Chapter 5

Question 1

Examples of business that have a bailee’s exposure

Answer 1

Drycleaners
Garages
Jewellars
Furriers
Trucking firms
Couriers

Question 2

Bailee for hire

Answer 2

One who has temporary custody of the personal property of another for a purpose other than sale, and who is compensated as a condition of the custody - The level of care required of bailees by law.

Question 3

Ordinary Care

Answer 3

Requirement to take the same care of goods of others as would be taken by prudent and diligent owner of such goods

Question 4

When could bailees be held responsible for damage to customers’ property?

Answer 4

Bailees may be responsible to customers property when negligent in common law or in contract

Question 5

When would bailee be responsible for damage to customers property

Answer 5

Bailees may be responsible for damage to customer’s property when negligent in common law or in contract

Question 6

The coverage that bailees exposure is usually insured by under most commercial property policies.

Answer 6

Stock

Question 7

Two other types of bailee policies

Answer 7

Legal Liability policy

A special Bailees Customer Policy that insures direct loss or damage to customers property, regardless of fault.

Question 8

Two coverage areas normally provided by Inland Transportation policies

Answer 8

In Transit

During delay incidental to transit

Question 9

When could bailees be held responsible for damage to customers’ property

Answer 9

Bailees may be responsible to customers property when negligent in common law or in contract

Question 10

The two factors to determine whether the owner or the carrier should purchase insurance on a shipment - Inland Transportation Insurance

Answer 10

Weather the owner or carrier is responsible for loss to the property -who is responsible
to what extent

Question 11

Common carrier

Answer 11

Includes airlines, airlines, railroads, trucking companies and others that provide transportation to an member of the public.

Question 12

Contract carrier

Answer 12

One that carries, for pay, goods of certain customers only

Question 13

Private carrier

Answer 13

One who hauls their own goods or goods entrusted to them as bailees or lessees, including shippers who own or lease their vehicles and carry their own goods

Question 14

The responsibility owned to property owners by common carriers

Answer 14

The safe delivery of goods entrusted to them

Question 15

Common carriers will not be held responsible for all losses to goods in their possession. identify five of these losses

Answer 15

Acts of god
acts of public enemies
acts of public authority
neglect or default of shipper
inherent vice of property transported

Question 16

Standard (ordinary) bill of lading

Answer 16

Used to reflect (and limit) the amount that the common carrier is legally liable for

Question 17

Valued bill of lading

Answer 17

Increases the carriers liability, usually requested by the owner when the value of the goods exceeds the value stated in the standard bill of lading

Question 18

Released bill of lading

Answer 18

Releases the carrier from any liability for the goods transported

Question 19

The Transportation Floater (broad form) is designed for these types of property

Answer 19

Owned by the insured
Owned by others but for which the insured is responsible
Sold but not delivered

Question 20

When does coverage begin and end when insured by a Transportation Floater Broad form

Answer 20

coverage begins when property leaves the premises and continues until property is unloaded at final destination

Question 21

Other forms of transportation that can be endorsed onto the Transportation Floater (broad form)

Answer 21

Railroad
Public or private truckers
Vehicles hired or leased by the insured
Airlines
Otherwise, except ocean-going vessels

Question 22

The Trip Transit policy is designed for this type of client

Answer 22

A business that wants to insure a single shipment of porperty

Question 23

What is a Catastrophe Limit and why is it used

Answer 23

catastrophic limits are the most an insurer will pay in any one occurrence of loss. insurers use these to limit coverage in large losses.

Question 24

The factors considered by the insurer to determine the Trip Transit policy premium

Answer 24

Nature of the property
Distance travelled
Method of transportation, including experience of operators

Question 25

When coverage applies under the Truckman’s Legal Liability Cargo Rider

Answer 25

From the time the goods are loaded for shipment until they reach their destination

Question 26

How limits of insurance are selected by the insured for the Truckmans Legal Liability Cargo Rider

Answer 26

The insured must select an amount of insurance for each vehicle stated on the Policy

Question 27

When can coverage be added to Trickmans legal liability cargo rider for temporary locations

Answer 27

Coverage can be added for property temporarily located at the insureds terminal warehouse or loading station

Question 28

How the insurer limits its liability for loss to shippers property in any one disaster under the Truckmans Legal liability cargo rider.

