• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL

Chapter 8. Steps in the Planning Process > Essential Insurance Coverage Checkli...

Essential Insurance Coverage Checklist

FIRE INSURANCE No action needed Look into this
1. Other perils—such as windstorm, hail, smoke, explosion, vandalism, and malicious mischief—can be added to your basic fire insurance at a relatively small additional cost. ______ ______
2. If you need comprehensive coverage, your best buy may be one of the all-risk contracts that offer the broadest available protection for the money. ______ ______
3. The insurance company may indemnify you—that is, compensate you for your losses—in any one of several ways: (1) It may pay actual cash value of the property at the time of loss, (2) it may repair or replace the property with material of like kind and quality, or (3) it may take all the property at the agreed or appraised value and reimburse you for your loss. ______ ______
4. You can insure property you do not own. You must have an insurable interest—that is, a financial interest—in the property when a loss occurs but not necessarily at the time the insurance contract is made. For instance, a repair shop or a dry-cleaning plant may carry insurance on customers’ property in the shop, or a person holding a mortgage on a building may insure the building although he or she does not own it. ______ ______
5. When you sell property, you cannot assign the insurance policy along with the property unless you have permission from the insurance company. ______ ______
6. Even if you have several policies on your property, you can still collect only the amount of your actual cash loss. All the insurers share the payment proportionately. For example, suppose that you are carrying two policies—one for $20,000 and one for $30,000—on a $40,000 building, and a fire causes damage to the building amounting to $12,000.

The $20,000 policy will pay $4,800; that is:

The $30,000 policy will pay $7,200; which is:

______ ______
7. Special protection other than the standard fire policy is needed to cover the loss by fire of accounts, bills, currency, deeds, evidences of debt, and money and securities. ______ ______
8. If an insured building is vacant or unoccupied for more than sixty consecutive days, coverage is suspended unless you have a special endorsement to your policy canceling this provision. ______ ______
9. If, either before or after a loss, you conceal or misrepresent to the insurer any material fact or circumstance concerning your insurance or the interest of the insured, the policy may be voided. ______ ______
10. If you increase the hazard of fire, the insurance company may suspend your coverage even for losses not originating from the increased hazard. (An example of such a hazard might be renting part of your building to a dry-cleaning plant.) ______ ______
11. After a loss, you must use all reasonable means to protect the property from further loss, or run the risk of having your coverage canceled. ______ ______
12. To recover your loss, you must furnish—within sixty days (unless an extension is granted by the insurance company)—a complete inventory of the damaged, destroyed, and undamaged property showing in detail quantities, costs, actual cash value, and amount of loss claimed. ______ ______
13. If you and the insurer disagree on the amount of loss, the question may be resolved through special appraisal procedures provided for in the insurance policy. ______ ______
14. You may cancel your policy without notice at any time and get part of the premium returned. The insurance company also may cancel at any time but it must give you a five-day written notice. ______ ______
15. By accepting a co-insurance clause in your policy, you can get a substantial reduction in premiums. A co-insurance clause states that you must carry insurance equal to 80 percent or 90 percent of the value of the insured property. If you carry less than this, you cannot collect the full amount of your loss, even if the loss is small. The percent of your loss that you can collect will depend on the percent of the full value of the property you have had insured. ______ ______
16. If your loss is caused by someone else’s negligence, the insurer has the right to sue this negligent third party for the amount it has paid you under the policy. This is known as the insurer’s right of subrogation. However, the insurer will usually waive this right upon request. For example, if you have leased your insured budding to someone and have waived your right to recover from the tenant for any insured damages to your property, you should have your agent request the insurer to waive the subrogation clause in the fire policy on your leased building. ______ ______
17. A building under construction can be insured for fire, lightning, extended coverage, vandalism, and malicious mischief. ______ ______

LIABILITY INSURANCE No action needed Look into this
1. Legal liability limits of $1 million are no longer considered high or unreasonable, even for a small business. ______ ______
2. Most liability policies require you to notify the insurer immediately after any incident on your property that might cause a future claim. This holds true no matter how unimportant the incident may seem at the time it happens. ______ ______
3. Most liability policies, in addition to bodily injuries, may now cover personal injuries (libel, slander, and so on) if these are specifically stated in the policy. ______ ______
4. Under certain conditions, your business may be subject to damage claims, even from trespassers. ______ ______
5. You may be legally liable for damages, even in cases where you used “reasonable care.” ______ ______
6. Even if the suit against you is false or fraudulent, the liability insurer pays court costs, legal fees, and interest on judgments in addition to the liability judgements themselves. ______ ______
7. You can be liable for the acts of others under contracts you have signed with them. This liability is insurable. ______ ______



Not a subscriber?

Start A Free Trial

  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint