Claudia I commercial study review #1

The Non-owned Detached Trailers Coverage Extension on the Building and Personal Property Coverage Form provides up to what amount for non-owned trailers used in the insured's business?

$5,000 The Non-owned Detached Trailers Coverage Extension provides $5,000 of excess insurance for loss or damage to non-owned trailers in the insured's care, custody, or control. The insured must be contractually obligated to pay for the loss, and the trailer cannot be attached to a vehicle.

Under commercial property insurance, the Causes of Loss - Special Form extends coverage to apply to property in transit, up to what limit of insurance?

$5,000 The Property in Transit Coverage Extension will provide a $5,000 limit for damage to personal property owned by the insured while it is in transit.

The Causes of Loss - Basic Form applicable to commercial property policies covers direct damage caused by bacteria during what period of time following policy inception?

12 months The Causes of Loss forms provide an Additional Coverage to provide limited coverage for direct losses resulting from fungi, wet or dry rot, or bacteria. The limit of insurance is $15,000, and the limit applies to the 12-month period that begins with the policy's inception date.

All of the following events could end coverage provided by the Builders Risk Coverage Form, except:

45 days after the covered building is put to its intended use The Builders Risk Coverage Form offers a number of circumstances that could trigger coverage termination. If the covered building is partially or fully occupied, or if it is put to its intended use, the insured has 60 days before that circumstance would terminate coverage.

Under commercial property insurance, the Causes of Loss - Special Form extends coverage to apply to property in transit, up to what limit of insurance?

5,000 The Property in Transit Coverage Extension will provide a $5,000 limit for damage to personal property owned by the insured while it is in transit.

Losses caused by vandalism are not covered under the Building and Personal Property Coverage Form if the property has been vacant for more than how many consecutive days?

60 Because of the increase in risk of loss to vacant property, coverage is excluded for the perils of vandalism, glass breakage, water damage, and theft if the property was vacant for more than 60 consecutive days immediately before the loss. The amount paid for damage by other perils is reduced by 15% during the period of vacancy. This is provided by the Vacancy condition.

Coverage D of a Dwelling policy covers which of the following losses?

Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy Coverage D - Fair Rental Value includes coverage for the indirect loss of access prevented by a civil authority due to the direct physical loss of a neighboring property by a covered peril. Coverage D will not provide coverage for lease cancellation. Additional living expenses are provided by Coverage E.

Company ABC has several construction projects occurring at the same time, and the company wants coverage for the buildings during construction. If Company ABC wants the limit of insurance to be adjusted monthly depending on the progress of construction, which form will their agent recommend?

Builders Risk Reporting Form A Builders Risk Coverage Form will insure buildings and structures while being constructed. The reporting form will adjust the limit of insurance based on monthly reports, and is useful when an insured has several construction projects at the same time.

All of the following coverage forms may be added to the Commercial Package policy, except:

Businessowners policy (BOP) The BOP is designed as an alternative to the CPP, and cannot be added to it as a coverage part. Workers' Compensation is another type of policy that cannot be added to a CPP and must be purchased separately. The Building and Personal Property Coverage Form, Builders Risk Coverage Form, and Legal Liability Coverage Form are all available forms to include in a CPP's commercial property coverage part.

When added to a commercial property policy, which of the following would not be covered by the Ordinance or Law Endorsement?

Cost of fines due to the enforcement of building codes The Ordinance or Law Endorsement applies if the enforcement of any building, zoning, or land-use law results in a loss of value of the part of the building that is not damaged by a covered loss, costs of demolition and clearance of the undamaged parts of a building, and increased costs of repairing or reconstructing damaged parts of a building. Building code fines are not covered by the policy or by the endorsement.

Under commercial property policies, which of the following is correct concerning the Causes of Loss - Special Form?

Coverage is provided for all losses except as specifically limited or excluded The Causes of Loss - Special Form provides open perils coverage. Beyond the expanded number of perils insured against, the form also provides coverage extensions and coverage sublimit not seen in other Causes of Loss forms.

Which of the following is not a named peril under the Causes of Loss - Basic Form applicable to commercial property policies?

