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CIC - Multi Line Casualty > Section 1 - Bailee Coverage > Flashcards

Section 1 - Bailee Coverage Flashcards

1
Q

Bailment and the 2 Parties Involved

A

Bailment is a relationship where on party (the Bailee) accepts property of another party (the bailor) for a particular purpose

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2
Q

3 Types of Bailment and Their Level of Care

A

1- Gratuitous Bailment for the benefit of the bailor: Coat check example. Low duty of Care

2- Gratuitous Bailment for the benefit of the bailee: Borrowing Lawnmower example. High duty of care

3 - Bailment for mutual benefit of the bailor and bailee: Exchange for money. Reasonable duty of care

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2
Q

How to Cover Bailee Exposure? Why not CGL? Why not Property (4)

A

Bailor gets first party insurance

Insurer can subrogate Bailee

CGL Excludes Care custody OR control

Property has no benefit to Bailee coverage

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3
Q

Legal Liability vs Damage Liability. 2 things that both pay for

A

Legal Liability: Coverage only if Bailee is legally liable for the damage.

Damage Liability: Coverage for damage to property regardless of whether the Bailee is legally liability for the loss.

Both pay for damage to the property and charges insured has earned from the work

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4
Q

Covered Property

Processing Definition

A

Direct damage by covered peril to property of others in your care custody an control for processing.

Processing includes (but not limited to) finishing, repairing, restoring, adjusting, or other similar work upon the property

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5
Q

How to Cover Bailee Exposure? Why not CGL? Why not Property (4)

A

Bailor gets first party insurance

Insurer can subrogate Bailee

CGL Excludes Care custody OR control

Property has no benefit to Bailee coverage

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5
Q

Bailee: Property not Covered & Why (8)

A

FAVJAM WC
Furs or fur trimmed garments (crime)
Aircraft or Water Craft (MARINE)
Vehicles, self propelled (auto)

Jewelry, precious stones and metals (CRIME)

Accepted property by a processor without a charge for services (PROPERTY OF OTHERS)

Money and securities (CRIME)

Waterborne Property (Except carrier for Hire) (OCEAN MARINE)

Contraband (UNINSURABLE)

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5
Q

Property in Storage - Limit, what’s needed, when

A

$5k. Storage receipt issued. When processing completed

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5
Q

Debris Removal Supplemental Limits

A

25% of loss (inside limit) + $5k additional expense

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6
Q

Bailee coverage - Off Site Coverage - Limit / When needed

A

$5k limit. Needed for businesses that sometimes send property off site to have specific repairs / services done

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7
Q

Pollution Cleanup Supplemental Limit and What it Covers - Bailee Coverage

A

$10k annual aggregate. Covers extraction of pollutants from land and water and necessary testing

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8
Q

Bailee coverage - Group 1 Exclusions (6)

A

CNFEWS
Civil Authority
Nuclear Hazard
Flood
Earth Movement or Volcanic Eruiption
War and Military Actual
Sewer Backup and Water Below Surface

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9
Q

Group 2 Exclusions (11) - Bailee

A

2MCTP WEL
- Mechanical Breakdown
- Missing Property
- Contamination or Deterioration
- Criminal, Fraudulent, Illegal
- Temperature and humidity
- Theft from an unattended vehicle
- Processing work
Pollutants
Wear and Tear
Electrical Currents
Loss of Use

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10
Q

4 Options for Insurer Payment

A

Pay the value of the lost or damaged property

Pay cost of repairing or replacing the lost or damaged property

REbuild, repair, or replace with like kind and quality in a reasonable time

Take all or any part of the property at the agreed or appraise value

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11
Q

Why Buy Builder Risk (3)

A
  • Changes in values, incurable interest and Exposures

Coverage Gaps
- Property doesn’t cover paved surfaces, excavation, grading, foundations, pipes,
- Low sub limits for important things like landscaping, outdoor property

Property Location Specific
- Minimal Coverage for property off premises ($10k) and Property in Transit

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12
Q

Completed Value Basis vs Reporting Form

A

Completed Value
- Value of the finished project and other property used in construction that won’t become a permanent part of structure
- Good for single projects

Reporting Form Basis
- Good for multi project
- Occurrence + Catastrophe Limit + Project sublimit
- Periodic reports that are punished if not timely

