Property & Casualty Insurance 15 Hour California Insurance Continuing Education Course Published By: Training Solutions. Online, Anytime, Anywhere. ™ www.infinityschools.com i Did you know Infinity Schools offers Online Pre-License Training? Our online pre-license training system includes: 1. Online study lessons 2. Instructor led video training 3. Online practice exams 4. Practice final exam simulator Infinity Schools prepares thousands of individuals each year to prepare for and successfully pass the California State Insurance examination. If you or any of your staff would like to prepare to pass the state exam please visit our website or contact us directly. Publishers Note: Care has been taken to ensure that the information in this course material is as accurate as possible. Please be advised that applicable laws and procedures are subject to change and interpretation. Neither the authors nor the publisher accept any responsibility for any loss, injury, or inconvenience sustained by anyone using this guide. It is further understood that the course, the author nor the publisher is engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Copyright © 2011 Infinity Schools Insurance Training Center All rights reserved. Printed in the United States of America. No part of this publication may be used for reproduced in any form or by any means, transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Infinity Schools. Training Solutions. Online, Anytime, Anywhere. ™ 1310 Esplanade #317-S Redondo Beach, CA 90277 www.infinityschools.com [email protected] Phone: 800-600-2550 Fax: 424-247-9050 ii TABLE OF CONTENTS CHAPTER 1: FIRE INSURANCE 1 FIRE INSURANCE HISTORY ............................................................................................... 1 DEFINITION OF FIRE .......................................................................................................... 1 BASIC PROVISIONS OF THE STANDARD FIRE POLICY .................................................. 1 LIMITATIONS ON RECOVERY .......................................................................................... 1 COVERED PERILS ............................................................................................................. 2 ASSIGNMENT OF THE POLICY ......................................................................................... 2 CONDITIONS, EXCLUSIONS, AND OTHER PROVISIONS .............................................. 2 OTHER INSURANCE .......................................................................................................... 2 SUSPENSION OF INSURANCE .......................................................................................... 2 OTHER PERILS AND ADDED PROVISIONS ..................................................................... 2 PROHIBITION OF WAIVER ................................................................................................ 2 CANCELLATION ................................................................................................................ 2 PROTECTION OF THE MORTGAGEE'S INTEREST ............................................................ 2 PRO RATE LIABILITY CLAUSE ............................................................................................ 2 REQUIREMENTS IF CASE LOSE OCCURS ....................................................................... 2 APPRAISAL CLAUSE .......................................................................................................... 2 COMPANY'S OPTION....................................................................................................... 3 NO ABANDONMENT OF PROPERTY ............................................................................... 3 OTHER PROVISIONS ......................................................................................................... 3 FIRE INSURANCE RATING................................................................................................. 3 SUMMARY ......................................................................................................................... 3 CHAPTER 2: DWELLING COVERAGE 4 THE 1984 HOMEOWNERS PROGRAM ........................................................................... 4 TYPES OF HOMEOWNERS POLICIES .............................................................................. 4 HO-1 (BASIC FORM) ........................................................................................................ 4 HO-2 (BROAD FORM) ...................................................................................................... 4 HO-3 (SPECIAL FORM)..................................................................................................... 5 HO-4 (CONTENTS BROAD FORM) .................................................................................. 5 HO-6 (UNIT-OWNERS FORM) .......................................................................................... 5 HO-8 (MODIFIED COVERAGE FORM) ........................................................................... 5 POLICY LAYOUT ............................................................................................................... 5 DECLARATIONS ................................................................................................................ 5 DEFINITIONS ...................................................................................................................... 6 ANALYSIS OF HOMEOWNERS (HO-2) POLICY ............................................................. 7 SECTION 1 - PROPERTY COVERAGE .............................................................................. 7 SECTION 1 - PERILS INSURED AGAINST .......................................................................... 8 (HO-2) ................................................................................................................................ 8 FIRE OR LIGHTNING. ........................................................................................................ 8 WINDSTORM OR HAIL ...................................................................................................... 8 EXPLOSION ....................................................................................................................... 8 RIOT OR CIVIL COMMOTION ......................................................................................... 8 AIRCRAFT AND VEHICLES ................................................................................................ 8 SUDDEN AND ACCIDENTAL SMOKE DAMAGE ............................................................ 9 VANDALISM OR MALICIOUS MISCHIEF ......................................................................... 9 THEFT .................................................................................................................................. 9 BREAKAGE OF GLASS ...................................................................................................... 9 FAILING OBJECTS ............................................................................................................. 9 WEIGHT OF SNOW, ICE OR SLEET .................................................................................. 9 ACCIDENTAL DAMAGE CAUSED BY PLUMBING .......................................................... 9 WATER HEATERS, HEATING SYSTEMS, AIR CONDITIONERS, OR SPRINKLERS ............. 9 FREEZING OF PLUMBING ................................................................................................. 9 SUDDEN DAMAGE FROM ARTIFICIALLY GENERATED ELECTRICAL CURRENT .......... 9 SECTION 1 - EXCLUSIONS ................................................................................................ 9 ORDINANCE OR LAW ...................................................................................................... 9 EARTH MOVEMENT........................................................................................................... 9 POWER FAILURE ............................................................................................................. 10 iii NEGLECT ......................................................................................................................... 10 WAR ................................................................................................................................. 10 NUCLEAR HAZARD ......................................................................................................... 10 SECTION 1 - CONDITIONS ............................................................................................. 10 LOSS SETTLEMENT. .......................................................................................................... 10 REPLACEMENT COST AND INSURANCE TO VALUE REQUIREMENT .......................... 10 REASONS FOR THE COINSURANCE REQUIREMENT ................................................... 11 MORTGAGE CLAUSE ..................................................................................................... 11 SECTION 2 - LIABILITY COVERAGE ............................................................................... 11 COVERAGE E - PERSONAL LIABILITY ............................................................................ 11 COVERAGE F - MEDICAL PAYMENTS TO OTHERS .....................................................