Free Property Insurance Basics Study Guide
Iowa Property exam — Property Insurance Basics.
The national guide covers the core property concepts:
- perils and hazards;
- actual cash value and replacement cost;
- coinsurance, deductibles and other insurance;
- binders, endorsements and subrogation.
Iowa's state questions here focus on Iowa's standard fire policy, which is printed in full in Iowa Code 515.109(6), along with related property rules and Iowa's comparative fault law.
National concepts in brief
- Actual cash value = replacement cost minus depreciation. Iowa's claim rule also lets insurers use market value, and the insured may ask for the depreciation worksheet (191 IAC 15.44(2)).
- Replacement cost pays without deducting depreciation.
- Insurable interest in property must exist at the time of loss.
- A binder is temporary coverage.
Iowa's standard fire policy (Iowa Code 515.109)
When it's required: fire policies must use the standard form. The exceptions are policies on automobiles, aircraft, farm crops until stored, and marine or inland marine risks (Iowa Code 515.109(2)). Binders include all the standard policy's terms (Iowa Code 515.109(3)).
Know these provisions of the standard form:
| Provision | Rule |
|---|---|
| Policy period | Begins and ends at noon, standard time, at the property's location |
| Insuring agreement | Pays actual cash value, not more than the cost to repair or replace with like kind and quality, and not more than the insured's interest |
| Excluded property | Accounts, bills, currency, deeds, money, securities and evidences of debt. Bullion and manuscripts are covered only if specifically named |
| Perils not included | War, insurrection, orders of civil authority, neglect and theft. Destruction ordered to stop a fire from spreading is covered |
| Explosion or riot | Not covered, unless fire ensues, and then only the fire loss |
| Suspension of coverage | Coverage is suspended if the building is vacant or unoccupied beyond 60 consecutive days, unless agreed otherwise in writing |
| Concealment and fraud | Willful concealment, misrepresentation or fraud, before or after a loss, voids the entire policy |
| Assignment | Not valid without the insurer's written consent |
| Removal | Property removed to protect it from a peril is covered pro rata for 5 days at each place it is moved |
| Pro rata liability | Each insurer pays its share of the total insurance. Example: $100,000 of $150,000 total insurance on a $30,000 loss pays $20,000 |
| Proof of loss | Signed and sworn, within 60 days after the loss, unless the insurer extends the time in writing |
| Appraisal | Each side pays its own appraiser and splits the umpire's cost. If the appraisers can't agree on an umpire within 15 days, a judge picks one |
| Company's options | The insurer may take the property or repair, rebuild or replace it, with notice within 30 days after proof of loss |
| Abandonment | Property can't be abandoned to the insurer |
| When loss is payable | 60 days after proof of loss and agreement or appraisal |
| Suit | Must be filed within 12 months after the loss |
| Mortgagee clause | If the insured fails to file, the mortgagee must file proof of loss within 60 days of notice |
Other Iowa property rules
- Measure of recovery: the insurer is liable for the property's actual cash value at the date of loss, up to the amount stated in the policy (Iowa Code 515.136).
- Copy of application: the insurer must provide a true copy of any application made part of the policy. If it doesn't, it can never use the application's falsity as a defense (Iowa Code 515.133–515.134). Iowa has no general free look for property and casualty policies.
- Policy revival: paying the full amount due during the term, before a loss, restores coverage from the date of payment (Iowa Code 515.131).
- Return premium: pro rata when the insurer cancels; short rate when the insured cancels (Iowa Code 515.126).
- Prior owner's losses: a property can't be declined solely because of a prior owner's losses, unless the damage wasn't repaired (Iowa Code 507B.4(3)(l)).
- Rates may not be excessive, inadequate or unfairly discriminatory. Fire rates use at least five years of experience. Filings have a 30-day waiting period, extendable by 15 days (Iowa Code 515F.4–515F.5).
Comparative fault
- Iowa uses modified comparative fault (Iowa Code 668.3).
- A claimant recovers damages reduced by their own share of fault, unless that fault is greater than the combined fault of the defendants.
- In effect, a claimant 51% or more at fault recovers nothing.
Common exam traps
- The standard policy runs noon to noon.
- Proof of loss is due in 60 days; payment is due 60 days after proof. Suits must be filed within 12 months.
- Theft is not a covered peril under the standard fire policy. Explosion is covered only for the ensuing fire.
- The vacancy suspension starts after 60 consecutive days.
- An insurer that fails to give a copy of the application loses the misrepresentation defense.
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Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
