CPCU 551 Flashcards – Module 3

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[h] CPCU 551 – Module 3

[q] Abandonment condition

[a] A condition of the Building and Personal Property Coverage Form (BPP) that prohibits the insured from abandoning damaged property to the insurer.  It indicates that making arrangements for the repair or disposal of covered property is the insured’s responsibility.

[q] Appraisal condition

[a] A condition of the BPP that establishes the appraisal process that must be followed if the insured and insurer cannot agree on the value of the property or loss.

[q] Duties in the Event of Loss or Damage condition

[a] A condition of the BPP that describes the duties the insured must perform when a loss occurs.  Duties include:

Notifying the police in certain circumstances.

Giving the insurer prompt notice of the loss.

Taking reasonable steps to protect property.

Permitting the insurer to inspect the property.

Submitting to examination under oath.

Cooperating with the insurer.

Sending a signed proof of loss within 60 days.

[q] Loss Payment condition

[a] A condition of the BPP that provides the insurer with the following options if a covered loss occurs:

Pay the amount of the loss or damage.

Pay the cost of repairing or replacing the damaged property.

Take over the property and pay its agreed or appraised value.

Repair, rebuild, or replace the damaged property with other property.

[q] Recovered Property condition

[a] A condition of the BPP that gives the insured the option of taking recovered property and refunding the loss payment to the insurer.

[q] Vacancy condition

[a] A condition of the BPP that indicates if a building where a loss occurs has been vacant for more than 60 days before the loss, the insurer will not pay if the loss is caused by:

Vandalism.

Sprinkler leakage.

Breakage of building glass.

Water damage.

Theft.

[q] Valuation condition

[a] A condition of the BPP that sets forth rules for determining the value of covered property.  In general, the covered property is valued at its actual cash value.

[q] Coinsurance condition

[a] A condition of the BPP that requires the insured to carry, at a minimum, insurance equal to at least a specified percentage of the insured property’s actual cash value.

[q] Mortgageholder condition

[a] A condition of the BPP that requires the insurer to include a mortgageholder in any loss payment.

[q] Agreed Value coverage

[a] An optional coverage of the BPP that suspends the Coinsurance condition if the insured carries an agreed amount of insurance.

[q] Inflation Guard coverage

[a] An optional coverage of the BPP that annually increases the limit of insurance by a percentage shown in the declarations.

[q] Replacement Cost coverage

[a] An optional coverage of the BPP that insures losses on a replacement cost basis instead of actual cash value.

[q] Extension of Replacement Cost to Personal Property of Others coverage

[a] An optional coverage of the BPP that covers personal property of others at replacement cost.

[q] Concealment, Misrepresentation, or Fraud condition

[a] A commercial property condition that voids coverage if the insured commits fraud, concealment, or misrepresentation.

[q] Control of Property condition

[a] A commercial property condition indicating that coverage will not be affected by acts of persons other than the insured, if those persons are not acting under the control of the insured.

[q] Insurance Under Two or More Coverages condition

[a] A commercial property condition that prevents double recovery when property is covered under two coverage parts.

[q] Legal Action Against Us condition

[a] A commercial property condition that prohibits legal action against the insurer to enforce the policy unless:

The insured has complied with all conditions of the policy.

The action is brought within two years after the date the direct physical loss occurred.

[q] Liberalization condition

[a] A commercial property condition specifying that if the insurer adopts any revision that would broaden coverage, the broader coverage is extended automatically to policies already in effect.

[q] No Benefit to Bailee condition

[a] A commercial property condition that reinforces the insurer’s right of subrogation against a bailee.

[q] Other Insurance condition

[a] A commercial property condition that prescribes the amount of recovery under a policy when another policy is subject to the same provisions as the coverage part.

[q] Indemnity

[a] Restoring an insured to the same position they were in prior to a loss.

[q] Subrogation

[a] The process by which an insurer can, after it has paid a loss, recover the amount paid from a party who caused the loss.

[q] Policy Period, Coverage Territory condition

[a] A commercial property condition that states that coverage begins on the effective date and ends on the expiration date shown in the declarations, and also states that covered property is covered only while it is located within the U.S. or Canada.

[q] Transfer of Rights of Recovery Against Others to Us

[a] A commercial property condition that prohibits the insured from eliminating the insurer’s recovery rights.

[q] Cancellation condition

[a] A common policy condition that permits an insurer to cancel a policy by mailing or delivering written notice of cancellation to the insured.  The notice must be mailed or delivered to the insured at least 10 days prior to the date of cancellation if the cause is nonpayment of premium, or at least 30 days before the date of cancellation for any other reason.

[q] Changes condition

[a] A common policy condition that states the policy constitutes the entire contract between the insurer and the insured.  The policy can be changed only by a written endorsement issued by the insurer.

[q] Examination of Books and Records condition

[a] A common policy condition that gives the insurer the right to examine the insured’s records related to the policy at any time during the policy period and for up to 3 years after the termination of the policy.

[q] Inspections and Surveys condition

[a] A common policy condition that gives the insurer the right, but not the obligation, to inspect the insured’s premises or operations at any reasonable time during the policy period.

[q] Premiums condition

[a] A common policy condition that indicates the first named insured is responsible for paying the policy premium.

[q] Transfer of Rights and Duties condition

[a] A common policy condition that prohibits the insured from transferring any rights under the policy to any other person or organization without written consent from the insurer.

[q] Specific insurance

[a] Insurance that covers each building for a specific limit of insurance.

[q] Blanket insurance

[a] Insurance that uses one limit of insurance to cover either:

One type of property in one or more separately rated buildings.

Two or more types of property in one or more separately rated buildings.

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