CH7- Commercial Property Broad Form

Question 1

How many clauses does the Commercial Property Broad Form have?

Answer 1

The broad form has 18 clauses, one more than the named perils form. The new clause is the Locked Vehicle Warranty.

Question 2

How is the Insured Property clause in the Broad Form divided?

Answer 2

The Insured Property clause in the broad form differs from the named perils in that it is divided into two sub-clauses, A & B. Sub-clause A is identical to Insured Property clause in Named Perils form, but Sub-clause B provides coverage in some circumstances where the Named Perils does not.

Question 3

What is included in Sub-clause b for Insured Property?

Answer 3

This applies building or contents in circumstances for which an amount of ins. is specified on the Dec Page:

• temporary locations; excludes locations owned, rented or controlled by the insured
• building at newly acquired location; applies for 30 days from acquisition date or until expiry, whichever comes first
• contents at newly acquired location; applies for 30 days or until expiry
• property in transit; applies within Canada or continental US until property is delivered
• sales representative; contents within their possession in Canada or the continental US

Question 4

Under Excluded Property, the Broad form lists 16 exclusions - 7 of which are identical in the Named Perils Form. What are the additional exclusions?

Answer 4

• sewers, drains and watermains exclusions
• animals, fish, or birds exclusion
• furs, jewellery, precious stones exclusion
• marine insurance and waterborne property exclusion
• property in the custody of others exclusion
• property in the custody of a sales rep exclusion
• boilers and pressure vessels exclusion
• property being worked on exclusion
• exterior glass or vitrolite exclusion

Question 5

What is the exception to the property in custody of others exclusion?

Answer 5

The exclusion to this is for property in the custody of a carrier delivering it, where the insured is responsible for the property until it is delivered.

Question 6

What are the exceptions to the exterior glass and vitrolite exclusion?

Answer 6

Exterior glass or vitrolite will be covered under these exceptions:

• if loss or damage to such property would otherwise be covered under the extension of coverage for building damage by theft
• if loss or damage was caused directly by one of the named perils

Question 7

There are 16 excluded perils in the broad form, three of which are identical to the name perils form (war risks, nuclear incident, and by-laws). What are the remaining excluded perils?

Answer 7

• earthquake; does not apply to property in transit and ensuing fire is covered
• flood, tidal waves, tsunamis
• influx of water
• breakdown, since equipment is meant to withstand use
• change in atmosphere or temperature
• other non-insurable losses such as evaporation, leakage, marring, scratching, crushing, weight loss
• smudging and industrial smoke
• pests such as rodents, vermin, insects, bats, raccoons
• indirect losses such as delay, loss of mark, loss of use
• dishonest acts as this would be against public policy; does not apply if the insured immediately notifies police
• earth movement such as snow slide, land slide
• explosion of boilers or pressure vessels, except when tanks have internal diameter less than 24 inches
• building movement as this is usually due to poor workmanship

Question 8

What are the four parts of the influx of water exclusion?

Answer 8

1) seepage, leakage, or influx of water which concerns water from natural sources, mainly underground
2) backup or overflow of sewers, sumps, septic tanks, or drains which concerns human sources of loss
3) precipitation that enters the insured building through wall or roof openings as this can be avoided through good property maintenance
4) rain or natural precipitation diffused over the surface of a roof

Question 9

What do the two Non-Insurable Losses exclusions exclude?

Answer 9

The first is loss due to dampness or dryness in the air; temperature changes or extremes; and total or partial interruption to the supply of electricity, water, gas or steam. Second applies to a number of losses, including shrinkage, evaporation, weight loss, leakage, contamination. These causes are covered when they arise from named perils.

Question 10

What is agricultural smudging?

Answer 10

In agricultural smudging, containers of slow-urning combustible material are ignited to create a blanket of smoke, called smudge pots, and are used in operations such as fruit orchards when low temperatures are expected. This is excluded because it comes from friendly fire - one that is burning where intended.

Question 11

What are the two exceptions to the Pollution exclusion?

Answer 11

1) Exception applies if the spill or escape of a pollutant is directly caused by an insured peril.
2) Exception applies to secondary loss or damage - loss or damage that happens when an insured peril is caused y a spill or escape that itself was caused by an insured peril.

Question 12

What is an example of the exceptions to the Pollution exclusion?

Answer 12

A fire causes explosive chemicals to leak onto the floor and cause an explosion. This leaves behind an unpleasant odour that permeates the building. The damage to the building is covered along with the cost of clean up, since fire was the proximate cause.

Question 13

Describe the Mysterious Disappearance exclusion.

Answer 13

Mysterious disappearances are excluded since this would be a case of presumed theft, not actual theft, and is not a named peril. This can be discovered at any time or on taking inventory.

Question 14

What are the two differences for the extension of Growing Plants, Trees, Shrubs, or Flowers in the Open?

Answer 14

1) Coverage extends loss or damage caused by a Named Peril, except windstorm or hail.
2) Loss or damage caused by theft or attempted theft is also covered.

Question 15

Define warranty.

Answer 15

A warranty is a statement or stipulation in a contract the breach of which nullifies the contract.

Question 16

What is the Locked Vehicle Warranty?

Answer 16

The Locked Vehicle Warranty stipulates that any vehicle in which the insured carries insured property:
- will have a fully enclosed body or compartment
- all the doors of the vehicle will be locked; and
- all the windows of the vehicle will be closed.
This clause applies to theft only.

Question 17

Which three terms are defined differently in the Broad Form than they are in the Named Perils Form?

Answer 17

1) Named Perils including Riot, Vandalism and Malicious Acts so as to not list the perils every time that Named Perils is mentioned.
2) Premises, which extends to temporary locations and newly acquired locations.
3) Surface Water, which is not found in the Named Perils Form and means water or natural precipitation temporarily diffused over the surface of the ground.