The cause that sets other causes in motion when multiple causes combine to produce loss or damage. the cause without which a given result would have not occurred
A situation where there are 2 causes resulting in a loss and 1 of the causes is excluded while the other cause is not excluded. Unless the policy specifies otherwise, the loss is covered. Example: a policy that excludes earth movement will still pay a loss due to for or explosion that ensues directly from the earth movement.
A situation under which at least 2 policies provide identical coverage for the same risk. When policies are concurrent, each policy pays that proportion of a loss that its limits bear to the total of all policies. Example: A building is covered for a total of $500,000. Company A provides $250,000 of the total, Company B provides $250,000 of the total, and the building sustains a $100,000 covered loss. Company A would pay $50,000 of the loss, and Company B would pay $50,000 of the loss.
A situation under which at least 2 policies cover an insured's property against damage or destruction, but since the limits of coverage, kinds of property, and perils covered are not the same under all policies, the insured may not be fully covered in the event of a loss.
Example: A building is covered for a total of $500,000. Company A provides $250,000 of the total and provides theft coverage, Company B provides $250,000 of the total and does not cover theft, and the building sustains a $100,000 theft loss. Company A would pay $50,000 of the loss, and Company B would pay nothing.
An individual or organization who has taken into its care, custody, and/or control the property of another for servicing, repair, or storage.
Example: Dry cleaners, jewelers, furriers, etc.
An individual who retains the ownership of property that has been taken into the care, custody, and/or control of a bailee.
Example: the owner of the clothing to be cleaned, the jewelry to be repaired, or the fur to be stored.
Property coverage that provides benefits up to the limits of a policy, regardless of other policies in effect.
Property coverage above the primary amount of insurance. Excess insurance does not pay until any primary insurance has been exhausted.
Example: primary insurance is $250,000 and the excess insurance is 1,000,000. After the losses exceed $250,000, the excess insurance will pay for the losses up to a total of $1,000,000.
Damage to property in which the proximate cause of the loss is an insured peril.
Example: Fire damage to an insured residence, or water damage to the residence resulting from a ruptured water pipe.
Consequential/Contingent Loss. A second or financial loss occurring as the result or a direct loss.
Example: Additional living expenses incurred as the result of a private residence being rendered uninhabitable as the result of a fire or other type of direct loss; loss of rental income caused by a direct loss; loss of business income and extra expenses caused by a direct loss.
Coverage applies only to lossess caused by perils that are specifically stated in the policy.
Example: Fire, lightning, wind, hail, aircraft, riot, vehicles, explosion, smoke, etc
(Special Form) Coverage applies to all losses caused by all perils except for those specifically excluded. Open peril coverage is sometimes referred to as all risk coverage.
Example: Some of the perils typically excluded are earth movement, ordinance or law, power failure, nuclear hazard, etc.
Actual Cash Value
Pays for the cost to repair or replace the damaged property at the time of loss, less Depreciation.
Functional Replacement Cost
A property policy provision that changes the valuation method otherwise applicable (actual cash value or replacement cost) to valuation that allows replacement with less costly property that is functionally equivalent.
Example: the replacement of damaged property with identical property is impossible die to some technological or environmental change.
This method of writing coverage is used when insuring 1 property on 1 policy for 1 specific amount of insurance
This method of writing coverage is used when insuring more than 1 property on 1 policy with a specific amount of insurance on each property.
This method of writing coverage is used when insuring more than 1 property on 1 policy for a single amount of insurance that applies to all properties covered under the policy. The amount of insurance must equal at least 90% of the value of all of the properties insured. Example: Commonly used to insure business personal property or contents at multiple locations with no specific limit per location.
Specifies that if the insurer broadens coverage with no increase in premium, the broadened coverage automatically applies to existing policies without the need for an endorsement.
Example: Expanding the time frame for damage caused by earth movement from 72 to 168 hours as a single event under the Earthquake Cause of Loss Form to the Commercial Package Policy.
A provision contained in most policied insuring commercial property, and is used to encourage the insured to purchase and maintain insurance to value.
