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31 Cards in this Set
- Front
- Back
What is included in the definition of building? |
-Fixed structures pertaining to building; |
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What is included in the definition of stock? |
-Merchandise USUAL to insureds business; packing, wrapping and advertising material; similar property to others, for which insured is liable |
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What is included in equipment? |
-General contents usual to the insureds business, furniture, fittings, machinery etc; tenant's improvements; Similar property belonging to others for which the insured is liable |
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What conditions need to be present for "similar property belonging to others" to be insured? |
-Insured has to be legally liable; Insured was obligated to insure it; it must be similar to insureds usual stock or equipment already insured |
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What are the 5 ways to determine ACV? |
1.Formula/cost depreciation -Straight line depreciation -plateau depreciation 2.Market value/direct sales approach 3.True value to owner 4.Income approach 5.Broad approach |
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What are 6 factors used in the broach approach to determine value? |
Assessed valuation ; Resale value ; Market value ; Obsolescence ; Rental value |
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What are two ways to insure commercial property? |
All property |
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What are three ways property can be valued? |
ACV |
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What is reinsurance? |
Ceding part of the risk to other insurers |
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What are 3 rules/guidelines of resinsurance? |
1.All share in premiums and losses ; 2.The contract is between the primary insurer and the reinsurers ; 3.The primary insurer controls the policy and claims |
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What is subscription insurance? |
When a group of insurers participate in providing insurance coverage. |
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What are the 2 rules/characteristics of subscription policies? |
1. All share in premiums and losses ; 2. Each agreement is negotiated separately |
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Why might someone negotiate a subscription policy? |
-Risk exceeds limits of what insurers is willing to pay at once ; -Risk is too specialized for reinsurance treaties ; -Spread business among large markets ; -Type of risk is not one insurer wants to expose it's reinsurers to |
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Three common commercial policy clauses? |
Deductible ; Indemnity ; Co-insurance |
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Why do exclusions exist? |
-Some losses are not insurable (war) ; -Some losses would be catastrophic (earthquake) ; -Some losses are best served with specialized policies (air/auto) |
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What is permission? |
- To have concurrent insurance - To make additions, alterations or repairs - To do such work and keep such articles which are necessary for the insureds business |
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When will a breach of conditions not affect a claim payout? |
- If breach had nothing to do with loss ; - If breach occured in area of premises not controlled by insured |
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Who is protected from subrogation? |
Business partner or anyone with insurable interest |
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What conditions apply to property protection systems? |
- To notify forthwith of any defects or flaws ; - To notify forthwith if the service has been discontinued or cancelled ; - To notify forthwith if the authorities have suspended response to service |
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Why does the Verification of Values clause exist? |
-Allows the insurer to confirm that the levels of insurance are reasonable -Allows the insurer to determine values on hand after a previous loss -Allows the insurer to check for the existence of other insurance policies, which may have to share claim payment |
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What property has special basis of settlement? |
Tenant's improvements ; Business records (blank plus cost to copy) |
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What are the terms of the locked vehicle warranty? |
-vehicle must be locked, windows rolled up ; -vehicle must have enclosed space ; -vehicle must have been forcibly entered ; -visible signs of forcible entry must be present |
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What are breaches of good faith under Statutory Condition 1? |
1. Any false description of property ; 2. Any misrepresentation of material fact |
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What counts as a material fact? |
1. Matters inherent to the property - details about heating and electrical ; 2. Personal info bearing moral hazards
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What personal information about moral hazards would be considered material fact? |
-Claims history ; -Number of mortgages on property ; -Vacancy |
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What facts are not deemed to be material? |
-facts which are known (or reasonably presumed known) to insurer ; -facts which are easily discovered upon inquiry ; -facts which lessen risk |
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What must an insurer do to deny coverage based on misrepresentation? |
Prove that the misrepresentation contributed to the loss. |
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When an insurer received notice of a Material Change what may they do? |
-Cancel policy and return unearned premium; -Accept policy with higher premium |
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What are some additional conditions? |
-Notice to authorities ; -Sue and labour - duty of insured to try to ; recover property ; -No benefit to bailee ; -Pair and set ; -Parts |
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What is the difference between package and manuscript polices? |
Package combine under one form. |
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What is the intent of the waiver of co-insurance clause? |
Eliminates the needs for costly inventory to prove compliance with co-insurance. |