Ch 8 Commercial Package Coverages Flashcards
Does commercial property coverage have its own dec page an conditions?
Yes
How are the contents of a mono line policy different from a CPP?
The amount of coverage parts added.
What are some of the commercial property forms available?
1) building and personal property
2) business income
3) extra expense
4) builders risk
5) condo association
6) condo commercial unit owners
7) legal liability
8) leaseholder interest
9) glass
10) mortgageholders e&o11) tobacco sales warehouses
What are the two coverages of building and personal property?
A building
B personal property
Does building coverage cover a $3000 sign not attached to the building?
No only covers up to $2500
What is considered business personal property?
Furniture, portable machinery, equipment, inventory, stock, personal property owned by the insured and used for business purposes.
How far away from a building is business personal property covered?
100 feet in the open or in a car.
What is the limit for personal property owned by others?
$2500
When is the only time animals are covered on business personal property?
When considered stock or inventory
What are the additional covered under personal property?
Debris removal
Preservation of property (30 days)
Fire dept charges ( $1000)
Pollutant cleanup and removal
How much is the maximum debris removal coverage?
< 25% of the amount paid for damage to property (includes deductible), plus an additional $10k if needed.
When are coverage extensions provided
When 80% coinsurance percentage is on dec page
When is a building considered vacant?
When 70% of units vacant
How many days are newly acquired buildings covered?
30 days
How much is covered for newly acquired buildings
$250k structure, $100k personal property
This coverage extension includes coverage to trees, shrubs, plants, fences, satellite dishes/antennas ($1000 max).
Outdoor property
Which perils are outdoor property covered for?
FLARE fire, lightning, riot, explosion
What types of locations are covered for property off premises?
1) temporarily at location you do not own, lease or operate.
2) in storage of lease started after policy effective
3) at any fair, trade show, exhibition
What is the vacancy clause?
If vacant more than 60 days for following perils aren’t paid;
Vandalism, sprinkler leakage, internal water damage, glass breakage, theft, attempt theft
Fore damage and other perils have coverage reduced by 15%.
What can be added to a policy to provide sprinkler leakage and vandalism coverage when a building is vacant over 60 days?
Vacancy permit
Building under construction are/are not considered vacant?
Are not
If am insured rents an office condo when is the building considered vacant?
When it no longer contains enough business personal property to conduct the customary operations of the insured tenant.
When an insured owns the building, when is it considered vacant.
At least 31% of the total square footage has to be used by the owner to conduct customary operations.
Of the insured has a 80% coinsurance clause and the replacement value is $100k, if the building suffers a $85k partial loss and the insured has maintained 80% insurance to value, what is paid?
$80k. Loss cannot exceed 80% of replacement cost.
This cause of loss form covers same perils as DP Basic (fire, lightning, extended coverages, vandalism, sprinkler leakage and sinkhole collapse. (Exclusions: glass, water damage, falling objects, weight of snow, ice, sleet, collapse)
Basic Cause of Loss
A property form which contains Basic form perils plus: glass breakage, damage weight of ice, etc.; falling objects; internal water damage ((discharge from appliance or bursting pipes). FLOOD NOT COCERR Collapse is an additional coverage.
Broad cause of loss.
This cause of loss form is all-risk. Contains all broad form perils and any perils that aren’t excluded. Even theft.
Excluded perils: earth movement, war, nuclear hazard, flood, sewer backup, drain backup, power failure off premises, ordinance or law, etc. SAME exclusions AS HO3
Special cause of loss
When an earthquake form is added what is the definition of a single occurrence?
168 hour period
What is the minimum earthquake deductible?
$250
Endorsement that increases business personal property endorsement to match seasonal inventory fluctuations.
Peak
Endorsement that covers perishable stock for temperature/humidity change caused by MECHANICAL BREAKDOWN OR POWER OUTAGE also covers contamination by refrigerant. Has to be beyond the insured’s control.
Spoilage
This form covers fluctuating inventory. Final premium is calculated at end of year. A floater form can be added up cover transported property c
Value reporting form
Why happens if insured does not reports values of inventory on time or reports inaccurate inventory?
Losses are paid to amount last reported.
This form protects against loss to gross earnings due to suspension of operations due to direct covered physical loss. Two forms: business income/extra expense and just business income.
Business income form c
Is a business income form subject to coinsurance?
Yes. 50%-60% clause (10% increments)
What is the waiting period (deductible) before claims are paid on business income?
72 hours
This form covers net income plus continuing expenses.
Business income form
What are the additional coverages user business income?
Expenses to reduce loss
Alterations and new buildings ($100k)
Civil authority (cannot access building due to police/fire order)
Extended business income
How long is business income and extra expense covered due to civil authority?
four consecutive weeks
Under business income how long is loss of income covered under the extended business income extension?
39 days after restoration
What is sometimes use on a business income form instead of a coinsurance clause?
Monthly limit of indemnity. If used the insured will get a percentage of the policy limit for any one month business is interrupted. (Ex. $40k limit 25% monthly. Insured gets $10k for a month.
When do businesses use the extra expense form?
When operations continue after destruction of their facilities. Covers renting equipment, new facilities, etc, moving.
What is covered under builders risk?
Damage to building, foundation, fixtures, machinery, equipment to service building, temporary structures like scaffolding.
What is not covered under builders risk?
Existing buildings
When does builders risk coverage end?
1) 60 days after occupied
2) property accepted by purchaser
3) named insured abandons property with no intent to complete it.
4) policy cancels
Which coverage extensions can be added to builders risk?
Legal liability (property)
Condo association - protects condo association. Can be added when owners is responsible for improvements, alterations, additions
Condo commercial unit owners (if condo agreement requires)
Leaseholder interest - covers commercial tenant when lease under favorable conditions is terminated before normal date due to a peril.
The CGL is written on a ______ basis.
Occurrence
For a loss to be covered under an old CGL policy it has to occur ___________________.
During the policy period
What does claims made mean?
Injury or damage ha to occur after a retroactive date. The loss has to be reported during this period.
What is one of the main reasons for switching from occurrence to claims made?
Occurrence of latent injuries (ex. Asbestos)
What are the three sections of general liability?
Coverage A “BI and PD liability”: 1) premises and operations 2) products and completed operations
coverage B Personal injury and advertising injury liability
Coverage c medical payments
Are injuries or pd caused by plows or street cleaners covered by CGL?
No.
How do limits work with coverage A (BI pd) on a CGL?
Ex 250/500/1 million
Are products and completed operations covered on a CGL?
Yes.
Are ATMs and vending machines covered under CGL?
No. Not a product being sold.
Does coverage A cover “insured contracts” and damage to premise rented to you?
Yes. Sublimit for propert rented is $100k
What types of contracts does A cover?
LEASE Incidental contracts such as: lease agreements, easements, incidental agreements with municipality, sidetrack agreements, elevator maintenance agreements
How does damage to premises rented to you work?
Protects you as a commercial tenant from damage to landlords building and personal property (7 day limit on personal property)
Are incidental medical malpractice, non owned watercraft and host liquor liability covered on A?
Yes. Restriction only applies if insured manufactures or distributes the liquor.
