Prop & Cas ch. 6

differences in the way output policies prop covered

-buildings and other structures -personal prop at unspecified locations -personal prop in transit -personal prop pf others

aggregate limit

1045 contains an aggregate limit whereas 1040 doesnt -1045 aggregate limit is equal to the occurrence limit applicable to earthquake and volcanic eruption -occurence limit shown is the most that will be paid for any one loss and the most that will be paid in total for all covered earthquake and volcanic eruption losses during the policy year -CLM provides an option for an additional premium to increase the aggregate limit to twice the occurrence limit

national flood ins program

US congress realized that ins companies couldnt cover floods so they made a program run by FEMA -policies may be obtained directly through FEMA or through insurer that is part of this -can use write your own program -rates that NFIP establishes do not vary among insurers -sets eligibility requirements, coverage limits, and coverages under its general property form and the residential condominium building ass policy

flood and earthquake coverage output policies

most have an option to add flood and earthquake coverage which reduces or eliminates the need for DIC -backup of sewers and drains is included in flood coverage extension in some policies

crime exposures DIC

DIC is picked a lot because it has theft coverage -special forms can attach a theft exclusion endorsement so the insured can get DIC that specifically covers theft or provides open perils coverage without a theft exclusion -insurer often applies a substantial theft deductible to eliminate smaller losses and the limit of ins for the theft may be less than the total exposure -sometimes the insured will accept a lower theft limit be cause it is unlikely that even a severe loss will involve their entire stock

insurance for highly protected risks

a large prop account whose construction meets high standards of risk mitigation and control characteristics and whose management maintains best practices loss control and risk mitigation techniques for the specific occupancy -provides intensive risk control services that wild be too expensive for insurers to provide on smaller accounts -the insurer provides prop coverage that is broader than that provided by standard commercial prop forms -rates are also considerably lower than the usual commercial prop rates -since large volumes HPR business is needed to amortize the loss control costs most HPR ins is written by a few large insurers with substantial prop ins expertise

mudflow

a river of liquid and flowing mud on the surfaces of normally dry land areas as when earth is carried by a current of water -other earth movements such as landslides, slope failure, or saturated soil mass moving by liquidity down a slop are not mudflow

DIC type endorsements advantages and disadvantages

advantages: -convenience of one policy -avoidance of minimum premium for the DIC coverage disadvantage: -coverage is not as broad as that of a operate DIC policy -amount of ins provided is often less than what they want

flood coverage endorsement covers

are covered even if they aren't covered for any other perils under the rest of the policy -foundations below the lowest basement floor -underground pipes, flues, and drains

flood

as used in flood ins policy means: 1. a general and temp condition of partial or complete inundation of two or more acres of normally dry land area of two or more props (at least one of which is your prop) from: a. overflow of inland or tidal waters b. unusual and rapid accumulation or runoff of surface waters from any source c. mudflow 2. collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined in A above

eligibility for NFIP

available for owners of prop located in communities that participate in the NFIP -to participate communities are required to regulate new construction and substantial alterations and improvements of existing structures by adopting and enforcing community floodplain management ordinances -classifies areas with high risk of flooding as special flood hazard areas or areas that are determined to have a 1% or greater likelihood of flooding in any given year -federal regulations mandate that insured lenders requires flood ins for these high risk places -if communities are eligible for NFIP they are placed in emergency program until required floodplain management plan and necessary FIRMS are developed

sublimit form CP DS 06

earthquake and volcanic eruption schedule that can be used to schedule specific or blanket limits for all covered locations and to show the applicable deductibles