Earthquake Like most property policies, the Causes of Loss - Basic Form will not include earthquake as a covered peril. An endorsement is available for the insured to add coverage for earthquake losses to their commercial property policy. Sprinkler leakage, sinkhole collapse, and volcanic action are all named perils.

Under the Common Policy Conditions of the Commercial Package policy, the insurer does not have the right to do which of the following?

Examine the insured's records at any time, up to 5 years after policy expiration The insurer may examine and audit the insured's books and records at any time, including up to 3 years following the expiration or termination of the policy. The insurer's right to these examinations, their right to inspections and surveys, their right to cancel the policy for certain reasons, and the requirement for insurer consent before policy changes are made are all provided for by the Common Policy Conditions.

Which of the following kinds of property may be covered under a Building and Personal Property Coverage Form?

Grain stored inside a building Grain, hay, straw, and other crops located outside are considered property not covered, but that which is stored inside a building could have coverage. Property in transit over air or water, property specifically covered under other insurance, and any vehicle licensed for use on public roads are also considered property not covered.

Endorsements that coordinate Commercial Package policy coverage parts to avoid duplication are called:

Interline Interline endorsements coordinate coverage contained in one coverage part of the policy with another coverage part.

All of the following are Common Policy Conditions that apply to a Commercial Package policy, except:

Interline endorsement Interline endorsements are endorsements, not conditions. They are used to coordinate coverage contained in one part of the policy with other coverage parts to prevent duplication.

In a Commercial Package policy, what may be added to prevent duplication of coverage?

Interline endorsements Interline endorsements are used to coordinate coverage between coverage parts in a Commercial Package Policy and prevent duplication.

The Building and Personal Property Coverage Form does not cover:

Liability The Building and Personal Property Coverage Form only provides property coverage, meaning liability is not covered under this form. Insureds with property coverage using this policy would need a separate Commercial General Liability Coverage Form, which could be added as a coverage part to their Commercial Package policy. The three coverages provided by the Building and Personal Property Coverage Form are for buildings, business personal property, and the personal property of others.

Which is NOT a Common Policy Condition under a Commercial Package policy?

Liberalization Liberalization is a Commercial Property Condition, applicable to coverages included in the commercial property coverage part. The Common Policy Conditions, which apply to the CPP in its entirety, are: Cancellation, Changes, Examination of Your Books and Records, Inspections and Surveys, Premiums, and Transfer of Your Rights and Duties Under This Policy.

Under the Business Income and Extra Expense Coverage Form, extra expense coverage applies to:

Necessary expenses incurred during the period of restoration to minimize the suspension of business Extra expense coverage is intended to reimburse the insured for expenses incurred in getting back into business as soon as possible after a loss, such as any expenses meant to minimize business suspension, continue operations at the described location, or move operations to a temporary replacement location. Loss of business income is covered by business income coverage, not extra expenses coverage.

Under the Business Income With Extra Expense Coverage Form, extra expenses are defined to include all of the following expenses, except:

Payroll Payroll is considered part of business income, not extra expenses. Extra expenses are those expenses that the insured incurs that would not have been incurred had the loss not occurred.

Which commercial property endorsement offers the best method of insuring a store's holiday inventory?

Peak Season Limit of Insurance Endorsement The Peak Season Limit of Insurance Endorsement covers a specified increase in an insured's business personal property limit during a designated period, such as the holiday shopping season, to account for higher-than-usual value of stock on the premises.

All of the following are Commercial Property Conditions of a CPP, except:

Premiums The Premiums condition is a Common Policy Condition. Commercial Property Conditions, standardized across commercial property policies, include Concealment or Fraud, Control of Property, Insurance Under Two or More Coverages, Legal Action Against Us, Liberalization, and No Benefit to Bailee.

Which of the following statements regarding Property Off Premises coverage under the Building and Personal Property Coverage Form is correct?

Property in the care, custody, and control of a salesperson is excluded if they are not at a fair, trade show, or exhibition The Property Off Premises Coverage Extension applies to the insured's covered property while it is temporarily at a location the insured does not own, lease, or operate. Property in the care, custody, or control of a salesperson is only covered if the salesperson is at a fair, trade show, or exhibition. Otherwise, that property is excluded, as is property located in or on a vehicle. This coverage is different from the Preservation of Property Additional Coverage, which provides coverage for up to 30 days when it is removed from the premises to protect it from a covered peril.

