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22 Cards in this Set
- Front
- Back
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What 5 elements are embodied by the insuring agreement * 5 things To be a legal contract |
An agreement Between legally capable parties For consideration (money, premium) Demonstrating intent To do something that is legal |
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Describe the co insurance formula |
Did (amount of ins) ---------------------------X amount loss= Should (min amount req) |
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Define Proximate cause |
Active efficient cause that sets in motion a train (chain) of events which brings about a result (loss/damage) without the intervention of any other force started and working actively from a new and independent source
*it is the event that leads to a loss in a continuous unbroken chain of events and without this event the loss would not have happened |
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What is the principle of Indemnity
*what it means |
no profit from loss the insured shall not receive more than the actual loss suffered.
objective of contract return insured as nearly as possible to financial position they enjoyed immediately prior to loss. |
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Describe the two primary ways insurers adapt the basic fire policy to their own purposes |
-specific Policy builds on a standard policy that includes the insuring agreement , all normal exclusions and limitations & statutory general conditions. include schedule describing property insured, terms in policy adapted to specific needs by attaching riders to add or subtract perils or modify standard policy terms IE: Homeowners policy
-Modular Policy sum of several parts (modules) IE: Commercial policy |
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Define indirect loss and state the most common type of indirect loss? |
Arises from direct loss it encompasses other loss suffered as a consequence of the damage/destruction of the physical property -revenue -earnings -additional costs and expenses
Business interruption is the most common type of indirect loss, it includes loss of earnings, rents and rental income and extra expenses incurred to keep a business in operation after a direct loss.
business operation cannot be recovered under a fire policy-there are specific policies for this |
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Define occupancy in the context of an insured building or structure? |
use of premises what are the premises being used for
when the subject matter is a specific building or structure or consists of movable property located within /adjacent to a building or structure the insurer needs to know its occupancy (not the identity of people occupying the premises, but the use of the premises)
essential for insurer to assess risk |
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Define modular policy?
Define Specific policy? |
builds on the standard policy and is made up of several parts or modules by adding pages to complete the policy, each page containing another portion of the contract.
Ie: commercial policy
specific policy : builds on standard policy and includes the insuring agreement, all normal exclusions and limitations, and statutory conditions. modified to fit certain needs by building on the standard policy by adding a form or rider to add or subtract perils or otherwise modify the terms of the policy ie: homeowners policy |
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Why is it important for an insured to accurately describe the location of movable property? |
property described in the policy at a location not described in th epolicy will not be insured. therefore property at more than one location will usually be insured under a separate policy for each location or under a single policy with each location separately described in the schedule and assigned its own amount of insurance. |
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What is the difference between one item and one object? provide an example |
property insured at one location may be described in one item however that doesn't mean the property comprises only one object. it means the amount of insurance for the item applies to all objects within the class of objects described in the item. ie: office contents includes all desks,chairs, stationary etc that need not be identified individually to be insured under amount of insurance applying to this item. |
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How does the basic fire policy give effect to the principle of indemnity?
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by making the amount payable to the insured the least of -the actual cash value of the damaged or destroyed property at the time of loss -Interest of the insured in the property -the amount of insurance |
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When assessing the actual cash value of lost or damaged property, how is depreciation determined? |
cost of replacing the property, less any depreciation to it. -physical condition of property -resale vaue -normal life expectancy just before loss -market prices -obsolescence |
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Describe the circumstances in which loss of or damage to electrical devices or appliances is excluded? |
if caused by lightning or other electrical currents, however loss from any ensuing fire is covered. |
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How does the application of heat exclusion apply when fire spreads beyond the excluded property? |
will cover damage to other insured property damage if the fire spreads.
also if a fire starts elsewhere and eventually destroys goods undergoing a heat process, the exclusion would not apply to that loss. only the goods actually undergoing the process are excluded. |
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Describe the types of event that would be listed under the war risks exclusion? |
foreign or civil war or riot or other civil disturbance is excluded. -events listed considered uninsurable.
if people taking part in riot or disturbance set the insured property on fire or starts a fire that spreads to insured property-that loss is not recoverable.
*exception riot can be added as rider to a fire policy. |
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what is the purpose of the nuclear liability act? |
direct and indirect loss caused by nuclear incident are excluded except for ensuing loss directly from fire, lightning or explosion of natural gas or manufactured gas.
-direct / indirect loss by contamination of radioactive materials also excluded
-purpose: a licensed operator of a nuclear installation has an absolute liability, without proof of fault or negligence.
-contamination insurance is highly specialized, usually obtained by few who handle radioactive substances (hospitals/labs). the major exposure for operations that use this material is liability to others. insurance is available through specialty sources.
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lBasic fire policy list the First group of exclusions
list the second group what is the excluded property |
1st: Electrical devices application of heat War risks nuclear incident
2nd: -Excluded property: money, books of account, securities for money, evidence of debt and titles, automobiles, tractors & other motor vehicles, aircraft, watercraft. -alterations and additions -vacancy, unoccupancy, disuse -volatile substances -by-laws
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Under the additions or alterations exclusion , what type of loss or damage is covered, and what type is excluded? |
loss or damage to building or contents during and or resulting from alterations or additions to the building is excluded unless written permission has been granted for them-normal repairs allowed without permission.
-applies only to the location involved in such work.
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what is the significance of the word "while" to the vacancy, unoccupancy,disuse exclusion? |
it triggers the exclusion as soon as vacancy, unoccupancy or disuse occurs and for as long as it persists. -deals with the circumstance that would likely increase the risk of loss/damage. -policy not terminated and coverage is automatically reinstated as son as vacancy ,unoccupancy ends. |
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Explain the difference between unoccupancy and vacancy? |
-used interchangeably in the dictionary -unoccupied is generally used where all occupants are absent from the property but intend to return. -vacant is used to indicate the absence of all occupants , none of whom intend to return. -presence or absence of furnishings is not a determining factor.
*for manufacturing operations, insured must be aware of situation and vacancy/unoccupancy must continue for more than 30 consectutive days
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Define Flashpoint of a liquid? |
the lowest temperature at which the liquid gives off sufficient vapours to form an ignitable mixture with the air; such a mixture will ignite on contact with a flame or spark. |
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chap 3
What is a deferred payment clause?
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the insured is indemnified for only a portion of the total loss to a building at the time of loss.
-the remainder of the loss payment is deferred until the insured repairs or replaces the building
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