Chapter 7 - Commercial Package Flashcards
Commercial Package Policy common policy declarations
Describes the covered property, designates primary and optional coverages, and indicates limits, perils, mortgagee, and deductible information.
What is the commercial package policy?
Most common way of insuring commercial properties and liabilities.
Is comprised of any combination of stand-alone policies and covers both property and liability.
What are some common policy conditions for Commercial Package Policy?
- Cancellation/ non-renewal - 10 days new business/ 10 days non-payment / 60 days non-renewal
- Changes in coverage - all changes in coverage must be done by endorsement
- Audits & Inspections - gives the insurer the right to gather information necessary to underwrite the policy
- Premium - the first named insured is responsible for the payment of the premium
- Assignment - Insurance is not transferable
What are the coverages of Commercial General Liability (CGL)?
A - Bodily Injury and Property Damage
B - Personal and Advertising Injury
C - Medical Payments
What are the liability exposures for Commercial General Liability (CGL)?
Premises & Operations
Products & Completed Operations
What is Coverage A of Commercial General Liability?
Bodily Injury & Property Damage (BI & PD)
Bodily damage is bodily injury, sickness, disease, or death
Property Damage is physical damage to tangible property, including loss of use
What is Coverage B of the Commercial General Liability policy?
Personal & Advertising Injury
Personal injury can be libel, slander, false arrest, detention, malicious prosecution, wrongful eviction, wrongful entry, and publication violating privacy
Advertising injury can arise from oral or written publication caused by libel, slander, publicist ion violating privacy, misappropriation of ideas, and copyright or trademark infringement
What is Coverage C of Commercial General Liability (CGL)?
Medical Payments
First aid
Must incur and be reported within 1 year by individuals injured in the premises of insured or as a result of the insured’s operations.
Limit is $5,000
Is paid without regard to fault or negligence.
What are supplemental payments for Commercial General Liability (CGL)?
Primary used to defend a liability claim
All expenses that the insurer occurs
All cost taxed against the insured
Loss of earnings up to $100 per day for court appearances
Cost of court bonds
$250 bail bonds for traffic violations involving BI
Pre-judgment interest on court bonds
Post-judgment interest on court bonds
Who are the names insured on Commercial General Liability?
- Sole Ownership - Insured and spouse
- Partnership - Insured, all members, partners and spouses
- Corporation - Insured, officers, directors, stockholders
Who are the other insured’s on Commercial General Liability (CGL) policies?
- Employees
- Real estate manager
- Temporary custodian due to death of insured
- Any person driving mobile equipment
If an employee injures another employee, they both are not insured
What are the 6 separate limits of liability on Commercial General Liability (CGL)?
- Occurrence - max payable for all claims for one occurrence for premises and operations or products and completed operations
- General aggregate - max payable for policy period for all claims from occurrences under premises and operations
- Products and completed operations aggregate - max payable for policy period for products and competed operations
- Personal and advertising injury - max payable under Coverage B for one occurrence
- Fire damage legal liability
- Medical expense limit - max payable under Coverage C for any one person
Duties of insured
Promptly report occurrence, cooperate in the investigation, forward any paperwork about claim to the insurer
Subrogation
Transfer rights of recovery
Premium audit
Allows insurer to investigate conditions on premises to ensure they are getting the correct rate for the risk.
Can adjust premium at any time of conditions warrant
Mobile Equipment
Vehicles used primary off road, on crawler treads, or for providing mobility to equipment
Bulldozers, power cranes, etc
What are the exclusions for Coverage A (BI & PD) and Coverage C (Med Pay) for Commercial General Liability?
- Expected or intentional injury
- Contractual liability (exception for insured contracts)
- Alcoholic beverage business (a one time happening is ok)
- Worker compensation claims
- Employee injury
- Pollution
- Aircraft, watercraft, auto
- Transportation of mobile equipment
- War
- Nuclear or radioactive
- Property of Insured
- Insured’s product or work
- Impaired products (food poisoning is excluded, however getting sick from eating is covered)
- Recalled products
What are the exceptions to CGL Coverage B (personal or advertising injury)?
- Knowingly publishing false material
- Claim occurring prior to policy effective date
- Liability assumed under contract
- Willful violation
What are the exclusions to CGL Coverage B for advertising injuries only?
