Chapter 12 - Commercial Inland Marine Coverage

A company that sells mobile equipment has its stock protected under an Equipment Dealers Floater. Records of the company's business, including itemized inventories and sales records, must be retained for at least how long after the policy ends? A. 1 year B. 4 years C. 2 years D. 3 years

3 years

Nationwide Marine Definition

A guideline for classifying Inland Marine, Ocean Marine, and transportation exposures into categories of insurance. To be eligible for Marine insurance, all property must contain an element of transportation. Specifically, the property must be in transit, be moveable, or bear a relationship to transportation or communication. It defines broad classes of property that may be insured under Marine contracts.

The Valuation condition on Commercial Inland Marine policies states that property losses are valued on which loss settlement basis? A. Market value B. Actual cash value C. Replacement cost D. Salvage value

Actual cash value

Loss Condition - Transfer of Rights of Recovery Against Others to Us

Any person or organization that receives a claim payment must transfer subrogation rights to the insurer. However, the named insured may waive those rights prior to a covered loss.

Commercial Inland Marine coverages may be written in which of the following ways? A. As a stand-alone policy or as a coverage part in a Commercial Package policy. B. Only as a stand-alone policy. C. Only be endorsement attached to another property policy. D. Only as a coverage part in a Commercial Package policy.

As a stand-alone policy or as a coverage part in a Commercial Package policy.

An equipment dealer owns multiple store locations. At one location, required safeguards are not in operation while the location is closed. Coverage provided by the dealer's Equipment Dealers Floater will be: A. Terminated if safeguards are not in place for at least 10 days. B. Automatically suspended at all locations. C. Automatically suspended at that location. D. Automatically terminated at that location.

Automatically suspended at that location.

ZYX Construction wants to protect its mobile tools and machinery, such as forklifts and small hand tools. Which Inland Marine form will provide this coverage? A. Bailees Customers Form B. Contractors Equipment Floater C. Builders Risk Coverage D. Installation Floater

Contractors Equipment Floater

Common types of property insured by the Commercial Inland Marine Coverage Part include all of the following, except: A. Cargo in the custody of a common carrier. B. Exports traveling over water. C. Property in transit. D. Mobile equipment and other tools used by a contractor.

Exports traveling over water.

Controlled Lines of Coverage

Filed lines, that use policy forms, endorsements, and rates that are filed by insurers with the department of insurance in each of the states where they write insurance.

Common exclusions of filed Commercial Inland Marine policies include all of the following, except: A. Criminal acts by an insured. B. Fire or lightning. C. Governmental action. D. Consequential loss.

Fire or lightning.

Loss Condition - Pair, Sets, or Parts

In the case of loss or damage to any part of a pair or set, the insurer may repair or replace any part to restore it to its original value, or pay the difference between the value of the repair or set before and after the loss. In the case of loss or damage to any part of covered property made up of several parts, the insurer will only pay for the value of the lost or damaged part.

Goods being transported would be covered by which of the following types of insurance? A. Inland Marine B. Automobile C. Casualty D. Surety

Inland Marine

Cosigner

Is the person or company the that sends goods or merchandise.

Bailees Customers Coverage Form

Provides open perils coverage for covered personal property of others while it is in the care, custody, or control of the insured.

Commercial Articles Coverage Form

Provides worldwide coverage insurance for cameras, projection machines, films, musical instruments, related equipment, and similar property of others in the insured's care when these types of property are used for business or commercial purposes.

Loss Condition - Abandonment

The insured may not abandon property to the insurer.

Which of the following coverage forms covers the cost of replacing or reproducing documents that are important for the continuation of business, such as books, films, and maps? A. Valuable Papers and Records Coverage Form. B. Business Property Coverage Form. C. Accounts Receivable Coverage Form. D. Commercial Articles Coverage Form.

Valuable Papers and Records Coverage Form.

Property at fixed locations is only insured by Inland Marine forms when it is part of the __________.

transportation or communication industries.

