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12 Cards in this Set
- Front
- Back
How is the rate of premium calculated for fire insurance policies?
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Rates vary between properties & Insureds according to several characteristics.
-Public/Private fire protection -Occupancy -Construction & - Susceptibility. |
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How has public fire protection changed premiums charged to Insureds?
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A fire is more likely to be extinguished before it destroys property completely, than it would in a small community.
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How does the construction of a building affect the premium charged to Insureds?
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Buildings constructed of combustible material (frame) attract higher rates than a buildings constructed mainly/completely of non combustible material (concrete block)
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Describe the 4 different ways a deductible may be applied.
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1. Separate Items - applied separately to the amount recoverable under each item.
2. Occurance Basis - subtracted from the total amount of loss/damage arising from single event. 3. Loss above threshold - no loss paid below specific amount, anything over that amount paid in full. 4. Specific amount beyond which no deductible applies. |
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What is the purpose of Co-Insurance?
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Obliges the Insured to maintain a specified minimum amount of Insurance in relation to the value of the property Insured.
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Describe the Co-Insurance formula.
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amount of Insurance carried divided by the minimum amount of Insurance required times the amount of the loss = Amount recoverable by Insured.
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Why is it important for Insureds to consider the effect of inflation on property values when deciding how much insurance to buy?
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they may discover they are under insured at the time of a partial loss and incur a coinsurance penalty.
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Why do property policies often include a waiver of coinsurance for small losses?
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to nullify the coinsurance clause for losses exceeding neither 2% of the amount of insurance nor $5K.
Applies separately to each item. |
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What is the difference between the Stated amount Coinsurance clause and the standard co Insurance Clause?
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The difference is that the coinsurance requirements on a Stated Amount coinsurance are specified in dollars rather then as a percentage of the ACV found in the standard co insurance clause.
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When does the Stated Amount clause usually expire, relative to the policy, why?
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The Stated amount clause expires independently of the policy, usually three months later.
This gives the Insured 3 months after renewing to confirm values for the renewal terms. |
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Describe the circumstances in which an average distribution clause might replace a Coinsurance clause.
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In such operations as manufacturing or processing when goods move from one building to another and the total value remains fairly constant.
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How Does a deferred payment clause affect an insured in the case of loss of a building?
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The Insured is indemnified for only a portion of the total loss to a building at the time of loss. The remainder of the loss payment is deferred until the insured repairs or replaces the building.
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