Ch. 8 Commercial Property Insurance - Random Questions 1 - MI P&C Licensing

All of the following are true of Builders Risk forms, except: A. Coverage is always written on an open perils basis B. Coverage does not apply to outside radio and television antennas C. Coverage terminates when the policy expires or it is cancelled D. There is no vacancy provision

A. Coverage is always written on an open perils basis Coverage may be written with any of the Cause of Loss Forms (Basic, Broad, or Special). 8.4

Endorsements that coordinate CPP coverages to avoid duplication are called: A. Interline B. Panel C. Special D. Coordinating

A. Interline Interline endorsements coordinate coverage contained in one coverage part of the policy with another coverage part. 8.1

Which of the following is not covered under the Building and Personal Property Coverage Form? A. Liability B. Buildings C. Business personal property D. Personal property of others

A. Liability Liability is not covered under this form, but is covered under the Commercial General Liability policy. 8.3

Which of the following is not covered under the Building and Personal Property Coverage Form? A. Liability B. Buildings C. Personal property of others D. Business personal property

A. Liability Liability is not covered under this form, but is covered under the Commercial General Liability policy. 8.3

All of the following are additional coverages under the Building and Personal Property Coverage Form, except: A. Peak season B. Debris removal C. Fire department service charge D. Preservation of property

A. Peak season If desired, peak season coverage must be added by endorsement. 8.3

All of the following are true in regard to commercial property coverage, except: A. The Basic Form insures against water damage B. The Broad Form does not cover settling, cracking, bulging or expansion C. Vandalism coverage is limited to 60 days if the property is vacant D. The Special Form insures against open perils except those specifically excluded

A. The Basic Form insures against water damage The Basic Cause of Loss Form does not cover water damage. 8.2

Which of the following is found in the Common Policy Declarations of the CPP? A. The total premium charged for each coverage part B. The provision granting the insurer the right to make inspections of insured property C. The insurer's cancellation right D. The provision that the first named insured is responsible for all premiums

A. The total premium charged for each coverage part The premium amount is shown on the Common Policy Declarations page. The other statements appear in the Common Policy Conditions. 8.1

Which of the following would not be found in the Common Policy Declarations page of a Commercial Package Policy? A. The insured's name and address B .Exclusions C .The inception and expiration date D. The policy premium

B .Exclusions The Declarations page of an insurance policy contains the information that adapts the policy to a specific insured and property. The exclusions are provisions that apply to all policies and policyholders. 8.1

The Commercial Package Policy (CPP) will have at least how many coverage parts? A. 4 B. 2 C. 1 D. 3

B. 2 In order to be a package policy, there must be at least 2 parts, otherwise a single policy would be purchased. 8.1

When considering insurability of a commercial property for renewal, the insurer can use: A. Police records B. Physical inspection C. Lie detector test D. Price of company stock

B. Physical inspection Under the common policy conditions, the insurer can use inspections and surveys for the purpose of underwriting and rating. 8.1

All of the following are true in regard to commercial property coverage, except: A. The Broad Form does not cover settling, cracking, bulging or expansion B. The Basic Form insures against water damage C. Vandalism coverage is limited to 60 days if the property is vacant D. The Special Form insures against open perils except those specifically excluded

B. The Basic Form insures against water damage The Basic Cause of Loss Form does not cover water damage. 8.2

Which statement is false about Commercial Property insurance? A. The Condominium Association Form will cover refrigerators, air conditioners and cooking ranges that are owned by the named insured B. Time element losses and direct losses are the same C. Loss of commissions due to interruptions of a manufacturing business is a time element loss D. The Builder's Risk Reporting Form insures a building under construction for an amount that increases with the increasing value of the building

B. Time element losses and direct losses are the same Time element losses are indirect losses, not direct losses. 8.7

The common policy declarations of the CPP contain all of the following, except: A. Name and address of the named insured B. Transfer of rights and duties C. Description of the business being insured D. The policy period

B. Transfer of rights and duties Transfer of Rights and Duties is in the Conditions section, not the Declarations. 8.1

A building valued at $200,000 is insured for $150,000 with an 80% coinsurance requirement and a $1,000 deductible. After the building is totally destroyed , incurring debris removal expenses of $10,000, how much will the Building and Personal Property Coverage Form pay? A. $154,000 B. $155,000 C. $159,000 D. $160,000

C. $159,000 After a total loss, the policy will pay the face amount less the deductible, plus up to $10,000 for debris removal. The coinsurance requirement only penalizes the insured for not carrying insurance to value in the case of a partial loss. 8.3

The Basic Cause of Loss form covers damage caused by bacteria during what period of time following policy inception? A. 18 months B. 6 months C. 12 months D. 24 months

C. 12 months The basic form provides limited coverage for fungus, wet rot, dry rot, and bacteria up to $15,000 during the 12-month period that begins with the policy's inception date. 8.2

The Commercial Package Policy (CPP) will have at least how many coverage parts? A. 1 B. 4 C. 2 D. 3

C. 2 In order to be a package policy, there must be at least 2 parts, otherwise a single policy would be purchased. 8.1

How long after a loss before the Period of Restoration begins for Business Income coverage? A. 168 hours B. 24 hours C. 72 hours D. 48 hours