According to the Nationwide Marine Definition, all of the following risks may be insured by inland marine insurance, except: A. Domestic shipments B. Commercial autos C. Transmission towers and their equipment D. Cargo being transported for export

Commercial autos

Which of the following is not covered under the Installation Floater? A. Electrical equipment B. Carpeting C. Elevators D. Construction equipment

Construction equipment

With respect to Marine policies, the term uncontrolled means: A. Forms that are not approved by the National Association of Insurance Commissioners. B. Forms that are not standardized by any rating bureau. C. Forms that must be tailored to the individual insured by endorsement. D. Forms that are filed with the state insurance department by insurers.

Forms that are not standardized by any rating bureau.

Loss Condition - Other Insurance

If other insurance with the same plan, terms, conditions, and provisions applies to the loss, the insurer will pay its pro rata share. Otherwise, coverage is excess insurance.

Contractors Equipment Floater

Provides open perils coverage on the insured's equipment, such as mobile tools, equipment, and machinery. Includes small hand tools, mobile equipment, forklifts, compressors, and generators that are used in the course of contracted work.

Show Window Coverage Option

Provides theft coverage for articles in a display window at the insured premises if the window is broken or smashed. The damaged windows themselves are not covered, and other commercial property coverage would be needed.

Money Coverage Option

Provides theft coverage for money stored in locked safes or vaults that are located on premises and are broken open.

Which of the following is not covered under the Valuable Papers and Records Floater? A. Maps B. Blueprints C. Securities D. Mortgages

Securities

The Equipment Dealers Floater covers which of the following? A. The tools and equipment in the equipment dealer's repair shop. B. The office furniture and fixtures of equipment dealers. C. The equipment dealer's building and contents. D. The equipment dealer's stock, primarily consisting of mobile agriculture and construction equipment.

The equipment dealer's stock, primarily consisting of mobile agriculture and construction equipment.

Loss Condition - Loss Payment

The insurer will give notice of its intentions to pay or not pay a loss within 30 days of receiving the proof of loss. Claims will also be paid within the same time period if the insured has complied with all policy terms and an agreement has been reached about the amount of loss or an appraisal award has been made.

Loss Condition - Reinstatement of Limit after Loss

The limit of insurance will not be reduced by the payment of any claim, except for total loss of a scheduled item. In that instance, the insurer will refund the unearned premium on that item.

Loss Condition - Appraisal

If the insured and insurer disagree on the value of the property or the amount of loss, either may make a written demand for an appraisal of the loss.

Loss Condition - Recovered Property

If the insured or insurer recover any property after the loss has been settled, the other party must be notified. The insured may choose to have the property returned to them, in which case the loss settlement must be returned to the insurer. The insurer will pay the expenses needed to repair the recovered property, subject to the limit of insurance.

ABC Company sold an elevator system to a business and provides installation services. While being installed into the buyer's place of business, ABC Company may use which of the following Inland Marine forms to protect the elevator? A. Bailees Customers Coverage Form B. Installation Floater C. Equipment Dealers Floater D. Contractors Equipment Floater

Installation Floater

Loss Condition - Duties in the Event of a Loss

Insured must give prompt notice to the insurer of any loss or damage, including a description of the property involved, and the police must be notified if a law may have been broken. The insured must take reasonable steps to protect the property from further damage. A sworn proof of loss is due to the insurer within 60 days of the insurer's request. The insurer may inspect the property or the insured's books and records. The insurer may also examine any insured under oath. The insured must immediately send copies of any legal papers and cooperate with the insurer's claim investigation or settlement.

Under Commercial Inland Marine policies, all of the following statements describe loss conditions including on the Commercial Inland Marine Conditions Form, except: A. Insurers must accept property abandoned to them by an insured. B. Subrogation rights must be transferred to the insurer, unless the named insured waives their subrogation rights prior to a covered loss. C. An insured or insurer may demand an appraisal if they disagree on the amount of a loss. D. If one party recovers property after its loss has been settled, the other party must be notified of the recovered property.

Insurers must accept property abandoned to them by an insured.