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13
Q

Whose interests covered in Builders RIsk? (7)

A

OG SCAMM
Owner of Project
General Contractor
Subcontactors (of every tier)
Construction Manager
Architects and engineers
Material suppliers
Mortgagees and lenders

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14
Q

Advantages to Numerous Parties as Insureds (4) - Builders Risk

A
  • Compliance with construction contract
  • Efficient settlement of claims
  • Direct rights for all insureds
  • Avoids litigation and subrogation
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15
Q

Disadvantages to Numerous Parties as Insureds - Builders Risk (2)

A

Claims get paid to all parties (Fiduciary endt to help)_

Misrepresentation / Concealment of one insured could void policy (vitiating clause for protecting innocent insureds)

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16
Q

Property Covered - Builders Risk (3)

A

BMS (they cover the beams)

Scaffolding, Fences, temporary structures at the job site
- Buildings
- Materials becoming part of permanent structure

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17
Q

Property Not Covered - Builders Risk (8)

A

CT PROWLS
- Contraband
- Trees, shrubs, plants (limited)
- Property not a permanent part of building
- Roadways and Walkways more than 1k feet away
- Other Property
- Waterborne Property
- Land
- Standing or Existing Building (endt available)

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18
Q

3 Options for Renovations (Existing Structure) (3)

A
  • endt for renovations or rehabilitation
  • Specific coverage form includes it
  • Use existing property policy
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19
Q

Coverage Extensions - Builders Risk (6)

A

FF WEED
- Fraud and Deceit ($50k)
- Fungus (limited) ($15k)
- Waterborne Property ($10k)
- Emergency Removal ((10 days)
- Emergency Removal Expenses ($10k)
- Debris Removal (25% + 5k)

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20
Q

Supplemental Coverages - Builders Risk (12)

A

STTTEEPP ROOF
- Sewer Backup $10k
- Temporary Storage Locations $10k
- Transit $10k
- Trees and Shrubs $10k
- Expediting Expenses $10k
- Expense to Re-Erect Scaffolding $5k
- Pollutant Cleanup and Removal $25k
- Personal Property $10k
- Rewards $1k
- Ordinance or Law ( Undamaged Part of Building) $Policy Limit
- Ordinance or Law (Increased Cost to Repair and Cost to Demolish / Clear Site) $50k
- Fire Department Service $1k

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21
Q

Group 1 Exclusions - Builders Risk

A

CNFEWS + OF
Same as other one plus Ordinance and Law and Fungus (b/c included in supplemental)

22
Q

Group 2 Exclusions.- Builders Risk

A

Same as Bailee exclusions (2MC TP WELDDS) + 3 - 2

PLUS DDS
- Defects errors and omissions
- Delays in Completion and INcreased construction costs
- Steam Boiler Explosion

MINUS
- Processing Work
- Theft from Unattended Vehicle

23
Q

When Coverage Ceases - Builders Risk (6)

A

CCIIAA

  • Cancelled or expired policy
  • Completed building / structure for 90 days
  • Insurable interest ceases
  • Intended use starts
  • Abandon with no intent to complete
  • Accepted by the purchaser
24
Q

Builders Risk “Delay” Definition

A
  • Delay means interruption in construction, erection, or fabrication of buildings caused by a covered peril

DOESNT MEAN
- interruption caused by change order, design change or other action or decision that is independent of damage or loss by covered peril

25
Q

Additional Construction Expenses - Builders Risk - (6)

A

FLAPPD
- Financing
- Lease administration
- Advertising
- Permit Fees
- Professional Fees
- Design Fees

26
Q

Soft Costs - BR - (4)

A
  • Interest Payments
  • Realty Taxes
  • Lease Expenses
  • Insurance Premiums
27
Q

Why Purchase Installation Floater? (3)

A
  • Trade contractors have no input for limits or deductibles
  • Some contracts require trade contractors carry their own insurance
  • Many projects don’t have builders risk coverage (repair of HVAC system or plumbing))
28
Q

Non-Reporting vs Reporting - Installation

A

Non-Reporting is good for one project. Can do blanket basis for multiple projects if exposures consistent.

