Commercial Package Policy (CPP)

Question 1

Subrogation Clause

Answer 1

occurs when an insurer pays an insured for a loss caused by a third party. The insurance company is then “subrogated” – or steps into the shoes of the insured – to sue that third party for the loss suffered by the insured.

Question 2

Inflation Guard

Answer 2

Coverage automatically increases the limit of insurance by an annual percentage shown in the dec page.

Question 3

Replacement Cost

Answer 3

Changes ACV coverage to replacement cost coverage for buildings and certain personal property of insured, but not contents of a residence. Claim replacement cost within 180 days after the loss.

Question 4

Business Income Coverage Form

Answer 4

Pays for actual loss of business income during the period of restoration.

Question 5

Business Income

Answer 5

Includes net profit before income tax and continuing normal operation expenses including payroll.

Question 6

Period of Restoration

Answer 6

Starts 72 hours after the physical loss or damage and ends on the date the property should have been repaired, rebuilt, or replaced with similar quality, even if it extends beyond policy expiration date.

Question 7

Extra Expense

Answer 7

Any extra expenses incurred to continue operations at premise or temporary location during the restoration period.

Question 8

Civil Authority

Answer 8

Covers loss of income and extra expense when a civil authority prohibits access to the insured premises, after the 72 hours, for up to 3 weeks from the date of the government action.

Question 9

Maximum Period of Indemnity

Answer 9

Limits loss payment to no more than either the insurance limit or amount of loss sustained during the 120 days immediately following the direct loss

Question 10

Monthly Limit of Indemnity

Answer 10

Limits loss payment to a fraction of the limit of insurance shown in the dec page for each 30 day period following a direct loss.

Question 11

Agreed Value

Answer 11

Coinsurance requirement will be calculated on a value agreed to in advance.

Question 12

Extended Period of Indemnity

Answer 12

Changed the 30 day limit on extended business coverage to a longer period, shown in the dec page.

Question 13

Basic and Broad causes of Loss Forms

Answer 13

Cover the same perils as dwelling and HO with addition of coverage for sprinkler leakage and sinkhole collapse

Question 14

Equipment Breakdown Form

Answer 14

Provides boiler and machinery insurance. Covers losses caused by breakdown of covered equipment.

Question 15

Covered Equipment

Answer 15

Equipment built to operate under internal pressure or vacuum, electrical/mechanical equipment used to generate transmit or use energy, and communication and computer equipment

Question 16

Breakdown

Answer 16

A failure of pressure or vacuum equipment, mechanical failure, or electrical failure causing damage to covered equipment.

Question 17

Expediting Expenses

Answer 17

Is the extra cost necessarily incurred to make temporary repairs and speed up permanent repairs or replacement of damaged property.