LESSON 6 Flashcards
One that combines two or more coverages into a single policy.
Commercial Package Policy
If property and liability insurance coverages are combined into a single policy, it is also known as a ________________.
Multiple-line Policy
A policy that provides only one type of coverage is known as a ________________.
Monoline Policy
A commercial property coverage form that is widely used to cover a direct physical damage loss to commercial buildings and business personal property.
Building and Personal Property (BPP) Coverage Form
The insured selects the property to be covered.
It includes the following:
▪ Buildings
▪ Named insured’s business personal property
▪ Personal property of others in the care, custody, or control of the named insured
Covered Property
It is part of the complete contract.
Insureds can select one of the following forms:
▪ Causes-of-loss basic form
▪ Causes-of-loss broad form
▪ Causes-of-loss special form
Causes of Loss Forms
These are the 11 Causes-of-Loss Basic Form (perils) to covered property
▪ Fire
▪ Lightning
▪ Explosion
▪ Windstorm or hail
▪ Smoke
▪ Aircraft or vehicles
▪ Riot or civil commotion
▪ Vandalism
▪ Sprinkler leakage
▪ Sinkhole collapse
▪ Volcanic action
Three Causes-of-Loss Broad Form
▪ Falling objects
▪ Weight of snow, ice, or sleet
▪ Water damage
It is an insurance policy that covers almost any type of damage to insured property—unless the policy specifically says it doesn’t.
Causes-of-Loss Special Form
Designed for businesses with fluctuating inventory values.
It requires periodic reports of business personal property value to the insurer.
Reporting Forms
It is formerly called business interruption insurance.
It is designed to cover the loss of business income, expenses that continue during the shutdown period, and extra expenses because of loss from a covered peril.
Business Income Insurance
Other Commercial Property Coverages
Some businesses require specialized forms, including:
- Builders Risk Insurance – covers buildings under construction.
- Condominium Insurance – protects condo associations or
unit owners.
- Equipment Breakdown Insurance – covers mechanical or
electrical breakdowns.
- Difference in Conditions (DIC) Insurance – fills gaps not
covered by standard policies.
- Terrorism Insurance – covers losses from acts of terrorism.
Protecting goods during shipment from various perils.
Two main types:
- Ocean Marine Insurance – covers goods transported
over water.
- Inland Marine Insurance – covers goods shipped on
land, as well as fine arts, jewelry, and furs.
Transportation Insurance
Coverage for Maritime Shipping
Types of it:
- Hull Insurance – covers damage to the ship or vessel.
Cargo Insurance – covers damage or loss of shipped goods.
- Protection & Indemnity (P&I) Insurance – covers third-party liabilities.
- Freight Insurance – covers lost earnings if goods aren’t delivered.
Ocean Marine Insurance
A type of insurance that covers goods, equipment, and other property while being transported over land or stored temporarily. It also covers infrastructure used for transportation, such as bridges and tunnels.
Inland Marine Insurance
To resolve conflicts between fire insurers and marine insurers, a nationwide marine definition was created in 1933 and revised in 1953 & 1976.
Nationwide Marine Definition
Major Classes of Inland Marine Insurance
-
Domestic Goods in Transit - covers goods transported by common carriers (trucking
companies, railroads, airlines) or a company’s own trucks. - Property Held by Bailees - covers property temporarily in the possession of another party (bailee - someone who has a temporary possession of someone else property to perform service).
-
Mobile Equipment & Property - covers equipment that frequently moves from one location
to another. - Property of Certain Dealers - covers specialized dealers with inland marine “block” policies.
-
Instrumentalities of Transportation & Communication - covers fixed-location property used in transportation or
communication.
Other Inland Marine Forms
- Shipment of Goods - covers domestic shipments for manufacturers, wholesalers, and retailers.
-
Bailee Forms
- Bailee’s Liability Policy: covers a firm’s liability for customers’ property but only if the firm is legally liable.
- Bailee’s Customers Policy: covers loss or damage to customer property regardless of liability (e.g., for high-value items like fur coats). -
Business Floaters - covers property that frequently moves between
locations. -
Instrumentalities of Transportation & Communication
- covers bridges, tunnels, towers, pipelines, and power lines.
It is someone who has temporary possession of property that belongs to others.
Bailee
It is a package policy specifically designed for small- to medium-sized retail stores, office buildings, apartment buildings, and similar firm. Thus, it is designed by Insurance Services Office (ISO).
Business Owners Policy (BOP)
Qualifies for a BOP:
- Retail stores
- Restaurants
- Office-based businesses (e.g., accounting firms)
- Apartment building landlords
- Wholesalers and warehouses
A business can face legal liability risks beyond auto, aviation, or employee injuries.
Commercial Liability Insurance or General Liability
Key Components of Commercial Liability Insurance
1.Premises and Operations Liability - covers liability from ownership & maintenance of
business premises.
2. Products Liability - covers manufacturers, wholesalers, and retailers for injuries or damages caused by defective products.
3. Completed Operations Liability - covers liability from faulty work performed away
from business premises after the work is completed.
4. Contractual Liability - Covers a business that agrees to assume liability for another party under a contract.
5. Contingent Liability - Covers liability from work done by independent contractors.
It is a comprehensive policy that covers a wide range of business risks, including bodily injury, property damage, personal injury, and advertising injury.
Commercial General Liability (CGL) Insurance
It covers employers against lawsuits from employees, former employees, and job applicants for:
- Wrongful termination
- Discrimination
- Sexual harassment
- Failure to promote/hire
- Other employment-related claims
Employment-Related Practices Liability Insurance
