PROPERTY INSURANCE CONCEPTS (FLA 220)
Terms in this set (85)
cause of loss (ex: fire, windstorm, vandalism)
introduces or increases the chance of loss from peril
a characteritstic of an object that increases the severity of loss by covered peril
intentional loss - conscious mental attitude of the insured
accident proneness - unconscious mental attitude of the insured
PROXIMITY CAUSE DOCTRINE
unbroken connection between the occurrence and the damage from the occurrence
physical harm to tangible property
economic loss as a consequence of direct loss
PRINCIPAL OF INDEMNITY
one should not profit. A principle which provides that when a loss occurs, the insured should be restored to the approximate financial condition occupied before the loss occurred, no better, no worse.
ACTUAL CASH VALUE - ACV
replacement cost minus depreciation
new for old, required to replace
FLORIDA VALUE POLICY LAW
if a total loss - company must pay the policy limit regardless of the property value
AGREED VALUE POLICY
Written with property insurance policies. It waives the Coinsurance clause and requires the insured to cary insurance equal to at least 80% of a signed statement of values filed with the company.
the price that would have been paid to purchase an asset in that market - in FLA we do not insure MARKET VALUE because we do not insure the land
damage items many be retrieved, reconditioned and sold to reduce the insureds loss
insured agrees to carry a certain percentage 80% - 90% or 100% of the property value
DID ÷ SHOULD x LOSS = RECOVERY
(DID = limit of insurance)
(SHOULD = property value)
separate limit for each building and contents or item
single limit of two or more covered items - full limit applies to any one of item
SPECIFIC vs BLANKET
example below based on coverage amount of $1,2000,000.
loss $300,000. -------pays $300,000.
loss $500,000. -------pays $500,000.
loss $400,000. -------pays $400,000.
(paid per occurrence)
deduct flat amount from loss payment
pay the loss from dollar one if the loss equals or exceeds the stated deductible
DEDUCTIBLE IS $25,000.00
LOSS $18,000. / PAYS $0
LOSS $20,000. / PAYS $0
LOSS $24,999. / PAYS $0
LOSS $28,000. / PAYS $28,000
a % amount is deducted from the loss (% of property value OR % of the policy limits)
2%, 5% or 10% of coverage A - (a % of the ACV of the property in certain Coastal areas)
absence of people and personal property from a building, coverage may be restricted after a period of vacancy
any unlawful taking of any property
taking the property by threatening to harm the person - gunpoint
taking property by breaking an entering and leaving visible signs of forcible entry or exit
the un-explainable vanishing of property
required by the insurer on forms of insurance subject to periodic premium adjustments
Rules of law dictate that a person must pay for damages done to another.
Insures the individual for financial losses which arise out of the person's responsibilities to other imposed by law or contract.
A policy condition found in many standard policies which states that if the insurer adopts a revision that would broaden coverage without additional premium within some period of time prior to the policy period or during the policy period, the insured receives the benefit of the broadened coverage.
The failure to exercise that degree of care that the law requires to protect others from an unreasonable risk of harm. The failure to act as a prudent person would have acted under similar circumstances.
In liability policies, generally defined to be an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
A specific agreement between the insured and the insurer that certain conditions will be met. This agreement becomes a party of the policy.
Statements an applicant for insurance believes to be true. Does not carry as much force as warranty.
The withholding of a material fact from the insurance company. May void the policy.
An oral or written statement providing immediate insurance protection, valid for a specific period. designed to provide temporary coverage until a policy can be issued or denied.
Law of large numbers
The more date you have, the more accurate your measurements and predictions will be when using that data. Law of large numbers is used to predict the frequency of losses and to accurately set rates. Risk can be measured on a large scale but is unpredictable on an individual scale.
Only the possibility of a loss. For ex: owning something with the possibility that it may be stolen or damaged. Pure risk is the type that is insurable.
Possibility of a loss or a gain. Betting on horses or investing in public stock are examples because the gambler or investor hopes for a financial gain. Insurance does not deal with speculative risk.
Cause of loss form
On property policies, describes what PERILS are covered by the contract.
Conditions or coverages that are added or removed from other parts of the policy. May broaden or narrow coverage.
Describes what parties are insured. The person named in the Declarations and relatives by blood or marriage residing in the same household.
Attempts to resolve disputes over value of property.
Allows disputes to be settled out of court by a neutral party.
Telling the insured that an optional coverage is either 1. required by law or 2. included in the policy and no charge or 3. adding coverage to a policy without disclosing the coverage was adding for additional premium. (Unfair and Deceptive practices)
Domiciled in Florida.
Domiciled in another state or US territory (not country).
Domiciled in another country.
