Chapter 4 Flashcards
Endorsement
Changes the terms or conditions of the policy
Rider
Adds additional coverage to those already in place
Media
Is CDs, DVDs, backup hard drives and cassettes, upon which data is recorded.
Data
The information stored on the media
Temporary Location
A location not specified on the policy which is not owned, rented or controlled in who or in part by the insured.
Newly Acquired Location
A location acquired (owned, rented or controlled) by the insured. Such location is a newly acquired location for a period of 30 days from acquisition.
Replacement Cost
The cost of repairing or replacing the property of the same site with new property of like kind & quality and for like occupancy without deduction for depreciation.
When the Insurer is asked to make a change to a commercial property policy, this can be done in any of three ways. Explain
Endorsement, rider, seperate policy
Name three ways in which coverage can be extended
Endorsement
Rider
Separate Policy
What does the Glass Rider insure against
all damage to the glass
lettering
ornamentation
tape or foil
When would one require a glass rider
Terms of a Tenant’s lease agreement may require that they be responsible for all glass
When Glass Rider is on a scheduled basis, what information is the broker required to identify
The type, number and size of glass to be insured
Location - Interior or Exterior
Description of lettering, ornamentation, tape and foil
On a glass rider, accidental breakage includes damage caused by:
The insured or their employees
Stones thrown from tires of passing vehicles
Shifting of the building due to earth movement
Four Coverage Components of the Accounts Receivable Form
Amounts which cannot be collected as a direct result of loss/damage to AR from an Insured Peril
Interest Charges on any loan to offset impaired collections pending repayment of such sums made uncollectible by loss/damage
Collection expense in excess of normal collection cost because of loss/damage
Other expenses, when reasonable to re-establish records of AR following loss/damage
What is the requirement of the insured when the accounts receivable records are not in use and the premises are closed?
Accounts receivable must be stored in the described receptible
2 factors that influence premiums to be charged on Accounts Receivable Forms?
1) Availability of Duplicates
2) Quality of Described Receptacle
When can coverage be extended to cover valuable papers and records
Being conveyed outside the premises
While temporarily at other locations
What is the coverage limit for valuable papers if property is removed form the insured’s premises
10% of the amount of insurance purchased or $5,000, whichever is less
What type of electrical disturbance is insured by Valuable Papers & Records Insurance
When caused by lightning damage
3 Coverage sections are included in EDP policies
Loss to data processing systems, including equipment and component parts
Active data processing media, including programs
Extra expense
Coverage for EDP includes coverage for what two things
Broad water losses
Mechanical and electrical breakdown
5 causes of mechanical & electrical breakdown insured by Electronic Data Processing (EDP) policies
1) Errors in machine programming
2) Processing
3) Short Circuits
4) Dampness or dryness of atmosphere
5) Extremes of temperature
What type of agreement may be requested by insurers when requesting Mechanical and electrical breakdown coverage on Electronic Data Processing Policies
Maintenance contract
What is the best means to avoiding a loss to media?
Proper back-up procedures
2 important coverages provided by Boiler & Machinery Policies
1) Explosion of boilers and pressure vessels
2) mechanical & electrical breakdown
What is the basic Insuring Agreement in Section 1 of Boiler & Machinery Policies?
Boiler & Machinery policies insure objects against accidents
2 types of Boiler & Machinery policies available
1) Limited Form
2) Comprehensive Form
List three instances in which insured property is deemed to be at a temporary location
It is not at any location specified on the policy
It is not in transit
It is not at any location owned, rented or controlled in whole or in part by the Insured
Briefly outline the off premises coverages provided under the Newly Acquired Location optional coverage extension
Coverage attaches at the time of acquisition and extends for a period of 30 days or coverage also applies to contents at newly acquired location within Canada that is owned, rented or controlled by the insured
Your clients regularly use Canada Post to send stock orders to their many out of town customers. Provide two reasons why they should consider insuring that exposure under the Property in Transit coverage.
An overall cost of coverage will be reduced, because you don’t have to insure each parcel individually.
Claims are settled quicker
A client’s sales representative left $1,000 worth of costume jewelry in her hotel room. When she returned from dinner she discovered that thieves had smashed the room door and stolen the merchandise. The Insurer attempted to deny the claim on the basis that the sales representative did not have custody of the insured property at the time of the loss. Explain whether the Insurer has a legitimate basis for denial of this claim.
Custody is defined as having control or care of a thing. A person can have “custody” of property without it being in their actual possession at the time of the loss.
What types of exposures are insured by the Property in Transit coverage extension?
All means of transport, incoming or outgoing goods, courier service, Insured’s own vehicles, air, rail
The Insuring Agreement contained in the Sales Representative optional coverage extension provides for coverage to insured property whether in transit or otherwise. Provide two examples of losses insured by this coverage.
AT the home of a sales representative
At a trade show or exhibition
In the sales representative’s automobile
Otherwise
What types of business would purchase an Instalment Sales Contract Floater
Manufacturers, wholesalers, retailers and other businesses selling equipment and merchandise on the partial payment plan
Also serves to satisfy the insurance requirements of financial institutions advancing money to the Insured on such plans
At what point in times does the coverage under the Instalment Sales Contract Floater cease to apply
Coverage ceases when the payments on the property have been completed
State two advantages provided to Insureds by the Peak Season Endorsement
insured does not need to remember to phone the broker to increase the values during the peak
Saves premium dollars as the insured does not have to pay for coverage not needed over the entire policy period
Identify the circumstances under which the Peak Season Endorsement would be used and state the type(s) of property to which it applies.
When the insured’s stock values change seasonally
The Insured must qualify for Replacement Cost coverage. Identify the three obligations required of the Insured before settlement will be provided on a Replacement Cost basis.
Replacement has been effected by the Insured with due diligence and dispatch
Replacement shall be on the same site or on an adjacent site
Payment will be made on a replacement cost basis only after replacement has been effected
Fire Department Charges can be covered under most commercial insurance policies. Some insurers will provide coverage only if the insured is liable for such payments. What kinds of situations could occur which would make the insured liable for the payment of fire department charges?
Fire department charges will be paid if a local fire department requires the assistance from neighboring fire departments
Explain the working of the Inflation Protection Endorsement
Increases the amount of building insurance during the policy period to reflect increase in building costs
No charge to Insured for interim increases in the building value
Elements of an accident under a Equipment Breakdown Policy
It must be sudden and accidental
There must be a breakdown
There must be physical damage to the object
There is a need to repair or replace the object
Three optional coverages under a Equipment Breakdown Policy
Production Machinery
Indirect Coverage (Loss of Profits, Gross earnings, etc)
Consequential/Spoilage Damage
