Nonrenewal occurs when the insured or the insurer decides to not continue coverage for another policy period after the current policy period expires. Flat cancellation means to cancel a policy on its effective date. Pro rata cancellation means to cancel a policy midterm so that a refund is made of unearned premium.
A Coinsurance condition requires an insured to carry a certain amount of insurance, which is expressed as a percentage of the insured property's value, in order to avoid a coinsurance penalty for partial losses. In this case, Consuela must carry insurance at least equal to 80% of the home's value, or $100,000, in order to satisfy the requirement.
An indirect loss is one that comes as a result, or consequence, of the original loss.
The subrogation condition transfers the insured's right to collect from a responsible third party to the insurance company.
Property insurance policies typically exclude nonaccidental losses, losses controllable by the insured, extra-hazardous perils, catastrophic losses, and property covered in other policies.
The question asks for the statement that is not correct. Prenotification is required for investigative reports, but not regular reports. The other choices are provisions contained in the Fair Credit Reporting Act.
Both material misrepresentation or concealment and intent are typically required for an insurance company to void a policy. Material facts are important information that could impact the insurer's decision to issue a policy or the terms of the policy. Intentional misrepresentation or concealment suggests that the policyholder knowingly provided false information or intentionally hid material facts from the insurer.
Most insurance policies include conditions that specify what the insured and insurer must do when a loss occurs. The insured's responsibilities after a loss include giving notice of claim to the agent or company, protecting property from further damage, and completing a proof of loss form.
A warranty becomes part of the policy. If it is breached, the insurer can void the policy.
The named insured is the person, business, or other entity named in the declarations to whom the policy is issued. First State Bank has an insurable interest as the mortgagee, but is not a named insured.
Because total coverage is $300,000 and policy C provides 50% of this amount ($150,000) it is obligated to pay 50% of the loss.