deductibles for earthquake and volcanic eruption

both endorsements contain a % deductible the replaces the dollar deductible in the BPP or other coverage form form to which the endorsement is attached -endorsements apply their deductible differently with respect to specific ins other than builders risk that is not written on a value reporting form -1040 coins form the amount of the deductible is a % of the limit of ins applicable to the prop that has sustained loss or damage -1045 no coins form sublimit form the amount of the deductible is a % of the value of the prop that has sustained loss or damage -for specific ins written on a value reporting form of for any ins written on a blanket basis both endorsements call for the deductible % to be applied to the value of the prop that has sustained loss or damage -both specify the same methods for determining the value of the prop insured on each coverage basis in accordance with value reporting or blanket basis statement of value requirements -earthquake deductible is calculated for and applied separately to each item insured -if the earthquake damaged both the building and the business personal prop a $10,000 deductible would apply to the building loss and a $5,000 deductible would apply to the personal prop loss -earthquake deductible does not apply to earthquake losses covered by the various ISO coverage forms for business income or extra expense

other coverage options output policies

can be broadened to provide certain coverages not averrable in standard policies such as interruption of websites, damaged or destroyed research and development projects, inventory appraisal and expenses and arson reward are not ordinarily included in standard policies but are in output policies: -auto physical coverage -equipment breakdown coverage -flood and earthquake coverage

exclusion of basic perils DIC

classifying it as inland marine in states that say it is a non filed class of business exempt them form rate and form filing requirements so it can be more flexible -another benefit of it as inland marine is that you avoid increased residual market participation in states that have residual prop or windstorm plans based on prop but not inland marine premiums written -to can be considered inland marine it must exclude fire and the perils covered by the extended coverage endorsement: windstorm, hail, smoke, explosion, riot, riot attending a strike or civil commotion, aircraft, and vehicles and insurers often add vandalism and malicious mischief

equipment breakdown exposure DIC

commonly excludes loss caused by steam boiler explosion or mechanical or electrical breakdown -so this exclusion should be coordinated with an equipment breakdown coverage the insured has

prop covered in HPR

defined as real prop and personal prop and the wording includes all prop except that which is excluded -standard policies wording only prop that is building or business personal prop -almost all HPR policies cover foundations, excavation, and underground pipes, flues, and drains, bridges, roadways, walks, fences, retaining walls, signs, and radio or tv antennas and towers -they extend coverage to prop located within 1,000 get of the described location

debris removal under coverage C

differences in this than in standard form: -includes coverage for removal of debris of other prop not just debris from covered prop which says that floodwaters commonly include floating debris -does not include the traditional 25% sublimit (limiting debris removal to no more than 25% of limit) also doesnt include the $10,000 additional coverage provided under the standard commercial prop policy so the insured may use the entire policy limit toward debris removal

attachment point

dollar amount above which the reinsurer responds to losses

valuation DIC

prop can be valued in whatever way is mutually agreeable to the insurer and the insured and different valuation methods can be used on the same policy -ex: could us replacement for buildings and contents and use invoice cost plus freight and other charges for prop in transit -other valuations might be used for particular needs

advantages of DIC

-DIC can be a cost effective method of obtaining flood and earthquake coverage -they usually do not require coins -their forms are often easier to modify to meet the insureds particular needs since they are non filed in many states -their forms may offer broader coverage for some perils and some exclusions may be less restrictive

differences between NFIP general prop form and standard commercial prop coverage forms

-NFIP covers building and contents on an ACV basis with no option for replacement cost but it does offer replacement cost for residential risks -NFIP does not include a coins provision -NFIP can't be written on a blanket basis because all buildings must be separately described and insured -NFIP excludes loss of use and loss of income and optional coverage aren't available either -NFIP excludes several types of prop such as prop located in , on or around water, underground structures, and buildings and contents if more than 49% of the ACV of the building is below ground unless the lowest level is above the base flood elevation but excludes coverage for contents in a basement with the exception of building service equipment

differences between REBAP and general prop form

-a higher limit of ins may be purchased and the max limit is $250,000 times the number of units cause of these high limits they rarely need to get additional coverage -max limit of contents is $100,000 and unit owners would be required to get ins for their own contents -NFIP offers replacement cost coverage on building prop insured under REBAP -REBAP includes an 80% coins requirement on buildings prop coverage and they must be insured for 80% of the buildings replacement cost or the max amount of ins available whichever is less to avoid penalty

