LA CLAIMS ADJUSTER PROPERTY
AND CAUSALITY PRACTICE EXAM 1
Insurable43Interest43-43answer--
______in43the43property43and43would43suffer43a43financial43loss43if43the43property43were4
3damaged43by43an43insured43peril,43their43family43members43(names43need43not43be43lis
ted43in43the43policy),43and43others43such43as43a43lien43holder,43for43example,43the43bank
43that43holds43the43mortgage43on43a43house.
Cause43of43Loss43Forms43-43answer--
____establish43and43define43the43causes43of43loss43(or43perils)43for43which43coverage43i
s43provided43under43the43form.43(Please43do43not43confuse43the43"cause43of43loss"43form
s43with43the43"proof43of43loss"43form,43which43is43the43form43submitted43to43the43insuranc
e43company43by43the43insured43when43they43have43a43claim.)
Basic43Cause43of43Loss43Form43-43answer--
This43form43is43a43"named43peril"43form,43that43specifies43the43perils43insured43against.43
The43perils43listed43on43this43form43will43usually43be,43as43the43name43implies,
the43most43basic43perils.43This43form43will43only43cover43those43perils43that43are43specifi
cally43named43in43the43form.
Broad43Cause43of43Loss43Form43-43answer--
This43form43is43also43a43"named43peril"43form43and43provides43coverage43for43the43perils
43named43in43the43basic43form,43but43adds43additional43perils43and43names
them43on43the43form.
Special43Cause43of43Loss43Form43-43answer--
___form43is43an43"open43peril"43or43"all43risk"
form43that43provides43coverage43for43all43risks43of43loss,43from43any43peril,43except43thos
e43that43are
specifically43excluded43in43the43policy.43Remember43for43your43state43licensing43exam43t
hat
when43coverage43is43provided43under43an43open43peril43form,43the43burden43of43proof43li
es43with
the43insurance43company43to43prove43that43the43cause43of43loss43is43excluded.
,Appraisal43Clause43-43answer--
This43property43insurance43provision43allows43either43the43insured43or43the43insurance43
company43to43demand43a43binding43appraisal43of43the43damaged43property43in43the43ev
ent43of43a43dispute43as43to43the43value43of43the43property.43The43clause43also43establish
es43the43required43appraisal43procedure.
Coinsurance43Clause43-43answer--
A43provision43in43property43insurance43policies43stating43that43the43insurance43company4
3and43the43insured43will43share43in43the43loss43incurred43by43the43insured,43based43on43a
43fixed43percentage43of43the43value43of43the43insured43property.43In43addition,43the43insu
red43will43face43a43penalty,43and43must43pay43a43higher43percentage43on43the43loss43if43t
hey43do43not43insure43the43property43for43a43certain43percentage43of43its43full43value43(us
ually43at43least4380%).43Sometimes,43in43Dwelling43&43Homeowners43policies43this43clau
se43is43called43the43"Loss43Settlement43Clause".
Concurrent43Causation43-43answer--
This43term,43when43referring43to43property43insurance,43is43a43doctrine43stating43that43if43
loss43or43damage43to43property43occurs43as43a43result43of43more43than43one43cause,43on
e43of43which43is43covered43under43the43policy,43while43the43other43cause43is43not43cover
ed,43the43damages43are43still43likely43to43be43compensated43by43the43insurer.43However,
43this43doctrine43is43being43revisited43frequently43in43the43courts43and43a43number43of43r
ecent43cases43have43been43decided43in43favor43of43denying43the43claim.
Pair43or43Set43Clause43-43answer--
This43policy43provision43states43that43if43part43of43a43pair43or43set43is43lost43or43damaged
,43the43loss43will43be43valued43as43a43fair43proportion43of43the43total43value43of43the43set.4
3It43gives43consideration43to43the43importance43of43the43damaged43article43to43the43set.43
The43insurer43is43not43required43to43pay43for43the43value43of43the43whole43set
The43Standard43Mortgage43Clause43(Mortgagee43Rights)43-43answer--
This43provision43protects43the
interests43of43the43bank/
financial43institution43that43holds43the43mortgage43on43the43insured43property.
