8- Commercial Package Policy

Question 1

What two parts must every policy have?

Answer 1

Property and liability

Question 2

4 components of a CPP

Answer 2

1) common policy declarations
2) interline endorsements (as needed)
3) one or more coverage parts
4) common policy conditions

Question 3

6 Common Policy Conditions of the CPP

Answer 3

Cancellation
Policy changes
Audit by insurer
Inspection by insurer
Premium
Transfer of rights

Question 4

Commercial General Liability (CGL) Basics

Answer 4

Does not cover persons liability
Does cover your legal liability to others
Does cover a lawyer
Does not cover injury to employees

Question 5

Does the CGL cover injury to employees?

Answer 5

No. That is worker’s compensation

Question 6

Can a repair shop purchase a CGL Policy?

Answer 6

No. Dealers and repair shops have Garage Liability

Question 7

What does the claims made coverage apply to?

Answer 7

Coverage A - BI & PD
Coverage B - personal and advertising injury liability

Question 8

Claims Made Policy Form

Answer 8

The claim must be turned in while the policy is still in force. Normally have a retroactive date

Question 9

Retroactive Date

Answer 9

Defines when coverage begins. Eliminates overlapping coverage.

Question 10

Can you advance a Retroactive Date?

Answer 10

ONLY with the written consent of the named insured and the insurer must receive written consent that the insured has been informed of the right to buy an Extended Reporting Period (ERP or Tail of Coverage)

Question 11

What is an ERP?

Answer 11

An extended reporting period does NOT extend the policy PERIOD. It only applies to BI & PD that occurred before the end of the policy period. Extends the period for reporting claims.

CANNOT BE CANCELED

Question 12

Basic ERP

Answer 12

No additional premium. Starts at the end of the policy period and gives and extra 60 days for reporting claims that occurred during the policy period & allows a claimant to report a claim up to 5 years as long as pending claim was no later than 60 days after.

Question 13

Supplemental ERP

Answer 13

Extends the claim reporting period indefinitely or provides a full Tail of Coverage. Named insured must request this ERP in writing within 60 days after the end of the policy period.

Additional premium may not exceed 200% of annual CGL premium

Question 14

Operations liability

Answer 14

Not a single fixed premises, but various premises.

Building contractor would need this to provide BI & PD coverage in case someone (other than him or employees) is injured or their property damaged.

Question 15

Premises Liability

Answer 15

Coverage for BI & PD on your FIXED PREMISES if someone is injured (not you or employees)

Question 16

Coverage A on a GCL also had coverage for products and completed operations…..

Answer 16

For businesses that manufacture or sell products (something) or build something (completed operation). Some need both if you sell 3rd party bottled drinks and someone gets sick

Question 17

Contractual or Assumed Liability

Answer 17

I’d you build your factory next to the railroad so you can load goods onto boxcars. Must sign agreement with railroad agreeing to assume liability.

If someone is injured by siding, you’re responsible not the railroad

Question 18

Insured contract

Answer 18

Contract for a lease of premises
Sidetrack agreement (railroad siding)
Easement or license agreement
Obligation, as required by law, to indemnify a municipality
Elevator maintenance agreement

Question 19

Independent Contractors Coverage

Answer 19

A general contractor may be sued for negligence of its subcontractors

Question 20

Personal & Advertising Injury Liability

Answer 20

Doesn’t cover BI or PD
Covers the insured’s liability for financial damages due to oral or written publication of material that slanders or libels a person or disparages a persons goods, products or services, or oral or written publication of material that violates a persons right of privacy.

Question 21

Advertising Injury means injury arising out of either of these offenses:

Answer 21

Misappropriation or advertising ideas or style of doing business

Infringement of copyright, title or slogan

Question 22

Personal Injury is injury that can arise out of one or more following offenses

Answer 22

False arrest, detention or imprisonment
Malicious prosecution
Wrongful eviction

Question 23

Coverage C on a GCL

Answer 23

No fault medical coverage on a per person basis

Question 24

Up to how much in defense costs will a CGL cover?

Answer 24

Provides unlimited defense costs

Question 25

What is included with supplementary payments in the CGL?

Answer 25

Legal fees, loss of earnings up to $250 per day, bail bonds, bonds to release attachments and any interest

Question 26

What must be given no later than 60 days before policy termination?

Answer 26

Insurer must provide information if they elect to cancel or not to renew coverage

Question 27

Commercial Property Conditions

Answer 27

Conditions spell out the rights and obligations of the parties to the contract. There are 9

Question 28

Concealment & Fraud Commercial Property Conditions

Answer 28

The policy is void if the insured intentionally conceals or misrepresents a material fact.