coverage A coverage parts

-additions and extensions attached to the covered building by a rigid exterior wall, a solid load bearing interior wall, a stairway, an elevated walkway or a roof -specifically listed fixtures, machinery, and equipment -materials and supplies to be used for construction, alteration or repair at the location (but only covered if stored in a fully enclosed building) -a building under construction, alterations, or repair (but there are a lot of limitations for buildings not yet walled or roofed)

disadvantages of layered prop ins

-conflicts in wording and interpretation among the various layers can result in coverage disputes among claim representatives responsible for different layers so when a loss involves both direct damage and business income a dispute can arise about the attachment point for the upper layers -if an insurer is unwilling or unable to participate in layered prop coverage it might also be unwilling to provide other coverages that the insured needs so organizations with layered prop might have a hard time finding insurers willing to cover its liability exposures that would otherwise be acceptable as part of a package policy -like how market for layered prop can sometimes be competitive it can also shrink rapidly making it hard and expensive for an insured to place all the described layers of coverage -min premium requirements for each layer may make the cost of layered coverage higher then the cost of a standard policy

general provisions DIC

-coverage territory -valuation -other ins

other ins condition in flood endorsement has these effects

-coverage will contribute proportionately with ins other than NFIP with the insurer will pay that proportion of the loss that the insurers loot bears to the total limits of all applicable flood ins -coverage is excess over the max limit that could have been insured under an NFIP policy

coverage C covers

-debris removal -loss avoidance measures -pollution damage

difference between general prop form and standard commercial forms

-does not include coverage for prop owned by others -when it covers both prop and contents items that may fall under either category must be insured under the building coverage

characteristics of HPR ins

-fire resistive masonry noncombustible or heavy timber (mill) construction -automatic sprinkler systems and other loss prevention equipment -adequate water supply and water pressure -adequate public or private fire protection

NFIP forms

-general prop form: covers most commercial buildings and contests risks such as factories, retail businesses, warehouses, or residential condo buildings that are nor eligible for coverage under RCBAP -residential condominium building ass policy

attributes of HPR ins

-if a organization does not value risk control for reasons other than premium reduction will probably soon conclude the meeting HPR standards is interfering with its business and insurers without the necessary staff will probably be unable to underwrite HPR accounts profitably offers associated wit complete automatic sprinkler protection but these are needed for HPR ins: -an insured whose managers are determined to control prop losses -an insurer that is able to provide the loss prevention engineering needed to implement a complete protection plan for the insureds prop

difference between flood coverage endorsement and NFIP

-it can provide coverage for a greater variety of prop unlike NFIP only covered flood damage -can be attached to a commercial prop coverage part providing the full range of commercial prop coverage where as NFIP has no business income coverage and only limited extra expense and law coverage -can be written subject to the replacement cost or functional valuation options available under commercial prop forms whereas NFIP is mainly ACV

disadvantages of DIC

-market for DIC is limited and the terms of coverage that insurers are willing to provide can vary over time -the insured and the insurer can't be as certain of how the provisions will be interpreted by courts as when standard provisions are used because the provisions of DIC are not standardized -insurance regulators in many states have not evaluated or approved the policy language because in such states these polices are written as non filed inland marine or issued by non admitted insurers -min premium requirements may make the coverage disproportionately expensive for smaller insureds -it may take more time to negotiate and prepare than a policy made up of standard forms and endorsements

advantages of layered prop ins

-obtaining adequate and flexible limits: because layer policies do not contain a coins clause insureds have more flexibility in setting limits for layered policies than they do for standard prop policies -pricing considerations: premium for the primary layer is higher than the premium for a similar amount of ins written on coins basis because the primary layer will pay small losses with no participation from the excess insurers and for most insureds the cost of excess layers should be l0w because losses rely go to the upper layers combined premiums is often lower than that of a single policy subject to standard coins rules because the insured may not need to purchase ins to value -availability of broader coverages: insured can obtain coverage for perils such as flood and earthquake much more easily in a layered prop program than in a standard policy often eliminating the need for DIC policy -accessing additional markets: many insurers are willing to be in a layered ins program

