Commercial Property Insurance Flashcards
One important insurance need for businesses is the need for __—coverage on real property such as office buildings, factories, warehouses, and insurance on business personal property such as furniture, fixtures, machinery, and inventory.
Property Insurance
A commercial property policy must include:
■ the commercial property declarations form;
■ the commercial property conditions form;
■ one or more commercial property coverage forms;
■ the causes of loss form; and
■ other mandatory endorsements.
The___provides additional information about the premises to be insured and the specific property forms that will apply. It also includes the name and addresses of any mortgage or lienholders.
commercial property declarations form
The ___ contain descriptions of the specific coverages being provided to the business. Each commercial property coverage form defines what property is covered, what property is not covered, how limits and deductibles apply, and what special conditions apply.
commercial property coverage forms
The causes of loss forms list the perils that the property is insured against. There are three separate causes of loss forms:
■ Basic
■ Broad
■ Special (open)
The __ forms list the perils that the property is insured against
causes of loss
Attached to every commercial property policy, the conditions form establishes the policy provisions with respect to the following issues:
■ Control of property ■ Legal action against the insurer ■ Other insurance ■ Policy period and coverage territory ■ Transfer of recovery rights against others (subrogation) ■ Concealment, misrepresentation, and fraud ■ No benefit to bailee ■ Insurance under two or more coverages ■ Liberalization
The __ condition states that an act of neglect of a person beyond the insured’s direction or control will not affect the insurance. In addition, if the insured violates a condition of the policy with regard to a specific location, the insurance applicable to other locations will not be affected.
control of property
Th___ condition gives the insured two years from the date that direct physical loss occurred to bring an action against the insurer. Such an action cannot be brought unless the insured has complied with all conditions of the policy.
legal action against us
The ___ condition states that when there is other insurance written on the same basis, the policy pro rates with the other policies. If there is other insurance covering the same loss but subject to a different plan or coverage, the policy is excess over the other insurance.
other insurance
The___condition states that a loss must occur during the policy period and in the coverage territory to be covered. The coverage territory is usually the United States, its territories and possessions, Puerto Rico, and Canada.
policy period, coverage territory
The ___ condition gives the insurance company subrogation rights
transfer of rights of recovery against others to us
The ___ condition states that the commercial property coverage is void if the insured intentionally conceals or misrepresents a material fact concerning the coverage, the covered property, the insured’s interest in covered property, or a claim.
concealment or fraud
The __ condition prohibits a bailee from being reimbursed by the insured’s commercial property insurance if the insured’s property is damaged or destroyed while in the bailee’s custody. Remember, a business is a bailee when they have care, custody, and control of a customer’s property
no benefit to bailee
The ___ condition states that any revision that broadens coverage without requiring additional premium will automatically apply to the coverage part if the revision is adopted by the insurer during the policy period or within 45 days of the policy’s effective date.
liberalization
The most commonly purchased form, and the form that is the core of the commercial property coverage part, is the____. It covers buildings, the insured’s business personal property, and the personal property of others located at the business premises.
The insured may select coverage for one or more of these categories. Coverage is only provided for coverages that have a limit of insurance shown in the declarations.
building and personal property coverage form
The most commonly purchased form, and the form that is the core of the commercial property coverage part, is the building and personal property coverage form. It covers buildings, the insured’s business personal property, and the personal property of others located at the business premises.
The insured may select coverage for one or more of these categories. Coverage is only provided for coverages that have a limit of insurance shown in the declarations.
In addition to the building itself, building coverage includes:
■ completed additions;
■ fixtures, including outdoor fixtures;
■ permanently installed machinery and equipment;
■ personal property used to maintain or service the premises, such as fire extinguishers;
■ outdoor furniture, floor coverings, and certain appliances; and
■ if not otherwise covered, additions under construction and alterations or repairs to the building, including materials, equipment, supplies, and temporary structures within 100 feet of the described premises.
____ is covered while it is in the building, in the open, or in a vehicle within 100 feet of the premises.
Business personal property
Business personal property is covered while it is in the building, in the open, or in a vehicle within 100 feet of the premises. It includes:
■ furniture (desks, chairs, file cabinets, etc.);
■ fixtures (lights, permanent shelves, bathroom fixtures, etc.);
■ machinery;
■ equipment;
■ stock;
■ the value of labor, parts, or services on the personal property of others (e.g., the business has invested money and labor in a tractor it is repairing for a farm customer);
■ if the insured is a tenant, the improvements and betterments added by the insured; and
■ leased personal property (e.g., a copy machine) that the insured has a contractual responsibility to insure, unless it’s otherwise covered.
The following property is excluded from coverage:
■ Money, accounts, food stamps, notes, securities, and related property (lottery tickets held for sale are not securities and are covered)
■ 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 (including satellite dishes)
– Signs that are not attached to the building (attached signs are covered for $2,500)
– Trees, shrubs, and plants
pays for loss to property that was removed from the insured location to protect it from a peril insured against. Coverage only applies if the loss occurs within 30 days after the property was removed.
Preservation of property
pays up to $1,000 for a fire department service charge. This is paid in addition to the limit of insurance; no deductible applies.
Fire department service charge
covers the costs to extract pollutants from land or water at the insured’s premises if the pollution was caused by a covered cause of loss. This coverage is subject to a $10,000 limit per policy period that applies in addition to the policy limit. The expenses must be reported to the insurer in writing within 180 days of the loss.
Pollutant cleanup and removal
The ___additional coverage pays to replace or restore electronic data that have been destroyed or corrupted by a covered cause of loss. ___means information, facts, or computer programs. $2,500 for all loss or damage sustained in any one policy year
electronic data
Coverage Extension what are they:
• 80% coinsurance has been met • Newly acquired or constructed property • $250,000—building • $100,000—personal property • Personal property of other— $2,500—not bailee • Valuable papers and records— other than electronic data—up to $2,500 • Property off-premises—$10,000 • Outdoor property—fences, antennas, satellite dishes, trees, plants, and shrubs • $1,000 • $250 limit applying to any one tree, plant, or shrub • Nonowned detached trailers—$5,000
The duties in the event of loss condition states that after a loss, the insured must:
■ notify the insurer about the loss or damage as soon as possible, provide a description of the property involved, and describe how, when, and where the loss or damage occurred;
■ notify the police if a law may have been broken;
■ take reasonable steps to protect the covered property from further damage and keep a record of expenses incurred to protect the property (if possible, the insured should separate the damaged property from the undamaged property);
■ provide a complete inventory at the insurer’s request;
■ allow the insurer to inspect the property, examine books and records, and take samples of the property at its request;
■ testify under oath with regard to the claim if requested by the insurer; and
■ send a signed, sworn statement of loss within 60 days of the insurance company’s request.
Loss Payment:
condition 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
The ___ condition describes how losses will be settled. Most losses are paid at actual cash value.
• Loss less than $2,500— replacement
Valuation
___already sold is valued at its net selling price.
Stock