An insured owns a commercial building worth $400,000 and insures it for $350,000 on a commercial property policy written on the Building and Personal Property Coverage Form. If the insured plans to construct a new building on the premises, coverage for the newly constructed property is:

Provided by a Coverage Extension for up to $250,000 If the insured meets the 80% coinsurance requirement, they may extend coverage to apply to newly acquired or constructed properties for up to $250,000 for the building itself and up to $100,000 for newly acquired business personal property. This is provided by the Newly Acquired or Constructed Property Coverage Extension. If the insured failed to maintain insurance to value, this extension would not be available to them.

The Builders Risk Coverage Form will not cover which of the following?

Television antenna located on the roof. Builders risk coverage applies to buildings and structures under construction, including foundations, fixtures and machinery, equipment used to service the building, building materials and supplies used for construction, and temporary structures. These items must be intended to be permanently located in or on the described building or within 100 feet of the premises. Coverage does not apply to land, lawns, trees, shrubs, plants, outside antennas, or signs that are not attached to the structure.

Which Causes of Loss form available for the property coverage forms on a Commercial Package policy will cover loss of merchandise due to a burglary?

The Special Form only Theft coverage, such as the theft of merchandise, is excluded by the Vandalism peril named on the Basic and Broad Causes of Loss forms, but theft is not excluded by the Special Form. However, all Causes of Loss forms will protect the building itself if it is damaged by burglars.

An insured protects their commercial property on the Building and Personal Property Coverage Form. The insured should consider purchasing the Value Reporting Form Endorsement if:

The insured has business personal property values that fluctuate, and needs protection for the values actually at risk The Value Reporting Form Endorsement allows commercial property insureds to report values of their business personal property throughout the policy period in order to have coverage appropriate for the fluctuations in value. If the insured only has an increased amount of business personal property during one specific time of the year and wants additional coverage during that time, the Peak Season Limit of Insurance Endorsement would be more effective.

Under a commercial property policy with the Value Reporting Form Endorsement, which of the following is NOT correct?

The insured is only required to report 80% of value of the property Reporting of 100% of values is required to guarantee that adequate insurance is being provided and charged.

Under a Commercial Package policy, which of the following is correct about the Inspections and Surveys condition included in the Common Policy Conditions?

The insurer has the right, but is not obligated, to make inspections and surveys at any time Inspections and surveys are a reasonable and effective underwriting tool of the insurer. They may be made whenever the insurer believes it to be necessary, including any time up to 3 years after the end of the policy. These inspections and surveys are not safety inspections.

Which of the following is considered property not covered under the Building and Personal Property Coverage Form?

Which of the following is considered property not covered under the Building and Personal Property Coverage Form? Electronic data including information, facts, and computer programs and the cost to replace or restore the electronic information is considered property not covered by the form, but limited coverage is available through the Electronic Data Additional Coverage. Stock is covered by business personal property coverage. Stock includes any merchandise held for sale, including animals in buildings and vehicles that are not automobiles.

An insured owns a commercial business insured on the Business and Personal Property Coverage Form. If the Outdoor Property Coverage Extension applies, the insured's fences, antennas, and plants are insured against all of the following perils, except

Windstorm The Outdoor Property Coverage Extension provides coverage for outdoor fences, radio and television antennas, satellite dishes, trees, shrubs, and plants against a limited number of perils, including fire, lightning, explosion, riot or civil commotion, and aircraft. Windstorm, hail, vandalism, and vehicles are not covered perils under this extension.

Which of the following perils is insured against by a commercial property policy using the Causes of Loss - Basic Form?

Windstorm Windstorm is a basic peril insured against by all Causes of Loss forms. The other perils are covered under the Broad and Special forms.

Which coverage may not be added to the Commercial Package policy?

Workers' Compensation and Employers Liability The CPP allows insureds to design insurance coverage that fits their business exposures, including general liability coverages and property coverages. A Workers' Compensation and Employers Liability policy is a separate policy altogether and cannot be included as part of a Commercial Package policy.

