CAIB 2 - Chapter 1 Flashcards PDF

# Card Front ## Insurance Terms - Actual Cash Value (ACV) - Replacement Value - Book Value - Co-insurance - Stated Amount Co-insurance - Exclusions (Insurance) - Permission Clauses - Breach of Conditions - Reinstatement Clause - Subrogation - Property Protection Systems - Notification of System Is...

# Card Front ## Insurance Terms - Actual Cash Value (ACV) - Replacement Value - Book Value - Co-insurance - Stated Amount Co-insurance - Exclusions (Insurance) - Permission Clauses - Breach of Conditions - Reinstatement Clause - Subrogation - Property Protection Systems - Notification of System Issues - Cancellation of Monitoring or Maintenance - Premium Adjustment Clause - Verification of Values Clause - Basis of Valuation: Stock (unsold) - Basis of Valuation: Stock (sold) - Tenant's Improvements Valuation - Business Records Valuation (manual) - Business Records Valuation (automated) - Property of Others - Locked Vehicle Warranty ## Other - Identify 3 ways to insure commercial property? - Basic difference between ACV & replacement value - Formula/Cost Approach - Income Approach - True Value to the Owner ## Clauses - **Waiver or Forfeiture of the Stated Amount:** A denial of coverage will not result in a denial of coverage by the insurer - **Salvage:** Provided by the policy when there has been a loss - Pair & Set Clause - Parts Clause # Card Back ## Depreciation - The cost to repair or replace damaged property, minus depreciation. - The cost to repair, replace, or rebuild property, without depreciation. - Original purchase price adjusted for depreciation. - Requirement for insured to carry enough insurance to cover losses. - Clause replacing standard co-insurance, requiring a filed Statement of Value. - Specific risks or property types not covered by the policy. - Allow changes to property without prior approval, within limits. - Non-compliance with policy conditions, potentially leading to claim denial. - Ensures automatic resetting/restarting of insurance after a loss. - Insurer's right to recover losses from a third party. ## Other - Systems like fire extinguishers and alarms to protect property. - Requirement for reporting system defects or interruptions immediately. - Duty to notify insurer about canceled or non-renewed monitoring/maintenance. - Allows adjustments based on actual stock values. - Insurer's right to inspect property after policy ends. - Valued at ACV or repair/replacement costs. - Valued at selling price minus discounts. - Valued by the repair/replacement cost of properly managed improvements. - Valued by reproduction costs of materials/labour. - Valued by reproduction costs of duplicates/originals. - Insurer may pay insured or owner for losses to others' property. - Covers vehicle theft under specific conditions of security. - Mandated rules for fire insurance contracts. - Building/Property limit of insurance. - Single limit of insurance ## Valuation Types - 3. Book Value - ACV takes depreciation into account, where Replacement cost does not - Most commonly used for real estate. The Replacement cost will often put down buildings - Use the net annual rent & multiply it by the capitalization rate to arrive at the ACV amount - The amount of insurance is automatically reinstated immediately following a loss. In other words the insured will have coverage when the value is reinstated immediately following the loss. The amount of the settlement is based on the value of the property lost or damaged, which includes the cost of installation, with the premiums restricted to the value of the lost or damaged part including the cost of installation.