Bare wall insurance is one of three approaches used for condominium insurance coverage. Under the “bare walls” approach, the condominium association insures only the bare structure of a single condominium building; structure, adaptations and furnishing of territories under collective ownership; and the association’s personal property, which is collectively owned. Under this methodology, individual unit owners are responsible for insuring building assets they own and use exclusively, such as sinks, built-in wardrobes, appliances, floors, and wallpaper (along with any upgrades and upgrades) in their individual owner-owned units. (HO) 6 or form of owners of premises. The other two methods of coordinating this coverage are the One Person Coverage and the All Inclusive Coverage. The rules and agreements of the condominium association usually specify which approach is required.
Insurance is a contractual relationship that arises when one party (the insurer), for a fee (premium), agrees to compensate the other party (the insured) for losses caused to a certain subject (risk) caused by certain unforeseen circumstances (hazards or dangers). The term ‘guarantee’, commonly used in England, is considered synonymous with ‘insurance’.
The 10/10 Rule is a matter of analyzing and demonstrating the transfer of risk as a precondition for the use of reinsurance accounting, which was codified in the early 1990s with the adoption of Financial Accounting Standard (FAS) 113 (and its statutory counterpart, SSAP 62). FAS 113 itself was a response to alleged abuses and set the standard for testing whether something should be called an insurance contract. FAS 113 required that the transfer of risk be demonstrated by comparing the present value of the cash flows associated with the contract and, in particular, by exceeding certain thresholds of “significance” of risk. The thresholds, often referred to as the 9a and 9b tests, are: 9a. The reinsurer assumes significant insurance risk under the reinsured parts of the underlying insurance contracts. 9b. It is possible that the reinsurer could suffer a significant loss from the transaction. While neither “significant” nor “reasonably possible” was defined in this context, standard rules of thumb quickly emerged in the implementation of FAS 113. The most commonly cited is the “10/10 Rule”. This rule states that a contract reaches a threshold if there is at least a 10 percent chance that it will suffer a loss of 10 percent or more in present value (expressed as a percentage of the contract premium ceded).