Under the Business Income Coverage Form, the period of restoration for business income coverage begins how long after the time of loss?

72 hours For business income coverage, the period of restoration begins 72 hours after the time of loss. The period of restoration ends on the date the property is repaired, or the date business is resumed at a new location, whichever happens first.

After a fire loss to a commercial building, an insured incurs expenses when they move business operations to a temporary replacement location while the building is repaired. Under the Extra Expenses Coverage Form, coverage for these expenses begins:

Immediately Extra expenses coverage will reimburse the insured for expenses incurred to minimize the suspension of business, including relocation expenses, during the period of restoration, which begins immediately after the direct physical loss occurs. If the insured had business income coverage, the period of restoration applying to lost business income would begin 72 hours after the loss.

An insured rents a commercial unit for their business and has commercial property coverage under the Building and Personal Property Coverage Form. The unit is considered vacant when:

It does not contain enough business personal property to conduct customary operations For insureds who are tenants, the Building and Personal Property Coverage Form defines vacant to mean that the rented or leased unit does not contain enough business personal property to conduct customary operations. If the insured owned the building, the building is considered vacant unless at least 31% of the total square footage is used to conduct customary operations or rented to and used by a lessee.

Under the Building and Personal Property Coverage Form, which of the following is correct about the Preservation of Property Additional Coverage?

It provides open perils coverage for 30 days on insured property temporarily stored at another location because of the endangerment of a covered peril The purpose of the Preservation of Property Additional Coverage is to provide open perils coverage for property being moved or temporarily stored at another location because it is endangered by a covered peril. This helps incentivize insureds to protect their property from losses, when possible. The moved property is covered for up to 30 days.

The Causes of Loss - Basic Form covers losses to commercial property caused by:

Lava flow Loss caused by lava flow is covered under the Volcanic Action peril. This coverage is provided by all Causes of Loss forms. Governmental action is a common exclusion on all Causes of Loss forms. The Basic Form will also exclude losses caused by frost and losses that result from theft, except that building damage caused by a burglar is covered.

If an insurer cancels a Commercial Package policy, the premium will be refunded on a:

Pro rata basis to the first named insured After policy cancellation by the insurer, the premium refund is issued pro rata to the first named insured, who paid the premium. The first named insured will also be the recipient of the cancellation notice an insurer must send if it cancels the policy. The provisions for cancellation and premium payments are found in the Common Policy Conditions.

After a covered loss to a commercial building insured on the Building and Personal Property Coverage Form, notice of the loss must be provided to the insurer:

Promptly, by oral or written notice Notice of loss must be provided promptly to the insurer. This initial notice does not have to be made in writing, meaning oral notice is allowed. A signed, sworn proof of loss must be provided typically within 60 days of the insurer's request.

An insured has a commercial property policy that uses the Causes of Loss - Basic Form. Loss by which of the following perils will be covered by the policy?

Sprinkler leakage Sprinkler leakage is a named peril included on the Causes of Loss - Basic Form. Falling objects and water damage caused by the accidental discharge of water are named perils on the Broad Form. Though smoke is a covered peril for all forms, exclusions apply to smoke resulting from industrial operations or agricultural smudging.

Under the Earthquake and Volcanic Eruption Endorsement attached to the commercial property coverage part, which of the following statements is correct?

The endorsement's deductibles apply separately for each building, personal property in each building, and personal property in the open The Earthquake and Volcanic Eruption Endorsement includes deductibles, written as percentages of the applicable limit of liability, that will apply separately to each building, to personal property located at each building, and to personal property in the open. Deductibles do not apply to business income and extra expense coverages, which insure against indirect losses. All earthquakes and volcanic eruptions that occur within any 168-hour period is considered a single earthquake or volcanic eruption, but the period must begin prior to the expiration of the policy.

An insured owns a commercial building and business personal property, insured on the Business and Personal Property Coverage Form with the Replacement Cost Optional Coverage. After a total loss to the building, the insured chooses to rebuild at a different location. Which of the following best describes the insurer's liability?

The insurer will pay the amount that would have been incurred if the building was rebuilt at the original location Buildings that are rebuilt at a different location are covered, but the insurer is only liable for the amount that would have been incurred if the building was rebuilt at the original location.