Surplus Lines Insurance
If you cannot write a policy after asking 3 admitted carriers, you can fill out a diligent effort form and write the business with a licensed surplus lines agent. the insured must sign an acknowledgement that they are not protected under the Florida Insurance Guaranty Act - FIGA
Florida Auto Joint Underwriting - state regulated of last resort auto policies. It is made up of all the auto insures in Florida, whoa re responsible for claims payment in proportion to the amount of premium they write in the state. Generally serves high risk drivers.
Citizens Property Insurance Corp (CPIC) - stated own insurer of last resort property insurance including HO, dwelling, and commercial property. Applicants must meet 15% rule as an eligibility requirement.
Glass Steagal Act
The Glass Steagal Act forced a separation between savings banks, investment banks, insurance companies and other financial institutions. The idea was to prevent mergers and acquisitions that may lead to bad things in the financial markets if giant companies failed.
Gramm Leach Bliley Act
This overrode the Glass Steagal Act - this allowed insurance companies , banks, and other financial institutions to merge legally. As a result, any one company and eat in multiple areas of the financial markets including insurance, investment banking, and savings, and mortgages.
Puerto Rico, Guam, US Virgin Islands.
Usually defined to include physical harm, sickness, disease or death resulting from any of these.
Boiler and Machinery coverage
Insurance which covers the insured against loss (liability and physical damage) arising out of the use of steam boilers or other machinery. (Part of Commercial Package Policy)
Vandalism and Malicious Mischief
Protects property against damage caused by vandals. Many property forms contain Vandalism and
Malicious Mischief coverage.
A Health policy provision that doubles death benefits otherwise applicable for accidents under
Drive other Car coverage
An endorsement to the Business Auto Policy, which covers named persons for non-business use of
autos, they do not own. Used when the named insured furnishes an auto to another, such as an
employee, who does not own his or her own car.
A Judicial bond commonly used to bond fiduciaries: guardians, administrators, trustees and executors,
or persons appointed by a court to manage the property of others.
Insurance of human beings against bodily injury, disablement or death by accident or accidental
means, or the expense thereof, or against disablement or expense resulting from sickness, and every
insurance appertaining thereto.
A Surety bond that may be required of those associated with import or export activities, to guarantee
that the required customs will be collected, reported and paid.
The event, which triggers coverage under a Commercial General Liability Coverage form. Under the
Occurrence form, the coverage trigger is bodily injury or property damage, which occurs during the
policy period, regardless of any later time at which a claim is made. Under the Claims-Made form, the
trigger is BI or PD, which occurs on or after the retroactive date and for which claim is made during the
Workers Comp Insurance
Insurance, which covers an employer's obligations under Worker's Compensation laws, which make
the employer responsible for, stated damages in the event of a work-related injury or illness. Worker's
Compensation coverage also includes separate coverage for Employers' Liability.
The section of an insurance policy, which states which losses will be indemnified, what property is
covered, which perils are insured against.
Value Reporting Endorsement
An endorsement that can be added to Commercial Property policies which sets the limit of insurance
somewhat higher than expected peak values and then requires the insured to make periodic reports
of actual values. These reports are averaged and the premium is then adjusted to reflect the average
Financial Responsibility Law
State law that requires owners or operators of autos to provide evidence that they have the funds to
pay for automobile losses for which they might become liable. Insurance is the usual method for
providing this evidence to the state.
Liquor Liability Coverage
This form belongs to the Commercial General Liability coverage part of the Commercial Package Policy.
It covers liquor liability, which is excluded from the standard CGL forms for those who are in the
business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages.
Business Auto Coverage Form
A form, which is a part of the Commercial Auto Coverages and is designed to cover the auto exposures
of businesses, other than truckers or garages.
Utmost Good Faith
A principle of insurance which states that the insurance company must be able to rely on the honesty
and cooperation of the insured, and the insured must rely on the company to fulfill its obligations in
Commercial Inland Marine coverages, which are not standardized.
The transfer to the insurance company of the insured's right to collect for damages.
In auto insurance, damage or loss to the insured own auto or autos int he insureds care, custody or control.
Contract bonds, which guarantee that jobs will be competed by the contractor according to contract specifications.
A legal agreement between two parties promising a certain performance in exchange for a certain consideration.
Preservation of property
This is a Property insurance coverage, sometimes known as a removal, which provides coverage for
property that has been removed from the premises following a covered loss.
An insurance contract.
Unfair Insurance Trade Practices Act
A Florida law describing certain practices that are prohibited, such as misrepresentation, denying
claims without reasonable investigation, etc.
Aircraft Liability Insurance
Coverage written to cover public and passenger liability and property damage liability.
Protection and Indemnity.
In Ocean Marine insurance, a form of liability insurance.
Classes of Inland Marine coverage for which standardized forms have been prepared as part of the
Commercial Package Policy. Contrast uncontrolled lines.
A form of insurance primarily designed to cover property in transport over land or sea
Bonds which guarantee that someone will perform faithfully whatever he or she agrees to do or that
someone will make an agreed upon payment to another party