low limits sufficient for most insureds because

-the insureds are located in areas with low exposure to earthquakes and they expect only partial damage -insureds underestimate their exposure to earthquake loss -insureds are unwilling or unable to purchase higher limits

how DIC type endorsements are similar to DIC policies

-they do not include coins provision -generally provide coverage for an amount of ins less than that carried on the prop under the insureds regular commercial prop policy -are subject to higher deductibles than the commercial prop policies to which they are attached

endorsements available to add earthquake and volcanic eruption ins

1. CP 10 40: earthquake and volcanic eruption endorsement 2. CP 10 45: earthquake and volcanic eruption endorsement (sublimate form) -in many ways these two are identical -both extend commercial prop coverage to include earthquake and volcanic eruption as a covered cause of loss but neither form defines earthquake -both forms state that all earthquake shocks or volcanic eruptions occurring within a 168 hour (7 days) period will be considered a single earthquake and volcanic eruption so aftershocks will be considered part of the actual event -CP 10 40 normally entered on the declaration page

flood ins rate maps

show boundaries of special flood hazard areas, the various flood zones, and base flood elevations

insurance to value conditions DIC

DIC normally doesnt require coins so the amount of coverage provided normally is only a portion of the total insurable values exposed to loss -these are judgment rated and the underwriter determines the premium on the basis of exposure to loss after considering the total value exposed -so as long as the underwriter has evaluated the exposure accurately and has charged an appropriate premium coins is not needed -keeping the limit low has the advantage of allowing the insurer to reduce the cost and increase the availability of its reins -if limits were set equal to total insurable value and insurers total exposure and cost of reins would increase a lot with the total exposure exceeding the limits available in the market -to further reduce their max possible loss fro catastrophic loss exposures underwriters sometimes impose an annual aggregate limit on flood and earthquake

output policies

combines all or most of the prop coverages a commercial organization needs -they were originally written only for manufacturers its has been broadened to include most types pf commercial insureds like medium and large agricultural operations -provide broader prop coverage than standard forms but don't provide liability coverage -coverage is normally written to cover risks of direct physical loss other than those specifically excluded with exclusions similar to standard forms -normally judgment rated rather than manual rated so there is flexibility in pricing and some insurers use it as part of a packaged policy -almost all either omit or suspend coins requirements which is very important -covers buildings, other structures, and personal prop

base flood elevations

computed elevation to which floodwater is anticipated to rise during the base flood and is shown on both FIRMs and flood profiles -is the regulatory requirement for the elevation of flood proofing of structures and the relationship between the BFE and a structures elevation determines the flood insurance premium -the zone in which the prop is located determines flood ins rates

difference in conditions

conditions policy has different conditions for loss exposures that aren't covered by other CPP policies like flood, earthquake and others -DIC policies are often written by non admitted insurers as a non filed inland marine policy so provisions and rates are open for negotiation between the insurer and the insured -available to almost any insured and fills in gaps left by the insureds other prop ins -are less available than before -have certain common policy provisions

supplementary coverages HPR

contain an unintentional errors clause that says that coverage for props that have been unintentionally committed or erroneously described in the listing of covered locations -sometimes this clause extends to unintentional failure to include newly acquired prop or erroneous cancellation of coverage on existing props -provide more debris removal coverage than standard forms up to $5 million for debris removal or 25% of the amount of loss whichever is greater -commonly include demolition and increased cost of construction coverage, consequential damage coverage and broad coverage for newly acquired prop -but don't include some of the coverage extensions for in ISO forms such as those covering prop in transit, valuable papers and records, and pollutant cleanup and removal -nominal amounts of ins provided by these ISO extensions would not be appropriate for the loss exposures covered by HPR -if such coverage needed to be HPR insured they can be added by endorsement for the full amount required

