CAIB 2 Terms and Definitions

CAIB 2 Terms and Definitions Scheduled Coverage - Answer-refers to policy on which coverage is provided only on that property which is specifically identified or scheduled All Property - Answer-refers to policy used to insure building, equipment and stock under a single limit of Insurance Tenants Improvement - Answer-building improvements, alteration and betterments made at expense of or purchased by the insured to a building occupied by the insured and which are not otherwise insured, provided the insured is not actual owner of such building Actual Cash Value - Answer-the replacement or repair cost less depreciation Replacement Value - Answer-represents the costs to repair, replace or rebuild the lost or damaged property without deduction for depreciation Reinsurance - Answer-involves an insurer to cede part of the risk it has assumed to one or more other insurer Subscription - Answer-an insurance policy under which a group of insurers has agreed to participate in providing policy insurance coverages Condition - Answer-is something that imposed by the insurer that requires the insured to do or not to do something Subrogation - Answer-refers to the right of the insurer to "step into the shoes" of the party whom it has compensated and sue any party whom the compensated party could have sued Warranty - Answer-is a promise that the certain facts are as they are represented to be and that they will remain so. Material Fact - Answer-a fact which if communicated to the Insurer would effect it ether to decline the insurance all together, or not accept it unless higher premium is paid Fraudulent - Answer-to act wilfully and with specific intent to deceive or cheat Void contract - Answer-is the one which has no "legal or binding force" and as such , "is incapable of being enforced by law" Fire Resistive - Answer-building which has met minimum standards in terms of hours it will withstand a specific, carefully controlled fire Non-combustible - Answer-all structural members including floors, roofs and their supports are constructed of steel, iron, concrete or other non-combustible materials Common Hazards - Answer-conditions common to all building which influence their potential for loss Detachment - Answer-refers to the proximity of the building insured or containing the property insured to other commercially rated buildings Adverse Selection - Answer-occurs when the applicants for insurance are largely those most likely to suffer a loss Risk Classification - Answer-refers to the grouping or classifying of risks according to established criteria, which in large part, is based on their probability for loss as a class Soft Market - Answer-characterized by intense competition between insurers. As a result, rates tend to be low Hard Market - Answer-occurs when low profits margins force out of the competition, as a result, insurers use a more disciplined underwriting approach which gives to the insured little or nothing in the way of rate discounts Hazard - Answer-is a condition which may cause a peril to occur Physical Hazard - Answer-a condition relating to the use of tangible property which could cause a peril to occur Moral Hazard - Answer-subjective characteristics of the applicant that could cause a peril to occur Morale Hazard - Answer-deals with the attitude of the client Accommodation Business - Answer-business which is marginal or substandard but which the insurers agrees to accept as a favour or accommodation to the broker Supporting Business - Answer-the existence of other insurance policies the applicant has with the same insurer Centrifugal Force - Answer-the inertia of a body that tends to move it away from the centre around which it revolves Mechanical Breakdown - Answer-a failure in the working mechanism of the machinery. A functional defect in the moving parts of the equipment which causes the latter to cease functioning or to function improperly. Electrical Breakdown - Answer-a failure in the electrical mechanism of the machinery, appliance or device Trade Losses - Answer-the types of losses which might be expected as a part of the every day operation of a business Wear & tear - Answer-deterioration or depreciation, i.e value by ordinary and reasonable use of the subject matter Gradual Deterioration - Answer-the deterioration of an object which arises naturally over time Latent Defect - Answer-a hidden or concealed defect, one which could not be discovered by reasonable and customary inspection, one not apparent in face of goods, product, document, etc. Mysterious Disappea