Chapter 6 - Commercial Property Policies

valuable papers and records

$2,500 for the cost to research, replace, or restore lost information from valuable papers and records, other than electronic data

what is the normal maximum and policy may pay up to for electronic data

$2,500 in any one year

nonowned detached trailers

$5,000 coverage applies only if the loss occurs when the trailer is in the insured's custody and only if the insured is contractually obligated to pay for the loss or damage

30%

30 days or less

60%

31 days to 60 days

resumption of operations

allows the insurer to reduce the amount of the loss if the insured does not resume operations as quickly as possible

period of restoration

begins 72 hours after the direct physical loss

operations

business activity at the premise described in the declarations

changes

changes in the terms can be made only by endorsement issued by the insurer

policy cover, common policy declarations, interline endorsements, lines of insurance declaration pages, lines of insurance coverage forms, common policy conditions, lines of insurance condition, causes of loss forms and endorsements

commercial policy consists of these modular parts

business personal property temporarily in portable storage units

coverage extends to business personal property while temporarily stored in a portable storage unit (including a detached trailer) located within 100 feet of the premises

personal effects and property of others

coverage for business personal property can be extended up to $2,500 for personal effects of the insured or his employees

newly acquired property

coverage is available for buildings or personal property that comes under the insured's control, care or custody after the beginning of the current policy period, coverage ends when the policy expires, 30 days after the property came under the insured's control, or when values are reported to the insurer, whichever happens first

newly acquired or constructed property

coverage is for 30 days for newly acquired buildings and personal property that are similar in use to the property insured

concealment, misrepresentation, or fraud coverage

coverage will be voided in the event the insured commited fraud as it relates to the policy at any time

business personal property coverage (BPP)

covers business personal property located in or on the building or structure described in the declarations or in the open, within 100 feet of the building or structure, or within 100 feet of the premises, whichever is greater

extra expense coverage form

covers consequential losses, and may be used by a business that will most likely not have a business income loss

personal property of others

covers personal property of others that is in the care, custody or control of the insured, if located in or on the building described in the declarations, or in the open within 100 feet of the building or structure, or 100 feet of the premises

extra expenses

expenses incurred by the insured, above their normal operating costs, during the period of restoration and to minimize the suspension

other insurance

f other insurance applies, the insurer will settle on a pro-rata basis if the other insurance written on the same basis

a covered loss that leads to a necessary suspension of operations during the period of restoration and at the premise described in the declarations

how is business interruption coverage triggered

insurance under two or more coverages

if more than one coverage under the policy can respond to the same loss, the insurer will pay no more than the actual loss

recovered property

if property is recovered after payment has been made, the insured has the option of keeping the property and returning the amount paid

vacancy

if the building has been vacant for more than 60 consecutive days before the loss, the insurer will not pay for damage caused by vandalism, sprinkler leakage, glass breakage, water damage, theft, or attempted theft

other insurance

if the insured has other insurance with the same terms, conditions, and provisions, the policy will contribute by limits

fire department service charge

if the insured is under any obligation to pay for fire department service calls, the policy will reimburse the insured for up to $1000 for this charge

civil authority

if the insured suffers a business income or extra expense loss because a neighboring property is damaged by a loss covered in the insured's policy and requires a suspension of the insured's operations or a civil authority needs unimpeded access to the damage property

liberalization

if the insurer adopts any provisions that would broaden coverage during the policy period or within 45 days prior to the effective date, the broadened coverage will apply without having to be endorsed on the policy

appraisal

if the insurer and insured cannot agree on the value of property, both parties my make a written demand for this

mortgageholders

if the insurer denies coverage because the insured failed to comply with the policy provision, the mortgage holder may still be able to receive payment if the mortgage holder pays any premium due under the policy, submits a signed proof of loss within 60 days, and has notified the insurer of any changes in ownership or occupancy

additional insureds

if the named insured is a partnership or corporation, coverage also applies to the insured's partners, executive officers, trustees, directors and stockholders

extension of replacement cost to personal property of others

if the replacement cost option is selected the insured can purchase this option as well

duties in the event of accident,claim or suit

in the event of a loss the insured duties are to notify the insurer promptly of any accident that may result in a loss, send the insurer prompt written notice of any claim or suit brought against the insured, immediately send the insurer copies of any demands or notices in conjunction with a claim or suit, authorize the insurer to obtain records or other information, cooperate with the insurer in the investigation, assist the insurer in enforcing any right against another person, and not make any settlements or assume any obligations voluntarily

property not covered

includes land or water, outdoor lawns, trees, shrubs or plants, radio and television antennas, satellite dishes, and signs

property covered under a builders risk coverage form

includes the building or structure, temporary structures, including foundations, fixtures, machinery, equipment, materials, and supplies within 100 feet off the premises if intended to become a permanent part of the building

separation of insureds

insurance applies separately to the named insured and each additional insured, except with respect to the limits of insurance

