. Cancellation condition C. Appraisal condition D. Liberalization clause condition

C. Appraisal condition

A short term proof of insurance coverage provided to an insured until a policy can be delivered is known as a(n) _______. A. Endorsement B. Application C. Binder D. Proposal

C. Binder

Which of the following statements regarding types of property loss is false? A. A direct loss is a loss resulting directly from a peril insured against B. An indirect loss is the same as a consequential loss C. Direct losses include additional living expenses D. Fire damage to an insured home is considered a direct loss from a fire

C. Direct losses include additional living expenses

All of the following are parts of an insurance contract, except: A. Conditions B. Insuring Agreement C. Indirect Loss D. Exclusions

C. Indirect Loss

An additional loss that results from a direct loss to property is called a/an: A. General loss B. Absolute loss C. Indirect/consequential loss D. Vicarious loss

C. Indirect/consequential loss

Which type of construction material has a fire-resistance rating between one and two hours for walls, floors and roofs? A. Fire Resistive B. Joisted Masonry C. Modified fire-resistive D. Non-Combustible

C. Modified fire-resistive - the materials used in the walls, floors, and roof of construction must have fire resistive rating of at least 1 hour, but less than 2 hours.

The insuring agreement of a policy describes: A. Perils that are not covered B. Transfer of the rights of recovery C. Perils that are covered D. The duties of the insured in the event of a loss

C. Perils that are covered

The purpose of a binder is to: A. Allow the insurance company the right to complete a full credit check on the applicant B. Guarantee that the policy will be issued at the premium rate specified C. Provide temporary protection for the insured between the time the application is made and the policy is issued or the binder expires D. Provide permanent protection immediately with no need to actually issue a policy

C. Provide temporary protection for the insured between the time the application is made and the policy is issued or the binder expires

X's neighbor shoots off fireworks on July 4th and puts the shells in X's trash can, causing a fire and damaging X's garage. X's company pays the loss and contacts the neighbor for reimbursement. This is an example of: A. Appraisal B. Loss Settlement C. Subrogation D. Reimbursement

C. Subrogation - apply when negligent 3rd party is the cause of a loss. Since the insurance company has paid the loss, it is granted the insured's right to recover payment from the third party.

Which of the following is true of the Insuring Agreement? A. It provides the policy conditions B. It lists the policy premium amount C. The promise to indemnify an insured for a covered cause of loss D. It provides the name and address of the insured and the name of the insurer

C. The promise to indemnify an insured for a covered cause of loss

It will cost Gary $5,000 to put a new roof on his home to replace a roof destroyed in a windstorm. Assume that the original roof, which Gary paid $3,500 for 10 years ago, depreciated $300 per year. What was the actual cash value of the roof that was destroyed? A. $3,500 B. $3,000 C. $5,000 D. $2,000

D. $2,000 - ACV-Actual Cash Value is: Current Replacement Cost LESS Depreciation. (R/C is $5,000) minus the (depreciated value of the existing roof is $300 x 10 years = $3,000) = $2,000 ACV.

All of the following statements about binders are true, except: A. A binder specifies the effective date of coverage and amount of coverage B. A binder specifies the perils covered C. A binder specifies the insurer providing the coverage D. A binder specifies the premium amount

D. A binder specifies the premium amount - A binder does not specify the premium amount. The Declarations of an actual policy would include the premium.

All of the following are insured's duties after a loss under a property policy, except: A. Giving notice of loss as soon as possible B. Submitting to examination by insurer C. Furnishing inventory of damaged property D. Abandoning the property to the insurer

D. Abandoning the property to the insurer

When property is valued on a replacement cost basis, losses will be paid: A. At an amount previously agreed upon by the insured and insurer B. At market value of the damaged property C. At the cost to replace with functionally equivalent property D. At today's costs, without any deduction for depreciation

D. At today's costs, without any deduction for depreciation - replacement cost valuation pays the cost to replace property with property of like kind and quality, without a deduction for depreciation. Many property policies providing loss valuation at replacement value require property to be insured to a certain percentage of its replacement value, such as 80% or 90%

All of the following are methods of loss valuation, except: A. Actual cash value B. Replacement cost C. Stated amount D. Blanket value

D. Blanket value - there is no valuation basis called blanket value. A blanket limit is a method of writing insurance limits.

