ACE NC STATE EXAM: LATEST QUESTIONS AND ANSWERS
AND STEP BY STEP + TIPS.
Blanket coverage
a single policy on the insured's property for 1) more than one type of property in the
same location, 2) the same type of property in two or more locations, 3) two or more
types of property in two or more different locations. Ex- a contractor may have a variety
of small tools at a job sites, instead each tool individuals, he sinsures all the tools under
one blanket coverage policy.
Property loss valuation
property insurance policies determine the method of payment based on how the
property with comparable new property minus depreciation and obsolescence
Actual cash value
ACV, is the cost of replacing damaged or destroyed property with comparable new
property minus depreciation and obsolescence. Ex- if an insured was carrying more
insurance coverage than the actual loss, the insurer is required to refund the overpaid
premium with an addition of 6% interest per year
Replacement cost
is the actual cost of replacing property without a deduction for depreciation or
obsolescence
Functional replacement cost
is the amount needed to put a building back to the functional manner before the loss
occurred, ex- if a dwelling had plaster walls before the loss, the insurer may use
sheetrock to replace the damaged plaster walls
Salvage value
is the amount for which an insurance company can sell recovered property after paying
damages to the insured. Recovered property can help an insurer reduce the overall loss
on a claim. Property insurance contracts give the insurer the right to the damaged
property after a claim has been settled
Mortgagee
,is the party holding a mortgage or lien on a real property. Mortgage lenders and banks
are examples of mortgagees. Mortgagees are considered additional un-named insureds
in the policy.
Loss payee
is the party to whom the insurance company pays in the event of a loss. Property
policies have a loss payable clause that protects the mortgagee. The loss payable
clause authorizes payment to persons with insurable interest in the property other than
the named insured. Ex- a person own a property for which FBC bank extends financing.
Due to an unexpected accident the property catches fire and a claim is filed for the
damages. As a result the claim check released by the insurance company will be
equally distributed between the insured and the FBC bank. The bank is both the
mortgagee and loss payee in this example because it is also entitled to the amount of a
loss or claim.
Misrepresentation
(false pretense with intent to defraud) is the failure to disclose any material facts about
the risk. Failure to disclose the facts will allow the insurance company the right to cancel
the policy
Breach of warranty
is a violation of an agreement between a seller and buyer in reference to the condition,
content, quality or title of an item sold. In the insurance policy, a warranty is a provision
that pledges a condition does or will exist at some point in the future. Ex- commercial
property policy may contain a warranty that a sprinkler system will be maintained in the
building covered. A breach of warranty is when the insured violates the pledge by no
longer having a functioning sprinkler system.
Concealment
is the intention to withhold relative information about the risk from the insurance
company. If the fats are not known by the insurance company, it gives the insurer
ground to cancel a contract and not pay a claim.
Negligence
is the failure to act with legally required degree of care for other resulting in bodily harm
or property loss. Is the basis for payment of liability claims.
, Contributory negligence
if an injured party even slightly contributed to the loss, the injured party cannot recover,
NC definition of negligence
Comparative negligence
the injured party may collect even if he or she had some part in the negligence
Liability
is a condition enforced by the courts to do something bound under law or in a contract.
Insurance contract liability is the result of the acts taken or not taken by the insured that
may cause harm to the 3rd parties. Ex- a person operating a motor vehicle has a duty
not to damage another person or their property. If the operator does harm, he or she
has liability for the loss.
Supplementary payments
payments from the insurance companies for costs such as court cost and attorney's
fees. Ex- a liability case for an auto accident causing $50,000 in bodily injury goes to
court because the insurance company is contesting the claim and incurs legal fees
costing $10,000. The insurance company may be liable for the $50,000 depending on
judgement but they will also pay the $10,000 through the supplementary payments
provision in the policy.
Bodily injury
is the temporary or permanent physical harm to a person. Injury, disease or death that
is caused by an insured to a third party.
Property damage
damage or destruction to real and/or personal property
Personal injury
damage through libel, slander, false arrest, defamation of character and invasion of
privacy that could lead to a financial judgement against a person. Most liability
insurance contracts do not cover "personal injury." Homeowners policy will not cover
personal injury, but a person umbrella policy will.
