Chapter 4

Front 1

Types of Property

Back 1

Real Property and Personal Property

Hint 1

Buildings and move able contents

Front 2

Detail vs No Detail

Back 2

Covered Property

.Specific (scheduled)-detailed list of covered items

.Blanket- no detail list

.Single litmit of coverage.

Front 3

Policy Limits of Coverage

Back 3

The declaration page describes the Policy limits, also known as the limit of coverage, limit of liability, or limit of insurance.

Hint 3

These limits represent:

.Maximum coverage.

.Listed on the declarations page.

Speed Limit

Front 4

Perils Insured Against: Open Perils and Named Peril Polices

Back 4

Open Perils policy insures against all risk of direct physical loss except those specifically excluded in the policy.

Hint 4

This type of contract is sometimes called all risk, special, or comprehensive coverage.

Front 5

Named perils or specified peril coverage list the perils or causes of loss insured against under the contract.

Back 5

Lightning

Fire

Windstorm

Hail

Vandalism and other man made losses.

Hint 5

Only covers perils listed in the contract

Less expensive

Front 6

Open (special)

Back 6

Open (speical) perils all risks of direct physical loss unless specifically excluded.

Hint 6

More expensive

Front 7

Covered Perils

Back 7

.Basic

.Broad

.Special

Front 8

Basic cause of loss form was introduced

Back 8

In 1986 by the Insurance Services Office

Front 9

The basic peril coverage options include

Back 9

.Fire-must be hostile, intentional loss (arson) is not covered

.Lighting- natural electricity

.internal explosions any explosion inside a covered location.

Front 10

Extended Coverage (EC) Perils

Back 10

Are 9 additional perils and are included in most states policies.

Hint 10

Example: WCSHAVVER & V&MM

Wind-

Civil commotion

Smoke

Hail

Aircraft

Vehicle

Volcanic eruption

Exposion

Riot

Vandalism and malicious mischief (V&MM)

Front 11

Broad Perils Coverage

Back 11

Is also a named peril coverage that lists what is covered. All basic form perils are included fire, lighting, internal explosions, the extended Coverage perils (WCSHAVVER), and vandalism and malicious mischief (V&MM)- plus the following additional perils.

B- BURGLARY

I-ICE,SLEET, AND SNOW (WEIGHT OF)

G-GLASS BREAKAGE

A- ACCIDENT DISCHARGE OF WATER

F-FREEZI G OBJECTS-FREEZING OF PLUMBING, HEATING AIR CONDITIONING, OR AUTOMATIC FIRE PROTECTIVE SPRINKLER SYSTEMS AND HOUSE APPLIANCES.

F-FALLING OBJECTS

E-Electric current Sudden and artificially generated electric current (does not include damage to a tube, transistor, or similar electrical component)

C-Collapse

T-Tearing asunder-Sudden and accidental tearing apart, cracking, or burning of steam or hot water hearing, air conditioning, automatic fire protective sprinkler system and water heaters.

Hint 11

BIGAFFECT

Front 12

Exclusions from Broad Perils

Back 12

The weight of ice, snow, or sleet peril that cause damage to awnings, fences, patios, pavement, swimming pools, foundation, retaining walls, bulkheads, piers, wharves, or docks is not included with broad peril coverage.

Front 13

Special Peril (Open) coverage

Back 13

Insures against all risk of direct physical loss unless they are specifically excluded.

The following are some examples of perils commonly excluded from speical (open) perils coverage:

.Flooding

.Earthquake

.Intentional damage caused by an insured

.Losses due to enforcement of building codes

.Damage caused by a power interruption occurring off premises

.Government Seizure.

Front 14

Alternative Dispute Methods

Back 14

.Appraisals disagreement on the amount of the loss.

.Company and insured pay their own appraiser.

.Appraiser of any two of the three determines the amount

.Arbitration disagreement about other area of the loss.

Front 15

Coinsurance requires the insured to carry a minimum amount of insurance.

Back 15

The coinsurance requirement is normally 80% of the replacement cost. If the minimum required amount is carried, then claims are paid in the full up to policy limits. If the minimum is not carried, partial losses are not paid in full.

Example #1- Has total loss

. Policy pays up to policy limits, which is 100,000.

Example# 2- Has partial loss when kitchen fire cause 10,000 damage

.DID 100,000

.SHOULD 200,000×80=160,000

.=0.625×LOSS 10,000= 6,250 amount insurer pays

Front 16

Vacancy and Unoccupancy

Back 16

Vacant:

.Empty buildings no people or contents

.Insured penalized after 60 days of vacancy.

Unoccupied:

.Contents remain but no people

.No loss of coverage.

Front 17

Standard Mortgage Clause or Loss Payable Clause

Back 17

.Allows Lender to pay premium

.Lender entitled to receive notice if policy is to be canceled

.Lender can file claim.

.Lender protected from negligent or dishonesty acts of the insured.

.Lender only entitled to receive payment up to the amount of the debt.

Front 18

Bailee

Back 18

Is a person or organization that has temporary possession of someone else's personal property

The no benefit to bailee condition states that the bailee is not covered under the property owners policy while the bailee has possession of the property.

Hint 18

Dry cleaners and storage facilities