INSURANCE
QUESTIONS
1
Explain how insurance can allow an owner to accept a lower rate of
return on an investment property.
2
What is the rationale behind the "duty of good faith"?
3
What is meant by "indemnity" and how is the concept
important in valuation practice?
4
What is the meant by insurable interest and why does the insurance
industry require every policyholder to have one?
5
How can insurance premiums be used in an investment valuation? If it
is used, will a lower or higher capitalization rate result?
6
What is meant by a primary fire zone and how will this affect fire
insurance premiums? (You will need to look up the local fire control
and prevention regulations).
7
What sort and type of insurance policies should a property manager
have over a neighbourhood shopping centre?
8
Why is fire insurance part of "risk management"?
9
Why is "extra cost reinstatement insurance" necessary for
the adequate insurance of a pre war block of flats in the inner
suburbs?
10
Determine the payout figure for the following insurance claim using
the “subject to average" clause:
- Value of
building: $200 000
- Amount insured
for $100 000
- Value of
damage: $6 000
11
What would be the answer to 10. if the building had been insured for
$300 000?
12
Why are replacement cost valuations indexed? Which index should be
used for the cost of building? Discuss.
13
How can lease guarantee insurance be used in the valuation of an
investment
property?
14
Compare farm insurance with a typical Hand H insurance policy
15
In what manner is insurance over rural lands different to that over
urban land?
16
Why is the expected cost of replacement value increased by an index?
What are the dangers in doing or not doing this?