Which of the following statements regarding the Commercial Articles Coverage Form is correct? A. Coverage is only provided for property while on the insured's premises. B. Coverage is written on a named perils basis. C. Coverage is provided while the property is in transit on land and at sea. D. It covers property used for business purposes, such as cameras and films.

It covers property used for business purposes, such as cameras and films.

Exports

May also be insured at any location, and they acquire their character when being prepared for export. They must retain that character, unless diverted for domestic trade.

Imports

May be insured at any location and must remain segregated from other property so it can be easily identified.

Uncontrolled Lines of Coverage

Nonfiled lines, that use policy forms, endorsements, and rates that are not filed with or through any rating bureau or state department of insurance.

As provided by the Commercial Inland Marine Conditions Form, in the event of a partial loss to covered property, the claim payment will: A. Not reduce the limit of liability. B. Not reduce the applicable sublimit, but the aggregate limit will be reduced. C. Automatically be based on an appraisal. D. Reduce the limit of liability.

Not reduce the limit of liability.

Inland Marine policies generally cover property that is: A. Being shipped by motor truck only. B. Shipped by sea to other countries. C. On ocean-going vessels once they reach inland river ways and ports. D. On land only.

On land only.

Under Commercial Inland Marine policies, the insurer may do which of the following in the event of loss or damage to a pair or set? A. Repair or replace any part to restore the pair or set to a value that exceeds its original value. B. Pay the difference between the value of the pair or set before and after the loss. C. Pay the market value of the lost or damaged part of the pair or set. D. Pay the salvage value of the pair or set.

Pay the difference between the value of the pair or set before and after the loss.

Under the Valuable Papers and Records Floater, all of the following types of papers or records would be covered, except: A. Deeds B. Property held as samples. C. Drawings D. Films

Property held as samples.

Inland Marine policies are primarily designed to insure: A. Property that is mobile in nature and that may be away from insured's premises. B. Buildings and contents used for manufacturing. C. Overseas shipments. D. Exclusively property being transported on inland waters.

Property that is mobile in nature and that may be away from insured's premises.

Installation Floater

Provides coverage to moveable property - such as electrical, plumbing, or heating equipment - to be installed in a building. Carpeting, tile, glass, elevators, machinery, and similar property can also be included in coverage.

Equipment Dealers Floater

Provides insurance for a dealer's stock in trade consisting principally of mobile equipment used for agricultural and construction industries, such as binders, reapers, harvesters, tractors, bulldozers, and road scrapers.

Valuable Papers and Records Floater

Provides insurance for the destruction of valuable papers and records, which include abstracts, books, deeds, drawings, films, maps, and mortgages.

Accounts Receivable Coverage Form

Provides open perils coverage and does not exclude theft losses. The form does exclude losses that result from dishonest acts of an insured or the insured's employees, bookkeeping or accounting errors, and alteration or falsification of records to conceal wrongful acts.

Under the Jewelers Block Floater, which of the following losses can be covered by a Coverage Option when indicated in the Declarations? A. Damage caused by wear and tear. B. Theft of jewels stored in an on-premises show window that was smashed by burglars. C. Loss of market. D. Broken or smashed show windows.

Theft of jewels stored in an on-premises show window that was smashed by burglars.

In the event a company's records are destroyed, the Accounts Receivable Coverage Form would cover uncollectable sums if the loss resulting from which of the following perils? A. Falsification of records. B. Theft. C. Arson committed by an employee. D. Bookkeeping or accounting errors.

Theft.

Instrumentalities of Transportation or Communications

This category covers items that are often at a fixed location because they play an important role in the transportation and communities' industries. These items are not easily insured on traditional commercial property policies. They include bridges, tunnels, transmission towers and their radio and television transmitting equipment, piers, wharves, slips, docks and dry-docks, marine railways, pipelines, outdoor cranes, loading bridges, and similar types of equipment.

Domestic Shipments and Property in Transit

This category includes shipments on consignment, for sale or distribution, for approval or auction, while in transit, while in the custody of others, and while being returned. It does not include coverage for shipments that are on premises owned, leased, or operated by the cosigner. Property under this category is protected by various transportation coverages.