Insuring Property and Liability Risks

Table of Contents

Chapter 1 Why Do We Have Insurance?	6
What is risk?	7
Premium dollars: a certain loss.	9
Insurance takes away the worry.	11
Charge it!	12
Marine insurance keeps the goods moving	12
Insurance line development/There’s always a way	13
Fire insurance: one of the first forms invented	14
Making the policy practical	15
Standardization becomes necessary	16
Chapter 2 Understanding the Impossible	22
There are 4 basic parts	22
Declarations	23
The Insuring Agreements	24
When is the policy effective?	25
Binders	26
Canceling the policy	28
What are the principle concepts of insurance?	32
Indemnity	32
Insurable Interest	33
Using the Mortgage Clause	35
When negligence or neglect is a factor	36
Proportional payment	36
When more than one mortgage exists	37
Chapter 3 Liability Limitations	39
Insuring for logical amounts	39
Actual Cash Value	40
Repair or replace?	42
Policy language has specific meanings	44
Chapter 4 When Multiple Policies Exist	45
Who pays what?	46
Companies who are not able to pay	47
“Other Insurance” alternatives	48
Non-concurrent policies	48
What happens when claimants refuse the offer?	50
Chapter 5 Insurance Doesn’t Always Pay Everything	52
How coinsurance works	54
Why would a policyholder want coinsurance?	56
Small versus large property owners	57
Coinsurance history/Consumer distrust	58
Coinsurance variety	60
Deductibles/Why are deductibles used?	61
Straight deductible/Convertible deductible	62
Cumulative and participating deductibles/Franchise deductibles	63
Progressively diminishing deductibles	63
Loss limitation clauses/Pro Rata Distribution clause	64
Use of deductibles	65
Types of deductibles	66
In closing	67
Chapter 6 What Are We Insuring Against?	69
Perils/Defining the losses	69
“Loss and Damage by Fire”	70
Lightning/Removal of goods	73
Exceptions	75
Arson	77
Coverage for fire department charges/Debris removal	78
Exceptions to payment	79
Peril Expansion	81
Extended Coverage Endorsement	82
How the deductible applies	83
Windstorm and Hail	83
Beach Plans	84
Explosion	85
Riot and Civil Commotion	86
Aircraft & Vehicles/Smoke/The Apportionment Clause	87
Joint Loss/The Optional Perils Endorsement	89
Vandalism & Malicious Mischief Endorsement	90
Earthquake & Volcanic Eruption Insurance	91
Automatic Sprinkler Coverage	93
Water Damage	94
Flood Insurance	95
Chapter 7 Fire Insurance Forms	97
Putting the policy together	97
Policy Forms	98
Residential Policy Forms (Dwelling forms)/Dwelling and Contents Form	99
Dwelling Coverage	100
Contents Coverage	101
Dwelling and Contents Broad Form	103
Replacement Cost Coverage/Dwelling Buildings Special Form	104
Dwelling Policy Program	105
Commercial Forms	106
Property Covered - Coverage A – Buildings	106
Coverage B – Personal Property of the Insured	107
Coverage C – Personal Property of Others	107
It Doesn’t Cover Everything	107
Extensions of Coverage	108
How is the policy arranged?	110
Is your client adequately insured?	111
Chapter 8 Marine Insurance	112
What is marine insurance? / Is there a standard marine policy?	112
How are marine policies classified?	113
First group: loss or damage to conveyances	113
Second group: “Port Risk Only” policies	114
Third group: fleet policies	115
Fourth group: “Full Form” and “Total Loss Only” policies	115
Fifth group: Hull policies adapted to the type of vessel	116
Liability protection	116
Class 1 - Collision	117
Class 2 - Protection and Indemnity Insurance policies	117
Class 3 - Excess Protection and Indemnity insurance	118
Class 4 - Water Pollution liability	118
Chapter 9 Marine Insurance Marketing	120
Cost, Coverage, and Sales / Rates: A judgment call	120
Client evaluation	121
Hull rates	122
Cargo rates	124
Considering Past Performance/International competition/Pleasure boats	125
Yacht Hull Coverage	126
Other coverage for yachts	127
First Coverage - Protection and indemnity insurance	128
