Types of loss and Loss Valuation
Which of the following is TRUE for stated value?
the insured chooses the value of property
Which method of valuation is best for property that is practically impossible to replace such as art or antiques?
agreed value
Which valuation method is used to by the insurer and the insured to specify value of a particular property before the policy is issued?
agreed value
Car 1 hits car 2 which in turn hits car 3. The loss to car 3 is all of the following EXCEPT
an indirect loss
If someone's automobile is stolen, what is the cost of a rental vehicle considered to be?
consequential loss
Which of the following is an example of replacement cost valuation?
cost new without depreciation at the time of loss
A fire spreads from Joe's house to Mike's house to Pat's house. The fire at Pat's house is what kind of loss?
direct
Which of the following is an example of a financial loss caused by a home being damaged in a windstorm?
direct loss
John owns a collector's set of Three Stooges mugs. Each of the three mugs depicts on of the stooges and is worth $1,000. The set of three is worth $10,000. If the Curley mug is destroyed by a covered peril, the Pair and Set Clause would dictate what settlement amount to John, disregarding the dudctible?
$8,000
Pair and Set Clause
Value before the loss- value after the loss= loss
Which method of property valuation would include depreciation as a variable?
Actual Cash Value
Which valuation method uses the concept of depreciation?
Actual Cash Value
Which of the following explains market value in determining loss valuation?
Property is evaluated for the price of a willing buyer would pay
Market Value
The amount that the property can be sold for
An indirect loss is also known as
a consequential loss
A house is on fire and ignites the neighbor's house. Damage to the neighbor's house would be considered
a direct loss
Sephen's house is hit by lightning and catches fire. Soon, the fire spreads to the Anderson's house next door. Though the fire fighters save the Anderson's house, they do significant damage with their axes and fire hoses. The Andersons must live in a motel for 60 days while their house is renovated. Which of the Anderson's losses is an indirect loss?
additional cost of living in a motel
All of the following are examples of direct loss EXCEPT
after a car crash you have to rent a replacement vehicle
Which of the following defines a loss which is consequential and comes as a result of an original loss?
indirect loss
Determining adequate indemnification after a loss is a principle duty of the
insurer
Which of the following describes market value?
it is what property can be sold for
Which of the following methods are losses settled on an actual cash value (ACV) basis?
less depreciation
While Fred is shopping, store security Barney thinks he is shoplifting. Barney tackles Fred, breaking both his arm and cell phone. Fred cannot return to work for two weeks. Which of Fred's losses are considered an indirect loss?
lost income
Agreed Value
method used by the insurer and insured to specify value of a particular property before the policy is issued ex. antiques
All of the following types of construction are subject to functional replacement cost basis EXCEPT
modern
Valued Policy
provides payment of the full policy amount on the declarations page in the event of a total loss without regard to the actual value or depreciation
If Fred gets a new roof when his 1--year-old roof is destroyed by hail, the loss was settled on what basis?
replacement cost
Stated Value
the insured chooses the limit of insurance for the property, but at the time of loss, the insurer will pay the lesser amount of the amount stated on the declarations page or actual cash value
If a man enters a building through an unlocked window and takes insured property, how is the loss best described?
theft
The property valuation method paying the full policy amount listed on the declarations page in the event of a total loss, regardless of the actual cash value is called
valued policy
