CAIB 2 - Key Terms Exam With Complete Solutions

replacement value -ANSWER- Cost to repair, replace or rebuild the lost or damaged property without deduction for depreciation Scheduled Coverage -ANSWER- Coverage for property specifically identified or scheduled on the insurance policy All Property -ANSWER- All property owned by Insured is covered by a single limit of insurance. Subject to 90% co-insurance. (Building, stock and equipment) Tenant's Improvements -ANSWER- Building improvements, alterations and betterment's made at the expense of Insured by a tenant Actual Cash Value -ANSWER- Repair or replace lost or damaged property less the depreciation Reinsurance -ANSWER- Passing off or "ceding" part of the risk assumed to one or more reinsurers Subscription Policy -ANSWER- A type of policy where a group of insurers agree to share in providing coverage. Condition -ANSWER- Something imposed upon an Insured under the policy that requires them to do or not do something. Can be statutory, policy, other or additional. Subrogation -ANSWER- The right of the Insurer to "step into the shoes" or assume the rights of the party who has been compensated. Can sue who the original party could have sued. Warranty -ANSWER- A promise that certain facts are true and will remain so Material Fact -ANSWER- A fact which communicated to the Insurer, would cause reason to either decline insurance or charge a higher premium Fraudulent -ANSWER- To act willfully and with specific intent to deceive or cheat for the purpose of causing financial loss to another or financial gain to ones self Void Contract -ANSWER- A contract with no legal or binding force Fire Resistive -ANSWER- A building that has met minimum standards in hours it will withstand a controlled burn. Generally made of concrete and steel. Non Combustible -ANSWER- A building where all structural members (floor, roof and supports) are constructed of steel, iron, concrete or other non combustible material. Common Hazards -ANSWER- Conditions common to all buildings which influence the potential for loss. Heating, electrical services, detachment, protection and occupancy. Detachment -ANSWER- The proximity of the building insured to other commercially rated buildings. Adverse Selection -ANSWER- When the applicant for insurance are largely those most likely to suffer a loss. Risk classification -ANSWER- The grouping of classifying of risks according to established criteria Soft Market -ANSWER- Intense competition between insurers. Rates tend to be abnormally low. Hard Market -ANSWER- Due to an increase in the loss ratio partly brought on by low rates of a soft market. Hazard -ANSWER- A condition which could cause a peril Physical Hazard -ANSWER- Conditions 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. Clients ability to be good or bad.