Dohrn 2024 Illinois Property Review Supplement - PDF

An Illinois Certified Course Provider Since 1987 Phone: Office: 847-455-1130 Fax: 847-455-1153 Website: www.dohrnit.com Dohrn Insurance Training, Inc. 8517 Grand Avenue Pre-licensing and Ethics Classes and CE Self-Study...

An Illinois Certified Course Provider Since 1987 Phone: Office: 847-455-1130 Fax: 847-455-1153 Website: www.dohrnit.com Dohrn Insurance Training, Inc. 8517 Grand Avenue Pre-licensing and Ethics Classes and CE Self-Study River Grove IL 60171 Property Review Supplement-2024 This Review Supplement consists of: 1) “Bullet Points” of key definition and contract concepts likely to be included in state exam testing. They are offered in the form of condensed materials as a quick study reference; 2) Dohrn’s condensed Insurance Law including Quick Reference of Time Periods and Dollar Amounts 3) “Exam Review Questions” from our Exclusive Dohrn SimX Prelicensing Simulated Online Exam question database to help you review some selected key material points in class. Table of Contents Property & Casualty Terms & Provisions (Same on Both Exams) ……. 2 - 4 Property Only Terms & Provisions …………...……………………………. 5 - 7 Property Policy Types at a Glance …………………………………………. 8 -21 General Law Quick Reference Page …………….………………………….22 Illinois Property AND Casualty Law.………..……………….……………. 23-25 Illinois Property ONLY Law.…………………………………….……………. 25-26 Dohrn SimX Review Exam: Property Part 1……………………………… 27-30 Dohrn SimX Review Exam: Property Part 2………………………….….. 31-32 ANSWER KEYS FOR DOHRN Review Exam ……………….… … 33 DOHRN SimX Access Instructions……………………………………..……34 DOHRN Office Hours & Contact Information…………………………….35 © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated  2 I) Property Terms and Related Concepts /AND/ II) Property Policy Provisions and Contract law These two sections are short but crucial to passing your state exams. Property and Casualty have many terms and policy provisions in common and there are many terms and policy provisions that apply to property only while there are some others that apply to casualty only. We present them below in that format: l BOTH PROPERTY AND CASUALTY - Terms and Provisions l PROPERTY ONLY - Terms and Provisions Your Illinois state exam weigh`s Terms and Provisions as follows: PROPERTY: l OUT 50 TOTAL QUESTIONS TERMS & PROVISIONS = 25 QUESTIONS or 50% lOUT 50 TOTAL QUESTIONS POLICY TYPES = 25 QUESTIONS or 50% PROPERTY AND CASUALTY (BOTH) - Terms and Provisions l Risk - is strictly defined as an uncertainty regarding financial loss èPure risk = chance of loss without a possibility èSpeculative risk = chance of loss and gain. to gain a profit from that loss. ONLY risks which are insurable are pure risks. l Insurable Interest – Must have it to own insurance. Insurance Interest exists as to any individual when damage or destruction of property will result in a financial loss to that individual. In a property or casualty contract, insurable interest must exist at the time of loss. l Hazard – is a possibility which will give an increase to the chance that a peril will occur. è A hazard makes it more likely that a peril (loss) will occur due to actually happening. THREE TYPES 1) Morale hazard - depends upon the subjective makeup of the insured and can arise from the state of mind related to indifference of the insured to the loss that may occur. 2) Physical hazards are conditions left in a manner making a loss more likely to occur. 3) Moral hazards – Dishonesty or bad habits of the insured make the chance for loss greater. l Actual Cash Value (ACV) = replacement cost minus depreciation (use or wear and tear). ACV reinforces the principal of indemnification. l Law of Large Numbers - insurance companies can spread risk among a large number of insureds who have similar exposures to loss making the risk of loss predictable which allows premium rating. The greater the number of insured in the same risk pool, the closer the actual loses will be to those predicted. l Indemnity - All property insurance contracts are contracts of indemnity and their purpose is to make the insured "WHOLE" again. èIndemnity is designed to put the insured in substantially the same financial position that he or she was in prior to the occurrence of loss. èThe principal of indemnity also stands for the fact that an insured shall not profit or gain by their loss. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  3 BOTH PROPERTY AND CASUALTY - Terms and Provisions continued l Accident - is an unexpected, unintended and sudden event. An accident is unforeseen. An accident is always an occurrence but not every occurrence is an accident. l Occurrence - a continuous or repeated exposure to conditions that results in injury or loss, it is not as time specific as an accident. Occurrence includes BOTH Accidents and continuous/repeated exposure. l Cancellation- To cancel means to end the contract early and both parties may cancel. l Nonrenewal - The contract is not canceled but instead it goes to the termination point listed in the declarations at which point but the insurer has decided the policy will not be continued. Negligence Liability – when one party harms another they must pay “damages” to the injured party. èAbsolute- result of a hazardous activity, no negligence need be proved; è Strict – product liability; è Strict – Associated with product liability when a product is defective and fails and injures the customer who used it properly, the business is liable without regard to fault or negligence. è Vicarious – “respondeat superior” or let the master answer for negligence of their servants. l Negligence – failure to provide care that a reasonable or prudent person would have supplied given the same or similar circumstances. It is carelessness but not intentional. l Binders – is a temporary insurance contract issued by a carrier or agent that places coverage in effect prior to issuance of the policy. Binders can be verbal or written. There are 4 elements, or main parts that make up an Insurance contract –D-I-C-E 1 lDeclarations – USUALLY FIRST POLICY PAGE, it contains the BASIC UNDERWRITING INFORMATION- Name of Insured, address, amount of coverage, premiums, describes the insured locations and names the parties to the contract. It lists the parties to contract, the date coverage begins and ends, it describes the coverage provided. and it indicates whether open or name perils. 2 l Insuring Clause or Agreement- The promises between the two parties are exchanged (insured begins and promises toends, it describes pay premium on the timecoverage and thatprovided they toldand theittruth in the application and carrier agrees to pay loss under the terms of this clause and provide fair underwriting and pricing. and it indicates whether open or name perils. 3 l Conditions - describes the rights and duties of the parties to which BOTH PARTIES ARE BOUND. It includes the clauses/provisions of the policy such as Other Insurance, Subrogation, Assignment, Cancellation, Nonrenewal, Notice of Claim, ETC. 4 l Exclusions /Limitations- limit the scope of coverage as to people, perils and property. They tells us what IS NOT COVERED. l Duties of the Insured when a loss occurs - "reasonable compliance" in these areas: 1) Immediate Notice of loss 2) Duty to Prevent Further Loss 3) Call the Police when a violation of law occurs –theft loss 4) Damaged and Undamaged Property must be separated 5) Inventory the loss 6) Claim Verification or Proof of Loss (within 60 days) © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  4 BOTH PROPERTY AND CASUALTY - Terms and Provisions continued l Proof of loss is required near the end of the claim process and it must be in writing. It is a sworn statement made by the insured to the insurer before any loss can be paid. l Notice of Claim (notice of loss provision) - the insured must take certain steps in the event of loss or occurrence in order to lead to a filing a successful claim The insured is bound to notify the insurance company of loss as soon as reasonably possible. The insured may be required to notify the police if a violation of the law has occurred (i.e. burglary or theft). l Other Insurance (Pro Rata Liability) Pro Rata Liability is a formula for indemnification when coverage by more than one company is effect on the same property at the time of a loss. The loss is shared by the various carriers in the same proportions as their respective policy limits. l Subrogation (also called Transfer of Recovery Rights) the insurance company, by assignment from the insured as stipulated in the insurance contract has the right to recover from third parties any recoverable loss which was reimbursed by the insurance company to the insured during the settlement of the claim. Subrogation is a concept related to indemnity, or the prevention of the insured to profit, in this case, from collecting for sustained damages twice. l Warranty is a fact which is sworn to by a party; stronger statement than a representation. l Representations are considered to be a statement of fact to the best of one’s knowledge l Concealment is the failure to disclose a known material fact, which if intentional, will void a contract. l Fair Credit Reporting Act - administered by the Federal trade Commission Helps assure that applicants for insurance are treated in a fair, accurate and confidential manner and protects them against the use of obsolete information. Also protects consumers that they receive fair and equitable treatment when consumer reporting agencies are utilized. lTerrorism Risk Insurance Program Reauthorization Act of 2015– (TRIPRA): è Act of Terrorism is redefined and eliminates requirement that the perpetrator of the act be acting on the behalf of a foreign person or interest (domestic acts can now be terrorism). è Terrorism Rick Insurance Program is extended through 12/31/2020 è Sec of Treasury is required to 15 days’ notice to Congress for an act of terrorism estimated to cost more than program trigger Devise method to determine pro rata share of insured losses that exceed $100 billion (CAP) èProgram trigger in 2015 is $100,000,000 raises annually in 2016 until $200 million in 2020. è Insurers must disclose to policyholders the $100 billon cap on liability coverage è There would no terrorism cover in property and casualty policies