coverage territory DIC

cover prop located within the US and canada but when worldwide is needed they are willing to provide -principal exposure is normally at insureds premises but the insured may need when transit coverage is included broad territorial limits if the insured is shipping prop to or receiving prop from foreign countries

coverage C

coverage for loss avoidance measures pays for measures to protect prop from imminent flood damage allowing reasonable expenses up to $1,000 for the cost of sandbags or other supplies to protect the property -also provides for a separate $1,000 limit applicable towards the cost of moving prop to a safer location when flooding is imminent -pollution damage coverage pays up to $10,000 for damage to the covered prop caused by the discharge, seepage, migration, release, or escape of pollutants because of flood but does not cover the costs of testing to monitoring pollutants unless required by law -none of the coverages is subject to a deductible nor do these coverages increase the A and B limits of liability

other ins flood coverage endorsement

coverage is excess over the max NFIP limit available whether or not the insured actually has an NFIP policy unless the insurer waives that requirement -if the NFIP requirement has not been waived the insurer will pay only that portion of the loss exceeding the max amount that could be insured under an NFIP policy whether collectible or not -requirement for NFIP is often waived for prop located outside a special hazard zone -for prop located within a special hazard zone the insurer will generally require that the insured carry the max available NFIP limit if it is willing to provide coverage at all with the insureds loss history being a significant factor - any waiver of NFIP is in the schedule and when a waiver applies only to some of the insureds locations in schedule -since coverage in NFIP does not apply to many of the items covered by a CPP the resulting loss apportionment when both NFIP and commercial flood ins are in force can be complex

general prop form

covers direct physical loss caused by flood as defined in the policy at the premises in declaration it has 4 sections -coverage A: building prop -coverage B: personal prop -coverage C: other coverages -coverage D: increased cost of compliance applies the deductible separately to building and contents coverages even if both are damaged by the same flood loss

coverage B of general prop form

covers either household personal prop or other than household personal prop but not both -household personal prop includes prop usual to a living quarters that belongs to the insured, a member of the household, a domestic worker, or a guest -other than household personal prop is good for most commercial prop owners and includes coverage for these furniture and fixtures machinery and equipment stock (including merchandise, raw materials, in process and finished goods) other personal prop owned by the insured and used in the insureds business

debris removal for flood coverage endorsement

covers the expense to remove debris of covered prop and other debris resulting from flood -extends to the cost of removing debris from the premises not just from covered prop like NFIP -cost of removing deposits of earth or mud from the grounds is not covered and the cost of removing mud from within the building is -covers the expense to remove debris of covered prop that has floated or been hurled off the described premises -the most the insurer will pay for the debris removal and damage to covered prop is the limit of flood ins that applies

earthquake and volcanic eruption endorsement

earthquake ins can be hard to get and very expensive in places that have them a lot like the west cost, arkansas, illinois, indiana, kentucky, misssissippi, and tennesssee that are effected by the new madrid fault -other places it is offered but overlooked

equipment breakdown coverage

enables insurers to provide equipment breakdown coverage in a packaged policy -often in standard policies but is different in output policies -done by eliminating the commercial prop exclusions pertaining to equipment breakdown exposures rather than by adding a separate coverage form -creates a more seamless coverage which can avoid potential coverage gaps

water exclusion

flood endorsement does not cover all of the causes of loss excluded by the water exclusion -it is known as the flood exclusion but it excludes more than flood, surface water, and mudslide like it excludes loss from water and waterborne materials discharged from sewers, drains or sump -the endorsement excludes the same stuff unless the discharge results from flood and occurs within 72 hours after the flood recedes -also water exclusion specifically excludes loss caused by underground water that roses on or seeps through foundations, walls, floors, or other structural components -endorsement does not cover underground water unless with flood

exclusions for earthquake and volcanic eruption

has exclusions for law, government action, nuclear hazard, utility services and war and military action -also loss caused by landslide, mine subsidence, tidal wave, tsunami, flood, mudslide, or mudflow even if they are from earthquake and volcanic eruption they are excluded -along with loss caused by an earthquake and volcanic eruption that begins before the inception of the ins