This43clause43also43grants43coverage43to43the43mortgagee,43even43if43the43insured43inte
ntionally43caused43the43loss.43The43bank43can43also43provide43a43proof43of43loss43or43pa
y43the43insurance43premiums43in43case43the43insured43cannot,43or43refuses43to43do43so.4
3The43mortgagee43must43also43be43advised43if43the
contract43has43been43cancelled43or43nonrenewed43by43the43insurer
broad43evidence43rule43-43answer--which43is43a43combination43of
"replacement43cost43minus43depreciation"43and43"fair43market43value"43that43a43judge43d
etermines
,Replacement43Cost43-43answer--
This43is43defined43as43"the43current43cost43to43purchase43new,43the43item43that43was43lo
st43or43damaged,43with43no43deduction43for43depreciation".
Functional43Replacement43Cost43-43answer--
would43be43used43to43value43of43the43property43at43the43cost43to43replace43the43property
43that43was43lost,
damaged43or43destroyed,43with43property43that43serves43the43same43function.
Valued43Policy43Law43-43answer--
a43state43law43requiring43insurance43companies43to43pay43the43full43"agreed43value"43of4
3the43policy43in
the43event43of43a43total43loss.
•43Flood43(a43separate43policy43must43be43purchased);
•43Earthquake43(a43separate43policy43must43be43purchased);
•43Mold;
•43Acts43of43War;
•43Parts43of43the43property43in43disrepair,43such43as43worn-
out43electrical43wiring43and43plumbing,43air
conditioning,43heating43units,43and43roofs.43-43answer--
perils43that43are43typically43not43covered43under43property43insurance43policies43are:
Fair43Access43to43Insurance43Requirements43(FAIR43Plans)43-43answer--state-
mandated43insurance43programs43that43provide43"fair"43access43to43property
insurance43for43individuals43who43cannot43secure43insurance43in43the43standard43market
.
High43risk43-43answer--
FAIR43Plans43are43considered43part43of43the43"residual43market"43of43any43state.43Insure
rs43in43the43standard43market43may43consider43the43individual's43claims43history43or43the
43property43they43are43attempting43to43insure,43___
A43liability43loss43-43answer--
____43occurs43when43a43person43or43entity43is43determined43to43have43been43responsibl
e,43or
legally43liable,43for43injury43or43loss43to43another43person43or43liable43for43damage43to43a
nother's43property43and
the43law43requires43them43to43make43financial43restitution.
A43duty43of43care43-43answer--
arises43when43the43law43recognizes43a43relationship43between43two
parties,43and43due43to43this43relationship,43one43party43has43a43legal43obligation43to43act
43in43a43certain
manner43toward43the43other.43For43example,43a43department43store43has43a43duty43to43t
ake43reasonable
, care43to43keep43their43premises43safe43for43customers
Breach43of43Duty43-43answer--
A43person43or43entity43breaches43the43duty43of43care43by43failing43to43take43reasonable43
care43in43fulfilling43the43duty.
Contributory43Negligence43-43answer--
Common43law43defense43against43negligence43states43that43if43an
individual43contributes43to43his43or43her43own43loss43in43any43way,43then43another43cann
ot43be43held
liable43for43the43loss
Comparative43Negligence43-43answer--
Law43that43allows43an43injured43party43to43collect43from43another
party43for43a43loss,43even43when43the43injured43party43contributed43to43his43or43her43own
43loss.
Damages43are43reduced43to43the43extent43of43the43injured43party's43negligence.43This43i
s43the
defense43used43in43most43states.
Assumption43of43Risk43-43answer--
In43some43states,43a43doctrine43known43as43assumption43of43risk43may
apply.43Assumption43of43risk43applies43when43a43person43knowingly43exposes43himself43
or43herself43to
danger43or43injury.43When43a43person43assumes43this43risk,43he43or43she43may43be43pre
vented43from
recovering43from43a43negligent43party.43This43doctrine43is43frequently43associated43with4
3injuries
incurred43by43spectators43at43sporting43events
Intervening43Cause43-43answer--
An43independent43action43that43breaks43the43chain43of43causation43and
sets43in43motion43a43new43chain43of43events.43When43this43occurs,43the43intervening43ca
use43becomes
the43proximate43cause43of43loss.43This43can43serve43as43a43common43law43defense.
Statute43of43Limitations43-43-43answer--
States43have43enacted43laws43as43to43when43certain43types43of43lawsuits
must43be43filed.
Absolute43Liability43-43answer--
As43we43have43discussed,43negligence43has43to43be43present43to43hold43someone
legally43liable43for43an43action.43There43are43some43exceptions,43however.43Absolute43li
ability43is43imposed
by43law43on43those43participating43in43certain43activities43that43are43considered43especial
ly43hazardous.