C. 72 hours The Period of Restoration begins 72 hours after the time of the loss. 8.7

All of the following are coverage extensions under the Building and Personal Property Coverage Form, except: A. Personal effects and property of others B. Outdoor property C. Inflation guard D. Newly acquired or constructed property

C. Inflation guard Inflation Guard is an optional coverage, not a coverage extension. 8.3

All of the following are true of the Commercial Builders Risk Coverage Form, except: A. Coverage is excluded for lawns, trees and plants B. Coinsurance applies to Builders Risk at the percentage listed on the declarations C. Liability coverage is included in the form D. Covered perils are specified by attaching a separate causes of loss form

C. Liability coverage is included in the form There is no liability coverage in a Builders Risk policy. 8.4

The Replacement Cost optional coverage of the Building and Personal Property Coverage Form applies automatically to all of the following types of property, except: A. Merchandise held in storage or for sale B. The building listed in the Declarations C. Personal property of others D. The insured's business personal property

C. Personal property of others Property of others is not included in the replacement cost optional coverage. 8.3

Which of the following is correct about Inspections and Surveys under the Common Policy Conditions of the CPP? A. Inspections or surveys must be made prior to the policy effective date B. The insurer may make inspections and surveys only during the first 90 days of the policy period C. The insurer has the right, but is not obligated, to make inspections and surveys at any time D. The insurer has the obligation to make inspections and inform the insured if the property has serious hazards

C. 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. 8.1

Which statement is false regarding the Building and Personal Property Coverage Form? A. Coverage does not apply to money or securities B. If either the insurer or the insured submits a written demand for appraisal, each will choose and pay for his or her own appraiser C. The standard deductible is $100 D. The Peak Season Endorsement can be provided for a specified increase for a certain period

C. The standard deductible is $100 The standard deductible is $500. 8.3

The Commercial basic Cause of Loss Form does not cover which of the following perils? A. Sprinkler leakage B. Sinkhole collapse C. Smoke D. Earth Movement

D. Earth Movement Earth movement is an exclusion on the Basic Cause of Loss Form. 8.2

Which coverage form may not be added to the Commercial Property Coverage Part? A. Building and Personal Property Coverage Form B. Commercial Builders Risk Coverage Form C. Legal Liability Coverage Form D. Homeowners Special Form

D. Homeowners Special Form The CPP is designed for Commercial insureds only. Personal lines policies are not eligible for inclusion. 8.3

All of the following are true of the Building and Personal Property Coverage Form, except: A. Building Coverage includes the building structure, completed additions, permanently installed fixtures, machinery and equipment B. Personal property owned and used to service the building is included in the building coverage C. Personal property of others that is in the insured's care, custody, and control is automatically included up to $2,500 D. Tenant's improvements that are not legally removable are included in the Personal Property of Others Coverage

D. Tenant's improvements that are not legally removable are included in the Personal Property of Others Coverage 8.3

Which of the following is false regarding the Building and Personal Property Coverage Form? A. Business personal property includes property that is either in the building or within 100 feet of the building B. Trees, shrubs and plants are covered up to $1,000 with a sublimit of $250 for any one tree, shrub or plant C. Newly acquired or constructed property is automatically included for 30 days, not exceeding $250,000 for each building D. The policy covers vehicles licensed for road use

D. The policy covers vehicles licensed for road use Autos for sale and those licensed for road use are excluded. 8.3

The Commercial Property policy applies a limit of what dollar amount for business personal property temporarily away from the premises? A. $10,000 B. $2,500 C. $15,000 D. $5,000

A. $10,000 A limit of $10,000 of coverage is extended for the insured's covered property (other than stock) while it is temporarily at a location the insured does not own, lease, or operate. 8.3

Outdoor signs attached to the building are covered up to what amount? A. $2,500 B. $1,000 C. $5,000 D. $3,000

A. $2,500 Attached signs are covered up to $2,500 per sign for any one occurrence. 8.3

Under the Business Income form, the period of restoration begins how many hours after the time of loss? A. 72 hours B. 96 hours C. 48 hours D. 120 hours

A. 72 hours The period of restoration ends on the date the property is repaired, or the date the business resumed at a new location, whichever is earlier. 8.7

A Builder's Risk policy automatically ends within how many days after construction is complete? A. 90 B. 120 C. 30 D. 60

A. 90 Coverage ends automatically 90 days after completion. It was also end 60 days after the date of full occupancy, if earlier than 90 days after completion. 8.4

The Condominium Commercial Unit-Owners Coverage Form does not cover which of the following? A. Improvements B. Building exterior wall C. Appliances D. Business personal property

B. Building exterior wall The exterior wall is part of the common property covered by the Condominium Association Coverage Form. 8.6

Which of the following is found in the Common Policy Declarations of the CPP? A. The insurer's cancellation right B. The provision granting the insurer the right to make inspections of insured property C. The total premium charged for each coverage part D. The provision that the first named insured is responsible for all premiums

C. The total premium charged for each coverage part The premium amount is shown on the Common Policy Declarations page. The other statements appear in the Common Policy Conditions. 8.1