earthquake sprinkler leakage coverage option

in both earthquake endorsements the insured can decide to restrict coverage to loss due to sprinkler leakage resulting from earthquake or volcanic eruption -since sprinkler damages happens a lot with earthquakes insureds can get a less expensive coverage -when they pick the sprinkler leakage only option the regular earthquake deductible does not apply so the deducible is the same one that applies to fire loss

flood coverage DIC

in some cases the definition of flood or water damage is broader then in CPP endorsement or NFIP but most of the time when it provides coverage in excess of those will not drop down to cover water damage losses in the DIC policy definition of flood but not by the definition of flood in the underlying coverage -another way to cover is to limit the water exclusion in the DIC to flood as defined in NFIP so the policy will cover many types of water damage that are not included n NFIP flood -these are subject to special flood restrictions such as lower limits, higher deductibles, or the requirement that the flood coverage is payable in excess of the max amount available from the NFIP -that is preferable by insureds because the other causes of covered water damage are not subject to lower limit of ins and higher deductible applicable to flood losses covered by this endorsement -some DIC contain broad exclusion of water damage adding back only coverage for flood as defined by the NFIP so it does not cover things like sewer backup and underground water -some DIC flood coverages fall short of NFIP definition including no coverage for mudflow but if the insured asks the insurer might broaden it

personal prop in transit output policies

includes personal prop on the insureds vehicles and in the custody of the insureds salespeople -this eliminates the need for a separate transit policy and provides more comprehensive coverage than that provided by standard forms -most don't provide coverage for overseas transit of exports and imports

DIC type endorsements

independently developed endorsements that can be attached to their commercial prop policies that serve some of the same purposes as DIC policy -does not provide open perils coverage so instead they are named perils forms, typically covering the perils of earthquake, flood, or other specified perils

emergency program

initial phase of a communitys participation in the NFIP in which prop owners in flood areas can purchase limited amounts of ins at subsidized rates

common earthquake limits

insurers purchase reins to protect against the catastrophic loss potential of earthquakes and floods -most insurers can provide low limits of earthquake coverage from $1 million to $5 million per occurrence -main difference between CP 10 40 and CP 10 45 is that 1040 is subject to the same coins requirement that applies to the rest of the policy and therefore the limit for it must be the same as the policy limit that applies to other covered perils -1045 isn't subject to coins and permits earthquake and volcanic eruption coverage to be written subject to a sublimit that is lower than the policy limit to the other covered perils

residential condominium building ass policy

insures residential condo asses as well as contents owned by the unit owners in common or by the condo ass -residential building has at least 75% of its floor area occupied for residential purposes and nonresidential condos can be insured under the general prop form

coverage D

it pays only for compliance costs related to floodplain management -ICC pays up to $30,000 for activities necessary to comply with state or local floodplain management laws that meet NFIP minimum standards such as elevation, flood proofing, relocation, or demolition -only available in policies with building coverage A -$30,000 limit is an additional amount of ins and may increase the amount of coverage -total payment may not exceed the max limit allowed in NFIP -available only for a building defined as a repetitive loss structure meaning that the building meets specific damage that lowers its market value has suffered flood damage on at least two occasions within ten yeas and is subject to state or community repetitive loss management provisions

occurrence and aggregate limit flood coverage endorsement

limit shown for flood is the most the insurer will pay for one occurrence but an annual aggregate limit normally also applies -aggregate limit is the most the insurer will pay for all floods within a 12 month period starting with the beginning of the policys present annual period -unless the higher limit is specified the aggregate limit is equal to the flood occurrence limit -if a single occurrence of a flood begins during one annual policy period and ends during the following annual policy period any limit of ins applicable to the second policy will not be available to cover the loss

newly acquired or constructed prop

limits it to: -for flood coverage the extension does not apply to any building or structure that is not fully enclosed by walls or roof -limit of ins is changed to 10% of the total of all limits of ins for flood coverage provided by the endorsement but this additional coverage doe snot increase the total limit for flood ins

