Property Insurance Concepts

Perils that are typically not covered under property insurance policies:

Flood, Earthquake, Mold, Acts of War, Parts of the property in disrepair , such-as worn-out electrical wiring and plumbing, air conditioning heating units, and roofs.

Blanket basis

One limit is applied to both the structure and the contents.

Contents

The personal property within a structure.

The Standard Mortgage Clause

This provision protects the interests of the bank/financial institution that holds the mortgage on the insured property.

Concurrent causation

This term, when referring to property insurance, is a doctrine stating that if loss or damage to property occurs as a result of more than one cause, one of which is covered un the policy, while the other cause is not covered, the damages are still likely to be compensated by the insurer.

broad evidence rule

a court ruiling explicitly requiring that all relevant factors be considered in determining ACV

fair market value

the current worth of an asset or the price the asset would bring if sold on the open market

Pair or Set Clause

this policy provision states that if part of a pair or set is lost or damage, the loss will be valued as a fair proportion of the total value of the set.

Coverage Extensions

A coverage that already exists in a policy, is extended in some way.

Coinsurance slause

A provision in property insurance policies that the insurance company and the the insured will share in the loss incurred by the insured , based on a fixed percentage of the value of the insured property

Vacancy/Unoccupancy Clause

A provision in property policies stating that coverage will no longer apply after a dwelling or building has been"vacant" or unoccupied for a 60 days

Specific basis

A separate limit scheduled "per type of property"

Special Provisions

Forms that modify the standard cause of loss forms to comply with state requirements

Salvage

Property that has been partially damaged by an insured peril.

Appraisal Clause

Used when insurer and insured dispute the amount of loss

general average loss

Voluntary loss taken to save the property from further loss.

Actual Total Loss

When the covered property to destroyed beyond repair, and nothing of value remains.

Fire Resistive

the exterior walls, floors, and roof of a masonry, fire-resistive material, but has a fire resistance of at least 2-hours.

Broad Cause of Loss Form

A "named peril" form and provides coverage for the perils named in the basic form, but adds additional perils and names them on the form.

Partial Average Loss

A loss that does not completely destroy or render useless, the insured property or does not completely exhaust the limits of the policy.

Indirect Loss or Consequential Loss

A loss that is not the direct result of a peril.

valued Policy Law VPL

A state law requiring insurance companies to pay the full agreed value of the policy. In the event of a loss.

special cause of loss form

An "open peril" form or "all risk" form that provides coverage for all risks of loss, from any peril except those that are specifically excluded in the policy. The burden of proof lies with the IC to prove that the cause of loss is excluded.

Ordinance or law

An endorsement for building code upgrades.

No Benefit to Bailee Clause

An insured's property insurance policy protects the insured, and not a person or entity, a Bailee, who may have temporary custody of the insured's property.

Pollution Clean-Up and Removal

Covered but the policy contains so many exclusions regarding this coverage that insureds may find they are not covered at all.

Debris Removal

Covered under the policy, but the amount of coverage is usually insufficient for property owners in most situations of loss.

Direct Loss

Loss that is a direct result of a peril, such as fire.

Blankets

More than one location

Constructive Total Loss

Occurs when the cost of salvaging the cargo is too high relative to the value saved.

Newly Acquired or constructed property Off-Premises

Personal property when an insured is constructing a new building, but. Only for a limited amount of time.

Abandonment Clause

Prohibits the insured from abandoning damaged property to the insurance company for repair or disposal.

Actual Cash Value (ACV) is defined as _____ minus _____.

Replacement Cost, Depreciation

The Loss Payable Clause

Similar to the mortgage clause, but protects the interest of an entity that has extended credit to , or leased chattel property to the insured.

Fair Access to Insurance Requirements FAIR

State-mandated insurance programs that provide "fair" access to property for individuals who cannot secure insurance in the standard market.

Functional Replacement Cost

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

replacement cost

The current cost to purchase new,l the item that was lost or damaged, with no deduction for depreciation.

stated value

The insurer will pay the value stated in the policy or the ACV whichever is less.

Agreed Value

The insurer will pay the value that was agreed upon and scheduled in the policy at the time the policy was purchased.

Masonry Non-Combustible

The outer walls are made of the same materials as joisted masonry construction but non-combustible materials are used for the floor and the roof. Difficult to burn and holds up to wind better than the other materials.

Non`Combustible

The structure is. Made entirely of light steel or similar light non`combustible materials. Used for garages and utility buildings. Less susceptible to fire but the wind resistance can be quite variable.

Joisted Masonry

These structures have exterior walls constructed from bricks, cinder blocks, precast cement walls, gypsum block, clay tile, or stone. Structural floors and rood are constructed of combustible materials. Less susceptible to fire and wind but is more expensive to build.

Cause of Loss Forms

This form is a "named peril" form, that specifies the perils insured against. Perils must be specifically named in the form.

Frame

This type of construction consists of a wood frame is that is actually supporting the structure. Most susceptible to the perils of fire and wind, it is the cheapest method of construction.

Modified Fire Resistive

This type of construction includes exterior walls, floors and roof of masonry, fire-resistive material. It haas a fire resistance rating of at least 1-hour.