Accident
an unexpected, unforeseen, and unintended event (not under the control of the insured)
resulting in bodily injury and property damage
AND STEP BY STEP + TIPS.
Blanket coverage
a single policy on the insured's property for 1) more than one type of property in the
same location, 2) the same type of property in two or more locations, 3) two or more
types of property in two or more different locations. Ex- a contractor may have a variety
of small tools at a job sites, instead each tool individuals, he sinsures all the tools under
one blanket coverage policy.
Property loss valuation
property insurance policies determine the method of payment based on how the
property with comparable new property minus depreciation and obsolescence
Actual cash value
ACV, is the cost of replacing damaged or destroyed property with comparable new
property minus depreciation and obsolescence. Ex- if an insured was carrying more
insurance coverage than the actual loss, the insurer is required to refund the overpaid
premium with an addition of 6% interest per year
Replacement cost
is the actual cost of replacing property without a deduction for depreciation or
obsolescence
Functional replacement cost
is the amount needed to put a building back to the functional manner before the loss
occurred, ex- if a dwelling had plaster walls before the loss, the insurer may use
sheetrock to replace the damaged plaster walls
Salvage value
is the amount for which an insurance company can sell recovered property after paying
damages to the insured. Recovered property can help an insurer reduce the overall loss
on a claim. Property insurance contracts give the insurer the right to the damaged
property after a claim has been settled
Mortgagee
,is the party holding a mortgage or lien on a real property. Mortgage lenders and banks
are examples of mortgagees. Mortgagees are considered additional un-named insureds
in the policy.
Loss payee
is the party to whom the insurance company pays in the event of a loss. Property
policies have a loss payable clause that protects the mortgagee. The loss payable
clause authorizes payment to persons with insurable interest in the property other than
the named insured. Ex- a person own a property for which FBC bank extends financing.
Due to an unexpected accident the property catches fire and a claim is filed for the
damages. As a result the claim check released by the insurance company will be
equally distributed between the insured and the FBC bank. The bank is both the
mortgagee and loss payee in this example because it is also entitled to the amount of a
loss or claim.
Misrepresentation
(false pretense with intent to defraud) is the failure to disclose any material facts about
the risk. Failure to disclose the facts will allow the insurance company the right to cancel
the policy
Breach of warranty
is a violation of an agreement between a seller and buyer in reference to the condition,
content, quality or title of an item sold. In the insurance policy, a warranty is a provision
that pledges a condition does or will exist at some point in the future. Ex- commercial
property policy may contain a warranty that a sprinkler system will be maintained in the
building covered. A breach of warranty is when the insured violates the pledge by no
longer having a functioning sprinkler system.
Concealment
is the intention to withhold relative information about the risk from the insurance
company. If the fats are not known by the insurance company, it gives the insurer
ground to cancel a contract and not pay a claim.
Negligence
is the failure to act with legally required degree of care for other resulting in bodily harm
or property loss. Is the basis for payment of liability claims.
, Contributory negligence
if an injured party even slightly contributed to the loss, the injured party cannot recover,
NC definition of negligence
Comparative negligence
the injured party may collect even if he or she had some part in the negligence
Liability
is a condition enforced by the courts to do something bound under law or in a contract.
Insurance contract liability is the result of the acts taken or not taken by the insured that
may cause harm to the 3rd parties. Ex- a person operating a motor vehicle has a duty
not to damage another person or their property. If the operator does harm, he or she
has liability for the loss.
Supplementary payments
payments from the insurance companies for costs such as court cost and attorney's
fees. Ex- a liability case for an auto accident causing $50,000 in bodily injury goes to
court because the insurance company is contesting the claim and incurs legal fees
costing $10,000. The insurance company may be liable for the $50,000 depending on
judgement but they will also pay the $10,000 through the supplementary payments
provision in the policy.
Bodily injury
is the temporary or permanent physical harm to a person. Injury, disease or death that
is caused by an insured to a third party.
Property damage
damage or destruction to real and/or personal property
Personal injury
damage through libel, slander, false arrest, defamation of character and invasion of
privacy that could lead to a financial judgement against a person. Most liability
insurance contracts do not cover "personal injury." Homeowners policy will not cover
personal injury, but a person umbrella policy will.
Accident
an unexpected, unforeseen, and unintended event (not under the control of the insured)
resulting in bodily injury and property damage