When the insurance company chooses to broaden coverage with no increase in premium, the broadened coverage automatically applies to all existing policies without the need for an endorsement. The company is exercising which of the following? A. Generosity clause B. Non Endorsement clause C. Appraisal clause D. Liberalization clause

D. Liberalization clause

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? A. Special peril B. Named peril policy C. Content peril D. Open peril policy

D. Open peril policy

Which of the following describes the 'Loss Payment' condition regarding how long an insurer has to pay for a loss after receiving the proof of loss and having reached an agreement with the insured. A. Personal lines 90 days and Commercial lines 60 days B. Personal lines 60 days and Commercial lines 90 days C. Personal lines 30 days and Commercial lines 60 days D. Personal lines 60 days and Commercial lines 30 days

D. Personal lines 60 days and Commercial lines 30 days

Which of the following is not true about an insurance policy? A. An insurance policy that pays before all other coverage is called primary coverage B. An application is a document that provides information for underwriting purposes C. A deductible is a specified amount of loss that is retained by the insured D. The insuring agreement includes the name of the insured

D. The insuring agreement includes the name of the insured

When the insurance company and insured cannot agree upon the amount of the loss, the person selected to help the two hired appraisers is called a(n): A. Adjuster B. Claim representative C. Agent D. Umpire

D. Umpire

DICE

Declarations Insuring Agreement Conditions Exclusions Additional Coverages

Direct loss & Indirect Loss

Direct loss - A loss that causes direct damage to property without an intervening cause. Ex. Fire damage to an insured residence, or water damage to the residence resulting from a ruptured water pipe. Indirect Loss or Consequential Loss - A loss that is not the direct result of a peril. Ex. Additional living expenses incurred as the result of a private residence being rendered uninhabitable as the result of a fire or other type of direct loss; loss of rental income caused by a direct loss; loss of business income and extra expenses caused by a direct loss.

Classifications of Construction

Frame - A building that has a roof, floor, and supports of combustible material, usually wood, and combustible interior walls. Joisted Masonry - Buildings with exterior walls of masonry or fire-resistive construction rated for not less than one hour and with combustible floors and roofs. Noncombustible - The buildings and its walls, floors, and structural framework are constructed of noncombustible materials. Masonry Noncombustible - Buildings with exterior walls of masonry (not less than 4 inches thick) or made of fire-resistive construction with a rating of not less than one hour of noncombustible floors and roofs. Fire Resistive - The entire building and roof are constructed of reinforced concrete and steel. Must have at least 2-hour fire resistive rating. Modified Fire Resistive - The materials in the walls, floors, and roof of a structure must have a resistive rating of at least 1 hour, but not less than 2 hours.

Conditions con't

Legal Action Against Us - Specifies that no one may bring suit against the insurer until all terms and conditions of the policy have been complied with. Loss Payment - Specifies how the insurer will make payment for loss and any applicable time frames that must be honored when submitting proof of loss and other claim documents. Under ISO (Insurance Services Office) Personal Lines Forms this time frame is 60 days, and under Commercial Lines Forms this time frame is 30 days. Abandonment of Property - Specifies that the insurer is not obligated to accept any property abandoned by an insured. Under ISO (Insurance Services Office) Personal Lines Forms, this time frame is 60 days and under Commercial Lines Forms, this time frame is 30 days. Mortgage Clause - Specifies how the policy protects the mortgagee's financial interest. (A mortgagee has insurable interest in real property.) Payment is made to mortgagees only up to its insurable interest in covered property and in order of precedence. The mortgagee must comply with requirements if the insured's claim is denied and the mortgagee wishes to collect under the policy: -It must pay any premium due under the policy on demand if the insured fails to do so -It must notify the insurer of any change in ownership, occupancy, or substantial change in risk of which the mortgagee is aware -It must submit a proof of loss to the insurer if the insured fails to do so. If the insurer cancels the policy for nonpayment of premium, the insurer must give the mortgagee at least 10 days written notice before the effective date of cancellation. The insurer must give a 30 day written cancellation notice for all other reasons. If the insurer decides not to renew the policy, the insurer must give the mortgagee written notice at least 10 days before the nonrenewal takes effect. No Benefit to Bailee - Specifies that no coverage applies if loss payment benefits a bailee. Recovered Property- Specifies the procedure to be followed when lost or stolen property is recovered after the insurer has made payment under the policy. Each party shall notify the other of any recovery and, under most property policies, the insured has the right of keeping the claim payment or returning the claim payment and retaining right to the property after adjustments have been made for any damage. Bankruptcy - Specifies that bankruptcy or insolvency of the insured does not relieve the insurer of any of its duties or obligations under the policy. Death - Specifies that in the event of the named insured's death, the insurer will extend coverage to the legal representative of the deceased with respect to the premises and property covered under the policy at the time of the named insured's death. Loss Payable Clause - Specifies how the policy protects the interests of a loss payee. A loss payee has insurable interest in personal property.

