Chapter 19: Business Property and Liability Insurance Flashcards
Commercial Property Insurance
Broadly speaking, the term commercial property includes business property of all types.
Covered property:
• buildings
• business personal property of the named insured
• personal property of others in the care, custody, or control of the named insured
Builders Risk Coverage Form
This form provides protection for buildings under
construction and covers the unique loss exposures and valuation issues associated with these structures.
Condominium Association Coverage Form
This form covers property for which a residential or commercial condominium association is responsible. It covers not only property owned by the association but also furniture, fixtures, alterations and appliances of unit-owners if the association agreement requires the association to insure them.
Condominium Commercial Unit-Owners Coverage Form
This form covers the interest of the owner of a commercial condominium unit. Note that an owner of a
residential condominium unit can protect his or her interest under an HO-6 policy.
The Extra Expense Coverage Form
The Extra Expense Coverage Form is designed to provide extra expense insurance for
organizations that must remain in operation after a property loss.
Business Income Insurance
Insurance that covers business losses after the occurrence of a direct physical damage loss that results in the suspension of business operations. The three basic types of losses covered include: net income, normal ongoing business expenses and extra expenses.
Burglary
the taking of property from inside an insured premises by a person who enters or leaves the premises unlawfully as evidenced by marks of forcible entry or exit
Safe Burglary
Burglary from a locked safe or vault or the removal of a safe or vault from inside a building.
Inland Marine Insurance
Today, inland marine policies and forms are used to write coverage for the following:
- goods in domestic transit
- property held by bailees
- mobile equipment and property
- property of certain dealers
- instrumentalities of transportation and communication
- difference in conditions (explained later)
Goods in Transit
mail, rail, truck, or aircraft. It is common for these policies to cover shipments only within and between
the continental United States, Alaska, and Canada
Mobile Equipment and Property
- contractors’ mobile equipment
- agricultural equipment
- cameras
- computer equipment
- farm animals
- fine art
- musical instruments
- physicians’ and surgeons’ equipment
- property on exhibition
- sales samples
- signs
- theatrical property
Property Held by Bailees
Bailees, such as dry cleaners, repair shops, and public warehouses, often have possession of significant amounts of customers’ goods. A bailee liability policy can be purchased to cover damage to these goods when the bailee is legally liable.
Property of Certain Dealers
Certain types of dealers in property have a significant amount of inventory that is likely to be transported. Special policies have been developed for these businesses that pick up not only the transportation loss exposure, but also provide coverage for merchandise
in a store, furniture and fixtures of the dealer, and property of others in the dealer’s care, custody, or control.
Difference in Conditions
A difference in conditions (DIC) insurance policy provides open-perils coverage to fill the gaps left by a policy owner’s other commercial insurance policies. Traditionally, it was used to provide open-perils coverage to policy owners whose basic policies provided named perils protection.
CGL
Commercial general liability (CGL) insurance
CGL is?
Commercial general liability (CGL) insurance is designed to cover a wide variety of liability loss exposures that can face an organization, including
• premises liability. An owner or tenant can be liable if someone is injured or property is damaged because of a condition in or arising out of premises that are
owned or occupied.
• business operations liability. A business can be liable if bodily injury, personal injury, or property damage results from the activities of the business owner or an employee. These activities can take place on or away from the business location.
• products liability. Legal liability often arises from bodily injury or property damage caused by a defective product that is manufactured or sold by a business.
• completed operations liability. Similarly, legal liability can arise out of work that has been performed by an insured. For example, a fire can start as a result of an improperly installed gas line.
• contractual liability. In many cases, a business, through written or oral contracts, assumes liability for the acts of others.
• contingent liability. A business can face liability because of work performed by independent contractors, such as a subcontractor hired by a firm.
Three types of commercial auto insurance policies are as follows:
- Business Auto Coverage Form
- Garage Coverage Form
- Motor Carrier Coverage Form
BAC
The Business Auto Coverage (BAC) Form provides the most common type of commercial auto insurance and is similar to the Personal Auto Policy
BOP
A business owners policy (BOP) is designed to provide property and liability coverage for small- to medium-sized businesses and organizations that meet certain eligibility requirements.
Claims-made basis:
Claims-made basis: Coverage applies to claims made while the policy is in force, even when the loss-causing events occur earlier.
Occurrence basis:
Occurrence basis: Coverage applies to bodily injury or property damage that occurs during the policy period, regardless of when claims for damages are made.
Professional Liability Insurance
Professional liability insurance can best be defined as insurance to protect against liability for the failure to use the degree of skill expected of a person in a particular occupation.
Most professional liability policies are written on a what basis?
Most professional liability policies are written on a claims-made basis.
This means that the policy in force when a claim is made is the policy that covers the claim, not the policy in force when the event that caused the claim occurred.
Directors and Officers Liability Insurance
Directors and officers (D&O) liability insurance is purchased by a corporation, but the
corporation (unless it is a nonprofit organization) is often only the policyowner and not an
insured; the insureds are the directors and officers.
Clients who sit on a corporation’s board of directors or a nonprofit organization’s board of trustees sometimes do not realize that they face serious liability exposures. In recent years, especially in light of various corporate scandals, individual board members have increasingly been held accountable for their actions or inactions. Stockholders frequently bring suits alleging that they have been financially harmed by the corporation’s negligent management.
