C12: Insurance on Property key terms

A legally recognized relationship to property such that the person benefits from its continued existence and suffers a direct financial loss if it is damaged or destroyed.

The principle that a property claim payment restores the insured to roughly the same financial position held before the loss, never better, subject to policy limits and deductibles.

A valuation method equal to replacement cost of damaged property minus depreciation, reflecting the used or depreciated worth of the item at the time of loss.

The amount needed to repair or rebuild damaged property with new materials of like kind and quality, without any deduction for depreciation, often capped by policy limits.

A policy arrangement in which insurer and insured fix a stated value for insured property in advance, and that amount is paid in full for a total loss without depreciation deduction.

A property policy provision requiring the insured to carry insurance equal to a specified percentage of property value, or claims are reduced proportionally to the shortfall.

The mutual duty of insurer and insured to deal honestly and disclose all material facts relevant to the risk, underpinning the entire insurance contract.

A false or misleading statement of fact, made in an application or renewal, that would have influenced the insurer's decision to accept the risk or set the premium.

The intentional or negligent failure by an applicant to disclose a fact material to the risk, which may allow the insurer to void or rescind the policy.

Mandated policy provisions, such as proof of loss, appraisal, and limitation periods, imposed by insurance law to standardize rights and duties in property contracts.

A formal sworn statement submitted by the insured detailing the date, cause, and amount of loss, supported by documentation, as a condition of payment.

A policy clause allowing either party to demand an independent valuation when they disagree on the amount of loss, separate from any dispute about coverage.

The insurer's right, after paying a claim, to step into the insured's shoes and pursue recovery from the party legally responsible for the loss.

Damaged property or remnants remaining after a loss that retain value; the insurer may take possession and sell them to offset the claim payment.

The amount of each loss the insured must absorb before the insurer pays, reducing premium and discouraging small claims.

A specified amount of loss a large commercial insured funds itself before any coverage layer responds, often paired with excess or umbrella policies.

A policy form that covers only the specific causes of loss listed, such as fire, lightning, explosion, and windstorm, with the burden on the insured to prove the loss fits.

A broad property form covering every cause of loss except those specifically excluded, shifting the burden to the insurer to prove an exclusion applies.

A commercial property form that insures risks of direct physical loss unless excluded, the broadest cause-of-loss option in commercial property programs.

An endorsement adding perils beyond the standard fire policy, historically windstorm, hail, explosion, riot, civil commotion, aircraft, vehicles, and smoke.

Property coverages that accompany or supplement fire insurance, including windstorm, hail, sprinkler leakage, and other extended perils written on similar forms.

A fire burning within its intended confines, such as in a fireplace or furnace, which is generally not covered as a fire loss; contrast with hostile fire.

A fire that escapes its intended container or place of burning, or occurs where fire should not be, and is the type of fire loss insured under fire coverage.

Coverage that reimburses lost net income and continuing expenses when a covered property loss interrupts operations, subject to a restoration period.

The time frame during which business interruption losses are payable, usually from the date of damage until operations resume with reasonable speed.

Coverage for additional costs an insured incurs to keep operating or reopen quickly after a covered loss, such as temporary relocation or expedited repairs.

Coverage for income loss caused by physical damage at a key supplier's or customer's premises, even though the insured's own property is undamaged.

Coverage extension that pays business income and extra expense loss when a government order prohibits access to premises because of nearby covered physical damage.

A single property policy applying one limit and one coinsurance calculation across multiple locations or items, rather than separate scheduled amounts.

Crime coverage reimbursing an employer for money or property stolen by employees acting alone or in collusion, typically written on a discovery basis.

A bond guaranteeing the honesty of named employees, paying the employer for loss caused by dishonest or fraudulent acts of covered persons.

A three-party instrument in which a surety guarantees a principal's performance or obligation to an obligee, with the principal ultimately liable for reimbursement.

Crime coverage for loss caused by someone fraudulently signing or altering checks, drafts, or similar instruments to obtain money or property.

Coverage for damage to pressure vessels, boilers, and mechanical or electrical equipment from sudden breakdown, plus resulting damage to surrounding property.

The modern successor to boiler and machinery coverage, insuring loss from accidental breakdown of covered equipment, including electrical and mechanical failure.

Coverage for deterioration of perishable goods caused by a covered equipment breakdown, such as failure of refrigeration or climate-control systems.

The underwriter's physical or virtual examination of insured premises to evaluate construction, occupancy, protection, and exposure before accepting or rating a risk.

A rating classification reflecting the quality of public fire protection serving a location, typically graded one through ten based on water supply and fire department capability.

Measures such as sprinklers, alarms, housekeeping, and maintenance intended to reduce the frequency or severity of insured losses and improve rating.