- Failure of goods, products or services to meet advertised quality
- Wrongful description of price
What are the exclusions to CGL Coverage C (med pay only)
Any insured, employees or tenants
Contractor hired by insured
“Claims made” policy forms vs “occurrence”
An occurrence form will respond to injuries or damages incurred during the policy period and is not dependent of when a claim is made
A “claims made” form will only respond to bodily injures or property damages if a claim is initially made at some time during the policy period or coverage/extended reporting period.
What is a retroactive date?
The first date a loss can occur and still be covers
Extended reporting period
Extends the time you have to report a claim
Pollution Liability Coverage Form
Also know as Standard Pollution Policy
Is the only way to cover the cost of cleanup
What are the 7 Coverage Forms for a Commercial Property policy?
- Building & Personal
- Business Income
- Extra Expense
- Builder’s Risk
- Legal Liability
- Condo Association
- Condo Commercial Unit - Owners
What is the deductible for Commercial Property Policy?
$250
What are the two components of Commercial Property Policy?
Coverage form
Cause of loss form
What does the coverage form do on a Commercial Property Policy?
Describes the object being insured
What does the cause of loss form do on Commercial Property Policy?
Identifies the perils that are insured against
What Commercial Property Policy covers theft?
Only special covers theft
What does the basic cause of loss form cover in Commercial Property Policy?
Fire Lightning Windstorm Hail Sinkhole collapse Volcanic action Smoke Aircraft Riot Vehicle Vandalism Sprinkler leakage
What does the broad cause of loss form cover in Commercial Property policies?
BASIC Fire Lightning Windstorm Hail Sinkhole collapse Volcanic action Smoke Aircraft Riot Vehicle Vandalism Sprinkler leakage
AND Glass breakage Falling objects Weight of snow, ice, sleet Water damage Collapse
What does the special cause of loss form cover in Commercial Property Policies?
All risks
Theft
While in transit
What are the additional limits on Commercial Property Policies?
Additional $10,000 debris removal
Stock is valued at selling price
Property in transit $5,000 covered only under special
Theft of jewelry, furs $2,500 covered only under special
Theft of stamps or tickets $250 covered only under special
What is the deductible for Commercial Property Policy?
$250
Coverage form Business and Personal Property for Commercial Property Policy
Used for direct damage to a building (Coverage A) the contents (Coverage B) and the property of others (Coverage C)
Is written on ACV valuation
Building and property within 100’ are included
What are the additional coverages for building and personal property coverage form on Commercial Property Polices?
Debris removal
Increased loss due to construction (used to comply with building laws due to a covered loss)
Preservation of property
What are the coverage extensions for building and personal property coverage form under Commercial Property Policy?
- Newly acquired buildings ($250,000 up to 30 days)
- Newly acquired personal property on premises ($100,000 up to 30 days)
- Personal property off premises ($10,000 for 30 days) except while in a vehicle, at a fair or exhibition or in custody of a sales person
- Personal effects of employees and others ($2,500)
- Valuable papers ($2,500)
- Outdoor property including signs ($1,000)
- $250 per tree, shrub, or plant for fire, lightning, explosion, riot or aircraft
- Glass breakage (on broad and special forms) covered $100 per plate and $500 per occurrence
Coverage form Business Income for Commercial Property Policy
If a business has to shut down, will reimburse for business loss income
72 hour waiting period
Coverage is in 30 day increments
Coverage form for Extra Expenses for Commercial Property Policy
Will reimburse for extra expenses incurred by business to stay open following a covered loss
Coverage form Builders Risk for Commercial Property Policy
Covers buildings under construction, including building materials and supplies, fixtures, machinery, equipment and temporary structures, including building materials and supplies belonging to subcontractors of the named insured.
Coverage ceases when job is complete
Coverage form Legal Liability for Commercial Property Policy
Provides legal liability coverage for real and or personal property of others in the insured’s care, custody and control
Coverage form Condominium Association for Commercial Property Policy
Similar to building and personal property coverage form with differences to accommodate the needs to the condo association
Coverage form Condominium Commercial Unit Owners for Commercial Property Policy
Designed to coordinate with the condo association coverage form and accommodate the special needs of commercial condo unit owners
What are some selected endorsements for Commercial Property Policies?
Ordinance or law coverage - provides coverage for indirect loss exposure from operations of building laws, normally excluded by the policy.
