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CPCU 551 Chapter 6
Chapter 6 Notes
| Question | Answer |
|---|---|
| What is the National Flood Insurance Program? | A program created by the government acknowledging that flood insurance did not exist at a price consumers were willing to pay. |
| What is WYO? | Write Your Own (A program allowing private insurers to write flood insurance under National Flood Insurance Program. |
| Who is eligible for flood national flood insurance? | Property located in communities participating in the nfip. |
| What two programs does the nfip consist of? | Emergency and Regular Program |
| Define Emergency Program? | Initial phase of nfip property owners can purchase a limited amount of insurance at subsidized rates (lower limites though). |
| Define Regular Program? | Second phase of nfip in which community agrees to adopt flood control and land use restrictions. Higher limits available. |
| Maximum amounts of insurance available for flood insurance? | Regular program is $500k for building and same for personal property in emergency program it is $100k. |
| Name the two forms the nfip insurance policy comes in? | General Property Form, Residential Condominium Building Association Policy |
| Rules associated with the nfip general property form? | Always covers at acv, does not include co-insurance, cannot be written as blanket policy, no loss of use or income included. |
| Name the four coverages in property covered secition of nfip Property Covered section? | A) Building Property B) Personal Property C) Other Coverages D) Increased Cost of Compliance |
| Coverage B (Personal Property) can be purchased to cover either? | Household Personal Property or Other then Household Personal Property (but not both) |
| Coverage C (Other Coverages)includes? | Debris Removal, Loss Avoidance Measures, Pollution Damage |
| Coverage C (Other Coverages) pollution coverage pays for up to how much? | $10k |
| Describe Coverage D (Increased Cost of Compliance)? | Only covers for compliance relative to floodplain management. Limit is $30k |
| What is REBAP? | Residential Condominium Building Association Policy. |
| In what three ways does REBAP differ from the General Property Form? | 1) Higher limit ($250k x # of units), 2) Replacment Cost is used 3) 80% Coinsurance applys |
| What is the ISO Flood Coverage Endorsement? | Insurance available through insureds outside of the mapped flood zones. It is attached to a commercial property policy. |
| How does the endorsement differ from nfip coverage? | Greater variety of property covered, wider range of coverage, can be written to cover at replacement cost of functional valuation. |
| Limits of insurance for flood endorsement (what is difference to other commercial coverage)? | Often subject to separate limit and usually lower then regular limit. |
| Earthquake Insurance (Often limited from $1-$5 million) why are these limits sufficient? | Insureds are often in area of low probability of quakes and damage is often minor, insureds often underestimate their exposure, insureds are unwilling or able to purchase higher limits. |
| Earthquake and Volcanic coverage consider what period of time as one occurrence? | 7 days |
| How are deductibles applied to earthquake coverage? | As a stated percentage of either the limit of insurance applicable, or a percentage of the value of the property. |
| How does earthquake coverage pay for "ensuing loss" ie a fire caused by an earthquake? | The most it will pay is the limit on the other covered peril (ie fire). |
| Define a "Difference In Conditions Policy"? | Policy that covers all risks basis to fill in gaps in regular commercial coverage. |
| List the advantages of purchasing Difference in Conditions Insurance? | Cost Effective, no coinsurance, easy to modify, broader coverage |
| List the dis-advantages of purchasing Difference in Conditions Insurance? | Market is Limited, Not standardized so they could be interpreted differently by the court, Minimum Premium amounts may make it too expensive for smaller insureds. |
| List the 3 types of speciality property policies? | Output Policies, Insurance for Highly Protected Risks, Layered Property Insurance. |
| Define Highly Protected Risk? | A large property that employees higher standards of loss control in exchange for broader coverage. Generally not cost effective to pay for the level of loss control for smaller properties. |
| Define Layered Property Coverage? | Buying property coverage in layers with excess levels so one carrier may cover up to 1 million, the next coverage over $1 million. |
| Attachment Point Defined? | Dollar amount at which a reinsurer respondes to loss. |
Created by:
GARYSCHILD
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