Property Insurance Flashcards

What does 'extra expense' coverage provide in a DC commercial property policy?

Answer: Payment for expenses above normal operating costs incurred to continue operations after a covered loss

Extra expense coverage pays for additional costs above normal operating expenses that are necessary to continue or resume operations after a covered loss.

Under DC property insurance rules, what is 'subrogation'?

Answer: The insurer's right to recover from a negligent third party after paying the insured's claim

Subrogation allows the insurer, after paying a claim, to step into the insured's shoes and recover the loss from the responsible third party.

Which DC property coverage pays for loss or damage to goods in transit by a motor carrier?

Answer: Motor truck cargo insurance

Motor truck cargo insurance covers freight while in transit in a motor vehicle, protecting the carrier against claims for cargo loss or damage.

What is the 'appraisal clause' in a DC property insurance policy used for?

Answer: Resolving disputes about the amount of loss when the insured and insurer disagree

The appraisal clause provides a mechanism to resolve disputes about the dollar amount of a covered loss without going to court.

Which of the following is covered under the Causes of Loss – Special Form for commercial property in DC?

Answer: Accidental discharge of water from a burst pipe inside the building

Accidental discharge from a burst pipe (sudden and accidental water discharge) is generally covered under the Special Causes of Loss Form as it is not among the standard exclusions.

A DC retail store's inventory is destroyed in a fire. The store has a $500,000 commercial property policy with an 80% coinsurance clause and the inventory was worth $400,000. The store carried $400,000 of coverage. Is there a coinsurance penalty?

Answer: No, because the store's $400,000 coverage equals 80% of $400,000 inventory ($320,000 required)

The coinsurance requirement is 80% of the property value ($400,000 × 80% = $320,000 required). The store carried $400,000, which exceeds the requirement—no penalty applies.