Chapter 4

Question 1

Endorsement

Answer 1

Changes the terms or conditions of the policy

Question 2

Rider

Answer 2

Adds additional coverage to those already in place

Question 3

Media

Answer 3

Is CDs, DVDs, backup hard drives and cassettes, upon which data is recorded.

Question 4

Data

Answer 4

The information stored on the media

Question 5

Temporary Location

Answer 5

A location not specified on the policy which is not owned, rented or controlled in who or in part by the insured.

Question 6

Newly Acquired Location

Answer 6

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.

Question 7

Replacement Cost

Answer 7

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.

Question 8

When the Insurer is asked to make a change to a commercial property policy, this can be done in any of three ways. Explain

Answer 8

Endorsement, rider, seperate policy

Question 9

Name three ways in which coverage can be extended

Answer 9

Endorsement
Rider
Separate Policy

Question 10

What does the Glass Rider insure against

Answer 10

all damage to the glass
lettering
ornamentation
tape or foil

Question 11

When would one require a glass rider

Answer 11

Terms of a Tenant’s lease agreement may require that they be responsible for all glass

Question 12

When Glass Rider is on a scheduled basis, what information is the broker required to identify

Answer 12

The type, number and size of glass to be insured
Location - Interior or Exterior
Description of lettering, ornamentation, tape and foil

Question 13

On a glass rider, accidental breakage includes damage caused by:

Answer 13

The insured or their employees
Stones thrown from tires of passing vehicles
Shifting of the building due to earth movement

Question 14

Four Coverage Components of the Accounts Receivable Form

Answer 14

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

Question 15

What is the requirement of the insured when the accounts receivable records are not in use and the premises are closed?

Answer 15

Accounts receivable must be stored in the described receptible

Question 16

2 factors that influence premiums to be charged on Accounts Receivable Forms?

Answer 16

1) Availability of Duplicates

2) Quality of Described Receptacle

Question 17

When can coverage be extended to cover valuable papers and records

Answer 17

Being conveyed outside the premises
While temporarily at other locations

Question 18

What is the coverage limit for valuable papers if property is removed form the insured’s premises

Answer 18

10% of the amount of insurance purchased or $5,000, whichever is less

Question 19

What type of electrical disturbance is insured by Valuable Papers & Records Insurance

Answer 19

When caused by lightning damage

Question 20

3 Coverage sections are included in EDP policies

Answer 20

Loss to data processing systems, including equipment and component parts
Active data processing media, including programs
Extra expense

Question 21

Coverage for EDP includes coverage for what two things

Answer 21

Broad water losses
Mechanical and electrical breakdown

Question 22

5 causes of mechanical & electrical breakdown insured by Electronic Data Processing (EDP) policies

Answer 22

1) Errors in machine programming
2) Processing
3) Short Circuits
4) Dampness or dryness of atmosphere
5) Extremes of temperature

Question 23

What type of agreement may be requested by insurers when requesting Mechanical and electrical breakdown coverage on Electronic Data Processing Policies

Answer 23

Maintenance contract

Question 24

What is the best means to avoiding a loss to media?

Answer 24

Proper back-up procedures

Question 25

2 important coverages provided by Boiler & Machinery Policies

Answer 25

1) Explosion of boilers and pressure vessels

2) mechanical & electrical breakdown

Question 26

What is the basic Insuring Agreement in Section 1 of Boiler & Machinery Policies?

Answer 26

Boiler & Machinery policies insure objects against accidents

Question 27

2 types of Boiler & Machinery policies available

Answer 27

1) Limited Form

2) Comprehensive Form

Question 28

List three instances in which insured property is deemed to be at a temporary location

Answer 28

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

Question 29

Briefly outline the off premises coverages provided under the Newly Acquired Location optional coverage extension

Answer 29

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

Question 30

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.

Answer 30

An overall cost of coverage will be reduced, because you don’t have to insure each parcel individually.

Claims are settled quicker

Question 31

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.

Answer 31

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.

Question 31

What types of exposures are insured by the Property in Transit coverage extension?

Answer 31

All means of transport, incoming or outgoing goods, courier service, Insured’s own vehicles, air, rail

Question 32

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.

Answer 32

AT the home of a sales representative
At a trade show or exhibition
In the sales representative’s automobile
Otherwise

Question 33

What types of business would purchase an Instalment Sales Contract Floater

Answer 33

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

Question 34

At what point in times does the coverage under the Instalment Sales Contract Floater cease to apply

Answer 34

Coverage ceases when the payments on the property have been completed

Question 35

State two advantages provided to Insureds by the Peak Season Endorsement

Answer 35

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

Question 36

Identify the circumstances under which the Peak Season Endorsement would be used and state the type(s) of property to which it applies.

Answer 36

When the insured’s stock values change seasonally

Question 37

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.

Answer 37

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

Question 38

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?

Answer 38

Fire department charges will be paid if a local fire department requires the assistance from neighboring fire departments

Question 38

Explain the working of the Inflation Protection Endorsement

Answer 38

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

Question 39

Elements of an accident under a Equipment Breakdown Policy

Answer 39

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

Question 40

Three optional coverages under a Equipment Breakdown Policy

Answer 40

Production Machinery
Indirect Coverage (Loss of Profits, Gross earnings, etc)
Consequential/Spoilage Damage