AND CAUSALITY PRACTICE EXAM 1
Insurable43Interest43-43answer--
______in43the43property43and43would43suffer43a43financial43loss43if43the43property43were4
3damaged43by43an43insured43peril,43their43family43members43(names43need43not43be43lis
ted43in43the43policy),43and43others43such43as43a43lien43holder,43for43example,43the43bank
43that43holds43the43mortgage43on43a43house.
Cause43of43Loss43Forms43-43answer--
____establish43and43define43the43causes43of43loss43(or43perils)43for43which43coverage43i
s43provided43under43the43form.43(Please43do43not43confuse43the43"cause43of43loss"43form
s43with43the43"proof43of43loss"43form,43which43is43the43form43submitted43to43the43insuranc
e43company43by43the43insured43when43they43have43a43claim.)
Basic43Cause43of43Loss43Form43-43answer--
This43form43is43a43"named43peril"43form,43that43specifies43the43perils43insured43against.43
The43perils43listed43on43this43form43will43usually43be,43as43the43name43implies,
the43most43basic43perils.43This43form43will43only43cover43those43perils43that43are43specifi
cally43named43in43the43form.
Broad43Cause43of43Loss43Form43-43answer--
This43form43is43also43a43"named43peril"43form43and43provides43coverage43for43the43perils
43named43in43the43basic43form,43but43adds43additional43perils43and43names
them43on43the43form.
Special43Cause43of43Loss43Form43-43answer--
___form43is43an43"open43peril"43or43"all43risk"
form43that43provides43coverage43for43all43risks43of43loss,43from43any43peril,43except43thos
e43that43are
specifically43excluded43in43the43policy.43Remember43for43your43state43licensing43exam43t
hat
when43coverage43is43provided43under43an43open43peril43form,43the43burden43of43proof43li
es43with
the43insurance43company43to43prove43that43the43cause43of43loss43is43excluded.
,Appraisal43Clause43-43answer--
This43property43insurance43provision43allows43either43the43insured43or43the43insurance43
company43to43demand43a43binding43appraisal43of43the43damaged43property43in43the43ev
ent43of43a43dispute43as43to43the43value43of43the43property.43The43clause43also43establish
es43the43required43appraisal43procedure.
Coinsurance43Clause43-43answer--
A43provision43in43property43insurance43policies43stating43that43the43insurance43company4
3and43the43insured43will43share43in43the43loss43incurred43by43the43insured,43based43on43a
43fixed43percentage43of43the43value43of43the43insured43property.43In43addition,43the43insu
red43will43face43a43penalty,43and43must43pay43a43higher43percentage43on43the43loss43if43t
hey43do43not43insure43the43property43for43a43certain43percentage43of43its43full43value43(us
ually43at43least4380%).43Sometimes,43in43Dwelling43&43Homeowners43policies43this43clau
se43is43called43the43"Loss43Settlement43Clause".
Concurrent43Causation43-43answer--
This43term,43when43referring43to43property43insurance,43is43a43doctrine43stating43that43if43
loss43or43damage43to43property43occurs43as43a43result43of43more43than43one43cause,43on
e43of43which43is43covered43under43the43policy,43while43the43other43cause43is43not43cover
ed,43the43damages43are43still43likely43to43be43compensated43by43the43insurer.43However,
43this43doctrine43is43being43revisited43frequently43in43the43courts43and43a43number43of43r
ecent43cases43have43been43decided43in43favor43of43denying43the43claim.
Pair43or43Set43Clause43-43answer--
This43policy43provision43states43that43if43part43of43a43pair43or43set43is43lost43or43damaged
,43the43loss43will43be43valued43as43a43fair43proportion43of43the43total43value43of43the43set.4
3It43gives43consideration43to43the43importance43of43the43damaged43article43to43the43set.43
The43insurer43is43not43required43to43pay43for43the43value43of43the43whole43set
The43Standard43Mortgage43Clause43(Mortgagee43Rights)43-43answer--
This43provision43protects43the
interests43of43the43bank/
financial43institution43that43holds43the43mortgage43on43the43insured43property.