Ioss payment in the event of loss or damage

insurance company has the option to pay the value of the lost or damaged property, pay the cost of repairing or replacing the lost or damaged property, take all or any part of the property at an agreed or appraised value, repair, rebuild, or replace the property with other property of like kind and quality, or the insurer must give notice of their intentions within 30 days after receiving the sworn proof of loss, and then pay the covered loss within 30 days after they determine the claim

bankruptcy

insured's bankruptcy does not relieve the insurer of their obligation under this coverage form

policy period, coverage territory

insurer will pay for loss or damage caused by an accident that occurs during the policy period shown in the declarations, and within the coverage territory (the United States, Puerto Rico, and Canada)

vacancy permit endorsement

is added to a building and personal property coverage for, the vacancy condition under the basic policy will be waived during this period

inflation guard

limits of insurance to which the coverage applies are automatically increased by an annual percentage shown in the declarations, and prorated over the policy term

100%

more than 60 days

what are some of the coverage extensions available

newly acquired or constructed property, personal effects and property of others, valuable papers and records, property off premises, outdoor property, nonowned detached trailers, and business personal property temporarily in portable storage units

newly acquired organization

newly acquired organizations, other than partnerships or joint ventures, are also covered, but only for 90 days or until the end of the policy period, whichever is sooner

legal action against the insurer

no person has a right to bring legal action against the insurer until all policy provisions have been complied with

legal action against the insurer

no person may bring legal action against the insurer until all policy terms have been complied with, and then only if the legal actions is brought within 2 years of the loss (may vary between states)

no benefit to bailee

no person who has custody of covered property, other than the insured, can benefit from the insurance

amendment of commercial property conditions

none of the commercial property conditions apply to this coverage form except concealment, misrepresentation or fraud, insurance under two or more coverages and liberalization

duties in the event of a loss

notify the police if a law has been broken, give the insurer prompt notice of the loss, and a description of how, when, and where it occurred, take all reasonable steps to protect property from further damage, at the insurer's request, provide an inventory of both damaged and undamaged property, permit the insurer to inspect the property as necessary, send the insurer a signed, sworn proof of loss within 60 days of its request, and cooperate with the insurer in the investigation

building coverage

nsures the building described in the declarations, outdoor fixtures and furniture, items used to service the property, permanently installed machinery and equipment, and additions under construction, including the material, supplies and equipment

an indirect loss

only payable after a covered direct damage loss

legal liability coverage form

property in the insured's care, customer, or control for which the insured is legally liable for damage

preservation of property (BR)

property removed to a temporary location to protect it from loss or damage is covered while it is being moved or stored at another location, provided loss or damage occurs within 30 days after the property is moved

declarations page

provides the information as to who, what, when, where, and how much

extended business income

provides time for the insured to resume normal income levels

premiums

responsibility for payment of the premiums rests with the first named insured

replacement cost

the actual cash value in the valuation conditions is replaced with replacement cost valuation

coinsurance

the coinsurance clause defines how much will be paid in the event the insurance limits do not meet the policy coinsurance requirements

maximum period of indemnity

the coinsurance clause is replaced and the most the insurer will pay for a loss of business income is lesser than the actual amount of loss sustained during the 120 days immediately following, or the limit of the insurance

monthly limit of indemnity

the coinsurance clause is replaced, and the most the insurer will pay in each 30-day period after a direct physical loss is the limit of insurance times a specified percentage shown in the declarations

cancellation

the first named insured may cancel the policy at any time by giving written notice to the insurer

abandonment

the insured cannot abandon property to the insurer

sod, trees, shrubs and plants extenstion

the insured may extend coverage to apply to a loss outside the building if the loss or damage is cause by a fire, lightning, explosion, riot or civil commotion, or aircraft

building material and supplies of others extension

the insured may extend coverage to include construction materials that would become a permanent part of the building for up to $5,000

business income agreed value

the insured must complete a business income report showing the business financial data for the previous 12 months and an estimate for the next 12 months

