CRIS - Property - Ch. 12 - Glossary

Actual Cash Value (ACV)
Click the card to flip 👆
1 / 29
Terms in this set (29)
Actual Cash Value (ACV)
In property insurance, one of the two major methods of establishing the value of insured property for loss payment purposes. Although the term is seldom defined in the policy, the generally accepted insurance industry definition of actual cash value is the cost to repair or replace the damaged property with new materials of like kind and quality, less depreciation of the damaged property.
Agreed Value Coverage Option, Provision, or Endorsement
A property insurance provision that suspends the coinsurance clause until a specified expiration date. Insurers usually require a statement of property values signed by the insured as a condition of activating or including an agreed value provision in a commercial property policy.
All Risks Coverage
Property insurance covering loss arising from any fortuitous cause except those that are specifically excluded. This is in contrast to named perils coverage, which applies only to loss arising out of causes that are specifically listed as covered.
Blanket Limit
A single limit of insurance that applies over more than one location or more than one type of property, or both. This is in contrast to specific or scheduled limits of insurance, which are separate limits that apply to each type of property at each location.
Builders Risk Policy
A property insurance policy that is designed to cover property in the course of construction. There is no single standard builders risk form; most builders risk policies are written on inland marine (rather than commercial property) forms. Coverage is usually written on an all risks basis, and typically applies not only to property at the construction site, but also to property at off-site storage locations and in transit. Builders risk insurance can be written on either a completed value or a reporting form basis; in either case, the estimated completed value of the project is used as the limit of insurance.
Business Income Insurance
Time element property insurance that pays for loss of income that results when damage by a covered cause of loss to the organization's premises causes a suspension or slowdown of its operations.
Coinsurance Provision
A property insurance provision that penalizes the insured's loss recovery if the limit of insurance purchased by the insured is not at least equal to a specified percentage (commonly 80 percent) of the value of the insured property. The coinsurance provision specifies that the insured will recover no more than the following: the amount of the loss multiplied by the ratio of the amount of insurance purchased (the limit of insurance) to the amount of insurance required (the value of the property on the date of loss multiplied by the coinsurance percentage), less the deductible.
Commercial Crime Policy
A crime insurance policy that is designed to meet the needs of organizations other than financial institutions (such as banks). A commercial crime policy typically provides several different types of crime coverage, such as: employee dishonesty coverage; forgery or alteration coverage; computer fraud coverage; funds transfer fraud coverage; kidnap, ransom, or extortion coverage; money and securities coverage; and money orders and counterfeit money coverage.
Commercial Property Policy
A property insurance policy for businesses and other organizations that is designed to cover primarily completed, occupied buildings and their contents. Contractors purchase this policy to cover damage to their own buildings, office contents, and most other personal property that they own (other than vehicles and contractors equipment).
Deductible
A portion of covered loss that is not paid by the insurer. Most property insurance policies contain a per-occurrence deductible provision that stipulates that the deductible amount specified in the policy declarations will be subtracted from each covered loss in determining the amount of the insured's loss recovery.