Question 29

Beyond Control Commercial Property Conditions

Answer 29

Any act by someone other than the insured and beyond their control will not affect the coverage

Question 30

Duplicate coverage Commercial Property Conditions

Answer 30

If two or more coverages apply to the same loss, the insurer will not pay more than the actual loss

Question 31

Legal actions Commercial Property Conditions

Answer 31

Lawsuits may be filed only if all terms of the policy have been complied with and only if the suit is filed within two years

Question 32

Liberalization Clause Commercial Property Conditions

Answer 32

Any revision of the policy that broadens the coverage without any additional premium will immediately apply

Question 33

No Benefit to Bailees Commercial Property Conditions

Answer 33

No one other than the insured may benefit from the policy

Question 34

Other Insurance/Pro Rata Liability Provision Commercial Property Conditions

Answer 34

If more than 1 policy is in effect, the policies will share the claim proportionately, whether the other policy is collectible or not

Question 35

Coverage Applies Commercial Property Conditions

Answer 35

During the period and within coverage territory: US & its territories, Canada and Puerto Rico

Question 36

Subrogation Commercial Property Conditions

Answer 36

Permits the insurer to take the insured right of recover and attempt to recover amounts paid from negligent party

Question 37

Coverage A (CPP)

Answer 37

Covers buildings, built ins, permanently installed equipment and so forth

Question 38

Coverage B (CPP)

Answer 38

Business personal property (contents), including stock, equipment, merchandise, office furniture, etc. within 100ft of premises

Question 39

Coverage C (CPP)

Answer 39

Personal property of others

Question 40

Additional Coverages (D? On CPP)

Answer 40

Debris removal, max of 25%. Removal of business personal property to safety up to 10 days. Fire Department Service Charge up to $1000. Extracting pollutants up to $10,000

Question 41

5 Extensions of coverage with 80% Coinsurance?

Answer 41

1) extended to apply to “newly acquired property” 2) personal effects of your employees and to “personal property or others” 3) researching, replacing or restoring the lost information on “valuable papers and records” 4) business personal property covered while “temporarily off premises” 5) “outdoor property” such as fences, antennas, signs and so forth

Question 42

After 60 days vacant?

Answer 42

No coverage for vandalism, sprinkler leakage, glass breakage, water damage or theft. Coverage reduced by 15% on other perils

Question 43

Reporting Forms

Answer 43

Allow amount of insurance coverage to fluctuate during the policy period and often used by businesses that have large changes in inventory

Question 44

Standard deductible?

Answer 44

$250 per occurrence, regardless of # of buildings affected by the loss

Question 45

How does a Commercial Building & Personal Property Form pay claims?

Answer 45

On an ACV basis, RC is available as an option.

Question 46

Inflation Guard

Answer 46

Automatically increases the limit of insurance every year to make sure the property is properly insured.

Question 47

Builders Risk Form

Answer 47

Designed for buildings in the course of construction, growing to its maximum as the completed value of the building

Question 48

What are the Builders Risk Forms vacancy provisions?

Answer 48

There are none because buildings under the course of construction are not considered to be vacant

Question 49

Builders Risk Form Coinsurance Clause?

Answer 49

There isn’t one

Question 50

How does Builders Risk pay claims?

Answer 50

On a ACV basis and RC is not available

Question 51

When does coverage under a Builders Risk Form automatically terminate?

Answer 51

The insured builders interest in the property ceases. When property is sold. Or 90 days after construction is completed

Question 52

Time Element Losses

Answer 52

Consequential, or indirect, losses

Question 53

Business Income Coverage Form (Business Interruption)

Answer 53

Applies to losses and expenses related to an interruption of normal business operations

Question 54

Period of restoration

Answer 54

Begins on the date that the direct physical loss occurred and ends on the date that it will be repaired, rebuilt or replaced

Question 55

Business Income

Answer 55

Net profit or loss before taxes PLUS continuing operating expenses

Question 56

Contingent Business Interruption Insurance

Answer 56

Protects an insureds business income from interruption due to loss or damage of property that the insured does not own, operate or control

Question 57

Extra Expense Coverage

Answer 57

Covers actual and necessary extra expenses due to a direct physical loss. Does not cover loss of business income Ex- only covers the extra expenses because you had to move your business to a temporary location to continue operations

Question 58

Legal Liability Form

Answer 58

Applies to the insured’s responsibility for the property of others while in the insureds care