Insurance Basics: Understanding Property Insurance and Its Coverages, Exams of Nursing

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Illinois Property Insurance Illinois Property Insurance Exam Questions (155 Terms) with Certified Answers/ A+ Score Solution 2024-2025. insurance policy - Answer: transfer of financial risk Pure Risk - Answer: a risk that presents the chance of loss but no opportunity for gain Speculative Risk - Answer: Chance of loss or gain (betting) Illinois Property Insurance What do insurance companies cover? - Answer: pure risks Pooling of risks - Answer: When a large group of people contribute money to a fund out of which their losses can be paid insured - Answer: the person or business covered by the insurance policy premium - Answer: money paid by the insured to the ins. company in exchange for the insurance policy lapse - Answer: when a policy is terminated due to non payment of premiums endorsement - Answer: form of ins. policy usually added for additional coverage Peril - Answer: cause of loss Hazard - Answer: Increases the chance of loss Risk - Answer: likelihood that loss will occur Actuary Tables - Answer: tables used for calculating premium rate tables Loss reserves - Answer: moneys set aside to pay claims in accordance with the actuary tables Illinois Property Insurance An adjuster - Answer: ins. company representative who administers claims, who has two principle responsibilities adjuster's principal responsibilities - Answer: verify that there was coverage on the day a loss occurs, verify that there was coverage on person who is submitting the claim loss settlement (adjustment) - Answer: amount paid on the loss Liability Coverage - Answer: pays all sums for which an insured becomes legally liable for bodily injuries and property damage to third parties Claimant - Answer: person who sustains injuries/damages who is making the claim an insurance company will pay to an injured claimant on a liability claim if - Answer: if insurance company determines that a court would find the insured legally liable Necessary Elements - Answer: legal requirements that a claimant must be able to prove to be successful in making a liability claim Negligence - Answer: important requirement a claimant must satisfy to persuade a court that the insured is legally liable for damages Illinois Property Insurance Omission - Answer: failing Commission - Answer: doing Representations - Answer: basic regular statements which the insured believes to be correct to the best of his/her knowledge Warranties - Answer: special statements that the insured guarantees to be correct an insurance company can refuse to pay a claim if - Answer: if representations can be proven to be false, concealed, or intentional Underwriting - Answer: process of determining whether an application for insurance qualifies for coverage underwriters - Answer: folks who do underwriting inspections - Answer: person sometimes hired by underwriter to do a consumer investigation of the property being proposed for insurance purpose of inspection - Answer: to verify the value of the property, the use of the property, the use of the surrounding properties, and to see if proposed property is well mainatined Illinois Property Insurance Fair Credit Reporting Act - Answer: if an insurance company needs to do a consumer report, this Law requires that the ins. company must warn applicants before doing so Gramm-Leach-Bliley Act (Privacy Act) - Answer: provides for the protection of consumer information, requires financial organizations to provide a consumer a privacy notice, makes financial org. tell consumers of his/her right to request information Buildings - Answer: structures permanently attached to land that are usually insured for replacement cost or sometimes for actual cash value personal property - Answer: property not permanently attached to land (tables, chairs) often insured for actual cash value or replacement cost Replacement Cost Coverage - Answer: pays the cost of rebuilding, repairing or replacing insured's property in an event where a building is totally destroyed, a replacement cost policy will pay for what? - Answer: cost of rebuilding foundation and everything above it with new materials and new labor, like kind and like quality at the same location if the insured decides not to rebuild, repair or replace building, what happens? - Answer: insurance company will indemnify only the actual cash value of the loss Illinois Property Insurance Declarations Page - Answer: information page that has names of people insured Insuring Agreement - Answer: clause that states the insurance company's promise to indemnify Requirements that must be met at the time policy is purchased - Answer: Application, premium what is needed when filing a claim? - Answer: notice of loss, proof of loss Property Insurance exclusions - Answer: properties excludes, perils excluded, morale, moral, physical hazards, Inherent Vice. Elements of a Contract - Answer: competent parties, offer and acceptance, mutual agreement, consideration, legal purpose What happens if insured is not a competent party? - Answer: policy is voidable at the insured's option 2 reasons why people buy property insurance - Answer: protects an insured against risk of financial loss that insured can not affordable, required to borrow money for mortgage Illinois Property Insurance Standard Fire policy - Answer: least property insurance coverage available, covers only classes of property specifically described on the declarations page only for their actual cash value Standard Fire Policy perils covered - Answer: hostile fire, lightning, removal Duties of the insured after a loss in Standard Fire Policy - Answer: prompt notice of loss, proof of loss within 60 days, sue within 12 months if necessary Duties of Insurance company in Standard Fire Policy - Answer: indemnify within 60 days, if no loss settlement is accepted by insured, an umpire will make final determination AKA Arbritation Clause Subrogation Clause - Answer: states that ins. company can require the insured to transfer to it any legal rights which the insured has against third parties at the time of loss Assignment Clause - Answer: says no assignment (transfer) of the policy is valid unless signed by an officer of the insurance company Pro Rata clause - Answer: used when there is concurrent policies, sometimes done when insuring high value property Illinois Property Insurance Mortgagee Rights - Answer: if lender named in declarations page, they then have three rights in the policy: 10 days notice of cancelation, have loss paid to mortgagee, provide proof of loss should the insured fails to Salvage - Answer: when an insurance company pays a claim, and then the ins. company has the right to assume ownership of damaged property to fix the property up then sell it to recover part or all of the loss Vacancy and Unoccupancy Clause - Answer: usually found in commercial business property, states that coverage is terminated after the insured property has been left vacant or unoccupied for 60 consecutive days Vacancy and Unoccupancy Permit - Answer: endorsement that extends coverage beyond 60 days of vacancy or unoccupancy Standard Fire Exclusions - Answer: Money, accounts, valuable papers Standard Fire perils excluded - Answer: War (will cover fire damage resulting from a riot, violent demonst. hate crime, terrorism), theft, neglect, loss caused by an order of civil authority Property Insurance Policies - Answer: Extended Coverage endorsement, Vandalism and Malicious Mischief endorsement, Dwelling Building and Contents Basic Form (DP-1), Dwelling Building and Contents Broad Form (DP-2), Dwelling Building and Contents Special form (DP-3), Building and Personal property form. Illinois Property Insurance the personal property of others located at the business premises, can be used for office buildings, store buildings, malls, warehouses, or industrial buildings B.P.P form exclusions - Answer: 4 perils from standard fire and extended coverage, vandalism and mischief, damaged caused by agricultural or industrial smudging, damage caused by wear tear rot etc, vacancy and unoccupancy Optional Additional Coverages for B.P.P - Answer: building, personal property of the insured, personal property of others (bailee coverage) Homeowners Policy - Answer: must be owner occupied, 1-2 homes covered, package policy Section 1: Property Coverage under Homeowners Insurance - Answer: Dwelling (A) Other Structure (B) Personal Property (C) Loss of Use (D) Personal Liability coverage Section 2: Liability coverage under Homeowners Insurance - Answer: Personal Liability (E), Medical Payments to others (F) Dwelling Coverage A - Answer: main house and anything bolted, nailed, to the house is covered other structure Coverage B - Answer: covers fence around the yard, garage separated from the house, pool, 10%of cov. A Illinois Property Insurance Personal Property coverage C - Answer: covers stuff like pots and pans that are damaged, 50% of cov. A Loss of Use coverage D - Answer: additional living expense, missed rental payments, 20% of cov. A Personal Liability Coverage E - Answer: pays for injuries or property damage that insured did to other people Medical payments Coverage F - Answer: covers medical bills, lost wages for a person hurt by an insured or any member of his or her household HO1 Basic Form - Answer: Covers basic form perils of all of Section 1 and 2 on an ACV basis HO8 Modified Form - Answer: Covers all Basic Form Perils of Section 1 on an ACV basis HO2 Broad Form - Answer: covers Broad Form Perils of all of Section 1 and 2 on a RC basis for Dwelling and Other Structures HO3 Special Form - Answer: protects a home against all risk perils on a RC basis, ACV for coverage C Illinois Property Insurance HO4 Broad Form Renters - Answer: covers broad form perils for personal property (C), Loss of Use (D), and personal liability and Medical payments H.O. 5 Homeowners comprehensive form - Answer: the very best, covers all all risk perils of section 1 on a RC basis and all of Section 2 HO6 Broad Form Condo - Answer: covers broad form perils of Dwelling (A), Other Structures (B), Personal Property (C) on a limited, optional, and ACV basis Homeowners Section 1 - Answer: Coverage A, Coverage B, Coverage C, Coverage D Homeowners Section 2 - Answer: Coverage E, Coverage F Coverage A - Answer: Dwelling (House) Coverage B - Answer: Other Structures Coverage C - Answer: Personal Property Coverage D - Answer: Loss of use Coverage E - Answer: Personal Liability. Coverage F - Answer: Medical Payments Illinois Property Insurance Business Owners Policy (BOP) - Answer: A policy that combines property, liability and business interruption coverage for small- to medium-sized businesses. BOP policy must include - Answer: Common Policy declarations, common policy conditions, property coverage, CGL coverage Commercial Package Policy (CPP) - Answer: packages property and casualty coverages needed for large business properties CPP must include - Answer: Common Policy Declarations, Common Policy Conditions, Commercial Property coverage, CGL Boiler and Machinery Coverage - Answer: covers what it is named Builders Risk Coverage Form - Answer: A commercial property form that covers buildings under construction. Terrorism Risk Insurance Act (TRIA) - Answer: Requires insurance companies to offer terrorism insurance to their commercial policyholders. earthquake coverage endorsement - Answer: covers earthquakes, landslides, volcanic eruption, and earth movement Illinois Property Insurance National Flood Insurance Program - Answer: The federal government's program to provide Flood insurance at subsidized rates.