Commercial Coverages
In a commercial property policy, the insurer is referred to as...
"We"
Matt, the insured, took out a 20-year lease, and at the time invested $25,000 for improvements and betterments to the property. What is Matt's monthly leasehold interest?
$104.16 ($25,000/(20 years * 12 months = 240) = $104.16)
The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss?
$160,000 (30 or less days, 30-60 days, 60 or more days)
An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?
$30,000
A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?
$30,000 (Insurance policy/coinsurance requirement multiplied by the amount of damage)
A commercial property special form covers property in transit up to...
$5,000
Roger owned a grocery store and had a Reporting Form Policy with a $100,000 limit for the store's inventory. The last report Roger submitted was during a slow period and showed a value of $50,000. The value increased to $75,000, and Roger failed to submit his next report when due. What is the maximum amount of coverage Roger has?
$50,000
Under businessowners policy Section I, if an insurer wants to nonrenew a policy for nonpayment of premium, how many days before the expiration date must the insurer notify the mortgageholder?
10 days
The coinsurance requirement on a Builder's Risk form is what percentage of the completed value?
100%
The Earthquake and Volcanic Eruption Endorsement added to Commercial Property policies consider all earthquake shocks as one earthquake if they occur within what maximum time period?
168 hours
Terrorism Risk Insurance Program Reauthorization Act of 2015 has extended the TRIA to the year...
2020
A businessowner has a building and personal property policy that covers a shed in which he stores extra parts. If he buys a second shed for the same purposes, this will be automatically covered for how long?
30 days
Coverage under the builders risk form will end in all of the following situations EXCEPT...
60 days after the construction has ended (It should be 90 days)
An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?
80% of the property's replacement cost or more
When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover...
A share of the loss
Which of the following is an additional coverage provided under the Glass Coverage Form?
All of the above (Boarding up openings, installing temporary plates, and repairing frames)
According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties...
Automatically transfer to a legal representative
Business personal property coverage form covers all of the following EXCEPT...
Automobiles held for sale
A policy that insures all property at multiple locations for a single amount is referred to as...
Blanket
A loss has occurred before the first report has been filed on a value reporting coverage form. Which is/are true?
Both A & B (Full amount of loss up to policy limit is paid if loss occurs before first report due date and 75% of loss is paid if loss occurred after the first report due date)
What are the two causes of loss covered under the Glass Coverage Form?
Breakage and accidentally or maliciously applied chemicals
Which of the following is NOT found in a commercial package policy?
Certificate of authority
Which of the following is an additional coverage that is covered by the broad causes of loss form?
Collapse
A builder's risk form is most often written as which of the following?
Completed value form
The extra expense coverage form provides...
Coverage that will permit the insured to continue in business without interruption following a property damage loss
The commercial property declarations page contains which of the following information?
Description of the property insured
What is the purpose of the coinsurance clause found in property insurance policies?
Encourage the insured to insure the property closer to its full value
In a commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer?
First named insured
Which of the following is true regarding the fire department service charge under the builders risk form?
It is an additional coverage (Up to $1,000)
Which of the following statements concerning the builders risk coverage form is correct?
It may be written on a reporting form for the completed value of the structure
One policy type that allows the insured to select the coverage forms that best fits the individual needs of the client is called the...
Modular commercial lines policy
Which policy consists of the declarations and conditions, endorsements, and other attachments applicable to a single line of insurance?
Monoline
An insured owns and operates a commercial business. He has included a business income coverage form with his commercial package policy. When the insured's business is severely damaged by fire, the business income coverage will pay for...
Net income plus continuing expenses of the business
The insured with reporting value coverage has had a covered loss. It is discovered he underreported on the last report filed. Which is true?
No more than the amount reported divided by the actual value on the date the report was due will be covered
When does the coverage begin under the builders risk form?
One the date construction starts
A property insurance policy that insures a commercial building on a replacement cost basis includes the ordinance or law coverage endorsement. This endorsement will cover all of the following expenses EXCEPT...
Ordinance with which the insured was required to comply prior to the loss
A building insured with commercial property insurance has been vacant 90 days. Which of the following is NOT true?
Payment for unnamed perils is reduced by 25% (It should be 15%)
All of the following are additional causes of loss included in the broad form of a commercial property policy EXCEPT...
Replacement cost
A business owner whose inventory changes significantly throughout the year should consider having coverage written on what type of form?
Reporting form
A type of risk analysis used in commercial insurance in which the underwriter can give credits and debits for certain actions that an insured takes in the normal course of business that either increase the chance of loss or decrease the chance of loss is known as...
Schedule rating method
An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have?
Specific
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called...
Specific coverage
Under the commercial property coverage program, the basic causes of loss from insures against loss caused by...
Sprinkler leakage
Which situation would NOT be covered by the basic Causes of Loss form under a commercial property policy?
The Surf Side Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant
Which item would NOT be covered under building coverage in a building and personal property policy?
The bulldozer being used as part of a business addition under construction that is parked 500 feet from the building (It should be 100 feet)
All of the following statements concerning coinsurance are true EXCEPT...
The coinsurance formula will also be applied to total losses (In the event of a total loss, the face amount of the policy is paid)
The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy?
The first name insured may cancel the policy at any time by giving written notice to the insurer
In a commercial policy, the terms "you" and "your" refer to which of the following?
The insured
Under the provisions of the business income coverage form, all of the following are true EXCEPT...
The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first (Business income will pay beyond the expiration date of a policy. It will pay until the business is restored or the limits of coverage are exhausted)
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?
There is no coverage
The business income coverage form covers consequential loss of business income that occurs when a business must suspend operation because of a direct loss. Which of the following terms best describes the nature of this type of coverage?
Time element (These forms are also called time element forms because of the direct relation of the time a business is unable to operate to the amount of the loss)
All of the following types of property are covered by a standard builders risk form EXCEPT...
Tools 50 feet away from the building (Tools are not intended to become a permanent part of the structure will not be covered, no matter how close they are to the building)
All of the following are essential elements of a commercial package policy (CPP) EXCEPT...
Valuations and/or settlement provisions
Which of the following is NOT one of the available additional coverages in the builders risk form?
Vandalism (4 additional coverages offered by the builders risk form are debris removal, fire department service charge, pollutant cleanup, and preservation of property)
Besides the peril of earthquake, which other peril is covered by the earthquake cause of loss form under a commercial property policy?
Volcanic eruption
Personal business property out in the open is covered under commercial property policy only while...
Within 100 feet of the described premises
A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT...
Workers compensation coverage
