RMIN 5100 Test 3

transfer of risk from a primary insurer to a reinsurer (example: AIG to SwissRE)

transfer of risk from a reinsurer to another reinsurer (example: SwissRE to GenRE)

specific % of premiums that must be kept readily available to pay out claims/ liabilities

80%, 90%, 100%

=Rate*Limit

rate decreases, but this is offset by the increase in the amount of required insurance, which results in higher premiums

All else equal, premiums will decrease as CI requirement increases; however, there is less 'wiggle room' if the building increases in value, and there is most likely a guranteed penalty with 100% CI clauses

underinsurance; a business only buying insurance for its maximum probable loss

=Replacement Cost- Actual Depreciation

Note: NOT Accounting Depreciation

lower premiums bc a business is buying less insurance

higher premiums bc business is buying more insurance/ have higher risks/ are more likely to have a loss

less than $2500, only covers actual building itself

insurer will pay selling price of the property (which may or may not be >ACV); this provides some BIC (bc covering a lost sale)

insurer will pay for term installation (to replace broken glass) if required by ordinance/ law

• 1. If tenant replaces the property, he or she gets ACV
• 2. If tenant doesn't replace/ rebuild, pro-rata rate is enforced:
• I=(yrs remaining on lease/ total years of lease)*original cost

insurer will pay cost to recreate the lost data (but still subject to the $2500 limit depending on data type)

• Notice of Loss
• Police Report
• Preservation of Property
• Inventory and Inspection
• Proof of Loss
• Examination Under Oath

usually a check is written (for ACV) to the insured, which doesn't necessarily have to be used to replace the loss; however there are 3 other options

• 1. Pay Replacement Cost (higher than ACV)
• 2. Insurer pays to restore property; buys it from insured, repairs it, sells it at a later date (usually occurs when 2 sides cannot agree)
• 3. Insurer goes in and rebuilds building/ replaces property itself (to prevent fraud)

insured must notify the insurer of any recovered/ slavaged property (to prevent over indemnification)

• Tenant: only applies to rented space; 60+ days of not enough property for general customer operations
• Owner:60+ days of <31% occupation; if building is 31%+ occupied, it is NOT

• 1. Vandalism
• 2. Building Glass Breakage
• 3. Sprinkler Leakage
• 4. Water Damage
• 5. Theft
• 6. Attempted Theft

15%

insurer pays MH to the extent of its financial interest in the property

• 1)Fire
• 2)Lightning
• 3)Explosion
• 4)Windstorm or hail
• 5)Smoke
• 6)Aircraft or vehicles
• 7)Riot or civil commotion
• 8)Vandalism
• 9)Sprinkler leakage
• 10)Sinkhole collapse
• 11)Volcanic action
• 12)Fungus (at additional charge for limited coverage)

• 1)Falling objects
• 2)Weight of snow, ice, sleet
• 3)Water damage
• 4)Collapse (at additional charge)

fire that does not stay contained/ where it is supposed to be which causes a loss; usually accidental

fire that is intentionally started and stays in a particular area (e.g. a fireplace)

exterior damage must occure before interior damage

man made subsidence (i.e. from mining, etc) is excluded

steam boiler losses are excluded

Theft

volcanic eruption damages (earth movements) are excluded

• 1. Lead in Paragraph
• 2. Ordinance or Law
• 3. Earth Movement
• 4. Governmental Action
• 5. Nuclear Hazard
• 6. Utility Services (off premises)
• 7. War and Military Action
• 8. Water-damage from naturally occuring water sources
• 9. Fungus, Wet Rot, Dry Rot, Bacteria (Mold)
• 10. Terrorism

• 1. Artificially Generated Electric Current
• 2. Explosion of Steam Boilers
• 3. Mechanical Breakdown
• 4. Neglect
• 5. Limitation on Loss of Animals (only paid if animal dies)

typically provided broader coverage; only lists exclusions to the policy, not named perils like the other types (covers "everything but...")

• 1. Agreement simply provides coverage for risks of direct physical loss to covered property.
• 2. A cause of loss not specifically excluded is covered.
• 3. Shifts burden of proof from insured to the insurer for disagreements about covered perils.
• 4. Provides broader coverage.

• 1. Ordinance or Law
• 2. Earth Movement
• 3. Governmental Action
• 4. Nuclear Hazard
• 5. Utility Services
• 6. War and Military Action
• 7. Water
• 8. Fungus, Wet Rot, Dry Rot, Bacteria
• 9. Artificially Generated Electrical Current
• 10. Steam Boiler Explosion
• 11. Mechanical Breakdown
• 12. Neglect