Second Coverage - Federal compensation insurance	128
Third Coverage - Medical payments insurance	128
Reading the Yacht policy	128
Outboard policies	129
Chapter 10 Inland Marine Insurance	131
Goods in transit / Why is it called “Inland Marine” insurance?	131
Growth of the Inland Marine insurance industry	131
Nationwide Marine Definition	134
Inland marine insurance characteristics	136
All-risks protection	137
Excessive hazard / Property normally covered by other insurance	138
Wear and tear	138
Dampness or extremes of temperature	139
Carelessness of the insured / Carelessness of others	139
Mysterious disappearance	139
Infidelity (a disloyal act) / Artificially generated electricity	140
Earthquake and flood / War, acts of war, and nuclear reaction	140
Underwriting: Moral and Morale Hazards	140
Assignment / Who is requesting coverage?	141
Imports and exports (Categories A and B)	141
Domestic shipments (Category C)	141
Transportation policies	143
Parcel Post and registered mail policies	144
Registered mail policy	145
First class mail policy	146
Other forms: Armored car and messenger policy	146
Motor truck cargo insurance	147
Public trucker’s legal liability forms	148
Means of communication coverage	148
Chapter 11 Risks & Protection	149
Personal property floater risks	149
Scheduled and unscheduled floaters	149
Standard provisions	150
Terminology of the personal property floater	150
Floaters: Personal property floater	153
Personal effects floater	153
Personal articles floater	155
Government service floater	157
Snowmobile floater	157
Nearly anything is possible	158
Commercial property floater risks	159
Livestock floater	159
Accounts receivable insurance	160
Valuable papers & records insurance	161
Floor plan merchandise policy	161
Signs and street clocks form	162
Dealer’s block insurance	162
Electronic data processing	164
Chapter 12 Consequential Loss Insurance	166
Loss of business	166
Business interruption insurance	166
A separate and specific policy	167
Describing the property	168
Indemnity period	169
Forms	171
Gross earnings form	172
The agreed amount endorsement	173
Premium adjustment endorsement	174
Extended period of indemnity	175
Deferred loss payment endorsement	175
Payroll endorsements	175
Simplified earnings forms	176
Contingent business-interruption insurance	177
An earnings form of business interruption insurance	178
Extra expense insurance: business interruption means loss of business	179
Business income coverage form	180
Policy definitions	181
Individual consequential loss insurance	182
Rent insurance	183
Forms/Coinsurance	184
Period of indemnity/Rates/Additional living expense	185
Leasehold insurance	186
Recovering profit losses	187
Chapter 13 Boiler and Machinery/Glass Insurance	189
Boiler and machinery insurance/Premium	189
Inspection services	190
Application for coverage	191
Direct-Damage policy	192
Primarily property coverage	195
Exclusions	196
Endorsements/Business interruption endorsement	197
Extra expense insurance	199
Combined business interruption and extra expense	199
Consequential damage insurance/Utility interruption	200
Glass Insurance	200
Chapter 14 Insurance Ethics	203
Principles of honor and morality	203
We are only salespeople.	205
How did I become a moral person?	206
Is it really necessary to be ethical?	207
Egoism: Acting in our own self-interest.	209
Perception is everything.	211
Promoting ethics is a full-time job.	212
Combining investment methods for a satisfying result	216
Where do I start?	218
Investment portfolios	219
How do I know what is ethical?	221
Mores	224
An agent’s ethical requirements/Education	225
Meeting the people	226
What is covered and for how long?	227
Policy replacement	230
Does the applicant understand what was said?	231
Validating premium cost	231
Applicant signatures	232
Keeping in touch with your clients	232
Commingling funds	233
Making personal choices	234
Why bother with ethical behavior?	237