transfer of rights of recovery against the insurer (subrogation)

the insured must transfer any rights they possess to collect from another to the insurer after payment has been made

agreed value

the insurer and insured will determine a value for property

examination of books and records

the insurer is granted the right to audit books and records of the insured relating to the policy period up to 3 years after the end of the policy

inspections and surveys

the insurer is granted the right, but does not have an obligation, to make inspections, surveys, reports, and recommendations relating to the insurance

valuation

the insurer will settle the loss on an actual cash value basis unless under certain conditions

the building and personal property coverage form

the main commercial package form used to cover buildings, business personal property, and property of others

electronic data

the policy provides coverage for the replacement of electronic data for certain types of losses

policy period, coverage territory

the policy territory includes the United States, its possessions and territories, and Canada

preservation of property

the policy will pay for any damage to property moved to protect it from further damage, but only for 30 days after the property is first moved

increased cost of construction

the policy will pay the lesser of $10,000 or 5% of the limit of insurance applicable to the building for increased cost of construction resulting from building laws enforcement

debris removal

the policy will pay to remove debris of covered property and other property(with some limitations) when associated with a covered loss

pollutant cleanup and removal (BR)

the policy will pay up to $10,000 for expenses incurred to remove pollutants if the discharge is caused by a covered cause of loss and reported within 180 days of the occurrence

pollutant cleanup and removal

the policy will pay up to $10,000 for expenses incurred to remove pollutants if the discharge is caused by a covered peril and reported in writing within 180 days of the occurrence

debris removal (BR)

the policy will pay up to 25% of the direct physical loss plus any applicable deductible

transfer of rights and duties

the rights and duties of the insured under the policy can be transferred to another only with the written consent of the insurer

suspension

the slowdown or cessation of the insured's business activities

control of property

this condition states that any act or negligence by persons not under the direction of the insured will not void coverage

interline endorsements

those that apply, or could apply, to more than one coverage part and are designed to eliminate redundancy and minimize the number of endorsements in the policy

fire department service charge (BR)

up to $1,000 coverage is included

outdoor property

up to $1,000 for fences, and radio and television antennas (including satellite dishes), or $250 for tress, shrubs, and plants damaged or destroyed by fire, lightning, explosion, riot or civil commotion, or aircraft

property off premises

up to $10,000 for property, excluding stock, that is temporarily at premises that insured does not own, lease, or operate, or while at a trade show, fair, or exhibition

builders risk coverage form

used to insure buildings while under construction

business income with extra expense, business income without extra expense, and extra expense

what 3 forms cover are used to select coverage for indirect loss

maximum period of indemnity, monthly limit of indemnity, and business income agreed value

what are 3 additional optional coverages that will waive the coinsurance

additional insureds, newly acquired organization, and newly acquired property

what are 3 extensions of coverage included on the legal liability coverage form

general liability, commercial property (direct and indirect coverages), inland marine, commercial auto, equipment breakdown (also known as boiler and machinery), crime, and farm

what are 7 coverage parts may be included in the commercial package policy

debris removal, preservation of property, fire department service charge, pollutant cleanup and removal, increased cost of construction, and electronic data

what are additional coverages that can be added to the building and personal property coverage form

if the limit of insurance satisfies the coinsurance clause and the amount of the loss is less that $2,500, stock sold, but not delivered, glass will be valued at the cost of the replacement with safety glazing material, tenants improvements and betterments will be valued at actual cash value if repairs are made promptly, and valuable papers and records will be valued on the cost of blank material and labor required to transcribe the records

what are the conditions in which the valuation is not a cash value basis

30 days or less, 31 days to 60 days, and more than 60 days

what are the options for the limited selection of coinsurance

begins on the date the property is actually repaired and operations are resumed, and ends on the earlier of the date the insured could restore operations with reasonable speed and diligence, or 60 consecutive days after the date operations are actually resumed

what are the time frames for extended business income coverage

the insurer will reduce the amount it otherwise would have paid by 15%

what happens if a loss is caused by any other peril

$1,000 but not more than $250 per tree, shrub, or plant

what is the limits on the sod, trees, shrubs and plants extension

$10,000

what is the maximum amount the insurer will pay in any 12-month period for pollutant cleanup

it needs to be listed in the declarations with an appropriate limit of insurance

what needs to be done if the insured wants a specific building covered

up to $250,000 for a newly acquired buildings, and up to $100,000 for business personal property

what will the newly acquired or constructed property extension pay