CISR Personal Residential flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Insurable Interest

A financial stake in property such that loss causes the insured economic harm. Required at time of loss for property coverage; without it, no valid claim exists.

Actual Cash Value

Replacement cost minus depreciation. Used to settle losses where replacement cost coverage is absent or where the item is not scheduled for full value.

Replacement Cost

The amount needed to repair or replace damaged property with new property of like kind and quality, without deduction for depreciation, subject to policy limits.

Coinsurance Clause

A provision requiring the insured to carry a minimum percentage of replacement cost, often 80%. Partial losses are reduced proportionally when the limit falls short.

Deductible

The amount the insured pays before the insurer responds to a loss. Applied per occurrence unless the policy states otherwise, such as percentage wind deductibles.

Mortgagee Clause

Gives the lender the right to receive loss payment and notice of cancellation or nonrenewal, and protects the lender even if the insured's acts prejudice coverage.

Vacancy Versus Unoccupancy

Vacancy means no people and no furnishings; unoccupancy means furnishings remain but no one resides there. Each triggers different coverage restrictions.

Peril Versus Hazard

A peril is the cause of loss, such as fire or wind. A hazard is a condition increasing the chance of loss, such as faulty wiring.

Coverage A Dwelling

Covers the residence structure and attached structures such as garages and decks, on the basis stated in the form, usually replacement cost.

Coverage B Other Structures

Covers detached structures such as fences, sheds, and detached garages. Typically limited to 10% of the Coverage A limit unless increased.

Coverage C Personal Property

Covers household contents and personal belongings anywhere in the world, subject to special sublimits and the loss settlement basis stated in the form.

Coverage D Loss of Use

Pays additional living expenses and fair rental value when a covered peril makes the residence uninhabitable, usually capped at 30% of Coverage A.

Special Limits of Liability

Caps on categories such as money, jewelry, silverware, firearms, and securities. Higher limits require scheduling or endorsement.

Open Perils Coverage

Pays for all risks of direct physical loss except those specifically excluded. Contrasts with named perils forms that list covered causes of loss.

Named Perils Coverage

Pays only for causes of loss listed in the policy, such as fire, lightning, windstorm, hail, and theft. The burden is on the insured to show a listed peril.

Ordinance or Law Exclusion

Excludes the extra cost of rebuilding to current code requirements. Coverage can be added by endorsement to restore conforming construction.

Coverage E Personal Liability

Pays sums the insured is legally obligated to pay for bodily injury or property damage to others, plus defense costs, up to the occurrence limit.

Coverage F Medical Payments

Pays reasonable medical expenses to others injured on the premises or by the insured's activities, regardless of fault, within a set time period.

Defense Costs

Legal expenses the insurer pays to defend a covered liability claim. Under homeowners forms these are generally paid in addition to the Coverage E limit.

Duties After Loss

Conditions the insured must meet, including prompt notice, proof of loss, protection of property, and cooperation with the insurer's investigation.

Appraisal Condition

A dispute resolution method for the amount of loss, not coverage. Each party names an appraiser; an umpire resolves differences between them.

Cancellation Provisions

Rules governing when the insurer may cancel and how much notice is required. Short-rate applies for underwriting or nonpayment reasons; pro-rata otherwise.

Personal Umbrella Policy

Excess liability coverage above homeowners and auto limits. Usually requires maintaining specified underlying limits and may drop down for some losses.

HO-3 Special Form

Covers the dwelling and other structures on an open perils basis and personal property on a named perils basis. Common form for owner-occupied homes.

HO-5 Comprehensive Form

Covers both the dwelling and personal property on an open perils basis. Broader than HO-3 and typically used for higher-value homes.

HO-4 Renters Form

Covers personal property, loss of use, and liability for tenants. Does not cover the building, which the landlord insures.

HO-6 Condominium Form

Covers personal property, liability, and limited building items such as interior walls, fixtures, and improvements within the unit.

HO-8 Modified Form

Designed for older homes where replacement cost exceeds market value. Settles losses on a functional replacement cost or repair basis.

Flood Exclusion

Homeowners policies exclude surface water, waves, and mudslide. Flood coverage must be purchased separately, often through the NFIP or a private carrier.

Scheduled Personal Property

An endorsement listing specific items such as jewelry or art for higher limits, broader perils, and often no deductible.

Personal Injury Coverage

An endorsement covering libel, slander, and invasion of privacy. Standard Coverage E covers only bodily injury and property damage.

Declarations Page

The policy summary showing named insureds, policy period, limits, deductibles, and forms. It controls when it conflicts with other policy language.