Answer 28

Catastrophe limit - the most the insurer will pay in any one disaster or occurrence

Question 29

The co-insurance requirement of the Truckmans legal liability cargo rider

Answer 29

100%

Question 30

The premium basis of the Truckmens legal liability cargo rider

Answer 30

Provisional basis, and the insured must follow reporting requirements to determine premium at the end of the policy term

Question 31

Reasons why owners of property might not rely on carriers insurance

Answer 31

Not have adequate amounts of Insurance
Not be broad enough in perils insured against
Have been invalidated because of a breach of conditions
Have been lapsed or cancelled

Question 32

Advantages to owners who by their own transpiration insurance

Answer 32

Prompt recovery of losses directly from the insurer
Amounts payable is generally greater than that provided by carriers policy
Broader insured perils
Reduced insurance costs
Reporting provisions provides automatic coverage for all of the insureds shipment

Question 33

Three prospects for a Tool Floater

Answer 33

Contractors
Mechanics
Carpenters

Question 34

Two exclusions common to the Tool Floater

Answer 34

1) Loss or damage to electrical apparatus caused by artificial electricity 2) Loss caused by mysterious disappearance

Question 35

Identify the types of property insured by Contractors Equipment Floaters

Answer 35

insures all kinds of movable equipment owned, rented or leased by clients

Question 36

What guidance should brokers provide when Catastrophe limits are used on Contractors equipment policies

Answer 36

Not to store all of their equipment in ways that may expose all equipment to one occurance

Question 37

Two common approaches for insuring contractor’s tools

Answer 37

1) Scheduled basis - for tools of high value;

2) Blanket basis - for miscellaneous tools (usually subject to 100% co-insurance

Question 38

The reason why insurers commonly impose a catastrophe limit on the Contractor’s Equipment Floater

Answer 38

The high values of contractor’s equipment and the relatively high potential for a total loss.

Question 39

The three provisions relating to the Newly Acquired Equipment Extension for the Contractor’s Equipment Floater

Answer 39

1) Coverage only provided for similar equipment;
2) Coverage stops after 30 days;
3) Amount of insurance is limited

Question 40

Another name given to a Builders Risk policy

Answer 40

Course of Construction policy

Question 41

Builder’s Risk policy can be placed in these names

Answer 41

The project owner; or

- The general contractor.

Question 42

2 Exclusions found in Builders Risk Policies

Answer 42

1) No coverage for contractors tools and equipment 2) No coverage for faulty workmanship, improper materials or design - resulting damage is insured

Question 43

When will coverage automatically cease on a Builders Risk policy?

Answer 43

) when project is left unattended for more than 30 consecutive days 2) when there has been no construction activity for more than 30 consecutive days

Question 44

Three types of property insured by the Builders Risk - Broad Form.

Answer 44

1) All materials owned by the insured or others that will enter into and form part of the completed project;
2) Landscaping, growing trees, plants, shrubs or flowers that will enter into and form part of the project, as long as it’s included in the amount of insurance;
3) Temporary buildings, scaffolding, falsework, forms, hoardings, excavation, site preparation and similar work, as long as it’s included in the amount of insurance and only to the extent that replacement or restoration is needed to complete the project.

Question 45

How Resultant Damage coverage modifies the “improper material, workmanship or design” exclusion of the Builders Risk - Broad Form

Answer 45

Covers the costs to reconstruct or replace resultant damage from faulty material, workmanship or design

Question 46

Two off-location exposures that can be insured under the Builders Risk - Broad Form.

Answer 46

1) In transit - while in Canada and the continental U.S., excluding Alaska;
2) At any other location.

Question 47

When Builders Risk coverage usually stops

Answer 47

When the building comes into use or becomes occupied.

Question 48

Exceptions to when Builders Risk coverage usually stops

Answer 48

1) When the building is used for other construction work to satisfy the contract;
2) When the building is occupied for office or residential purposes before construction is complete.

Question 49

How the insurer deals with possibility of an insured under-insuring on a Builders Risk form.

Answer 49

The premium adjustment provision

Question 50

How are premiums calculated on Installation Floaters?

Answer 50

Gross annual receipts of clients

Question 51

Three coverages provided by the Installation Floater

Answer 51

1) While in transit by most forms of land transportation, including the insured’s vehicles;
2) While awaiting installation on site;
3) During installation until accepted or the interest of the insured ceases, whichever comes first.