Chapter 8: Commercial Property Policies

Question 1

Components of Commercial Package Policy

Answer 1

CPP = Declarations + Conditions + Endorsements

Question 2

Information included in Commercial Policy Declarations

Answer 2

Named Insured, mailing address, policy period, business description
Coverage parts and premiums
Forms that apply to all included coverage parts

Question 3

What are Common Policy Conditions

Answer 3

Cancellation, changes, examination of books/records, inspections/surveys, premiums, transfer of rights

Question 4

Define & list two Interline Endorsements

Answer 4

*Endorsements that apply to all parts of the policy
PA Notice
PA Changes Cancellations & Nonrenewal

Question 5

Farm Coverage Forms

Answer 5

normal COV A-D
COV E- scheduled farm property
COV F- unscheduled farm property
COV G- outbuilding

Livestock Form

Question 6

Identify losses to livestock covered under Broad Form that are not covered under Basic Form

Answer 6

electrocution, attack by dogs/wild animals, accidental shootings on insured location, drowning, loading/unloading

Question 7

3 perils unique to Farm Coverage that are covered under the Basic Farm Property Form that are not covered under the Commercial Building and Personal Property Basic Cause of loss Form

Answer 7

1. Collision COV E&F only; collisions causing damage to covered farm machinery, death of covered livestock, damage to other farm personal property while that property is being hauled
2. Earthquake loss to livestock
3. Flood loss to livestock

Question 8

How does the vacancy provision in the Farm Form differ from other policies

Answer 8

if it is unoccupied/vacant greater than 120 consecutive days then the building limit is reduced by 50%, unless an endorsement is attached to extend the period

Question 9

Building and Personal Property Coverage Form

Answer 9

buildings, business personal property and personal property of others, listed on dec page

Question 10

Property covered under Building

Answer 10

the building or completed addition, fixtures, permanently installed machinery or equipment, personal property used to maintain/service premise, appliances used for dishwashing/cooking/laundering, alterations/repairs under construction

Question 11

Property covered under Business Personal Property

Answer 11

*located in/on building, in open, in vehicle w/n 100 ft of building or described premise
-furniture, fixtures, machinery/equipment, stock materials, other personal property owned by insured, labor/materials, improvements/betterments if insured is a tenant, any leased personal property

Question 12

property not covered (17)

Answer 12

accounts, bills, insureds animals, autos held for sale, bridges , roadways, excavations, foundations of buildings, land, electronic data, vehicles - see list on page 10 of chapter 8

Question 13

6 Additional Coverages

Answer 13

Debris Removal - $5,000 limit
Preservation of property - 30 days
Fire dept service - $1,000 limit
Pollutant clean up $10,000 limit
Increased cost of construction $10,000
Electronic Data $2,500

Question 14

7 Coverage Extensions

Answer 14

These apply if co-insurance of 80% or more is shown on the dec page
1. Newly acquired/constructed property, up to $250,000 for new, up to $100,000 for BPP for 30 days
2. Property of others, up to $2,500, except for theft (no cov.)
3. Valuable papers $2,500
4. Property off premise $10,000 while temporarily away
5. Outdoor Property $1,000, no more than $250 for a tree
6. Nonowned, detached, trailers $5,000
7. BPP temporarily in portable storage unit $10,000 (storage unit must be w/n 100ft. of building in dec pages; $10,000 is limit up to 90 dyas)

Question 15

What valuation method is used to pay claims under the BPP Coverage Form

Answer 15

ACV basis unless otherwise stated

Question 16

What coverage does the Business Income Form provide

Answer 16

Actual loss of income to business when the loss results from partial or total shutdown; time begins 72hrs after loss; shutdown must be caused by direct loss or damage to property

Question 17

Business Income is…
*BI=NICE

Answer 17

Net Income (profit or loss before income taxes), earned or incurred, plus all Continuing operating Expenses

Question 18

3 optional Business Income forms

Answer 18

1. Extra Expense or w/o (ex. generator)
2. Civil Authority (ex. fir in are causing business shutdown)
   *w/n 1 mile for coverage to apply
3. Alterations and New Buildings (loss of income w/n 100ft)