Peak season - increases the limit of insurance on personal property during specified time periods
Spoilage - covers spoilage of perishable stock caused by power outage, mechanical breakdown or refrigerant contamination.
Commercial Crime
Protects a business from crime
Theft - loss of property by any act of stealing
Burglary - taking of property by means of forcible entry into or exit from the premises, leaving visible marks of force and violence at the place of entry or exit.
Robbery - taking of property by violence, fear or threat of violence from any person in custody of the property.
Mysterious Disappearance - any unexplained absence of covered property, even though it might not have been because of a criminal act.
Burglary
- taking of property by means of forcible entry into or exit from the premises, leaving visible marks of force and violence at the place of entry or exit.
Robbery
taking of property by violence, fear or threat of violence from any person in custody of the property.
Mysterious Disappearance
any unexplained absence of covered property, even though it might not have been because of a criminal act.
Commercial Crime Exclusions
Any loss resulting from acts committed by the named insured or the insured’s partners
Any loss resulting from the seizure or destruction of property by a governmental authority
Any loss that is an indirect result of an occurrence that is covered
Any legal expense related to legal action
Any loss resulting from any nuclear hazard / nuclear incident or war risks / warlike action
What are the conditions of Commercial Crime
Valuation is ACV
Discovery period is 1 year
policy period is 12:01 AM
Policy territory is US, Canada and US territories
Custodian
Any person who is on the regular employ of and authorized by the insured
Employees
Watchman
Any person the insured retains to have care and custody inside the premises and who has no other duties
Security officer
Messenger
Any insured or employee having care and custody outside the premises
What are the Commercial Crime Coverage Forms
Employee dishonesty
Forgery or alteration
Computer fraud
Outside the premises
Inside the premises - theft of money and securities
Inside the premises - robbery and safe burglary
Funds transfer fraud
Money orders and counterfeit paper currency
What are the schedules for employee dishonesty?
Name schedule - covers specific employee
Position schedule - covers employees in a specific position
Blanket schedule - covers all employees
What is another name for the coverage that protects against employee dishonesty?
Fidelity bond
What are the exclusions to employee dishonesty crime coverage form?
Inventory loss
Employees who committed an unlawful act prior to employment and did not disclose this information to the employer.
What is the only way to cover employee theft?
Employee dishonesty (fidelity bond) crime coverage form
What is the Commercial Inland Marine Policy?
Covers property that is subject to movement
Referred to as floaters
Generally written on a all risks basis
Personal floaters
Jewelry, furs, art objects, musical instruments, collections
Commercial Floaters
Accounts Receivable Commercial Article (art like items) Contractors Equipment Floater Equipment Dealers (large equipment like John Deere or Caterpillar) Installation Floater Jewelers Block - does not cover showroom windows or employee theft Signs Valuable Papers and Records Transportation Coverage
What is excluded on Jewelers Block?
Showroom window and employee theft
What is a common carrier?
UPS, FedEx, USPS
Motor Truck Cargo Forms
Truckers - covers a contract carrier’s legal liability for losses to property in the carrier’s care, custody, and control.
Shippers - covers shippers interests in property sold to another while it is being transported by a common carrier until it is delivered and accepted by the buyer
Owners - companies that own their own trucks to ship their own goods
Transit Coverage Forms
Annual - covers an insured’s property during all forms of transportation by common carriers or the insured’s own truck
Trip - a trip is from point A to point B
What is the only policy that does not have a declarations form?
Boiler and Machinery
It has a object definitions form
Under Boiler and Machinery Coverage Forms what is “covered property”?
Any property owned by the insured or any property in the care, custody or control of the insured for which he or she may be liable for
Under Boiler and Machinery Coverage Forms what is Accident
A sudden and accidental breakdown of the object or a part of the object.
Does not include wear and tear, deterioration, leakage or the functioning of a safety or protective device
Under Boiler and Machinery Coverage Forms what is object?
The equipment of the type listed in the Scheduled Form or the types included in the Small Business Forms
Boilers, air tanks, hot water tanks, generators, air conditioning and refrigerating systems, engines, compressors, pumps, transformers and switchboard.
What is the maximum limit for Boiler and Machinery?
$5,000,000
Policies are written on replacement value, however if equipment is not replaced within 18 months, will drop to ACV.