Reporting form good for multi projects with changing exposures

29
Q

Property Covered (2 Coverages and 2 Limitations)- Installation Floater

A

Covered
- Materials, supplies, fixtures machinery, or equipment
- Similar property of others that is in your care, custody, or control

Limitations
- Materials… etc., that will become a permanent part of your completed installation project
- If scheduled location coverage, only cover installation project on listed job site

30
Q

Installation Project Definition

A

Installation or construction project including, but not limited to, a repair or maintenance project that involves the installation, construction or rigging of materials, supplies, fixtures, machinery or equipment

31
Q

Property Not Covered - Installation Coverage

A

ABC MTW (ABC Monday Tuesday Wed)
- Airborne Property
- Buildings, Structures, and Land
- Contraband
-Machinery, Tools or equipment
- Trees, shrubs and Plants
- Waterborne Property

32
Q

Coverage Extensions - INstallation Coverage (3)

A

DEF

  • Debris removal
  • Emergency Removal
  • Fungus Coverage (Limited)
33
Q

Supplemental Coverages - Installation Floater

A

PSTT
- Pollutant Cleanup and Removal $10k
- Sewer Backup $5k
- Temporary Storage Locations $5k
- Transit - $5k

34
Q

Group 1 and 2 Exclusions - Installation Coverage

A

Same as builders Risk

Group 1
CNFEWS OF

Group 2
2MCTP WEL plus DDS minus PT

35
Q

When Does Coverage End - Installation (6)

A
  • Policy expires or is cancelled
  • Installation project accepted by purchaser
  • Your insurable interest in the project ceases
  • You abandon the installation project with no intent to complete it
  • THe installation project has been completed for more than 30 days
  • The covered property has been put to its intended used (Doesn’t apply to roofs or walls)
36
Q

Why Inland Marine Coverage (4)

A
  • BPP Excludes equipment away from premises or on public roads
  • Only $5k property in transit limit and has to be in insured vehicle
  • No theft away from premises
  • Sometimes more cost effective than endorsing property
37
Q

Contractors Equipment - Covered Property (2 Coverages and 1 limitation)

A

Coverages
- Your contractors equipment
- Contractors equipment in your care, custody, or control

Limitation
- Has to be on schedule (borrowed equipment usually not)

38
Q

Contractors Equipment Definition + 2 Items it includes

A

Machinery, equipment and tools of a mobile nature that you use in your contracting, installation, erection, repair or moving operations or projects

Includes
- self-propelled vehicles designed and used primarily to carry mounted equipment or
- Vehicles designed for highway use that are unlicensed and not operated on public roads

39
Q

Contractors Equipment - Property Not Covered (6)

A

LUV WAC
- Leased or Rented Property / Loaned
- Underground Operations (applies to drilling equipment but not bucks for backhoe / excavator)
- Vehicles (excluding the exception for carrying mounted equipment and unlicensed and not on public roads)
- Waterborne Property
- Aircraft or Watercraft
- Contraband

40
Q

Contractors Equipment Coverage Extension (1)

A

Debris REmoval (25% and 5k)

41
Q

Contractors Equipment Supplemental Coverages (6)

A

NEEPRS
- Newly Purchased Property (30% of schedule limit for 60 days)
- Employee Tools (limitation mandates have to be at job site) - $5k
- Equipment Leased or Rented from Others
- Pollutant Cleanup and Removal (25k annual aggregate)
- Rental Reimbursement (money o rent another piece of equipment. Not money for damage to rented equipment) $5k, 72 hours
- Spare Parts and Fuel $5k

42
Q

Excluded Causes of Loss (3 Group 1, 9 Group 2)

A

CNW (Group 1) 2MC TP WVL
- Civil Authority
- Nuclear Hzard
- War and MIlitary Action

Group 2
- Mechanical Breakdown
- Missing Property
- Contamination or deterioration
- Criminal, Fraudulent, Dishonest, or Illegal Acts
- Temperature / Humidity
- Pollutants
- Wear and Tear
- Voluntary Parting
- Loss of use

43
Q

Valuation - Contractors Equipment

A
  • Usually ACV
  • IF RC, carriers usually require that the equipment is relatively new
44
Q

COinsurance - per item vs per schedule - Contractors Equipment

A

Should apply per item and not per schedule. If you do per schedule then the whole equipment schedule will need to reviewed and could be penalized

45
Q

Time Element Contractors Equipment (2 Endts)

A

Continuing Rental or Lease Payments - for when contractually obligated to continue paying for rented equipment damaged

Contractors Equipment Income Ccoverage- loss to equipment off premise which is covered by property on premise

46
Q

3 Types of Carriers - Transportation Coverage

A
  • Common Carriers: Provides the public with transportation for hire interstate or intrastate
  • Contract Carriers: carriers hired with specific contract in place
  • PRivate Carriers: Companies that haul their own goods on their own vehicles (potential back hauling exposure)
47
Q

Common Carrier - Type of Liability and 5 Exceptions

A

Strict liability: Means they have to prove they are not negligent

5 Exceptions (PIAAA)
- Public Authority (mad cow disease so not shipping meat)
- Inherent vice or nature of goods being shipped (Apples can’t be shipped with other fruits)
- Acts of god / nature (Heart attack or weather unless driver could have avoided weather)
- Acts of public enemy (war with gov)
- Acts or default of the shipper (poor packaging or instruction)

48
Q

3 Carrier Options in Response to Claim - Transportation

A
  • Pay the shipper
  • Deny with 5 Exceptions
  • Pay reduced amount based on Bill of Lading
49
Q

2 Types of Bill of Ladings

A

Released Bill of Lading
- Limits the carriers responsibility to the value on the bill of lading. Often in terms of price per pound of cargo. Less expensive

Uniform or Valued Bill of Lading
- Declared value. Usually more expensive

50
Q

Why Transportation Coverage? (Property and BOP advantages / 4 Other Reasons

A
  • Property policy only $5k for property in transit
  • BOP has $10k limit

Other Reasons LPBC
- Limitations on Carrier Liability: For value and whether they responsible
- Prompt Claims Settlements (because 1st party coverage)
- Broad and Appropriate Coverage
- Cost effective: Usually better than buying insurance per trip through carrier

51
Q

Covered Property - Transportation (2 )

A

Property In a Terminal
- Loading and unloading and any temporary storage

Property In transit
- Loaded From or unloaded onto a sidewalk street, loading dock, or similar area that is adjacent to the indicated mode of transportation
- Need limits for each conveyance.
- Need extra coverage for “white glove” delivery

52
Q

Transit Definition (When Begins, what includes, and when ends)

A
  • Begins at point of shipment to a specific destination
  • Includes the ordinary reasonable and necessary stops, delays, transfers incidental to route, etc.
  • Ends upon acceptance of goods at the specified location
53
Q

Property Not Covered Transportation (9)

A

PEACH SCMM
- property in storage
- Exports and Imports
- Animals (Live animals)
- Contraband
- High Value Items
- Samples from Sales reps (given out for free so hard to say how much lost)
- Carrier for Hire or Lease Agreement
- Mail Shipments
- Money and securities

54
Q

Coverage Extensions Transportation (2)

A

DEBRIS REMOVAL
(25% plus 5k)

Emergency Removal
- Provides coverage for up to 365 days unless policy expires

55
Q

Supplemental Coverages Transportation (3)

A

PPR
Pollutant Cleanup and Removal - $10k

Property you have sold
- Sold at the owners risk meaning the owners is responsible for goods
- Covers if owner rejects the shipment or if owner hasn’t paid until goods arrive

Rejected Shipments
- Coverage for undeliverable goods or goods rejected by recipient
- 10 days after intended delivery until coverage ends. Includes going back to insured or temp storing

56
Q

Transportation Group 1 (3) and Group 2 (9) Excluded Covered Causes of Loss

A

Group One CNW
- Civil Authority
- Nuclear hazard
- War and MIlitary Action

Group 2 M 2C TPVWLS
- Contamination or Deterioration
- Criminal, Fraudulent, Dishonest
- Loss of Use
- MIssing Property
- Pollutants
- Spoilage
- Temperature / Humidity
- Voluntary Parting
- Wear and Tear

57
Q

How property Valued (2)- Transportation

A
  • Based off invoice
    -ACV if no invoice
58
Q

Policy Pays Lesser of (3)- Transportation

A
  • Amount determined under valuation
  • Cost to repair, replace ore rebuild with like kind and quality to extent practicable
  • Limit shown on schedule

CIC - Multi Line Casualty (6 decks)

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