Commercial Property Insurance Flashcards
Commercial Property Policy Must Include
Declarations form
Conditions form
1 or more commercial property coverage forms
The cause of loss form
Other mandatory elements
How many years does the insured have from the date that direct physical loss occurred to bring an action against the insurer in the “Legal Action Against Us”
2 years
Policy period, coverage territory
US, its territories and possessions (Puerto Rico) and Canada
Property NOT covered in a Business and Personal Property Coverage Form
Money, accounts, food stamps, notes, securities, and related property
Animals, unless they are boarded or held for sale
Autos for sale
Bridges, roads, walks, patios, and other paved surfaces
Contraband (property being illegally transported or traded)
Cost of excavations and other ground preparation
Foundations of buildings, structures, machinery, or boilers if their foundation is below the basement level or below ground level if there is no basement
Land, water, growing crops, and lawns
Retaining walls that are not part of a building
Bulkheads, pilings, piers, wharves, and docks
Property covered under another policy in which it is more specifically described
Underground pipes, flues, and drains
The cost to replace or restore information contained in valuable papers or records, including those that exist as electronic data, except as provided in the coverage extensions
Vehicles including watercraft and aircraft, that are licensed for use on public roads
The following property while outside of buildings, except as provided in the coverage extensions
Fences
Antennas
Signs that are NOT attached to the building
Trees, shrubs, and plants
Loss Payment
states that the insurance company will give the insured notice of how it intends to value the loss within 30 days after it receives the insured’s sworn statement of loss
Valuation
language in an insurance policy that determines the fixed amount a policyholder could receive in the event of a claim
Stock
already sold is valued at its net selling price
Tenant’s Improvements and Betterments
valued at Actual Cash Value
Vacancy
states that if a building has been vacant for more than 60 consecutive days before the loss, the insure will NOT pay for a loss due to vandalism, water damage, theft, or attempted theft, building glass breakage, or sprinkler leakage (unless the system has been protected against freezing). Any amount that would be covered will be reduced by 15%. Buildings under construction are NOT considered vacant
Mortgage Holder
promises to pay losses to any mortgage or lien holders named in the declarations as their interest may appear
Coinsurance
states that when the insured’s amount of coverage at the time of loss does NOT meet the required coinsurance percentage, the company reduces the payment it would otherwise make in the same proportion as the insurance carried bears to the insurance required
Builders Risk Coverage Form
Covers commercial, residential and farm buildings that are under construction. Written for 1 yr but can be extended
Coverage includes both the building under construction and its foundation. Fixtures, machinery, equipment used to service the building, and the insured’s building materials and supplies can be covered if they will BECOME a permanent part of the building and are w/in 100 ft of the building
Coverage may be extended to building supplies of others that are in the insured’s care, custody, or control of are covered if they are w/in 100ft of the building. Max paid under this extension is $5,000
When does Builders Risk Coverage End?
Coverage ends when one of the following first occurs:
o Policy expires or is canceled
o Property is accepted by purchaser
o Interest in property ceases
o Construction is abandoned
- 90 days after completion of construction
- 60 days after building is occupied in whole or in part or put to intended use
Builder Risk Coverage Form Exclusions
Land or water
Lawns, trees, shrubs or plants when outside of the building
Radio and TV antennas when outside of the building, including lead-in-wiring, masts, or towers
Signs not attached to the building
Business Income Coverage Forms
pay for loss of income that the insured sustains due to a direct physical loss from a peril insured against that forces the insured to suspend operations during the period of restoration.
- The period of restoration begins on the date the direct physical loss occurred and ends on the date the property can be repaired, rebuilt, or replaced w reasonable speed
- Suspension – means a slowdown or cessation of the insured’s business activities
Time Element Coverage
provides coverage for the loss of business income over a period of time that resulted from direct physical loss
Extra Expense
reimburses the insured for expenses incurred to keep a business going after a loss caused by a covered peril. This coverage is for a business that must continue at all costs
Business Expense Forms
Business Income with Extra Expense
Business Income without Extra Expense
Business Income WITH Extra Expense
provides coverage when your business shut downs temporarily due to a fire or other covered loss. It helps replace your income and covered expenses like rent, payroll and other financial responsibilities while your property is being repaired or replaced
Business Income WITHOUT Extra Expense
a form that covers the loss of business income from a covered loss. Extra expenses are covered only to the extent that such expenses reduce the loss, and coverage is limited to the amount of loss that is reduced
Additional Coverages
both business income forms include additional coverages. One such coverage is extended business income which pays for loss of business income, even after operations have been resumed, until the business has been restored. Expires 60 days after business is resumed
Business Income from Dependent Properties Broad Form
Provides coverage for
Contributing Location – provides raw materials to the insured. Loss of insured’s income because of a loss to the contributing location
Recipient Location – primary buyer of the insured’s goods. Insured loses income because the recipient location suffers damage
Manufacturer Location – provides manufactured goods to the insured. Insured loses income because the manufacture can’t supply because of loss
Leader Location – insured depends on another business to attract customers to their own buildings
Causes of Loss Form - Basic
Fire
Lightning
Internal explosion
WCSHAVVER
V&MM
Sprinkler leakage
Sinkhole collapse
Windstorm or hail
Limited coverage for fungus, wet or dry rot and bacteria additional coverage - provides coverage for mold that results from a covered cause of loss other than fire or lightning. Coverage is limited to $15,000 for all loss or damage that take place in a 12-month period
Causes of Loss Form - Broad
Basic - WCSHAVVER and V&MM
BIG AFFECT
Burglary damage
Ice, sleet and snow (weight of)
Glass breakage
Accidental discharge of water - accidental discharge of water or steam at the described location from within a plumbing, heating, air-conditioning, or automatic fire protective sprinkler system or household appliance
Falling objects
Electrical current – sudden and artificially generated electrical current (does NOT include damage to a tube, transistor, or similar electrical component
Collapse Additional Coverage - is covered ONLY when it is caused by one of the specified broad perils or any of the following additional perils:
* Breakage of glass
* Hidden decay
* Hidden insect or vermin damage
* Weight of people or personal property
* Weight of rain that collects on a roof
* Use of defective material or methods in construction, remodeling, or renovation if the collapse occurs while these are in progress
Tearing Asunder