Delayed Completion CoverageTime element coverage for property under construction, also commonly referred to as delayed start up (DSU), delayed opening coverage, or soft costs coverage. Covers income loss or specified additional expenses resulting from delay in project completion when the delay is caused by damage to the project from an insured peril.Dependent Properties Time Element CoverageTime element property insurance that pays for the loss of income or increase in expenses resulting from damage from a covered cause of loss to the premises of another organization on which the insured depends, such as a key supplier or customer. The two types are dependent properties business income coverage and dependent properties extra expense coverage.Direct Damage CoverageProperty insurance that pays the value of property that has been damaged by a covered cause of loss or the cost of its repair or replacement. This is in contrast to time element property insurance, which pays for loss of income or increase in expenses that result from the unavailability of the damaged property while it is being repaired or replaced.Employee Dishonesty or Employee Theft CoverageCoverage for employee theft of money, securities, or property, written with a per loss limit, a per employee limit, or a per position limit. Employee dishonesty coverage is one of the key coverages provided in a commercial crime policy.Equipment Breakdown InsuranceCoverage for loss due to mechanical or electrical breakdown of nearly any type of equipment, including photocopiers and computers. Coverage applies to the cost to repair or replace the equipment and any other property damaged by the equipment breakdown. Resulting business income and extra expense loss is often covered as well. Traditionally referred to as boiler and machinery insurance.Extra Expense InsuranceTime element property insurance that pays for costs in excess of normal operating expenses that an organization incurs in order to continue operations without interruption, or to minimize the interruption, while its property is repaired or replaced after having been damaged by a covered cause of loss.Inland Marine CoverageA group of property insurance coverages designed to insure exposures that cannot be conveniently or reasonably confined to a fixed location or insured at a standard rate under a standard form. Includes coverage for property under construction, property in transit over land, certain moveable property, instrumentalities of transportation and communication (such as bridges, roads, piers, and television and radio towers), legal liability coverage for bailees, and computerized equipment. Many inland marine coverage forms provide coverage without regard to the location of the covered property; these are sometimes called "floater" policies. Inland marine coverage forms are generally broader than property coverage forms due to the relative freedom from rate and form regulation of inland marine insurance as compared with property insurance.Installation FloaterInland marine coverage on property (usually equipment) being installed by a contractor. Essentially a specialized type of builders risk coverage that is often written on the same form used to provide builders risk coverage.Limit of InsuranceThe most that will be paid by the insurer in the event of a covered loss under an insurance policy.Manuscript Form or PolicyA insurance policy form that is custom designed for a particular insured.Named Perils CoverageProperty insurance coverage that applies only to loss from the causes, or perils, that are specifically listed as covered. It contrasts with all risks coverage, which applies to loss from all causes not specifically listed as excluded.Rents or Rental Value InsuranceTime element property insurance that pays for loss of rental income when a building that is rented out to others has been damaged by a covered cause of loss. Coverage is also provided for the fair rental value of the portion of the premises occupied by the insured. Rental value insurance can be provided by a business income coverage form or a specialized rents or rental value coverage form.Replacement CostOne of two methods of establishing the value of insured property for purposes of determining the amount the insurer will pay in the event of loss. It is usually defined in the policy as the cost to replace the damaged property with materials of like kind and quality, without any deduction for depreciation.Scheduled or Specific LimitsSeparate limits of insurance that apply to each type of covered property at each location. This is in contrast to a blanket limit, which is a single limit of insurance that applies over more than one location, more than one type of property, or both.Soft Costs CoverageTime element coverage for property under construction, also commonly referred to as delayed completion, delayed start up (DSU), or delayed opening coverage. Covers income loss or specified additional expenses resulting from delay in project completion when the delay is caused by damage to the project from an insured peril.Subrogation ProvisionProvision in an insurance policy addressing whether the insured has the right to waive its recovery rights against another party who may have been responsible for loss covered under the policy. Standard commercial property policies contain a subrogation provision (called "Transfer of Rights of Recovery Against Others to Us") that allows the insured to waive recovery rights against others, provided that this is done in writing prior to loss. However, nonstandard policies, including builders risk and contractors equipment policies, must be checked to determine whether pre-loss waivers are allowed.Standard Form or Standard PolicyA insurance policy form that is designed to be used by many different insurers and has exactly the same provisions, regardless of the insurer issuing the policy. Most standard insurance policy forms are developed by insurance advisory organizations, such as Insurance Services Office, Inc. (ISO) for use by the insurers that purchase their services.Time Element InsuranceProperty insurance that pays for loss of income or increase in operating expenses that result from the unavailability of the damaged property for its normal use while it is being repaired or replaced. This type of coverage is called "time element" insurance because the amount of loss depends on how long it takes to repair or replace the damaged property.Vegetated RoofVegetated, or "green," roofs are planted roof systems that consist of a waterproof membrane to protect the roof structure, an optional drainage layer, an engineered growing medium, and a layer of plants.