Dwelling policy Eligibility
must be used principally for dwelling purposes
may not have more than 4 apartment units, and not more than 5 roomers or boarders in total
Mobile home are eligible if they are permanently located, but only on the basic form. coveage would not include an attached car port
incidental business occupancies are permitted, providing theyare of the service type, such as a beauty shop, professional office, music lesson studio, etc and do not involve retail sales or manufacturing, or have more than 2 persons at work at any one time
farm propertys are not allowed
DP-1 (basic form)
Named Peril, basic, ACV, never stacks.fire, lightning,and internal explosion
Coverage A = dwelling,
Coverage B = other structures 10% of A, Coverage C = contents,
overage D = Fair rental value, 20% of A
DP-2 (broad Form)
1. The perils that are covered are one included in DP-1 with the ECE and optional VMM endorsement attached, plus: damage
by burglars; falling objects; weight of snow, ice, and sleet; accidental discharge
or overfl ow of water or steam; sudden and accidental tearing apart, cracking,
burning or bulging of a steam or hot water heating system, or an air conditioning
or automatic fi re protective sprinkler system, or an appliance for heating water;
freezing of a plumbing, heating, air conditioning, or automatic fi re protective
sprinkler system, or of a household appliance; and sudden and accidental damage
from artifi cially generated electrical current.
2. The burglary damage peril includes damage to the covered property caused by
the burglars, but not theft of property. The vehicle peril does not include loss to
a fence, driveway, or walk caused by a vehicle owned or operated by the insured.
The smoke peril does not include loss caused by smoke from agricultural
smudging or industrial operations.
3. dwelling and other structures- Replacement Cost,
4. contents ACV
DP-3 (Special Form)
( open peril), except for perils specifically excluded.
2. Theft of property that is part of the dwelling or other structures is covered as long
as the dwelling or other structures are not under construction or have not been
vacant for more than 30 days immediately preceding the loss.
3. Personal property or contents are covered for the Broad Form (DP-2) perils.
4.dwelling and other structures replacement cost 5. contents actual cash value .
Coverage A- Dwelling
covers the residence & any attached structures; materials intended for construction or repair to the dwelling; does not cover damage to the land itself (if a tractor trailer runs off the road and plows a big rut in your yard)
coverage B - Other structures
Covers building & structures on the premises other than the dwelling set apart by clear space from the dwelling - standard coverage 10% of coverage A
coverage c- personal property
Covers personal property of insured (owned or borrowed) is covered even if taken anywhere in the world; covers damage to guests property if damage occurs while visiting the insured's property.
Coverage D - fair rental value
1. This coverage is an indirect loss property coverage that applies following a direct loss to property described in Coverages A, B, or C by an insured peril.
2. This coverage pays the fair rental value of that part of the described location that is rented to others or held for rental to others at the time of a loss.
3. The Coverage D limit of insurance is up to 20% of the Coverage A limit and is automatically included under each of the dwelling forms. In the case of the
DP-1, this limit does not increase the amount of insurance available beyond the Coverage A limit, while in the case of the DP-2 and DP-3 this limit does increase the amount of insurance available beyond the Coverage A limit.
coverage e - additional living expense
1. This coverage is an indirect loss property coverage that applies following a direct loss to property described in Coverages A, B, or C by an insured peril, and is automatically included only in the DP-2 and the DP-3.
2. This coverage pays the additional living expense incurred by the insured when an owner-occupied dwelling sustains a direct loss. Additional Living Expenses are deemed those sustained by an insured household in order to maintain its normal standard of living. Coverage can include the increased auto expense of driving a greater distance to and from work as the result of a direct loss.
3. The Coverage E limit of insurance is up to 20 percent of the Coverage A limit, and this amount of insurance does increase the amount of insurance available beyond the Coverage A limit.
A coverage provided in many property contracts that reimburses the insured for expenses involved in removing debris produced by a loss from a peril insured against.
HO-2 (Broad Form)
A named peril...if a specific peril or hazard is not named in the policy, it is not covered. This form covers more perils than the basic form includ: falling objects, weight of ice, snow etc.
paid on replacement cost basis
HO-3 (Special Form)
- Open Perils Coverage replacement cost - Personal Property-Named Peril (broad form perils) Coverage paid on acv
Contents Broad Form: Protects tenants against loss of personal property. Specifically for tenants who rent apartments, houses or rooms.losses paid on ACV basis
comprehensive form; open peril coverage for dwelling and other structures and personal property losses paid on replacement for dwelling and ACV for contents
Unit Owners Form; used for owners of condominium units & cooperative apartments; condominium associations carry insurance on properties owned in common but, covers the personal property of the individual unit owner for the same named perils listed in HO-2 paid on ACV