Commercial Insurance (Word Problems) Flashcards
Understanding Commercial Insurance via word problems.
What three perils does the Basic Fire Policy cover?
ELF aka:
- Explosion (of coal, natural, and manufactured gas)
- Lightning (except for damage to appliances
- Fire.
How is the peril of lightning broadened in the Named Perils Form?
Includes damage to appliances.
How is the peril of explosion broadened in the Named Perils Form?
Includes other types of explosions.
What perils does the Broad Form cover?
All risks subject to policy conditions and exclusions.
What is the Professional Liability Insurance we use in our field as brokers?
Errors and Omissions.
What is included under the definition of Building?
- Buildings
- Additions
- Fixtures and fittings (permanently attached)
- Maintenance supplies
- Growing plants
What is included under the definition of Equipment?
- Equipment
- Contents (including fixtures, fittings, and utensils)
- Tenant’s improvements
What is included under the definition of Stock?
- Stock
- Merchandise
- Packaging
- Wrapping
- Advertising materials
What is the coverage amount based on for a Builder’s Risk?
Completed value of the building.
What are the three exclusions under Glass Insurance?
- Fire
- War
- Nuclear
What signs can be covered under a Sign Floater?
Exterior signs.
What does the by-law exclusion do?
Excludes additional cost to rebuild in compliance with bylaws.
What are the two requirements that must be met before the Farm Rebuilding Clause will pay the full amount of the farm buildings?
- Rebuild within 9 months
- 200 feet from the original site
How many months’ worth of the Rental Value Endorsement should be insured?
12 months.
What form would be used to cover stock where the stock values are fairly consistent?
Premium Adjustment Clause.
What form would be best used to cover stock where sales vary substantially from month to month?
Peak Season Endorsement.
What coverage does the Consequential Loss Assumption Clause provide?
Covers losses due to failure of a cold storage unit.
What does the Gross Earnings Form cover in the event of a loss?
Loss of earnings from the date of loss to the date the business reopens.
What does the Profits Form cover?
Loss of earnings from the date of loss to the date the profits return to what they were prior to the loss.
What does Extra Expense cover?
Costs associated with keeping business open at another location.
What is the major difference between the Gross Earnings Form and the Profits Form?
Period of indemnity.
What does the Contractor’s Equipment Floater cover?
Moveable equipment from site to site.
What does a Tool Floater cover?
Moveable tools from site to site.
What does the Boiler and Machinery Policy cover?
Explosion and rupture of boilers and breakdown of machinery.
Aka B + E and E + B - Boiler Explosion and Equipment Breakdown.
What does the term Floater mean?
A type of insurance that covers property that is easily moveable.
What does the Supplementary Payments section of the CGL cover?
- Defence costs
- Post-judgement interest
- Other litigation expenses
What is included in Theft?
Burglary and Robbery.
Does Burglary and Robbery include Theft?
No.
What does the 3D Policy cover?
- Employee “D”ishonesty
- “D”isappearance
- “D”estruction of property.
Does the 3D Policy cover safe burglary and robbery on the premises?
Yes.
What kind of losses does the Co-Insurance Clause concern itself with?
Partial losses.
Who are the three parties to a bond contract?
- Principal (the applicant for the bond)
- Surety (the bonding company)
- Obligee (who the obligation is owed to)
What do Fidelity Bonds cover?
Dishonesty of employees.
What does Products Liability cover?
Lawsuits resulting from goods that cause injury or damage to the purchaser like defective or dangerous products.
What does Garage Liability pay for?
Garage Liability covers lawsuits resulting from the garage premises.
Protects against a lawsuit resulting from injury or damage to others arising out of the ownership of a garage such as slip and falls.
What does Stated Amount Co-Insurance Clause base the amount of insurance required on?
Appraisal of the property’s rebuilding cost.
What is the Co-Insurance Clause formula?
DID
——————— x LOSS (If applicable subtract deductible)
(SHOULD x %)
What are the criteria set out in the 2% Waiver of Co-Insurance?
- Loss must be less than $5,000
- Loss must be less than 2% of the amount of insurance on the property.
Why would Contingent Employers’ Liability be required?
When the employees are not covered by worker’s compensation.
Why would Owners & Contractor’s Protective Liability be required?
Protects against a lawsuit resulting from the negligent work of sub-contractors.
Why would Blanket Contractual Liability be required?
When your business assumes the liability of others in a contract.
What coverage does By-Law Endorsement provide?
It removes the exclusion and allows the insurer to pay the increased cost to rebuild made necessary due to by-laws.
How does Stated Amount Co-Insurance Clause differ from the traditional Co-Insurance Clause?
Based on appraisal and a specified value as opposed to percentage of rebuild.
What does Completed Operations Liability cover?
Liability arising from faulty workmanship.
What is a Manuscript Policy?
Policy written to cover a unique risk.
What is a Subscription Policy?
Policy where more than one insurer provides coverage.
What does Burglary require?
Forcible entry.
What does the care, custody, and control exclusion of the CGL policy not cover?
Damage to property the insured is in the care, custody, and control of, see Tenant’s Legal Liability.
When does the Self-Insured Retention liability deductible come into play under an Umbrella Liability Policy?
When the policy covers something the underlying policy does not.
What is the territorial limit of the Umbrella Liability Policy?
Worldwide.
What does the Named Perils Form cover?
SWILLER + Fire aka:
- Fire
- Smoke
- Windstorm
- Impact
- Lightning
- Leakage from fire protective equipment (e.g. Sprinkler system)
- Explosion
- Riot
What is Construction, Occupancy, Protection Exposure (COPE)
A set of risks that property insurance underwriters review when determining whether to offer an insurance policy.
What is required to make a Theft Insurance claim?
The insured will only have to prove that their property was taken without their consent.
Who is the principal and obligee in a surety bond?
The person doing the work (e.g. a contractor) is the Principal and the person who the work is being done for is the Obligee.
Who is the principal and obligee in a fidelity bond?
The Principal is the employee and the Obligee is the employer.