without TRIPRA l Terrorism Risk Insurance Act (TRIA)- defines an act of terrorism and protects the private insurance industry when loss from a terrorist attack is expected to exceed certain levels © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  5 PROPERTY ONLY - Terms and Provisions l Insurance is transferring risk. Through the law of large numbers insurance companies can spread risk among a large number of insureds who have similar exposures to loss making the risk of loss predictable. l Peril- an immediate specific event which causes a loss. è Specified or Named Peril- A contract or policy which specifically lists perils which are covered. èAll risk (OPEN) peril - These contracts list or name perils that ARE NOT COVERED. If the cause of loss is not excluded, it is covered l Loss - is an unintended, or unforeseen reduction or destruction of financial or economic value. è Direct Loss - results in property damaged or destruction by a peril (for example fire) which is insured against, without any intervening cause. Only loss type covered by property insurance. è Indirect (a/k/a Consequential) Loss - damage which results from a hazard or peril, but the loss was not actually caused by that hazard or peril, it was a result (a consequence) of the hazard or peril. l LOSS VALUATION – are the ways in which insurance carriers value the amount of a covered loss èReplacement Cost - is the exact amount of money needed to replace damaged or destroyed property at the point the loss occurred. (This method is contrary the indemnity principle because depreciation of an item is not a factor when paying the loss. èMarket Value – the amount a willing buyer would pay a willing seller for property before the loss occurred. It is not often used and it takes into account the value of the land and location versus just the cost of rebuilding the structure itself. è Stated Value – is the insurance amount not subject to coinsurance requirements when a covered loss happens. The stated amount is the most the carrier would pay under the terms of the contract for loss. è Salvage Value – is the asset value estimate of property upon its sale upon the end of its useful life and the property may be sold in whole or part. Once a carrier has paid a loss, this provision gives the insurance company the right to take possession of the property. l Proximate Cause - a doctrine which holds that an unbroken series of events must lead and form a c a u s e and effect relationship regarding a loss. Proximate cause is the actual loss immediately caused by a covered peril as defined in the contract of insurance. A party injured due to the negligence of another can recover damages only if it can be shown that the act of negligence was the proximate (immediate and direct) cause of the injured party’s loss. lLimits of Liability - this is the maximum amount the insurance company is obligated to pay for any loss, as specified in the contract. « Per Occurrence (includes per accident) – is a liability policy sub-limit that caps the payment for all claims that result from a single accident or a single occurrence. « Per Person – is the highest amount that will be paid to a single person in an accident for their bodily injury regardless of the bodily injury claim limit stated in the policy. « Aggregate limits - the maximum overall limit for the policy period, regardless of the number of claims. « Split limits - pays losses with separate limits for bodily injury and property damage and also prescribes a limit per individual while offering a greater payment for all individuals in an occurrence. « Combined single limit – a single dollar limit of liability applying to the total of damages for bodily injury AND property damage (combined). Resulting from one accident or occurrence. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  6 PROPERTY ONLY - Terms and Provisions continued l Coinsurance/ Insurance to Value - Coinsurance exists in order to require policy-holders to carry adequate insurance on their property and if they fail to do so, this clause imposes a penalty amount to be paid for smaller losses. MEMORIZE THE FORMULA IN THE BOOK ON PAGE 63. l Endorsements – written addendums used to alter the terms, coverage or conditions of the originally issued policy. They can be added when the contract is issued and they can be added later during the policy term. They must be signed by an executive of the insurance company and then attached to the policy itself. l Medical Payments – a/k/a “MedPay” take care of medical costs (not Liability) on a no-fault basis caused by covered injury. Legal liability is not required, just that the injury was a result of the insured’s activities or occurred at the insured’s location. l Blanket vs. Specific è Blanket is a single policy covering multiple classes of property at one location OR gives coverage for one or more classes of property at multiple locations. All property covered are written for ONE TOTAL amount of coverage. è Specific - a policy that covers a specific kind of property for a specified amount of insurance. l Definition of the Insured - The insured is an individual (person) or entity (corporation) indicated in the declarations page of a property contract whose interests are covered against perils named in the contract. l Elements of a Contract- There are four basic elements of a contract between two or more competent parties and they include: 1) offer and acceptance 2) Consideration (something for something or value transfer) 3) Contract must be for a legal object 4) Competent = legal age and a sound mind l Vacancy means a building has no people living or working in it AND there is no property stored inside for some minimum period of time (usually 60 days min). Empty of BOTH People and Personal Property. l`Unoccupancy means a building has no people living or working in it BUT some property is stored inside for some minimum period of time. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  7 PROPERTY ONLY - Terms and Provisions continued l Obligations of the Insurance Company - the obligations of the insurance company, according to the contract, are stated in the insuring agreement. If the insured makes timely payments and meets other requirements of the contract, the insurance company is bound to pay in the event of loss. l Mortgagee Rights- a “mortgagee” is the owner of a mortgage (i.e. the bank or a loan company). Mortgagee Interest allows a mortgage holder to receive loss settlement up to the extent of the mortgagee’s interest in the property (unpaid principal on a mortgage loan). The mortgagee can sue in their name and is entitled to extra time to prove a loss when the mortgagor (borrower) fails to do so. l Appraisal – When the insured and insurer disagree as to the loss value, each party selects a disinterested appraiser and either the appraisers’ choose an umpire/referee (who will cast the deciding vote when the appraisers disagree) or one is appointed by a court of record. l Assignment - is the transferring of some or all rights from one party to another. Assignment of rights held under property contracts is normally valid only with the written permission of the insurance company. l Policy Application – A printed form asking about information related to a proposed insured and the type and amount of coverage for which they are applying. The information contained gives the underwriter information upon which to make a decision to accept or reject an applicant. They are usually made a part of the contract and misrepresentations therein may lead to voiding a policy. l Sources of Insurability Information (during the underwriting process). è Info in the application è Motor Vehicle reports è Interviews with neighbors, friends, employer è Inspection of Property è Inspection of insurance history è Underwriting maps Territory - under a commercial property policy a loss or damage is only covered if it occurs in the coverage territory defined in the policy. This typically includes the United States (its territories and possessions), Puerto Rico. and Canada. When a policy does not specify a coverage territory it is assumed that it will apply worldwide. l Privacy Protection (Gramm-Leach-Bliley Act) limits when and how an insurance company can disclose nonpublic personal information to a nonaffiliated third party. Such disclosure is allowed only as follows: è Carrier clearly & conspicuously discloses to consumer in writing that info may be disclosed è Consumer must have chance to not allow third party disclosure è Consumer must get explanation about how to exercise a nondisclosure option --------------------------------------------------------------------------------------------------------------------------------------- When there is an ongoing relationship, TWO disclosures are required: 1) at the point the relationship is established and 2) before disclosing the protected information. Customer must also receive an annual privacy disclosure. Customers have option to decline sharing private info or to “OPT-OUT.” © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  8 PROPERTY INSURANCE POLICY TYPES AT A GLANCE DISTINGUISH BETWEEN PERSONAL LINES VS. COMMERCIAL LINES PERSONAL LINES: DWELLING AND HOMEOWNERS HOMEOWNERS “MULT-PERIL”: CONTAINS BOTH PROPERTY AND PERSONAL LIABILITY COVERAGE SECTION I – PROPERTY –STANDARD $1,000 DEDUCTIBLE COV A – DWELLING COV B - OTHER STRUCTURES (DETACHED) 10% OF COV A COV C – PERSONAL PROPERTY 50% OF COV A ( STATED VALUE IN H0-4 AND HO-6) COV D – LOSS OF USE` - CAN GET UP TO 30% OF COV A SECTION II – COMPREHENSIVE PERSONAL LIABILITY (CPL)- NO DEDUCTIBLE COV E – PERSONAL LIABILITY – min $100,000/ max $1,000,000 – NEED UMBRELLA FOR MORE COV F – MEDICAL PAYMENT (TO OTHERS – NOT THE INSURED) “NO FAULT” NOTES ON CPL: THE COMPANY WILL PROVIDE A LAWYER OF THEIR CHOICE IF YOU ARE SUED AND THE COMPANY CAN SETTLE A LAWSUIT OR CLAIM ANYTIME FOR ANY AMOUNT THE COMPANY WANTS TO AND THE INSURED IS BOUND TO THE SETTLEMENT. PROFESSIONAL AND BUSINESS ACTIVITIES NOT COVERED. OWNER OCCUPIED HO FORMS – ALL ARE REPLACEMENT COST @ 80% OR HIGHER HO-HO-2 – BROAD – 22 NAMED PERILS (NP) APPLIES TO BOTH DWELLING AND CONTENTS HO-3 – SPECIAL – OPEN PERILS APPLIES TO DWELLING ONLY; HO-2 NP ON CONTENTS HO-5 – COMPREHENSIVE – OPEN PERILS APPLES TO BOTH DWELLING AND CONTENTS OTHER HO FORMS- (HO-4 AND HO-6 CONTAIN HO-2 NAMED PERILS) HO-4 - CONTENTS BROAD – A/K/A “RENTERS’ INSURANCE) COV C, D, E & F ONLY HO-6 – CONDO OWNER – SIMILAR TO RENTER, CAN GET MINIMAL COV A & B H0- 8 – MODIFIED COVERAGE – RC MUCH MORE THAN MKT VALUE – “FUNCTIONAL” RC ONLY COVERS EXTENDED COVERAGE PERILS BUT NOT THE NINE BROAD FORM PERILS HO-2, The BROAD Form PERILS (22 TOTAL) Fire Lightening Plus EXTENDED COVERAGE (EC) consists of these additional TEN perils (REV C SHAW) Riot Civil Commotion Smoke Explosion Hail Volcanic Eruption, Vehicles Aircraft and Vandalism and Malicious Windstorm Mischief (VMM) Plus NINE more “broad form” perils: (BIG AFFECT) Burglar Damage Ice and Snow (weight) Glass Breakage Accidental Discharge Falling Objects Freezing of Pipes Electrical Damage Collapse (Abrupt) Tearing Apart PLUS Theft © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  9 THESE HO-2 NAMED PERILS APPLY TO BOTH THE DWELLING AND CONTENTS OF THE HO-2 FORM AND ALSO TO l HO-3 CONTENTS COVERAGE l HO-4 TENANTS BROAD FORM AND l HO-6 CONDO UNIT OWNER FORM The Perils (IMMEDIATE CAUSES OF LOSS) Defined: l Fire – MUST BE A GLOW, DIRECT LOSS BY HOSTILE FIREONLY IS COVERED. l Lightning – NATURAL DISCHARGE OF ELECTRICITY IN THE ATMOSPHERE l Windstorm- DIRECT ACTION OF WIND AND OBJETS HURLED BY THE WIND l Civil Commotion MANY PEOPLE CREATE A DISTURBANCE AND DAMAGE PROPERTY l Smoke - FROM ANY SOURCE EXCEPT agricultural smudging or industrial operations l Hail- DIRECT ACTION OF HAIL TO THE PROPERTY l Aircraft CONTACT TO PROPERTY WITH ANYTHING FLYING IN OR THROUGH THE AIR l Vehicles –AND OBJECTS HURLED BY VEHICLES THAT DAMAGE PROPERTY l Volcanic Eruption- LAVA AND AIRBORNE ASH (72 HRS = 1 EVENT) Excludes earth tremors l Explosion –DIRECT DAMAGE BY EITHER INTERNAL OR EXTERNAL EXPLOSION l Riot- GROUP OF PEOPLE WHO ARE ANGRY AND CAUSE DAMAGE TO PROPERTY l (V&MM)- INTENTIONAL/WILLFUL DAMAGE TO PROPERTY (except if 60+ days vacant) l Burglar Damage-DAMAGE DONE BY BURGLAR TO PROPERTY l Weight (snow/ice/sleet)-COVERS LOSS TO BUILDING AND CONTENTS INSIDE l Glass Breakage- ENTIRE BUILDING AND STORM DOORS, except 60+ days of vacancy l Accidental Discharge-WATER/STEAM FROM HVAC/SPRINKLERS/APPLIANCES/PLUMBING Except gradual and preventable loses-(seepage/leakage) homeowner must maintain property l Falling Objects-MUST STRIKE ROOF OR EXTERIOR WALL-EXTERIOR AND CONTENTS l Freezing of Pipes-EXCEPT failing to heat the premises or shut off water supply l Electrical Damage-SUDDEN/ACCIDENTAL LOSS except damage to electrical component l Abrupt Collapse- DUE TO HIDDEN DECAY/ANIMAL INFESTATION/CONTENT WEIGHT Except any wall or part building merely in danger of collapse (must actually fall down to be covered) l Tearing Apart-SUDDEN/ACCIDENTAL CRACKING/BURNING/BULGING of PIPE SYSTEMS l Theft- LOSS AND ATTEMPTED STOLEN PROPERTY except can’s steal from self and does not cover tenant loss nor trailers and campers that are away from the premises NINE PERILS EXCLUSIONS apply to ALL HO COVERAGE FORMS: 1) Ordinance or law- property is unsafe/ordered demolished 2) War – loss relating to war /warlike actions declared/undeclared, even civil war actions 3) Nuclear hazards- radioactive contamination from any cause 4) Water damage- flood, tsunami, tidal waves, sewer and drain backup (must buy flood insurance) 5) Earth movement –directly cause by earthquake (can endorse, pay extra) fire/explosion/theft is covered 6) Power Failure -except if the failure is caused by a covered peril 7) Intentional Loss- insured who intentionally damages/destroys their own property 8) Neglect – insureds have a duty to maintain/fix property. Not covered is loss was preventable 9) Government Action- property seized by government authority is not covered © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  10 IN ADDITION TO THE NINE EXCLUDED PERILS ABOVE, THESE PERILS ARE ALSO EXCLUDED IN BOTH HO-3 AND H0-5 FORMS Freezing pipes/systems in vacant dwellings Theft from a dwelling under construction Damage to foundations or pavements from ice and water weight Vandalism to vacant dwellings (vacant for more than 60 consecutive days) Latent defects, corrosion, industrial smoke, pollution Settling, wear and tear of the building (normal maintenance) Domestic Pets owned by insured Latent defects, corrosion, industrial smoke, pollution Mold, fungus or wet rot unless hidden & caused by water overflow or escape from within Nesting, infestation and discharge or release of waste products by any animal Weather conditions that aggravate excluded loss Birds, rodents or insects Government and association actions Defective construction, design, and maintenance COVERAGE C PERSONAL PROPERTY EXCLUSIONS Insured’s Animals, birds, fish Aircraft and parts Automobiles Sound/recording devices, tapes, records, discs in a motor vehicle Property of unrelated boarder’s/tenants of insured Hovercraft and part Credit cards/fund transfer card except in additional coverages Business data Property scheduled elsewhere (refers to Inland Maine Personal Articles Floaters). COVERAGE C – Personal Property Limits By Category and Per Occurrence 1) money (coins & precious metals, bank notes) $200 2) valuable papers (manuscripts, securities) $1,500 3) trailers, other than watercraft $1,500 4) watercraft and furnishings $1,500 5) theft of firearms $2,500 6) theft of pewter ware, silverware, gold ware, etc., $2,500 7) theft of jewelry, furs, precious stones $1,500 8) loss of portable electronic capable of being powered by a motor vehicle $1,500 9) antennas, tapes, wires, records, disks or other media in or upon a motor vehicle- $250 10) property on premises used for business purposes $2,500 11) property away from premises used primarily for business EXCEPT those listed in #9 and #10, above the limit is $1,500 12) personal property located in self-storage facilities is limited to 10% of the Coverage C limit (or $1,000 whichever is higher) © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  11 COVERAGE D: LOSS OF USE Coverage D applies when a covered peril renders the insured dwelling uninhabitable, or not fit in which to live. Three expenses are covered: 1) Additional Living Expenses – any necessary increase in living expense incurred by the insured to allow the household to maintain its normal standard of living. 2) Fair Rental Value – pays the fair rental value to any part of the premises rented to another minus any expenses that do not continue while the premises is not fit to live in. 3) Civil Authority Prohibits Use – Additional Living Expenses and Fair Rental Value are covered for up to two weeks if the prohibited use of the insured residence was the result of direct damage to neighboring premises by a covered peril. Section II - Comprehensive Personal Liability –CPL-(Coverage E & F) l Only those types of liability that are specifically excluded would not be covered. l CPL does not include business or automobile coverage for the individual or family unit l CPL protects the individual for liability that results from the personal activities of both the insured and family members, either on or away from their living quarters. l CPL policy also includes coverage for injury to domestic employees in a state where such workers are excluded from coverage under worker compensation laws l CPL coverage is automatically included in a homeowner policy as Section II l CPL does not have a deductible. l Coverage F will pay for all the medically necessary expenses EXCEPT MEDICAL EXPENSES OF AN INSURED INSURING KEYS OF COVERAGE E: l Company pays up to limit of liability after which it is the insured’s problem l Pays for and selects the lawyer to defend the insured in a lawsuit (lawyer works for Company) l Company can settle any lawsuit at any time for any amount without consent of insured INSURING KEYS OF COVERAGE F l Medical Payments to OTHERS, not to insureds l No Fault (paying medical expenses does not mean admitting to liability) l Medical expenses are broadly defined and include paying funeral costs l Three year time limit on paying from date of accident EXCLUSIONS FOR SECTION II COVERAGES These actions are designed to be covered under other existing policy coverage and are excluded: Motor Vehicles Watercraft Aircraft Hovercraft EXCLUSIONS which apply BOTH Coverage E and to Coverage F Intentional Acts Business Activities Professional Liability War Communicable Diseases Sexual Molestation Illegal Substances Nuclear Weapon © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  12 ADDITIONAL COVERAGES (NO COST) OF THE HOMEOWNER POLICY SECTION I Debris Removal. It will pay for the “reasonable cost” if caused by a covered peril. Reasonable Repairs - pays reasonable cost to protect the property from further damage. Landscape: shrubs, trees, plants and lawns due to fire, lightening, explosion, riot, civil commotion, aircraft, nonowned vehicle of insured, vandalism or malicious mischief and theft. HO-2, HO-3, HO 8: $500 per plant up to 5% of COVERAGE A limit ($250 per plant HO-8) Forms HO-4 and HO-6: $500 per plant 10% of COVERAGE C limit Fire Department Service Charge up to $500 is paid when the fire department is called to save or protect covered property from any peril covered in a policy if the protection service is from an outside entity. Property Removed - protect from further damage, for all perils, when moved up to 30 days. Credit Card Forgery – $500, without deductible for counterfeit money, unauthorized use of fund transfer cards, credit card use and check forgery. Loss Assessment – pays up to $1,000 charged by a corporation or association to the insured owner of a condo or a tenant in a building when communal property is damaged by a covered peril and the insured is assessed a share of the loss amount to pay. Landlord’s Furnishings –Limit pays up to $2,500 for loss to carpeting, household appliances and other household furnishings, but not for theft loss. Building Additions provides the Tenant Form 4 with loss coverage for betterments (tenant improvements) to the leased property caused by a covered peril (limit to the coverage is 10 % of Coverage C) Ordinance or Law requirements provides an extra 10% limit of the Coverage A amount for improvements to damaged property when building code upgrades result in extra cost for repair. Grave Markers pays up to $5,000 (including mausoleums) on or away from the residence premises for