Term
| Define: Personal Property Insurance |
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Definition
| Insurance policies provided for property having a personal or non-business use. |
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Term
| Define: Commercial Property Insurance |
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Definition
| Insurance policies provided for property having a business use. |
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Term
| State the main difference between "named perils" policies and the broader "all risks" policies provided by most insurers. |
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Definition
"Named perils" policies only cover losses caused by perils named in the policy.
Broader "all risks" policies insure against all risks of direct physical loss or damage subject to policy conditions and exclusions. |
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Term
| Identify the types of property insured by policies of Personal Property Insurance. |
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Definition
-Dwelling building
-Detached private structures
-Personal property |
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Term
| Identify the types of property insured by policies of Commercial Property Insurance. |
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Definition
-Building
-Stock
-Equipment |
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Term
Property policies insure "direct damage only. Explain and provide examples of:
i) direct damage
ii) indirect damage |
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Definition
i) Direct Damage is when the object of insurance is damaged or destroyed by an insured peril. Ex: physical damage caused by firefighters' axes, smoke and heat damage to adjacent storage shed.
ii) Indirect Damage is when the other losses arise as a result of direct losses. Ex: Loss of food in a freezer when the electrical motor is damages by a lighning strike, loss of profit to the business after a tornado destroys the building. |
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Term
Insurance policies may contain conditions and warranties.
Identify two types of "conditions" and briefly describe each. |
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Definition
a) Statutory Condition - Established in statute and legally binding on all parties.
Policy Condition - Specifically developed by insurers to deal with important coverage areas. |
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Term
| Exclusions are common to all property insurance policies. Provide two reasons why insurance policies contain exclusions. |
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Definition
Covering certain catastrophic losses, such as War, would jeopardize the solvency of insurers.
Wear and tear is a certainty, and only losses that MAY occur are insurable. |
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