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PROPERTY DEFINITION S Coinsurance Most building and business personal property policies have a coinsurance clause, which requires the insured to carry insurance equal to at least a specified percentage of the actual cash value of the property. If a loss occurs, and it is determined that the amount of insurance carried is less than the amount required,a penalty could be placed on the insured. (Example Attached) Agreed Value When the agreed value option is used the coinsurance requirement is removed and the insurer agrees to cover losses for its agreed value. As an example, the insured has property insured for $100,000 and the agreed value is also $100,000, if a loss occurs, any loss up to $100,000 is covered 100%. When this option is used the insured and the insurance company agree on the value of the property before the policy is issued. This option is usually assigned to one-of-a-kind property. Replacement Property can be valued in several different ways. Insurance companies commonly Cost& Actual use two approaches to determine value, which also determines how a loss will be Cash Value paid: the replacement cost method and the actual cash value method. Insurers consider replacement cost of a property item to be the cost to replace it with new property of like kind. Actual cash value is replacement cost, minus the accumulated depreciation for age and condition. Inflation Guard An insured can insure a building for its full value at the beginning of the policy year, but at the end of the year, it might not be covered for its full value. This problem can be corrected by adding inflation guard coverage. With inflation guard, the policy limit increases gradually during the policy term so that the total increase amounts to the desired percentage increase at the end of the policy term. Coverage In addition to the limits stated in the Building and Personal Property coverage Extensions & form, the policy has a coverage extensions section and an additional coverages Additional section. The coverage extensions section provides limited coverage for newly Coverages acquired or constructed property, property of others, certain out door property, and the cost of research and reconstruct information on destroyed records. When coverage is placed on the all risk form, two additional extensions are added for property in transit and coverage for certain repair costs related to damage caused by water. The two additional extensions are covered by certain perils only. The additional coverage section provides coverage for indirect losses that result from a direct loss. The coverage applies to removal of debris, preservation of property, fire department service charges and pollutant cleanup and removal. The coverage extensions and the additional coverages have limitations and are subject to certain conditions. Basic Form Fire, lightning, explosion, windstorm or hail, smoke that causes sudden and accidental loss or damage, aircraft or vehicles,riot or civil commotion,vandalism, sprinkler leakage, sink hole collapse and volcanic action. Broad Form Fire, lightning, explosion, windstorm or hail, smoke that causes sudden and accidental loss or damage, aircraft or vehicles, riot or civil commotion,vandalism, sprinkler leakage, sink hole collapse, volcanic action, glass breakage, falling objects, weight of snow, ice, or sleet, and water damage (accidental discharge or leakage). Special Form Excluding flood and earthquake. • 50