loss caused by a peril under Coverage C (whose limits are not increased). ADDITIONAL COVERAGES OF THE HOMEOWNER POLICY SECTION II In addition to Personal Liability (Coverage E) and Medical Payment (Coverage F) the following coverages are ALSO provided under Section II: CLAIMS EXPENSES paid in addition to the cost of legal defense including ▪ cost to investigate claims, ▪ premiums for court bonds ▪ reasonable expenses the insured incurs at the request of the company ▪ up to $250 per day for lost wages, ▪ interest charges post-judgment. FIRST AID EXPENSES – any expenses incurred by the insured for rendering first aid to others as a result of bodily injury are covered under this policy, BUT it DOES NOT cover first aid expenses to any insured. DAMAGE TO THE PROPERTY OF OTHERS – the company will pay up to $1,000 per occurrence for the replacement cost of the property of others that is damaged by an insured subject to several exception LOSS ASSESSMENT – there is a $1,000 per occurrence coverage for the insured’s share or assessment as a member of a group of property owners (for example a condo owner) © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  13 HOMEOWNER SECTION I CONDITIONS (Duties/Rights of Both Parties) Insurable Interest/Limit of Liability–, the most an insurer must pay is the insured’s interest in property at time of loss OR the limit of liability. Insured’s Duties After a Loss – include promptly notifying the company, notify the police when theft loss occurs, notify credit card or fund transfer company in the event of such loss, protect property from further loss, inventory the loss, cooperate with the insurer and submit a signed proof of loss within 60 days Loss Settlement – Buildings covered under Coverage A and B are settled on a REPLACEMENT COST BASIS subject to an 80% Co-Insurance requirement (otherwise ACV basis) Personal property loss (contents) is paid on an ACTUAL CASH VALUE BASIS EXCEPTION: if cost to repair or replace is both less than 5% of the Coverage A amount and $2,500, then settlement is made with or without actual repair. Loss to a Pair or Set- results in the company either repairing or replacing the pair or set to its original value before the loss or paying the difference between the ACV of the property before and after the loss. Appraisal – when the parties cannot agree of the value of the loss, each party selects an appraiser within 20 days of receiving notice from the other. The appraisers then have 15 days to select an umpire The umpire decides the value and each party pays for their own appraiser and the parties split the cost. Other Insurance (Pro Rata Liability)- If two or more policies cover the same loss, each policy will pay only its proportion of the loss. The insured may not profit by a loss. Suit Against the Insurer- by the insured requires that the insured comply with all policy provisions and the suit must be started within two years from the date of loss. Insurer’s Option- the Company can give notice to the insured with 30 days of proof of loss that they will repair or replace any part of the damaged property with like property. Loss Payment – will be made by the insurer within 60 days from the receipt of the insured’s proof of loss when there is agreement, a final judgment or the filing of an appraisal award. Abandonment of Property – by the insured to the company is not allowed, The Company must pay the loss as shown in the contract and ownership of the property cannot be forced upon them by the insured. Mortgage Clause – The mortgagee (lender) will be paid under Coverage A and Coverage B as their interest appears. If required to do so and with notice by the company, the Mortgagee has 60 days to file a proof of loss. The mortgagee also will receive 10 days’ notice prior to any cancellation or nonrenewal. No Benefit to Bailee – a bailee holds goods for repair or service and the Homeowners policy is not meant to pay such a loss. An insured cannot assign their coverage to a bailee if their property is damaged while in the care, control or custody of a bailee. Nuclear Hazard –radioactive contamination is excluded but direct loss by fire as a result is covered. Recovered Property – if property that was settled for loss is recovered by the insured they can either keep it or turn it over to the company. If the insured keeps the recovered property then the settlement is adjusted downward but if the property is turned over to the company then the settlement stands. Volcanic Eruption – any eruptions that occur with a 72 hour period is a single eruption. Policy Period – the policy only applies to loss that occurs within the policy period. Concealment or Fraud – No coverage with be provided to an insured who has committed fraud in obtaining or maintaining insurance coverage making false statements, and engaging in fraudulent conduct. Loss Payable Clause – when an additional party has insurable interest in certain personal property as indicated in the declarations (loss payee), they are considered an insured under the contract © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  14 SECTION I AND II (BOTH) CONDITIONS (a/k/a GENERAL CONDITIONS) Liberalization Clause – If an insurer broadens coverage to an existing policy edition all insureds having that original edition located in the same state within 60 days of the broadening are entitled to this better coverage at no extra cost. Subsequent editions and amendatory endorsement do not require liberalization. Cancellation/Nonrenewal Assignment Subrogation Waiver – is a voluntary relinquishment of a known right and must be in writing to be valid. Death – If an insured dies during the coverage period, his or her legal representative becomes an insured with respect to the premises and property of the deceased which was covered at the time of the death of the insured. HOMEOWNERS POLICY: DEFINING THE “INSURED”? the person named in the policy declaration AND any resident of a household who is a relative (of any age) AND any person under the age of 21 and in your care or the care of a resident of your household who is a relative AND Includes the named insured’s spouse if the spouse is a resident of the household. AND A child of the insured living away at college (full-time student) is an insured up to the age of 24. HOMEOWNERS POLICY: DEFINITION OF AN “INSURED LOCATION”? Any location the insured is staying at is considered to be an insured location The only location not insured is when the property is owned by the insured and not listed in the declarations of the homeowner policy. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  15 DWELLING PROGRAM (DP) ($250 STANDARD DEDUCTIBLE) 1 TO 4 UNIT FAMILY DWELLINGS, NO FARMS. BUY DP WHEN PROPERTY DOES NOT QUALIFY FOR HOMEOWNERS COVERAGES. NO LIABILITY OR THEFT (except ltd in DP-3). COMMON USES: DWELLING OWNER HAS A RENTER AND DOES NOT OCCUPY, THE STRUCTURE IS TOO OLD FOR HO OR THE COVERAGE AMOUNT IS TOO LOW FOR HO 3 COVERAGE FORMS (REFER TO PAGE 23-24 FOR COVERAGE STRUCTURE OF FORMS) ACV - DP1 –BASIC - NAMED PERILS – 3 PERILS: ADD (EC) 8 MORE PERILS – V&MM OPTIONAL RC (80%) DP2 –BROAD-NAMED PERILS – GET ALL IN BASIC AND EC PLUS 7 MORE & LS/GL/HD RC (80%) DP3-SPECIAL-OPEN PERILS – GET INSIDE THEFT - LS/GL/HD MAIN DP3 EXCLUSIONS ARE: INSECTS, BIRD, VERMIN, PETS PREVENTABLE LOSSES, THEFT OUT OF THE DWELLING AND POLLUTANTS. NOTE: DP1 HAS NO LS (LANDSCAPE COVERAGE) WHICH IS $500 PER PLANT/TREE/SHRUB UP TO 5% COV A. 5 PROPERTY COVERAGES AVAILABLE COV A – DWELLING COV B - OTHER STRUCTURES (DETACHED) 10% OF COV A COV C – PERSONAL PROPERTY (STATED VALUE IN A DWEILLING POLICY) (COV D&E ARE FOR “CONSEQUENTIAL” OR “INDIRECT LOSS” (DP-2 & 3 COV D&E is COMBINED) COV D - FAIR RENTAL VALUE – UP TO 20% OF COV A COV E – ADDITIONAL LIVING EXPENSES - UP TO 20% OF COV A (DP1 MUST ENDORSE) NOTE: IN DP1 ANY CLAIMS PAID UNDER B, C, D OR E IS NOT PAID IN ADDITION TO COVERAGE A OTHER COVERAGES - 8 FREE COVERAGE EXTENSION REMOVAL – UP TO 30 DAYS DP2 AND DP3, ONLY 5 DAYS DP1 DEBRIS REMOVAL - REASONABLE COSTS FIRE DEPT SERVICE CHARGE – UP TO $500 GENERAL EXCLUSIONS – ALL 3 COVERAGE FORMS ORDINANCE OF LAW – BUILDING CONDEMNED BY GOVT EARTH MOVEMENT – EARTHQUAKE BE COVERED FOR ADDITIONAL COST WATER DAMAGE – FLOOD IS A SEPARATE POLICY; CAN GET SEWER/SUMP COVERAGE POWER FAIL – SPOILED FOOD NEGLECT – OWNER MUST MAINTAIN PROPERTY WAR, NUCLEAR HAZARDS, INTENTIONAL, FREEZING AND GOVT ACTION ENDORSEMENTS – ADDED COVERAGE AT EXTRA COST (NOT IN BOOK – EXTRA INFO) AUTOMATIC INCREASE IN INSURANCE – OFFSETS THE EFFECT OF INFLATION BROAD THEFT COVERAGE – MUST OWNER OCCUPY –THEFT AWAY COVERED DWELLING UNDER CONSTRUCTION – AVG INS AMT DURING CONSTRUCTION SINKHOLE COLLAPSE – EARTH OPENS UP AND SWALLOWS THE HOUSE WATER BACKUP & AND SUMP PUMP OVERFLOW - $5,000 WITH $250 DEDUCTIBLE © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  16 COMMERCIAL LINES THE CPP, COMMERCIAL PROPERTY, BUSINESS INCOME, EXTRA EXPENSE, EQUIPMENT BREAKDOWNBUSINESSOWNERS & BUILDERS RISK CPP – COMMERCIAL PACKAGE POLICY – ISA SHELL CONTRACT WITH COMMON POLICY DECLARATIONS AND CONDITIONS INTO WHICH CAN BE PLUGGED COVERAGE FROM ANY ONE OF 7 DIFFERENT COVERAGE COMPONENTS (SEE P. 30). THIS ALLOWS THE COMMERCIAL CLIENT WHO DOES NOT QUALIFY FOR A BUSINESSOWNERS POLICY TO TAILOR THEIR COVERAGE. INTERLINE ENDORSEMENTS PREVENT COVERAGE DUPLICATION. COMMERCIAL PROPERTY AND BUSINESS PERSONAL PROPERTY FORM ($500 STANDARD DEDUCTIBLE) A - COMMERCIAL PROPERTY – OPTIONAL RC @80%. COVERS THE BUILDING B – BUSINESS PERSONAL PROPERTY – THE COVERAGE AMOUNT IS BASED ON THE PERSONAL PROPERTY VALUE C- PROPERTY OF OTHERS – BAILMENT PROPERTY IS COVERED (ANY PROPERTY UNDER THE CARE, CUSTODY OR CONTROL OF THE INSURED FOR WHICH HE IS RESPONSIBLE). NOTE: PROPERTY MUST IN OR WITHIN 100 FEET OF THE PREMISES TO BE COVERED. COVERAGE EXTENSIONS – ARE PROVIDED IF POLICY HAS 80% OR MORE COINSURANCE: NEWLY ACQUIRED/CONSTRUCTED – UP TO 30 DAYS – MAX = BUILDING COV LIMIT $250,000 ON BUILDINGS; PERSONAL PROPERTY LIMIT = MAX OF $100,000. PERSONAL EFFECTS/PROPERTY OF OTHERS - UP TO $2,500 VALUABLE PAPERS AND RECORDS - $2,500 LIMIT PROPERTY OFF PREMISES - UP TO $10,000 OUTDOOR PROPERTY - $1,000 EXCEPT FOR LANDSCAPE WHICH IS $250 PER PLANT NONOWNED DETACHED TRAILERS – $5,000 3 CAUSE OF LOSS FORMS – (COMMON PERIL EXCLUSIONS FOR ALL 3 FORMS P. 36) BASIC – “REV C SHAW + V&MM = SPRINKLER LEAKAGE AND SINKHOLE COLLAPSE BROAD – SAME AS THE BASIC PLUS 3 NEW PERILS OF FALLING OBJECTS, WEIGHT OF SNOW, ICE AND SLEET AND WATER DAMAGE (THIS IS NOT FLOOD COVERAGE) SPECIAL –OPEN PERILS – REVIEW ON P.36 EARTHQUAKE – IS SOMETIMES CALLED THE 4TH PERIL BUT IT CANNOT BE PURCHASED ALONE BUT MUST BE ADDED TO ONE OF THE CAUSE OF LOSS FORMS AT EXTRA COST. CONSEQUENTIAL/INDIRECT ENDORSEMENTS TO COMMERCIAL BUILDING: (CAN PURCHASE BI AND EE ALONE OR TOGETHER) BUSINESS INCOME – IS FOR INDIRECT/CONSEQUENTIAL LOSS OF BUSINESS INCOME CAUSED BY A COVERED DIRECT PERIL AND MUST BE ADDED TO COVERAGE AT EXTRA COST. THERE IS A 72 HOUR WAITING PERIOD. COVERAGE FOR “PERIOD OF RESTORATION” ONLY. BI = NET PROFIT PLUS NORMAL OPERATING EXPENSES PLUS PAYROLL. AUTOMATICALLY INCLUDES “EXTENDED BI” FOR 30 DAYS, EXTENDED PERIOD OF I N D E M N I T Y COVERAGE TO GO BEYOND 30 DAYS IS OPTIONAL COVERAGE AND COSTS EXTRA. EXTRA EXPENSE – IS FOR INDIRECT/CONSEQUENTIAL LOSS AND REIMBURSES THE INSURED FOR EXPENSES CAUSED WHEN THE INSURED CANNOT AFFORD TO BE SHUT DOWN EVEN FOR A BRIEF PERIOD (NOT ALL BUSINESSES NEED THIS). LOSS PAYMENT IS PAID WITHOUT A WAITING PERIOD. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  17 EQUIPMENT BREAKDOWN Historically referred to as "boiler and machinery" insurance, equipment breakdown is insurance coverage for business equipment breakdowns caused by motors burning out, utility, boiler malfunction (which can blow up a city block) and operations errors. It is sometimes added to either Commercial Property coverage or a Business Owner Policy as an endorsement when required. ► COVERAGES PROVIDED: Property Damage Expediting Expenses (There is a duty by the insured to call in for repairs to prevent loss whenever possible). Business Income and Extra Expense or Extra Expense Only (up to $25,000) Spoilage Damage pays for the spoilage damage to raw materials, property in process or finished products (damage must be due to the lack or excess of power, light, heat, steam or refrigeration). Utility Interruption – The interruption is the direct result of a "Breakdown" to "Covered Equipment" owned, operated or controlled by the local private or public utility or distributor that directly generates, transmits, distributes or provides utility services which is received by the insured. Newly Acquired Premises – for up to the number of days shown in the declarations Ordinance or Law Coverage - coverage applies despite the Ordinance or Law Exclusion if in- creases in loss are necessitated by the enforcement of any laws or ordinances that are in force at the time of the "Breakdown", which regulate the demolition, construction, repair or use of the building or structure. Damage to "Covered Property" caused by "Fungus", $15,000 limit in a 12 month period ► EXCLUSIONS. Equipment Breakdown coverage has exclusions common to all commercial property AND the exclusions also extend to fire and lightening and the Extended Coverage perils (because these are covered by Commercial Property). A major exception to the normal exclusion of explosion, is as follows, in the insuring agreement: However, we will pay for loss or damage caused by an explosion of "Covered Equipment" of a kind specified: Steam boiler; Electric steam generator; Steam piping; Steam turbine; Steam engine; Gas turbine; or Moving or rotating machinery caused by centrifugal force or mechanical breakdown. ►OTHER CLAUSES. Deductibles apply separately to each applicable coverage event proof of loss DUE within 60 days request. IF the insured repairs or replaces in a way that improves the environment or Increases efficiency or Enhances safety may get paid an additional 25% of damage amount. Repairs/replacements must take place within 24 months will pay only the smaller of the Cost it would have taken to repair or replace; or Actual cash value at the time of the "Breakdown". Standard “Liberalization” if they broaden coverage within 45 days will broaden no extra cost. ► DEFINITIONS "Breakdown" means the following direct physical loss that causes damage to "Covered Equipment" and necessitates its repair or replacement However, ‘Breakdown” DOES NOT MEAN or include: any loss that could have been prevented by replacement or damaged parts of strong maintenance. Breakdown must be an ACCIDENT. “Period of Restoration" means the period of time that: Begins at the time of the "Breakdown" or 24 hours before the insurer receives notice of "Breakdown" whichever is later; and Ends 5 consecutive days after the date when the damaged property at the premises described in the Declarations is repaired or replaced with reasonable speed and similar quality. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  18 BUSINESSOWNERS POLICY (BOP) ($500 STANDARD DEDUCTIBLE) IS A PREPACKAGED POLICY THAT STANDS ALONE, IT IS NOT PART OF A CPP. BOP IS ONLY AVAILABLE TO SMALL AND MEDIUM SIZE BUSINESSES THAT QUALIFY FOR IT EITHER DUE TO THE NATURE OF THEIR BUSINESS AND/OR THE TYPE AND SIZE OF THE BUILDING THAT HOUSES THE BUSINESS. COMPREHENSIVE COVERAGE; VERY REASONABLE IN COST. MULTI-PERIL: SECTION I PROPERTY (COV A: BUILDINGS; COV B BUSINESS PERSONAL PROP. SECTION II-LIABILITY (BUSINESS LIAB, MEDICAL PAYMENTS ($5,000) THE BOP REQUIRES: IF BOTH THE BUILDING AND PERSONAL PROPERTY OF THE BUSINESS ARE UNDER THE SAME OWNERSHIP THEN BOTH MUST BE INSURED UNDER THE BOP. ELIGIBILITY INCLUDES: *OFFICE BUILDINGS UP TO 6 STORIES HIGH OR 100,000 SF TOTAL FLOOR AREA; *APARTMENT/CONDO BUILDINGS OF ANY SIZE *MERCANTILE/PROCESSING/SERVICE/ ESTABLISHMENTS IF TOTAL FLOOR AREA NOT OVER 35,000 SF OR GROSS SALES ANNUALLY NO MORE THAN $6,000,000; *CONTRACTORS: CARPENTERS, ELECTRICIANS, PAINTERS, PLUMBERS, ETC. ARE OK UP TO $300,000 GROSS ANNUAL PAYROLL;MUST WORK IN BUILDING 3 STORIES OR SHORTER *\ FAST FOOD RESTAURANTS UP TO 7,500 SF WITH 25% LIMIT ON GROSS SALES FOR BEER AND WINE (HARD LIQUOR SALES AUTOMATICALLY DISQUALIFIES THE BUSINESS); SEATING LIMITS ARE 75 NO EXHAUST; 150 FOR CASUAL/FINE DINING, FAST FOOD CONVENIENCE STORES (GAS PUMPS OK WITH MAX OF 50% OF GROSS SALES). SPECIFICALLY INELIGIBLE BUSINESSES FOR THE BOP: *AUTO SERVICING *AUTO WASHING *PROPANE/KEROSENE FILLING * AUTO SALES* MANUFACTURING OPERATIONS *PLACES OF AMUSEMENT (I.E. THEATERS, COMEDY CLUB, KIDDY PARKS, CHUCK E CHEESE, ETC) * NO HOME BOUND BUSINESS * BANKS/S&L’S BOP CANCELLATION IDEAS: *10 DAYS FOR PREMIUM NONPAYMENT * 5 DAYS IF BUILDING IS VACANT OR UNOCCUPIED FOR 60 DAYS OR MORE, A COVERED LOSS HAS NOT BEEN SCHEDULED TO BE REPAIR WITHIN 30 DAYS, THE BUILDING IS UNSAFE OR BEING DEMOLISHED, IF THERE IS A FAILURE TO CONNECT REQUIRED UTILITIES FOR 30 DAYS OR MORE AND FAILURE TO PAY PROPERTY TAXES WITHIN I YEAR OF WHEN DUE. 30 DAYS NOTICE REQUIRED FOR ANY OTHER REASONS UNDER CONTRACT OR ALLOWED BY LAW. REVIEW PAGES 44 AND 45 FOR BOP ADDITIONAL COVERAGES (P.45-46 BOP EXTENSIONS) CAUSE OF LOSS IS OPEN PERILS AND OCCURRENCE BASIS UNLESS TE DECLARATIONS INDICATES A NAMED PERILS COVERAGE NOTE: DEDUCTIBLES DO NOT APPLY TO FIRE DEPARTMENT SERVICE CHARGES (WHICH IS $2,500 COVERAGE IN THE BOP), FIRE EXTINGUISHER SYSTEMS RECHARGE EXPENSE, and BUSINESS INCOME, EXTRA EXPENSE OR CIVIL AUTHORITY COVERAGES. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  19 BUILDERS’ RISK FOR BUILDINGS UNDER CONSTRUCTION; IT INCLUDES THE BUILDING, TEMP STRUCTURES, FOUNDATIONS, FIXTURES, MACHINERY, EQUIPMENT, MATERIALS AND SUPPLIES THAT ARE WITHIN 100 FEET OF THE PREMISES AS LONG AS THE SUPPLIES ARE INTENDED TO BECOME A PERMANENT PART OF THE BUILDING. COVERAGE PERIOD – BEGINS WITH CONSTRUCTION AND ENDS WHEN * CONSTRUCTION EXPIRES OR IS CANCELLED * CONSTRUCTION IS ABANDONED AND NO ONE IS COMING BACK TO FINISH * THE PURCHASER ACCEPTS THE PROPERTY * IT HAS BEEN 90 DAYS AFTER THE CONSTRUCTION IS COMPLETED * IT HAS BEEN 60 DAYS AFTER BUILDING WAS OCCUPIED OR PUT TO INTENDED USE * THE INSURED’S INTEREST IN THE PROPERTY CEASES Cyber First-Party Coverage (can be an Endorsement to CGL or BOP) In the modern digital information age, the confidential information prized by a company as well as customer personal information can be stolen through virtual thin air. “Cyber Risk Insurance” can protect a commercial concern for the expenses associated with data breach. First-party coverage is similar to commercial property insurance because it provides coverage for a company’s own damages from cyber losses which are covered under the policy. FIRST-PARTY RESPONSE This covers the financial loss relating to data breach for both the business and customers. A data breach is created when information is stolen or removed from the property of another without the permission or knowledge of the property owner. A huge benefit to business is the level to which this coverage enables the firm to protect its good business reputation with customers and the public alike. OTHER PROPERTY COVERAGES: INLAND MARINE, NATIONAL FLOOD INSURANCE PROGRAM, MOBILE HOME, WATERCRAFT, FARMOWNERS, CROP/HAIL & WINDSTORM INLAND MARINE – REFERS TO PROPERTY COVERAGE ON LAND ONLY. COVERAGE “FLOATS” WITH THE PROPERTY AND GOES ANYWHERE THE PROPERTY GOES AS LONG AS PROPERTY IS ON LAND... PERSONAL FLOATERS VS COMMERICAL FLOATERS- DISTINGUISH BETWEEN FLOATER COVERAGE FOR INDIVIDUALS VS. COMMERCIAL PURPOSES. 3 PERSONAL FLOATERS: PROPERTY – ARTICLES – EFFECTS. PERSONAL PROPERTY – FOR UNSCHEDULED PROPERTY (NOT APPRAISED OR INDIVIDUALLY LISTED IN DECLARATIONS) PERSONAL ARTICLES – FOR SCHEDULED PROPERTY –FURS, JEWELRY, CAMERAS MUSICAL INSTRUMENTS, FINE ARTS, COIN COLLECTION, STAMP COLLECTION, ETC. (ITEMS MUST BE APPRAISED BY EXPERT AND LISTED SEPARATELY IN DECLARATIONS) PERSONAL EFFECTS – PERSONAL EFFECTS USED/WORN WHILE ENGAGED IN TRAVEL. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  20 COMMERCIAL FLOATERS – CAN BE WRITTEN AS A STAND ALONE “MONOLINE” POLICY OR IT CAN BE INCLUDED AS PART OF A CPP. FILED FORMS – ARE THOSE FORMS PRE-APPROVED BY A STATE INSURANCE REGULATOR AND THEY USUALLY HAVE A $250 DEDUCTIBLE PER LOSS AND WRITTEN AS “ALL-RISK” UNFILED FORMS – HAVE NOT BEEN REVIEWED BY INSURANCE REGULATORS BUT IT IS OK TO SELL THEM SUBJECT TO PENALTIES IF THEY VIOLATE INSURANCE REGULATIONS UPON LATER REVIEW. THERE ARE DOZENS OF COMMERCIAL FLOATERS BUT ONLY ONE OR TWO STATE EXAM QUESTIONS. REFER TO THE CHART OF PAGE 51 FOR QUICK COMPARISON OF THE MORE COMMON COMMERCIAL FLOATERS. PAGE 52 EXPLAINS SEVERAL TRANSPORATION FLOATERS FOR YOUR STUDY. NOTE: GOODS THAT TRAVEL BY OR ON WATER REQUIRE “OCEAN” MARINE COVERAGE. NATIONAL FLOOD INSURANCE PROGRAM - (NFIP)– THE FEDERAL GOVERNMENT SUBSIDIZES WITH TAX DOLLARS THE HUGE POTENTIAL LOSES THAT COULD RESULT FROM THE FLOOD PERIL. FLOOD DEFINED: A TEMPORARY CONDITION OF PARTIAL OR COMPLETE INUNDATION OF WATER ON NORMALLY DRY LAND AREAS FROM INLAND OR TIDAL WATERS OR THE UNUSUAL OR RAPID ACCUMULATION OR RUNOFF OF SURFACE WATERS FROM ANY SOURCE. EXCLUDED FROM DEFINITION OF FLOOD: LANDSLIDES, BACKUP OF SEWERS, WINDBLOWN RAIN, SNOW OR SLEET AND FLOODING THAT IS WITHIN THE CONTROL OF THE INSURED. A COMMUNITY MUST APPLY TO BE INCLUDED IN THE PROGRAM AND AGREE TO ADOPT FLOODPLAIN MANAGEMENT STANDARDS WHERE CHANCE TO FLOOD IS MORE THAN 1% IN A YEAR (CONSIDERED A “HIGH RISK” AREA). UPON APPLICATION THE COMMUNITY IS IN THE EMERGENCY PROGRAM AND WILL BE PLACED IN THE REGULAR PROGRAM UPON MEETING LAND USE REQUIREMENTS. FLOOD INSURANCE REQUIRED BY LENDERS TO CLOSE. FLOOD INSURANCE PURCHASE – BACKED 100% THROUGH THE GOVERNMENT (NFIP) SOLD/SERVICEDTHROUGH PARTICIPATING PRIVATE INSURERS UTILIZING THE WYO – WRITE YOUR OWN PROGRAM. PRIVATE INSURERS ARE PAID TO SERVICE POLICYHOLDERS BUT BEAR NO FINANCIAL RISK AND PRODUCERS EARN COMMISSIONS COVERAGE LIMITS BUILDINGS CONTENTS EMERGENCY REGULAR EMERGENCY REGULAR SINGLE FAMILY $ 35,000 $ 250,000 $ 10,000 $ 100,000 OTHER RESIDENTIAL $ 100,000 $ 250,000 $ 100,000 $ 100,000 SMALL BUSINESS $ 100,000 $ 500,000 $ 100,000 $ 500,000 OTHER NON-RESID. $ 100,000 $ 500,000 $ 100,000 $ 500,000 © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  21 DEDUCTIBLES: $1K -$5K FOR BUILDING; $1K -$5K FOR CONTENTS: THE REGULAR PROGRAM. $2,000 FOR BUILDING; $2,000 FOR CONTENTS IN THE EMERGENCY PROGRAM. IMPORTANT NOTE: SINGLE FAMILY/CONDO DWELLINGS (THE RESIDENTAL AND CONDOMINIUM BUILDING ASSOCIATION POLICY) AUTOMATICALLY GET REPLACEMENT COST COVERAGE IF THEY TAKE THE MAX COVERAGE OR HAVE AT LEAST 80% RC COVERAGE IN PLACE. ALL OTHER BUILDINGS AND CONTENTS FOR EVERYBUILDING COVERAGE ARE PAID ON AN ACTUAL CASH VALUE BASIS. 30 DAY WAITING PERIOD – AFTER THE APPLICATION HAS BEEN TAKEN BEFORE COVERAGE STARTS A FLOOD POLICY CAN BE TRANSFERRED FROM SELLING PROPERTY OWNERS TO THE BUYER AND THERE IS NO BREAK IN COVERAGE. THIS TRANSFER, OR ASSIGNMENT IS ACTIVELY ENCOURAGE FROM ONE OWNER TO PASS TO THE NEW OWNER. THERE ARE NO BINDERS DURING THE WAITING PERIOD. MOBILE HOME- TREATS A MOBILE HOME LIKE AN APPRECIATING ASSET AND GIVES COVERAGE COMPARABLE TO A HOMEOWNERS POLICY WITH SECTION I PROPERTY AND SECTION II PERSONAL LIABILITY. NOTE COVERAGE C IS ONLY 40% OF COVERAGE-A AMOUNT. THE POLICY PAYS UP TO $500 FOR THE INSURED TO MOVE MOBILE HOME OUT OF HARM’S WAY AS LONG AS THERE IS NO RISK TO THE INSURED’S LIFE TO DO SO. WATERCRAFT – SINCE HOMEOWNERS AND DWELLING FORMS ONLY COVER WATERCRAFT FOR $1,500, A WATERCRAFT POLICY IS NEEDED WHEN THE BOAT HAS GREATER VALUE. THE WATERCRAFT POLICY IS STRUCTURED LIKE A HOMEOWNERS POLICY IN THAT IT HAS TWO SECTIONS OF COVERAGE: ONE FOR THE PROPERTY AND ONE FOR LIABILITY AS A RESULT OF OPERATING THE BOAT. VESSAL MORE THAN 26 FEET IS YACHT. HP LIMITS HO: 50 OUTBOARD/25 INBOARD. FARMOWNERS – HISTORICALLY IT WAS NEVER CLEAR WHERE TO PLACE FARM COVERAGE SINCE FAMILY FARMS REFLECT BOTH COMMERCIAL AND PERSONAL LINES NEEDS. THEREFORE THIS SPECIAL CATEGORY OF COVERAGE WAS CREATED TO TAKE CARE OF THE FARM NEEDS. IT COVERS FARM PROPERTY, INCLUDING THE RESIDENCE AS WELL AS LIABILITY, FARM MACHINERY, EQUIPMENT AND LIVESTOCK. WINDSTORM IS COVERED IN MOST HOMEOWNERS POLICIES BUT NOT IN HIGH RISK AREAS SUCH AS COASTAL REGIONS AND INLAND AREAS WHERE TORNADOS ARE COMMON. IN A HIGH RISK AREA A SEPARATE “WINDSTORM” POLICY” IS REQUIRED. DEFINITION OF WIND (WHICH IS COVERED) – A NATURAL AND PERCEPTIBLE MOVEMENT OF AIR PARALLEL TO OR ALONG THE GROUND. DEFINITION OF WINDSTORM IS A STORM WITH HIGH WINDS OR VIOLENT GUSTS BUT WITH LITTLE OR NO RAIN. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  22 General Law Quick Reference –Time Periods & Dollar Amounts- 22 Q’s Insurance Director – Hearings, Orders and Fines Cease and Desist Order – notice Market Conduct Exam: Director must Cease/Desist Final Order specific to served 20-30 days before hearing give at least 10 days hearing notice. Unfair Competition - fine $1,000 Max Violation of final order/Cease & Market Conduct Exam –examined Regulatory Exam of Producer – must Desist $5,000 Max; at the rate of party must request hearing within 10 request hearing within 14 days of $100 per day days of receipt of report. receipt of copy of report Failure to Obey Subpoena or Market Conduct Exam- Dir. must issue Regulatory Exam Producer written refuse to testify after service of written order within 90 days of hearing order violation– Max of $20,000 also Subpoena-$2,000 Max or report file date applies to those who aid or abets REFER TO PROPERTY BOOK PAGE 89 FOR LIST OF LICENSE FEES – KNOW LIST! License Renewal Periods Resident –Biennial Renewal (2 yrs) Business Entity –Renewal (2 yrs) Temp Prod License to sell– 90 days Temp License 180 days due to Up to 12 Months to Reinstate a Every year renew = Annual Death/incapacity/military duty Lapsed Prod. License –$430 (double) Every two years = Biennial Bond Requirements (if Brokering) - $2,500 or 5% previous year premium, whichever greater: $50,000 max CE REQUIREMENT – 24 Hours Total Biennial: 3 hr. Ethics Classroom or Live Webinar only; plus 21 hours self-study, SINGLE Course MAX = 12 Hours PL REQUIREMENT – 20 Hours per line of which at least 7.5 hours must be classroom (L, H, P, C & PL) Change of Address Notice: Producer’s Residence– 30 DAYS; Business Entity – 30 days License Suspension, Revocation or Denial (S/D/R) Once Director Takes action, Producer has 30 days to Once hearing requested, Dir. Must make hearing date request, in writing, a hearing within 20-30 days of mailing hearing notice to Prod. Civil Penalty for S/R/D is $10,000 per cause and Once Prod has R/D of license they may not apply for $100,000 Max for all Causes for order violation license again for at least 3 years Producer Fiduciary Duties Violations Improperly Holding client funds = 15 days or more Steal less than $150 = Misdemeanor Steal less than $150 twice or more or more than $150 Must deliver a policy within 90 days of offer when first one time and it is a Class 3 or 4 Felony, Respectively premium still needs to be collected by producer Premium Fund Trust Accounts If hold premiums for 15 days or more must have PFTA Must Balance PFTA at least every 30 days Must keep PFTA books & records for 7 yrs minimum Must credit insured account for refunds w/in 15 days Commissions and Compensation IF Service fee exceeds 10% of policy premium then agreement must be written & signed by both parties IF Policy is canceled within 90 days, prorated refund of service fee must be made within 30 days Felony Conviction of Producer must be reported to Director Within 30 days of Judgment of Conviction REGULATION 919 Prompt Investigation = 21 days When Liability is affirmed must offer payment within 30 days Reasonable Promptness = 15 days If claim is not resolved must write W/in 45 days and explain to insured Fine for Misrepresentation or Defamation by producer is MIN of $200 and MAX of $10,000 © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  23 ILLINOIS STATUTES PERTINENT TO BOTH PROPERTY AND CASUALTY INSURANCE - (5 Q’s BOTH PROP. & CAS. LAW EXAM) A)Renewal, Nonrenewal and Cancellation l There must be a cancellation provision which outlines the manner in which policies can be canceled or non-renewed in all property & casualty policies offered for sale except bonds and ocean marine. l An insurance company cannot cancel a policy solely based on the fact that the insurance agent who wrote the policy has left the company. l A company cannot terminate a line of business without notifying the Director, with reasons, at least 90 days prior to such termination. l All companies issuing policies shall provide the following loss information for the 3 previous policy years (5 previous years for AUTO) to the first named insured within 30 days of the insured's request. l Homeowners insurance: cannot refuse to issue or renew a policy solely because a space heater is used in a single family or 2 to 4 unit dwelling. l Cancellation of Any P & C Contract, To Be Valid Must be mailed, via certified mail with receipt, to last known mailing address on company record WITH explanation for the reason for the cancellation. CANCELLATION AND NONRENEWAL NOTICE NOTICE BY COMPANY PERSONAL LINES COMMERCIAL LINES NONPAYMENT 10 DAYS NOTICE 10 DAYS NOTICE 30 DAYS NOTICE IF POLICY IN FORCE OTHER THAN NON-PAYMENT 30 DAYS NOTICE FOR 60 DAYS OR LESS 60 DAYS IF POLICY IN FORCE FOR MORE THAN 60 DAYS INTENT NOT TO RENEW 30 DAYS NOTICE 60 DAYS NOTICE l Personal Property policy in force at least 1 year the insurance company cannot cancel except for 1) Obtainment originally by the insured of the contract by misrepresentation or fraud 2) Any action which will increase the risk originally accepted, in a measurable fashion. 3) Nonpayment of Premium. [NOTE: If the policy was in force for at least 60 days (but less than a year) then there are TWO more reasons why a Carrier Can CANCEL the insured: Violate Policy Terms and Loss of Re-insurer] l Except for nonpayment of premium, once an auto policy has been in effect for at least 60 days, or if the policy is a renewal policy, an insurance company may not cancel the policy except for many, many reasons, consult your text book section for a review of all of them. l Once a personal Line or Auto policy has been in effect for more than 5 years, the carrier CANNOT Nonrenew because of past nonpayment of premium as the grounds for the Nonrenewal. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  24 l No insurer providing dwelling and homeowners insurance coverage, shall nonrenew or cancel an insurance policy on a day care home or group day care home, solely on the basis that the insured operates a duly licensed day care home or group day care home on the insured premises. l No personal fire and EC policy may be cancelled where the sole basis for the cancellation is payment made by the insurance company of a claim or claims against such policy. l Any insured that wishes to appeal an Auto or Fire and EC policy cancellation or nonrenewal by an insurance company shall give 20 days’ notice (by mail or delivery) to the Director requesting a hearing. l If a person files a complaint with the Director regarding cancellation, nonrenewal or refusal to issue a fire and EC coverage policy, the insurer must respond to the complaint within 21 days. l No auto insurer shall fail or refuse to accept an application from a physically handicapped person or refuse to issue a policy solely because of the physical handicap. l A company cannot void a policy for misrepresentation unless in writing and can show the applicant had an actual intent to deceive or materially affect the acceptance of the risk by the company (personal lines). l Premium Finance Laws DO NOT APPLY TO BANKS Credit Unions/Savings and Loans Anyone operating under Consumer Installment Loan Act Party acquiring finance agreements from Or Consumer finance Act Insurers Premium Finance Laws require the proper license from the Director. Premium Financing = 10% or more of account receivables are more than 90 days past due. Maximum fine for violating premium finance law is $2,000 (producer without premium finance license). Max finance Service Charges for premium financing: Less than $500 = $20 $500 to $1,000 = $30 More than $1,000 = $40 l The Director is authorized to make reasonable rules requiring insurers doing business in the State of Illinois to report factual information in their possession that is pertinent to suspected fraudulent insurance claims, fraudulent insurance applications, or premium fraud. l Use of credit information. An insurer using credit info to underwrite or rate risks shall not: Use an insurance score that is calculated using income, gender, address, ethnic group, religion, marital status, or nationality of the consumer as a factor. Deny, cancel, or nonrenew a policy of personal insurance solely on the basis of credit information Base an insured's renewal rates for personal insurance solely upon credit information Take an adverse action against a consumer solely because he or she does not have a credit card account Take an adverse action against a consumer based on credit information, unless an insurer obtains and uses a credit report issued or an insurance score calculated within 90 days from the date the policy is first written or renewal is issued. Use credit information unless not later than every 36 months following the last time that the insurer obtained current credit information for the insured, the insurer recalculates the insurance score or obtains an updated credit report © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  25 l Hate Crimes; Coverage Refusal-applies to insurance policies if the insured or proposed insured is a/an individual religious organization educational organization any other nonprofit organization A "hate crime" may include any of the following: injuring, intimidating, interfering with, oppressing, or threatening any other person because of the other person's: ▪ race, ▪ color, ▪ religion, ▪ ancestry, ▪ national origin, ▪ disability, ▪ gender, ▪ sexual orientation It is a hate crime to deface, damage, or destroy the real or personal property of any other person for the purpose of intimidating or interfering with the person because of the factors listed above. An insurer CANNOT cancel, refuse to issue, or refuse to renew a personal property policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured PROPERTY INSURANCE REGULATION AND STATUTES IN ILLINOIS (3 QUESTIONS ON ONLY THE PROPERTY LAW EXAM ONLY) l REJECTION OF BASIS OF LOCATION - Refusal to provide homeowner or renters policies cannot be made solely on the basis of the geographic location of real property. Such a practice, which is known as "red lining," is prohibited. The reason for refusal must be more than a mere pretext for unfair discrimination. l The Illinois “Fair” Plan (FAIR stands for "Fair Access to Insurance Requirement") Purpose - to make basic property insurance increasingly available to the citizens of this State, and to deter the insurance industry from geographically redlining urban areas of this State. It creates an opportunity for individuals who are unable to otherwise purchase coverage through regular channels, to obtain fire and extended coverage insurance. All companies who write fire and extended coverage policies in Illinois must participate in "the pool". The FAIR PLAN is administered by the Industry Placement Facility It applies to owner-residents of a one to four family dwelling unit in an “urban area." The fair plan provides insurance on residential property to all citizens in the state of Illinois on a reasonable access basis by 1) Requiring binding of eligible risks immediately. 2) The use of premium installment plans. 3) The establishment of reasonable servicing standards. >Anyone with an insurable interest in real property is eligible for fire and extended coverage if they cannot get coverage through normal channels after they have made THREE ATTEMPTS at obtaining normal coverage OR WHO WAS NONRENEWED BY THEIR CURRENT CARRIER IS ELIGIBLE. > Each insurer, as a condition of its authority to transact such kinds of insurance in this State, must participate in the Industry Placement Program or the Director can revoke their Certificate of Authority to operate in Illinois. Procedure è 1) A completed application must be filed with the proper association AND 2) A property inspection is made by the insurance services office (ISO) of Illinois Once an application has been received, the FAIR plan must either 1) Approve the application and provide the coverage. 2) Decline the applicant until certain specified hazards are corrected 3) Reject the application because the property is uninsurable (owner has 60 days to ask for re-inspection). © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  26 l MINE SUBSIDENCE INSURANCE means lateral or vertical ground movement caused by a failure initiated at the mine level THAT DAMAGES RESIDENCES OR COMMERCIAL PROPERTY "Mine Subsidence" does not includeè lateral or vertical ground movement caused by earthquake, landslide, volcanic eruption, soil conditions, soil erosion, soil freezing and thawing, improperly compacted soil, construction defects, roots of trees and shrubs or collapse of storm and sewer drains and rapid transit tunnels. Exclusions to Mine subsidence Insurance include losses caused by è 1) Landslide; 2) Volcanic eruption: 3) earthquake: and 4) Collapse of storm & sewer drains & rapid transit tunnels. Exempt from this law è a county that has 1 million or more population or in any county which is an immediate next door neighbor to such a populous county (Cook and bordering counties). Reinsurance Amount = $200,000 per residence and commercial bldg., or $15,000 per living unit. l Consumer Affairs and Information Department must be established by all insurance companies issuing P&C contracts in Illinois to deal with policyholder questions and complaints. Such a department must be located in either the home, regional or branch office of the company and maintain a toll free number or accept the charges for any phone calls placed to the department. Insurance companies must provide written responses to written inquiries within 21 days of receipt NOTE: MAKE SURE TO REVIEW THE ABOVE CONCEPTS IN DETAIL IN YOUR TEXTBOOK. REMEMBER: l LAW COMMON TO ALL LINES WILL ACCOUNT FOR 22 OF 30 QUESTIONS l PROPERTY AND CASUALTY SPECIFIC LAW WILL ACCOUNT FOR 5 OF 30 QUESTIONS l PROPERTY SPECIFIC LAW WILL ACCOUNT FOR 3 OF 30 QUESTIONS = A TOTAL OF 30 QUESTIONS FOR PROPERTY LAW- PART 2 IN ADDITION TO PASSING PART 1 – GENERAL PROPERTY YOU MUST ALSO PASS THE STATE LAW PART 2 TO GET YOUR LICENSE © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  27 Illinois Property – General – Part 1 – 20 Review Questions Selected from the web-based exam question database of DohrnSimX 1) Which of the following facts about the Flood Program is FALSE? A. It is federally subsidized through the use of tax dollars. B. The regular program has higher coverage limits than the emergency program. C. Private carriers share in loss through the WYO. D. Private insurance agents who sell flood insurance are paid a commission for doing so.. 2) Insurance can best be described as: A. a method of valuation upon a loss B. a risk transfer of potential loss C. a way to solve grievances when the parties cannot agree on how to settle a claim D. a way to solve grievances when the parties cannot agree on the value of a loss 3) Which of the following coverages is an example of business interruption insurance? A. Commercial Package Policy. B. Earthquake endorsement. C. Business Income. D. Commercial Building and Business Personal Property Form 4) An insured has a Dwelling policy DP2 with a replacement value of $100,000. To save some money on premiums, the insured decides to insure the property for $32,000. If the insured suffers a $15,000 loss, how much with the insurer pay? A. $15,000 B. $15,000 minus the stated deductible C. $6,000 D. $4,800 5) Which of the following businesses would be eligible for a Business Owner Policy? A. The Seventh National Bank and Trust Co. B. Mike's Chicken to Go. C. Bob's Bar, Grill and Mortuary. D. The Jolly Fun Amusement Park. © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  28 6) B applied for a property policy and on the application failed to tell the agent about an arson he had been convicted of last year when specifically asked about criminal activity during the application. This is an example of a: A. misrepresentation B. material misrepresentation C. warranty D. material warranty 7) J has rented a room in his home to a tenant and has helped furnish the rented room with a carpet, refrigerator and sofa costing him $4,000. Less than one month later these furnishing were destroyed in a small fire. How much will J collect from his HO-2 policy for this loss? A. $0 B. $1,000 C. $2,500 D. $4,000 less depreciation. 