Question 19

Legal Liability Coverage form

Answer 19

loss/damage to property of others, rented/occupied or in insureds care/control, resulting from covered cause of loss

Question 20

List & Explain 3 causes of loss forms
*basic, broad, special

Answer 20

Basic- fire/lightening, WHARVVVESSS
Broad- all basic, plus; falling objects, weight of ice/snow, water damage from leaked appliances, collapse/breakage of glass
Special- covers everything except what is excluded
*special limits b/c included theft ($2,500- furs, jewelry, gold/silver, molds) (additional $5,000 for personal property in transit by vehicle)
*see pg. 16

Question 21

Explain the following Endorsements
*Ordinance & Law
*Spoilage
*Peak Season Limit of Insurance
*Value Reporting Form

Answer 21

O&L- increased cost to comply w/ codes
Spoilage- meat, dairy
Peak Season- increase BPP for period of time (farmers, Walmart- Christmas)
Value Reporting- report monthly

Question 22

Define Inland Marine

Answer 22

property off premise or in transit

Question 23

What are the 5 groups for which Inland Marine insurance can be provided

Answer 23

1. Imports
2. Exports
3. Domestic Shipments (w/n US)
4. Bridges, tunnels, instruments of communication/transportation (pipelines, towers, radio/tv equipment)
5. Property Floater Risks (personal/comm.)

Question 24

Explain the two different kinds of conditions under the Commercial Inland Marine Conditions Form

Answer 24

Specific Conditions
-Loss: abandonment, appraisal, duties in event of loss, insurance under two or more coverages, loss payment, other insurance, pair/sets, recoveries, reinstatement of limit after loss, transfer of rights of recovery
-General: concealment, misrepresentation/fraud, legal action against us, no benefit to bailee, policy period, valuation

Question 25

Difference between filed/unfiled Inland Marine Coverage forms

Answer 25

Filed- specific coverage form or rate (premium), must be filed with state authority; controlled
Unfiled- doesn’t have to be filed w/ state authority; uncontrolled
*major of Inland Marine is unfiled

Question 26

Name and describe the 6 Filed Inland Marine Coverage Forms

Answer 26

1. Accounts Receivable Coverage Form (money to insured)
2. Commercial Articles Form (cameras)
3. Jewelers Block (stock of jewelry, stones, metals in insured business; property sold not delivered; property of others in insureds care) *ACV valuation
4. Sign Coverage Form
5. Valuable Papers and Records
6. Equipment Dealers Coverage Form (sales of equipment/vehicles)

Question 27

Examples of Unfiled Inland Marine Forms

Answer 27

1. Bailee’s Customer (dry cleaner)
2. Contractors Equipment Floater (scheduled/blanket) (opened/named perils)
3. Electronic Data Processing (EDP)
4. Installation Floater (before installing property)
5. Transportation Coverage (private, contract, common)
6. Common Carrier Cargo Liability

Question 28

3 different motor truck cargo forms and two transportation policy forms

Answer 28

Motor Truck Cargo (truckers, shippers, owner)
Transportation Policies (Annual and transit)

Question 29

what is/is not breakdown

Answer 29

is: failure of pressure or vacuum equipment, mechanical failure, electrical failure, explosion
not: malfunction, defects/viruses, leakage of valve/fitting, damage to vacuum tube, damage to structure supporting equipment, functioning of any safety device, cracking or internal combustion of gas

Question 30

What is considered Covered Equipment

Answer 30

1. Equipment meant to operate under internal pressure
2. Electric/Mechanical equipment used in energy
3. Communication/Computer equipment
4. Utility equipment used to supply services

Question 31

Exclusions in Equipment Breakdown

Answer 31

see pg. 31-32

Question 32

Why is the suspension condition unusual

Answer 32

if equipment is found to be in a dangerous condition, the insurance company can suspend the insurance for that equipment; coverage only reinstated by endorsement