Common Policy Provisions - Types of Insured

Named Insured - The person or organization designated on the Declarations page of the policy. If property is being insured, the named insured should be the owner of the property. If vehicles are being insured, the named insured should be the party or entity to which the vehicle is titled and registered. The named insured receives the broadest coverage of all persons or organizations protected by a policy. Insured - A person or organization protected by an insurance contract. First Named Insured - The First Named Insured is the person or organization whose name appears first on the Declarations. The First Named Insured is granted rights and responsibilities by the policy that are not granted to other insureds. In commercial lines, many policies spell out those duties and responsibilities. Additional Insured - A person or organization not ordinarily protected by a policy but which, through the additional of an endorsement to the policy, is granted status as an insured. Under a property policy, an additional insured is often a co-owner of real property. Under a liability policy, an additional insured is often a party to an indemnification or hold harmless agreement. Coinsurance - A provision contained in most policies insuring commercial property, and is used to encourage the insured to purchase and maintain insurance to value, and to establish the basis of payment in the event the insured fails to maintain a specified percentage of that value. The higher the coinsurance percentage the insured agrees to purchase, the lower the rate that the insured pays for the insurance. Coinsurance applies only in the event of a partial loss, as total losses typically are paid in accordance with the Valued Policy Law. Formula: Amount of Insurance Carried/ Amount of insurance required X amount of loss = the amount the insurer pays

Scope of Coverage

Named perils - This type of property coverage only provides insurance for the causes of loss, or perils, listed. If a peril is not "named" in the policy, no coverage applies for loss or damage caused by that peril. Typical "named perils" are fire and theft. Named perils may contain coverage for up to 16 named perils; coverage for additional perils may be added by endorsement. The insured has the burden of proof following the claim. Open perils - this type of property coverage provides insurance for all causes of loss that are not specifically excluded under the policy. Typical exclusions in an "open perils" policy are flood and earthquake. The insurance company has the burden of proof following a claim.

Exclusions

Perils that are NOT covered by the policy are listed in the exclusions section. Other perils may be excluded in provisions stated elsewhere in the policy. Common property exclusions include: -Ordinance or Law -Earth movement -War -Water Perils that are NOT covered by the policy are listed in the exclusions section. Other perils may be excluded in provisions stated elsewhere in the policy (i.e., water damage, flood, sewer backup, etc.). -Utility failure that originates off-premises -Neglect of the insured to protect covered property from further loss -Intentional loss -Nuclear hazard, war, and military action -Governmental action -Fungus, wet rot, dry rot, and bacteria (e.g., mold)

Methods of Writing Property Insurance Limits

Specific Limit - Insurers a single item of property for a single limit of insurance. For example, a fire policy insurers one dwelling for $100,000 Scheduled Limit - Insures one or more items of property on a single policy and the amount of insurance applying to each item is shown on a schedule. For example, one farm policy insurers a home for $100,000 and a barn for $200,000 Blanket Limit - Insurers property located at more than one location OR more than one type of property at the same location OR both. For example, the $1 million blanket limit applies to two separate buildings at two separate locations, as well as the business personal property contained in each building.