This43clause43also43grants43coverage43to43the43mortgagee,43even43if43the43insured43inte
ntionally43caused43the43loss.43The43bank43can43also43provide43a43proof43of43loss43or43pa
y43the43insurance43premiums43in43case43the43insured43cannot,43or43refuses43to43do43so.4
3The43mortgagee43must43also43be43advised43if43the
contract43has43been43cancelled43or43nonrenewed43by43the43insurer
broad43evidence43rule43-43answer--which43is43a43combination43of
"replacement43cost43minus43depreciation"43and43"fair43market43value"43that43a43judge43d
etermines
,Replacement43Cost43-43answer--
This43is43defined43as43"the43current43cost43to43purchase43new,43the43item43that43was43lo
st43or43damaged,43with43no43deduction43for43depreciation".
Functional43Replacement43Cost43-43answer--
would43be43used43to43value43of43the43property43at43the43cost43to43replace43the43property
43that43was43lost,
damaged43or43destroyed,43with43property43that43serves43the43same43function.
Valued43Policy43Law43-43answer--
a43state43law43requiring43insurance43companies43to43pay43the43full43"agreed43value"43of4
3the43policy43in
the43event43of43a43total43loss.
•43Flood43(a43separate43policy43must43be43purchased);
•43Earthquake43(a43separate43policy43must43be43purchased);
•43Mold;
•43Acts43of43War;
•43Parts43of43the43property43in43disrepair,43such43as43worn-
out43electrical43wiring43and43plumbing,43air
conditioning,43heating43units,43and43roofs.43-43answer--
perils43that43are43typically43not43covered43under43property43insurance43policies43are:
Fair43Access43to43Insurance43Requirements43(FAIR43Plans)43-43answer--state-
mandated43insurance43programs43that43provide43"fair"43access43to43property
insurance43for43individuals43who43cannot43secure43insurance43in43the43standard43market
.
High43risk43-43answer--
FAIR43Plans43are43considered43part43of43the43"residual43market"43of43any43state.43Insure
rs43in43the43standard43market43may43consider43the43individual's43claims43history43or43the
43property43they43are43attempting43to43insure,43___
A43liability43loss43-43answer--
____43occurs43when43a43person43or43entity43is43determined43to43have43been43responsibl
e,43or
legally43liable,43for43injury43or43loss43to43another43person43or43liable43for43damage43to43a
nother's43property43and
the43law43requires43them43to43make43financial43restitution.
A43duty43of43care43-43answer--
arises43when43the43law43recognizes43a43relationship43between43two
parties,43and43due43to43this43relationship,43one43party43has43a43legal43obligation43to43act
43in43a43certain
manner43toward43the43other.43For43example,43a43department43store43has43a43duty43to43t
ake43reasonable
, care43to43keep43their43premises43safe43for43customers
Breach43of43Duty43-43answer--
A43person43or43entity43breaches43the43duty43of43care43by43failing43to43take43reasonable43
care43in43fulfilling43the43duty.
Contributory43Negligence43-43answer--
Common43law43defense43against43negligence43states43that43if43an
individual43contributes43to43his43or43her43own43loss43in43any43way,43then43another43cann
ot43be43held
liable43for43the43loss
Comparative43Negligence43-43answer--
Law43that43allows43an43injured43party43to43collect43from43another
party43for43a43loss,43even43when43the43injured43party43contributed43to43his43or43her43own
43loss.
Damages43are43reduced43to43the43extent43of43the43injured43party's43negligence.43This43i
s43the
defense43used43in43most43states.
Assumption43of43Risk43-43answer--
In43some43states,43a43doctrine43known43as43assumption43of43risk43may
apply.43Assumption43of43risk43applies43when43a43person43knowingly43exposes43himself43
or43herself43to
danger43or43injury.43When43a43person43assumes43this43risk,43he43or43she43may43be43pre
vented43from
recovering43from43a43negligent43party.43This43doctrine43is43frequently43associated43with4
3injuries
incurred43by43spectators43at43sporting43events
Intervening43Cause43-43answer--
An43independent43action43that43breaks43the43chain43of43causation43and
sets43in43motion43a43new43chain43of43events.43When43this43occurs,43the43intervening43ca
use43becomes
the43proximate43cause43of43loss.43This43can43serve43as43a43common43law43defense.
Statute43of43Limitations43-43-43answer--
States43have43enacted43laws43as43to43when43certain43types43of43lawsuits
must43be43filed.
Absolute43Liability43-43answer--
As43we43have43discussed,43negligence43has43to43be43present43to43hold43someone
legally43liable43for43an43action.43There43are43some43exceptions,43however.43Absolute43li
ability43is43imposed
by43law43on43those43participating43in43certain43activities43that43are43considered43especial
ly43hazardous.
