C12 - Insurance on Property – Midterm Complete Solutions

C12 - Insurance on Property – Midterm Complete Solutions Defining Property Insurance ️-Protection against loss/damage to property -First party insurance -Premium exchanged for protection -Fortuitous losses (sudden and accidental) -Insurable interest -Intangible product Real vs Personal Property ️R: buildings or land (can't be moved) P: office desk or machinery (can be transported) Promise that Property Insurance is based on ️-Insured promise to pay a premium -Insurers promise to protect and indemnify Five elements of an Insurance Contract ️1. Agreement (offer and acceptance) 2. Capacity to contract 3. Consideration 4. Genuine intent 5. Legality Additional Features of Insurance Contract ️1. Insurable interest 2. Indemnity 3. Principle of utmost good faith Insurance Policy ️-Formal agreement between parties -Outlines the terms and conditions -One year term -Claims 2 Types of Classes of Insurance ️1. Personal (habitational) 2. Commercial (building, equipment, stock) Classes of Insurance ️1. EBI - large machinery 2. Crop - growing of crops 3. Aviation - aircrafts 4. Earthquake 5. Flood 6. Marine - goods in transit 7. Builders risk - COC Elements of the Property Policy ️1. Name of insurer / insured 2. Names to whom the insurance money is payable 3. Premium 4. Subject matter of insurance 5. Indemnity for which insurer may become liable 6. Events / perils of which liability will accrue 7. Effective / expiry date Deductible definition ️An agreed, specified amount that the insured must pay on a claim before the insurance company will cover the rest of the claim Evolution of Property Insurance ️-First insurance policy = fire policy. It covered fire, lightning and limited explosion -Then it evolved into additional perils. So insurance against named perils or all risks Purpose of Exclusions ️-Specific circumstances -Temporary or permanent -May exclude part of the coverage -Restricts The 2 Groups of Basic Fire Policy Exclusions ️1. Exclusions of legislative considerations 2. Exclusions for underwriting and rating considerations Group 1: Exclusions for Legislative Considerations ️1. Electrical devices 2. Application of heat 3. War risks 4. Nuclear incident (exclusions also applies to radioactive material) Group 2: Exclusions for Underwriting and Rating Considerations ️1. Excluded property 2. Alterations and additions exclusion 3. Vacancy, unoccupancy, or disuse exclusion 4. Volatile substances 5. By-laws exclusion The Basic Fire Policy: Statutory Conditions ️Legislation stipulates: