Unit 11: Commercial Property Insurance Flashcards
1
Q
Commercial Property
A
- Commercial property declarations
- Commercial property conditions
- One or more property forms
- Cause of loss form (basic, broad, or special)
2
Q
Conditions
A
Attached to EVERY commercial property policy
Concealment or fraud voids coverage
3
Q
Conditions
Control of property
A
Condition states that an act of neglect of a person beyond the insured’s direction or control will not affect the insurance
4
Q
Conditions
Legal action against us
A
Gives the insured two years to bring an action against the insurer
5
Q
Conditions
Other insurance condition
A
- Pro rata: if policies are written on the same basis
- Excess: if the policies are not written on the same basis
6
Q
Conditions
Policy period and policy territory
A
Loss must occur during the policy period and in the covered territory; usually the US and its territories
7
Q
Conditions
Transfer of rights of recovery against others to us
A
Condition gives the insurance company subrogation rights
8
Q
Conditions
No benefit to bailee
A
Bailee is not reimbursed by insured’s commercial property insurance
9
Q
Conditions
Liberalization
A
- More coverage without more premium
- 45 days of policy’s effective date
10
Q
Building
A
- 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
- Materials, equipment, supplies, and temporary structures within 100 feet of the described premises
11
Q
Business personal property
A
- Furniture (desks, chairs, etc.)
- Fixtures (shelves, light fixtures, etc.)
- Machinery
- Equipment
- Stock
- The value of labor, parts, or services on the personal property of others
- Tenants’ improvements and betterments
- Leased personal property
12
Q
Excluded Personal Property
A
- Money, accounts, food stamps, notes, and securities
- Animals, unless they are boarded or held for sale
- Bridges, roads, walks, patios, and other paved surfaces
- Contraband (illegal property transported or traded)
- Cost of excavations and other ground preparation
- Foundations of buildings, structures, and machinery
- Land
- Bulkheads, pilings, piers, wharves, and docks
- Underground pipes
- Vehicles, including watercraft and aircraft, that are licensed for use on public roads or are principally operated away from the premises
13
Q
Excluded Personal Property (while outside of buildings)
A
- Fences
- Antennas (including satellite dishes)
- Signs not attached to the building ($2,500 for coverage is available for attached signs)
- Trees, shrubs, and plants
14
Q
Additional Coverages
A
- Debris removal: remove debris caused by a covered peril; up to 25% of the amount paid for direct loss to covered property plus the deductible; additional $25,000 if needed
- Property removal - 30 days
- Fire department service charge - $1,000, no deductible
- Pollutant cleanup and removal - $10,000 per policy period
- Electronic data - $2,500 for all loss or damage sustained in any one policy year
15
Q
Coverage Extensions
A
- 80% coinsurance has been met
- Newly acquired or constructed property
- $250,000 - building - 30 days
- $100,000 - personal property - 30 days
- Personal property of others - $2,500 - not bailee
- Valuable papers and records - other than electronic data - up to $2,500
- Property off premises - $10,00
- 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
16
Q
Conditions and Duties in the Event of Loss
A
- Prompt notice of loss
- Notify police if a crime
- Protect property from further damage
- Provide company an inventory or damaged property (if requested)
- Allow insurer to inspect damage
- Signed proof of loss within 60 days (if requested)
17
Q
Loss Payment
A
30 days after sworn statement of loss
18
Q
Valuation
A
- How loss will be settled (ACV)
- Loss less than $25,000 replacement
19
Q
Vacancy
A
Vacancy more than 60 days
- Vandalism, glass breakage, theft, and water damage excluded
- All other losses reduced by 15%
20
Q
Mortgage Holder
A
- 10 days’ notice if insurance canceled
- Mortgage holder will be paid losses
21
Q
Coinsurance
A
Loss x (did carry / should carry)
22
Q
Optional Coverage
A
- Agreed value
- Inflation guard
- Replacement cost
23
Q
Builders Risk
A
- Buildings under construction
- Materials and equipment on premises or within 100 feet
- Foundation
- Termination
24
Q
Builders Risk - Termination
A
- The property is accepted by the purchaser
- 90 days have elapsed since construction was completed
- The building is occupied or put to its intended use
- The insured’s interest in the property ceases
- The insured abandons the construction with no intention of completing it
25
Completed value form
Policy limit equals building value on the date of completion
26
Builders Risk Reporting Form
- Insured reports values during construction
- No more coverage than the last report
- 100% coinsurance required
27
Condominium Association Form
Covers property belonging to the association
- Buildings
- Personal property belonging
Doesn't cover personal property of condo owner (HO-6)
28
Commercial Unit Owner
Covers business personal property of condo owners
29
Time Element Coverage Forms
Business income
Covers loss of income and expenses due to suspension of business following a covered loss
30
Extra Expense
Coverage to avoid closure for businesses that must remain open (e.g. hospital)
31
Expenses to Reduce Loss
Covers necessary expenses to avoid further loss of income
32
Business Income from Dependent Properties
- Contributing location: provides raw materials to the insured
- Recipient location: primary buyer of the insured's goods
- Manufacturing location: provides manufactured goods to the insured
33
Extra Expense Coverage Form
Reimbursement for extra expenses
Time element coverage
34
Legal Liability Coverage Form
Covers property of others only if insured is legally liable
35
Basic Peril Coverage
- Fire
- Lightning
- Explosion
- Wind or hail
- Smoke
- Aircraft or vehicles
- Riot or civil commotion
- Vandalism
- Sprinkler leakage
- Sinkhole collapse
- Volcanic action (does not cover land movement)
- Fungus, wet rot, dry rot, and bacteria - $15,000 maximum
36
Broad
All of basic plus
- falling objects (does not cover damage to interior property unless the exterior of the building is damaged first
- weight of snow, ice, or sleet
- water damage (accidental discharge or leakage of water)
- collapse caused by any broad peril plus: breakage of glass, hidden decay, hidden insect damage, weight or people or personal property, weight of rain that collects on a roof, use of defective material or methods in construction
37
Special (open)
Covers all direct causes of loss
Exclusions
38
Value reporting endorsement
Allows insured to report values (usually on a monthly basis) to establish limits of coverage
No loss paid greater than the last report
39
Ordinance or law endorsement
Pays for additional costs of repair or replacement due to building ordinances or laws
40
Spoilage endorsement
Covers perishable stock (refrigerated)
41
Earthquake and volcanic eruption
Land movement