8) Which of the following is CORRECT regarding a Moral Hazard? A. it is a attitude of indifference to loss B. it is something tangible that will greatly increase the chance of loss occurring C. it is an attitude that displays dishonest, sometimes criminal mindsets towards loss occurring D. it is a specific, immediate cause of loss 9) Property covered under a Builder's Risk policy includes all of the following, EXCEPT: A. Foundations B. Partially completed structures C. Building materials intended to be put in the buildings that are located within 150 feet of the insured premises. D. Fixtures and machinery 10) D has a training business that is rapidly expanding. To accommodate D's growth, a finance company has lent him money to buy more office equipment. A condition of the loan was that the lender was to be named to be covered under the policy until the loan is fully repaid. The lender is a(an): A. Insured B. First Named Insured C. Additional Insured D. Beneficiary © Copyright 2013 – 2024 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  29 11) Actual Cash Value (ACV) takes usage of property into consideration when an insurer pays a claim so that the insured becomes whole again after a loss. To restore an insured in this manner is known as: A. depreciation B. indemnity C. liability D. Negligence 12) The Commercial Building and Business Personal Property Form does NOT include which of the following coverages? A. Buildings permanently affixed to the land. B. Furniture owned and used by the business. C. The personal property of others that is entrusted to the care of the insured. D. Liability created by the negligence of the insured. 13) The contractual obligation that states the insured must let the insurer know of loss as soon as reasonably possible is: A. Notice Of Claim B. Proof of Loss C. Application D. Liberalization 14) Which of the following descriptions of Dwelling Program coverage forms is INCORRECT? A. The Special form pays for loss to the dwelling and detached other structures on a replacement cost basis B. The Special form pays for loss to contents on an ACV basis C. The Basic form pays for loss to the dwelling and detached other structures on a replacement cost basis D. The Broad form pays for loss to contents on an ACV basis 15) Which of the following is CORRECT regarding deductibles? A. Higher deductibles mean higher premiums for the policy B. The insurer will pay loss under the deductible if the deductible is $100 C. Lower deductibles mean lower premiums for the policy D. The insurer will only pay amounts over and above stated deductibles in the policy 16) Which of the following personal property items would not need to be scheduled to be covered? A. A $5,000 custom made leather golf bag. B. A $20,000 mink stole. C. A family heirloom broach valued at over $50,000. D. A high end leather couch that cost $5,000. © Copyright 2013 – 2023 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  30 17) B is in a car accident caused by the other driver. B ends up going to the emergency room with minor injuries totaling $5,000 in loss. B's insurance company pays the claim but then seeks to recover losses from the other driver's auto insurance. This is the process of: A. Coordination of Benefits B. Subrogation C. Insurer Liability D. Part A Auto Liability 18) All of the following are elements of a Commercial package Policy, EXCEPT: A. Liability. B. Common Declarations. C. Coverage parts. D. Common Conditions. 19) Boats of what length require Yacht coverage? A. 24 feet or longer B. Longer than 26 feet. C. Longer than 28 feet. D. 36 feet or longer. 20) Which of the following statements concerning landscape coverage in a homeowners policy is NOT ACCURATE? A. An HO-2 and an HO-3 both offer up to $500 per plant, tree or shrub up to 5% of the Coverage A amount. B. An HO-5 and an HO-8 both offer up to $500 per plant, tree or shrub up to 5% of the Coverage A amount. C. HO-4 provides up to $500 per tree up to a maximum of 10% of the Coverage C amount. D. HO-6 provides up to $500 per plant up to a maximum of 10% of the Coverage C amount. © Copyright 2013 – 2023 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  31 Illinois Property – Law – Part 2 – 10 Review Questions Selected from the web-based exam question database of DohrnSimX 21) A producer is found guilty of rebating. Under what circumstance this would be held against the insurance carrier? A. If the carrier was aware of the producer and their rebating activities and did not report or try to prevent it. B. Such activity is automatically held against the carrier. C. If the carrier knew nothing about the producer rebating taking place. D. If the carrier is a stock insurance company. 22) When an insurer submits a documented mine subsidence loss to the Illinois Mine Subsidence Fund, within how many days must the Fund reimburse the insurer? A. Within 30 days of the loss. B. Within 60 days of the loss. C. Within 90 days of the loss. D. The state is broke, they will get around to paying when, or if, they are able. 23) When a producer is examined for non-financial market conduct, how many days from the filing of a duplicate copy of a written examination report does the producer have in which to request, in writing, a hearing on the matter? A. 10 days B. 14 days C. 20 days D. 30 days 24) V has failed to complete the continuing education requirement before license renewal. Three months after his license renewal date he attempts to renew his producer license. All of the following will be required of V, EXCEPT: A. The cost to renew will be double the normal license renewal fee. B. V will be required to successfully complete a prelicensing course for each line of authority held on the license that was renewed late. C. Twenty four hours of total continuing education credit must be earned before the renewal will be processed. D. He will have been required to complete a three hour ethics class.. 25) A commercial fire policy can be cancelled by an insurance company with ten days’ notice if the property insured is found to have consisted of any of the following conditions, EXCEPT: A. The insured fails to begin repairs on the property within 60 days of being paid on a loss claim. B. The local city government declares the building unsafe and orders its demolition. C. The building has not been connected to a water, electrical or heating supply for 30 days or more. D. The building is unoccupied for more than 60 days due to required construction repairs. © Copyright 2013 – 2023 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  32 26) An insurance commission may be paid to all of the following persons, EXCEPT A. A resident licensed producer B. An attorney licensed to practice law C. A non-resident licensed producer D. A limited lines producer 27) Which of the following criminal activities is most likely to lead to the termination of a producer's license? A. A misdemeanor DUI (Driving Under the influence). B. Embezzlement while employed part-time as a bookkeeper. C. Littering on the public highway. D. Trespassing on a neighbor's yard. 28) Assume a hate crime has been committed. All of the following actions and property is protected under the law, EXCEPT: A. damaging the garage of the insured. B. destroying the auto of the insured. C. defacing a painting belonging to the parents of the insured. D. damaging the picture window of the insured's home. 29) Which category of property owner is most likely to utilize the protections afforded under the Illinois FAIR Plan? A. Low income property owners. B. High income property owners. C. Property owners who are not able to secure real property coverage through normal insurance channels. D. Shareholders of stock insurance companies. 30) An auto insurer must provide at least 30 days prior days’ notice of policy cancellation to an insured, unless the reason is A. nonpayment of premium. B. fraud on the part of the insured. C. The insured violated the policy terms. D. The insured increased the original risk accepted in a measurable fashion. © Copyright 2013 – 2023 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  33 Answers for Property pages 27-32 General 1. C 2. B 3. C 4. C 5. B 6. B 7. C 8. C 9. C 10. C 11. B 12. D 13. A 14. C 15. D 16. D 17. B 18. A 19. B 20. B LAW 1. A 2. C 3. B 4. B 5. D 6. B 7. B 8. C 9. C 10. A © Copyright 2013 – 2023 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  34 **When you complete your course, DOUBLE CHECK your personal information on your completion letter upon your receipt and notify our office immediately if any changes are to be made. Certain incorrect information on your completion letter could result in you being turned away at Pearson Vue. To get into Dohrn SimX to access and complete your Pre-licensing exam & to use the online quiz question database: GO TO: WWW.DOHRNONLINE.COM 1) Enter your class registration number (the long number) and 2) Enter your PIN, which is the last four digits of the Social Security Number you entered when you registered. We proudly announce our question database is on Amazon servers for reliability. NOTE: MAKE SURE YOUR INTERNET BROWSER IS UP TO DATE, ESPECIALLY INTERNET EXPLORER WHICH MUST BE VERSION 8 OR HIGHER (IE7 IS NOT SUPPORTED ON OUR SYSTEM. WE RECOMMEND USING GOOGLE CHROME: THE DOWNLOAD TAKES ONLY SECONDS AND IS FAST AND RELIABLE. MOZILLA FIREFOX AND SAFARI ARE ALSO EXCELLENT. Thank you for choosing Dohrn for your Pre-licensing needs! We wish you luck on your adventures in the insurance industry! We look forward to seeing you within two years…. We offer about 5 monthly live ethics classes via the Zoom platform. We offer 10 different self-study courses that meet any lines of insurance. (Life, Health, Property, and Casualty) whose exams can be scored online We offer the 4 credit hour course required by the State of Illinois to sell Annuities We also offer 8 credit hour Long Term Care Partnership and the 4 credit hour Long Term Care Partnership Refresher course. © Copyright 2013 – 2023 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.  35 Dohrn Insurance Training Office Hours Information www.dohrnit.com (This is our general website with all information you will need to register and order pre-licensing, an ethics class or continuing education self-study courses) Fax to 847-455-1153 Or Email to [email protected] OFFICE HOURS Phone Number 847-455-1130 8:00 AM – 3:00 PM MONDAY- FRIDAY For a list of all of our course locations: http://dohrnit.com/locations.html Office info and calendar of closed days and reduced holiday hours: http://dohrnit.com/office.html © Copyright 2013 – 2023 Douglas N. Dohrn, Sr. and Douglas N. Dohrn, Jr. All Rights Reserved. These Materials May Not Be Copied, Duplicated or Disseminated.