R.M. Ch 12

Question 1

Building and Personal Property (BPP) coverage form

Answer 1

used to cover direct physical damage to the following:

• Buildings (including fixtures and permanently installed machinery and equipment)
• Business personal property
• Personal property of others in the care, custody, or control of the named insured

Question 2

Additional Coverages (BPP)

Answer 2

debris removal, preservation of property, pollutant cleanup and removal

Question 3

Other Provisions (BPP)

Answer 3

Deductible (per occurrence)

Coinsurance (commonly 80%)

Question 4

Optional coverages (BPP)

Answer 4

Agreed value (eliminates coinsurance req’t)
Inflation guard
Replacement cost (otherwise, ACV)

Question 5

Causes-of-loss form:

Answer 5

Specifies the covered perils for the BPP coverage

Question 6

Causes-of-loss Basic form

Answer 6

provides coverage for 11 causes of loss:

Fire riot or civil commotion
Lightning vandalism
Explosion sprinkler leakage
Windstorm or hail sinkhole collapse
Smoke volcanic action
Aircraft or vehicles

Question 7

Causes-of-loss Broad form

Answer 7

includes Basic form perils, plus:

• Falling objects
• Weight of snow, ice, or sleet
• Water damage
• Collapse

Question 8

Causes-of-loss special form

Answer 8

insures against “risks of direct physical loss” unless specifically excluded
- In other words, converts coverage from “named perils” to “open perils”

Question 9

Value reporting form

Answer 9

used to insure business personal property with fluctuating total values

• Premiums are based on the actual reported value of the covered property
• The insured can report values on a daily, weekly, monthly, quarterly or annual basis
• If the insured underreports values, a penalty applies to any recovery

Question 10

Business Income (and Extra Expense) Coverage Form (BIC):

Answer 10

covers indirect losses, whereas BPP covers direct losses

• Causes-of-loss forms same as for BPP
• When a covered direct physical loss causes a shutdown, BIC covers
  (1) loss of net income
  (2) expenses that continue during the shutdown period
  (3) extra expenses during period of restoration

Question 11

Extra expense coverage form:

Answer 11

covers extra expenses incurred by a firm in continuing operations during a period of restoration, but not lost net income