Conditions

The conditions section states the obligations of the parties to the contract, as well as any other conditions of coverage. The insureds duties and obligations are spelled out in this section. - Policy Period - Specifies that coverage only applies to losses occurring when the policy is in force. - Concealment of Fraud - Specifies that coverage may not apply if an insured makes a material concealment, misrepresentation, or fraud in the application pertaining to the claim. - Liberalization Clause - Specifies that if the insurer broadens coverage with no increase in premium, that broadening of coverage will apply to existing policies without the need for an endorsement. - Cancellation - Specifies the terms under which the policy can be cancelled by the insurer and the named insured. The named insured may cancel the policy at any time by giving written notice to the insurer. If the policy has been in effect for less than 60 days, and it is not a renewal, the insurer may cancel the policy for nonpayment of premium by giving 10 days written notice, and 30 days written notice for any other reason. If the policy has been in effect for more than 60 days, and it is not a renewal, the insurer may cancel the policy for nonpayment of premium by giving 10 days written notice, and 30 days written notice for the following specific reasons: material misrepresentation by the insured and substantial changes in risk. - Non-renewal - Addresses the requirements of the insurer if it elects not to renew a policy. - Assignment - Specifies that the insured may not transfer rights of ownership without the insurer's prior written consent. - Subrogation - States the insured must transfer to the insurance company its right of recovery against any party causing a loss after it accepts payment from the insurer for a loss. Subrogation allows the insurer to recover from the party that caused a loss any amounts paid to an insured. It also: -Prevents the insured from collecting twice for the same loss -Helps the insurer control expenses and premiums -Ultimately holds the responsible third party accountable for the loss. - Changes - Any changes to the policy must be made in writing by the insurer. - Insurable Interest and Limit of Liability - The insurer will not be responsible for payment of loss in an amount greater than the financial interest of an insured. Restoration/ Non-reduction of Limits - Specifies the sum and circumstances under which an insurer charges the insured, usually a business firm, to restore a policy to its initial face value or not reduce limits of coverage after the insurer has paid a claim either to the insured business or a third party on behalf of the business. Duties in the Event of Loss - Specifies the obligations of the insured in the event of a loss. With respect to any loss, these obligations include: -Giving prompt written notice to the insurer, including a complete description of how, when, and where the loss or damage occurred, -Notifying the policy if a theft occurred. -Cooperating with the insurer in the investigation and settlement of the loss. -Protecting property from further damage -Preparing an inventory of the damaged property. -Allowing the insurer to inspect any damaged property and examine books and records. -Submitting proof of loss to the insurer, including: -----The time and cause of loss -----Any other insurance that may cover the loss -----Any appropriate receipts, evidence, or affidavits to support the loss. - Loss settlement - Specifies which loss valuation method will apply to the property insured under the policy - Appraisal - Addresses disputes about the amount of a loss. If the insurance company and insured cannot agree on the amount of a loss, either party may request an appraisal. Each party selects its own appraiser and the appraisers select an umpire. Agreement by any two parties settles the loss. Each party pays the cost of its own appraiser and shares the costs of the umpire and the appraisal. Appraisal is a dispute resolution method and is not used to determine whether the policy provides coverage for a loss. - Other Insurance (Appointment of Pro Rata Liability) - specifies the process to be followed when more than one policy covers the same loss. each policy pays no more than its share of the loss.

Declarations

The declarations page describes informations about the policy including: - Who - Names the insurer and insured, including legal representatives in the event of the insured's death. - What - A description of the property being insured and other parties having insurable interests, such as a mortgagee - Where - The location of insured property and learned named insured's mailing address. - When - The effective and expiration dates of the policy. - How much - The limits of liability covered property and the annual premium for each type of coverage

