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How property is valued – principle of indemnity and property value. Define principle of indemnity
Insured should be restored to same financial position as before the loss, should not profit
4 property valuation methods
1. Actual cash value - Replacement cost less depreciation, I’ve been corresponds to market value. This is what auto collision and personal property coverage use.
2. Replacement value - cost to restore or replace as it was prior to loss. Depreciation not considered. More expensive but better for insured. Used for homeowners and can be elected for a personal property
3. Stated amount - Pace list of stated amount in policy, actual cash value, or cost to repair or replace. For property difficult to value and replace like unusual vehicles
4. Agreed value - based on appraisals, update periodically. Insurers usually limit benefits. Fine art, jewelry, collections, antiques
2 types of perils for property insurance
1. Named perils - usually for homeowners personal property. Can add additional as endorsement
2. Open perils - Usually for homeowner’s building
Straight deductible vs aggregate deductible
Straight - certain amount per occurrence before insurance pays anything
Aggregate - paid throughout policy year, insured pays losses up to aggregate amount, insurance pays rest of losses
Coinsurance formula
Insured’s payment = (Insurance amount purchased / amount required) * amount of loss
Usually between 70 and 90% required, then insurer will settle claim for the fully insured amount
2 types of liability coverage
1. Compensatory - bodily injury, property damage, personal injury, contractual liability, wrongful acts. These damages usually only covered. Can include additional costs like appraisal or assessment, defense expenses, loss of earnings resulting from required testimony and depositions, possible interest granted from date of incident to date of settlement
2. Punitive damages - attempt to punish party for actions. Some states do not allow
What is a tort and what are the three types of civil action torts?
A tort is a violation of rights of another person.
1. Intentional tort - libel, slander, trespassing, etc. Liability insurance may cover but usually does not if injury or damage was caused deliberately, maliciously, or at direction of insured.
2. Breach of contract tort - person or entity fails to fulfill contract terms, implied warranties of products and services, or damage to another’s property. Usually in context of business
3. Unintentional tort - from negligence or carelessness. Accounts for high percentage of bodily injury and property damage claims
5 questions answering legal liability attributable to negligence
1. Existence of a legal duty? Protect others from harm present. Burden of proof generally falls to injured.
2. Failure to perform that duty? Action as compared with those of a reasonable person.
3. Who can or cannot be held liable? Minors and her parents are not responsible for imputed negligence or mental incompetence. Imputed negligence is attachment to one person the asks of another because of a given relationship like parent child or employer employee.
4. Is there a damage or injury? Could be due to activity or non-activity of defendant
5. Proximate cause relationship? Prove relationship between active and the damage or injury
Other 3 factors that aren’t required but may support a case for negligence
1. Strict liability or absolute liability. It’s an unqualified liability regardless of negligence. Example: pitbull owner liable for harm or injury to others even though negligence or fault can’t be proven
2. Rep ipsa loquitor - modification of law of negligence. “ The thing speaks for itself.” Event causing injury or damage was in exclusive control of defendant and shouldn’t have occurred without negligence
3. Negligence per se - Standards of care a.k.a. law
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