14 property and casualty insurance
property and insurance basics property
and casualty insurance policy conditions
exam
In an auto policy that has split limits of 50/100/75, what does the "75" represent?
the maximum amount that will be paid to any one injured person
the maximum sum the insurer will pay for injuries to other people and property damage
to other cars or property
the maximum amount the insurer will pay for damage to other cars or property
the maximum sum the insurer will pay to all injured persons - answersthe maximum
amount the insurer will pay for damage to other cars or property
Under the split limits approach to stating a policy's liability limits, the third limit is the
maximum property damage amount that the insurer will pay for damage to other cars or
property resulting from the accident.
What does the "No Benefit to Bailee" provision in a property and casualty policy make
clear?
Bailees must wait until all other parties are reimbursed for a loss before they can be
covered.
Bailees can be covered only for the value of the insured's property being held by the
bailee.
Only bailees that can show an insurable interest in the insured's property can be
covered.
The policy does not cover bailees. - answersThe policy does not cover bailees.
The "No Benefit to Bailee" provision makes it clear that there is no coverage for outside
parties who are bailees.
what is constructive total loss - answersThis occurs when the damage to repair exceeds
the value of the vehicle/property.
, Ralph's car has been damaged beyond repair, and Ralph's insurer pays him what the
car was worth just before the accident. The insurer then takes possession of the car.
What is the car considered in technical terms?
refurbished parts
surplus
salvage
scrap metal - answerssalvage
Damaged property is referred to as salvage. Ralph's insurer will sell the salvage to an
auto junkyard and recover some of its claims payment.
Aimee thought she was correctly following the cooking instructions when she put a
frozen turkey into the turkey fryer, but the resulting fire destroyed her neighbor's wooden
deck. After paying for the deck, the neighbor's insurer attempts to recover from Aimee
by exercising its right of:
salvage
subrogation
reprisal
recovery - answerssubrogation
Subrogation is the insurer's right to recover its claim payment from a party that was
responsible for the loss. The neighbor's insurance policy no doubt includes a
subrogation provision that permits the neighbor's insurer, after paying the claim, to seek
recovery from Aimee.
Martha's home has an insurable value of $500,000, which she has insured for $300,000
under a property insurance policy with an 80 percent coinsurance clause. Ignoring any
deductible that might apply, if the building sustains $20,000 in damage due to a covered
peril, how much will the insurer pay?
tip:
did
_________________________ x loss
should (value x percent) - answers15,000
Because her property is underinsured, the coinsurance clause in Martha's insurance
policy reduces the amount that the insurer will pay for a covered loss. To recover
$20,000 for this loss, she should have purchased limits of at least $400,000 (i.e., 80
percent of the $500,000 building's insurable value).
The standard mortgage (mortgagee) clause in a property insurance policy covering real
property does which of the following?
property and insurance basics property
and casualty insurance policy conditions
exam
In an auto policy that has split limits of 50/100/75, what does the "75" represent?
the maximum amount that will be paid to any one injured person
the maximum sum the insurer will pay for injuries to other people and property damage
to other cars or property
the maximum amount the insurer will pay for damage to other cars or property
the maximum sum the insurer will pay to all injured persons - answersthe maximum
amount the insurer will pay for damage to other cars or property
Under the split limits approach to stating a policy's liability limits, the third limit is the
maximum property damage amount that the insurer will pay for damage to other cars or
property resulting from the accident.
What does the "No Benefit to Bailee" provision in a property and casualty policy make
clear?
Bailees must wait until all other parties are reimbursed for a loss before they can be
covered.
Bailees can be covered only for the value of the insured's property being held by the
bailee.
Only bailees that can show an insurable interest in the insured's property can be
covered.
The policy does not cover bailees. - answersThe policy does not cover bailees.
The "No Benefit to Bailee" provision makes it clear that there is no coverage for outside
parties who are bailees.
what is constructive total loss - answersThis occurs when the damage to repair exceeds
the value of the vehicle/property.
, Ralph's car has been damaged beyond repair, and Ralph's insurer pays him what the
car was worth just before the accident. The insurer then takes possession of the car.
What is the car considered in technical terms?
refurbished parts
surplus
salvage
scrap metal - answerssalvage
Damaged property is referred to as salvage. Ralph's insurer will sell the salvage to an
auto junkyard and recover some of its claims payment.
Aimee thought she was correctly following the cooking instructions when she put a
frozen turkey into the turkey fryer, but the resulting fire destroyed her neighbor's wooden
deck. After paying for the deck, the neighbor's insurer attempts to recover from Aimee
by exercising its right of:
salvage
subrogation
reprisal
recovery - answerssubrogation
Subrogation is the insurer's right to recover its claim payment from a party that was
responsible for the loss. The neighbor's insurance policy no doubt includes a
subrogation provision that permits the neighbor's insurer, after paying the claim, to seek
recovery from Aimee.
Martha's home has an insurable value of $500,000, which she has insured for $300,000
under a property insurance policy with an 80 percent coinsurance clause. Ignoring any
deductible that might apply, if the building sustains $20,000 in damage due to a covered
peril, how much will the insurer pay?
tip:
did
_________________________ x loss
should (value x percent) - answers15,000
Because her property is underinsured, the coinsurance clause in Martha's insurance
policy reduces the amount that the insurer will pay for a covered loss. To recover
$20,000 for this loss, she should have purchased limits of at least $400,000 (i.e., 80
percent of the $500,000 building's insurable value).
The standard mortgage (mortgagee) clause in a property insurance policy covering real
property does which of the following?