Non-Concurrency/ Non Concurrent policies

The existence of two or more policies covering the same exposures that don't have the same policy periods. Non-concurrency may create a coverage gap when underlying liability policies and an umbrella policy are non-concurrent because if an underlying liability policy exhausts its aggregate, it may violate the umbrella's underlying limits requirement. Example: A building is covered for a total of $500,000. Company A provides $250,000 of the total and provides theft coverage, Company B provides $250,000 of the total and does not cover theft, and the building sustains a $100,000 theft loss. Company A would pay $50,000 of the loss, and Company B would pay nothing. Deductible - the specified amount of each loss that the insurer must bear. In property insurance (and with a per claim, or per occurrence, deductible), the insurer subtracts the deductible from the amount of loss when making payment. By accepting a larger deductible, the insured's premium may be reduced. An insurer may require a larger deductible as an underwriting tool to limit small claims. Definitions - Words, terms, and phrases that are clearly described and used in an insurance policy for the purpose of clarifying the intent of the insurer and to avoid coverage disputes with respect to the extent of coverage provided by the policy. Most policies contain a definitions section in the policy and emphasize policy definitions by enclosing them within quotes or highlighting them with bold text. Bailee - A person or any organization to which property has been entrusted, usually for repairs, servicing or storage. Because bailees are legally responsible for property in their care, property insurance policies specifically exclude coverage for property in the care of a bailee. The customer is the bailor. Example: Dry clearers, jewelers, furries, etc. Bailor - a person or organization that entrusts property to a bailee. the customer is the bailor Primary Insurance - Any type of coverage that responds to a loss before all other coverage responds. Excess Insurance - any form of insurance coverage that provides protection against certain perils or causes of loss ONLY after loss or damage exceeds a stated amount or the limits stated in specific policies or self-insurance. Excess insurance any be written over primary, excess, or umbrella insurance. Unoccupancy - A property that contains personal property but has no occupants. Vacancy - A provision in a property policy that eliminates or limits coverage for buildings that don't contain sufficient personal property to support intended occupancy or use. Burglary - The taking of property from inside the premises of a locked safe or vault by a person who commits forcible entry into, or exit from, the property of another while trespassing. Robbery - The taking of property from the care and custody of a person who has been caused or threatened with bodily harm. Theft - The broadest of the crime coverages, theft includes any act of stealing. Includes: burglary, Robbery or Stealth. Mysterious Disappearance - The loss of property when the cause of loss is not known. This is NOT theft, burglary, or robbery.

Loss Valuation

a property policy pays for losses to property based on the valuation method contained in the policy or chosen by the insured in an endorsement added to the policy. --Replacement Value - The cost to replace or repair the damaged property (not exceeding policy limits) with property of like kind and quality, at current pricing, without a deduction for depreciation. Many property policies providing loss valuation at replacement value require covered property to be insured to a certain percentage of its replacement value, such as 80% or 90%. --Actual Cash Value (ACV) - The cost to repair or replace property at its replacement value, minus depreciation. Example: A building has a roof with a 20 year life expectancy destroyed by hail 5 years after its installation, and the cost to replace the roof at the time of the loss is $10,000. The current replacement value of $10,000 less depreciation of $2,500 (25%), equals the actual cash value of $7,500. -- Agreed Value - The insurance company and insured agree to a specific value of a particular property before the policy is issued. If a total loss occurs, the insurer will pay the Agreed Value. -- Stated Value - A valuation method that states the value of a particular property on the declarations page, but provides for the insurer to pay the lesser of the stated value or ACV of the property following a loss. Valued Policy - A policy that states the value of property as the amount shown on the Declarations page and will pay that full face value in the event of a total loss, regardless of the actual cash value. Functional Replacement Value - The cost to replace property with other property that performs the same function with similar efficiency, although the replacement property is not identical to the property being replaced. This valuation method is typically used with older property (such as a Victorian home) for which the replacement value exceeds the insured's ability or willingness to purchase coverage. Market Value - The price a willing buyer would pay for property purchased from a willing seller.

Additional Coverages

automatically included in property policies without an additional premium. The type of additional coverages depends upon the type of policy. Additional coverages are paid in addition to those stated in the insuring agreement and include debris removal, collapse, and fire department service charges.

Insuring Agreement

states the insurance company's promise to pay the insured. This promise is usually broad and the other sections of the policy restrict or limit the scope of coverage provided by the policy. Property insurance policies state in the insuring agreement what perils are covered.