Definition 1 of 15
comprised of buildings, structures and fixtures that are tangible. Real property can be seen.
Direct loss is
Replacement Cost:
Personal Property
Real property is
Definition 2 of 15
loss or damage as a direct result of a covered cause of loss.
Example:
A building that burns because of a fire (a covered peril) illustrates a direct loss. The building
was directly affected by the fire.
for the Insured?
Actual Cash Value (ACV):
Direct loss is
Indirect Loss
Definition 3 of 15
The insured's personal property is also known as Your Business Personal Property. Some of the
commercial property coverage forms define what is covered as business personal property. In
general, this includes most of the equipment, supplies, stock, machinery, etc., and material used
to operate the named insured's business.
Office equipment is an example of Your Business Personal Property
Insurable Interest
Real Estate
Other Structures
Personal Property
,Definition 4 of 15
Owner: Business owners stand to lose their investment in their building and other property as
well as their source of income.
Mortgage or Lien Holder: The mortgage or lien holder has an insurable interest when there is
an unpaid balance on the property loan.
Lessees or Tenants: When tenants sign leases, they are granted the right to occupy the
designated premises for a stipulated period of time. This right-to-use creates an insurable
interest for the tenant.
Signers of Contractual Agreements: Certain contracts, such as those signed when leasing
phone systems, copy machines or even entire buildings, may require the lessee to provide
direct damage insurance on the leased property. This contractual arrangement creates an
insurable interest.
Subrogation
Personal Property
Indemnity
Insurable Interest
Definition 5 of 15
Land is real property, but it is generally not the subject of insurance.
Buildings are real property. They have walls and a roof. You can probably envision many types
of buildings, ranging from a small one-story office to a skyscraper.
Structures. A structure is any construction, including buildings. However, examples of structures
that are not buildings include a 3-sided lumber yard storage shed or a gazebo. Another
example can be seen in the picture to the left. A stadium is an example of a structure.
Outdoor Fixtures. These are man-made objects, other than buildings or structures, that are
attached to land in some manner
Give examples of Real Property
Functional Replacement Cost:
What is Coinsurance?
Draw the coinsurance formula
, Definition 6 of 15
What should they have? replacement x ??%= amount they should have. If they have it great .
If not ...
what % of the amount are they at ?
amount they have divided by replacement
does over should x loss= the settlement amount
Draw the coinsurance formula
What is coinsurance?
Insurable interest
Personal property
Definition 7 of 15
is an insurance-to- value requirement wherein the insurer stipulates that the insured must carry
an amount of insurance equal to a specified percentage of the value of the property.
These specified percentages may be 80%, 90% or 100%, and either Actual Cash Value or
Replacement Cost may be used in valuation of the property. As long as the insured carries the
required amount of insurance, there is no penalty. If the insured carries less than the required
amount of insurance, a penalty applies. This means that the insured will not collect the full
amount of the loss.
Insurable Interest
Give examples of Real Property
Draw the coinsurance formula
What is Coinsurance?
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