coinsurance for flood coverage endorsement

may apply to the flood endorsement in the same manner as specified in the coverage form attached to the policy -coins may also be eliminated from the endorsement by electing the no coins option -no coins is the more likely choice because the limit for flood ins is usually lower than the limit applying to other perils -it eliminates the requirement to only apply coins % if specified if the no coins option is in effect

increased cost of compliance

national flood insurance coverage that pays for compliance costs related to floodplain management for qualifying structures

perils covered in HPR

normally provides open perils coverage with fewer exclusions than in special form and many still have all risks wording -usually don't limit coverage for collapse to the named perils approach used in the brand and special forms -they cover such collapse even if it occurs after construction, remodeling, or renovation is completed -usually covers backup of water through sewers or drains and seepage -damage from artificially generated electrical current or electrical arcing is covered -insurers that have the expertise to provide equipment breakdown ins often add it

earthquake coverage DIC

one of the main reasons to buy DIC coverage is to obtain either primary or excess coverage for earthquake and flood losses -often limit the insurers exposure to earthquake or flood loss in the same manner as the common policies and apply substantial deductibles or requiring the max amount of NFIP coverage as underlying ins -in high risk areas it may only cover a stated % (as low as 50%) for earthquake and flood loss above the deductible -earthquake coverage may be provided by omitting any exclusion of earthquake or other earth movement subject to an exclusion of earth movement loss to masonry veneer -this provides broader coverage than ISO earthquake endorsements because coverage is not limited to earthquakes and volcanos others can be covered unless they are specifically excluded -it could instead cover under a named perils basis and the breadth of coverage for earthquakes depends on the policys definition of the covered peril

additional coverages and coverage extensions for flood coverage endorsement

only debris removal and newly acquired prop provisions are modified by the flood endorsement from the standard commercial prop forms -all other additional coverages and coverage extensions provided by the commercial prop forms attached to the policy apply to the endorsement except that the amounts payable under the additional coverages or coverage extensions do not increase the limit of ins for flood insurance -limit is deemed necessary because the same flood can damage a widespread area and insurers wish to avoid the pyramiding limits

personal prop at unspecified locations output policies

personal prop can be covered anywhere within the policy territory without listing the location in the policy -doing this saves the insurer, producer, and the insured row cost of repeatedly endorsing changes of locations -also the insured doesnt have to worry about overlooking coverage for a new location -underwriters need to be careful evaluating all covered locations and the potential for new locations before providing this coverage

difference in conditions policies

policy that covers on an all risks basis to fill gaps in the insureds commercial prop coverage, especially gaps in flood and earthquake coverage -they can be used to cover flood and earthquakes not covered by CPP -to provide excess limits over underlying flood and earthquake coverage -to cover loss exposures not covered in CPP like prop in transit or prop worldwide

write your own

program allowing private insurers to write flood insurance under the national flood ins program -participating insurers issue and service NFIP policies in exchange for a % of the premium and a fee for claim adjustment service -WYO insurers write the vast majority of NFIP policies

prop covered with DIC

prop covered is the same prop covered by the insureds other policies: buildings and business personal prop -often exclude many of the same types of prop excluded in other prop forms such as accounts, records, bills, deeds, money and securities -also excludes prop that can be readily damaged or stolen like jewelry, watches, furs, gems, or fine arts -these exclusions vary by insurer and depend on the insureds operations and exposures -list of prop not covered in DIC is normally shorter than in standard policies such as they often don't exclude foundations and underground piping

personal prop of others output policies

provided only if the insured has agreed before the loss to insure it for the benefit of the owner of the insured is legally liable for the damage -to maintain customer goodwill insureds often prefer to provide complete coverage for customers goods even when they are not legally responsible for the damage and this could be endorsed to meet these needs -they also cover prop for which the insured is responsible under an installation agreement until the buyer accepts the installation eliminating the need for purchasing a separate installation floater

perils covered DIC

provides coverage equivalent to special form but with some perils excluded -they still offer all risks policies so they are often called all risk policies -but if the insured only needs it for one exposure you can get one that covers on a named perils basis -perils are often broader then those found in standard policies

coverage A of general prop form

provides coverage for building prop that is generally more restrictive than coverage offered under a standard commercial prop form -includes more restrictive definition of a covered building which must include two or more outside rigid walls and a secured roof so this does not include things like open sided parking garages

maximum amounts of ins available NFIP

regular programs have max amount of ins for nonresidential props is $500,000 for building coverage and $500,000 for personal prop all per building -emergency program max amounts are $100,000 on buildings ($150,000 in alaska, hawaii, guam and VI) and $100,000 on contents all per building -at the time of loss and unused coverage from one insured building can't be used to increase limits available to another building -residential condominium ass can purchase building coverage up to $250,000 times the number of units in the building -but contents coverage is limited to a max of $100,000 per building -under the dwelling police form homeowners can purchase up to $250,000 per family home and up to $100,000 in contents coverage and renters can get contents up to $100,000

regular program

second phase of the NFIP in which the community agrees to adopt flood control and land use restrictions and in which prop owners purchase higher amounts of flood ins than under the emergency program -maximum limits of ins are much higher than emergency

flood coverage endorsement

side effect of NFIP flood mapping is the increased availability of commercial flood ins -so underwriters are better able to assess the flooding hazards of the props they insure with the result that flood ins for commercial prop located outside of special flood hazard zones is widely available -a flood coverage endorsement was added and insurers offer independently developed flood endorsements -uses the same definition of flood as NFIP but endorsement doesnt follow the other terms and conditions of NFIP -endorsement is subject to certain provisions and limitations including limits of ins, other ins condition, exclusions and limitations, prop not covered, additional coverage extensions and coins -follows the terms and conditions that the policy it is attached to states unless the endorsement says otherwise

buildings and other structures output policies

some coverages c all buildings, business real prop causing it to cover all real prop expect that which is specifically excluded -coverage often extends to materials and equipment within 1,000 feet of the described premises rather than 100 feet -other than this and a few additional items it is pretty much the same from standard forms

HPR amending ISO standard forms

some insurers also add manuscript endorsements to ISO to include unintentional errors coverage, backup of sewers or drains and other coverage some ISO are available to match some HPR coverages: -law coverage endorsement (called demolition and increased cost of construction in some HPR) -debris removal increased limit of ins endorsement -additional covered prop endorsement

prop not covered flood coverage endorsement

some things that aren't covered by NFIP and BPP are covered here because they are not listed under prop not covered does not cover: -prop in the open unless specifically listed in the flood coverage schedule or declaration -prop not eligible for flood ins pursuant to the coastal barrier resource act or the coastal barrier improvement act -boat houses and open structures if located on or over a body of water -bulkheads, pilings, piers, wharves, docks, or retaining wall even if they have been removed from the prop not covered list for other causes of loss

ensuing limit endorsement for earthquakes

states that in the event of ensuing loss caused by another peril that is covered by the policy the most that the policy will pay for the entire loss is the limit for the other covered peril (fire) -earthquakes cause fires a lot that can be severe with each cause of loss form covering loss by fire or explosion from earthquakes -to prevent stacking of the regular policy limit and the earthquake limit when it results in fire or another covered cause of loss 1045 contains this provision -specifically it says that the insurer will not pay the sum of the two limits and the payment for the damage caused will be limited to the ins coverage for the peril -for 1040 no special wording is needed to distinguish between loss caused by earthquake and loss caused by other perils -limit is the most that will be paid for any one occurrence regardless of how many perils are involved

exclusions and limitations flood coverage endorsement

subject to all exclusions and limits found in the causes of loss form attached to the policy except these: -any part of the water exclusion in he causes of loss form that conflicts with the flood coverage endorsement does not apply -covers loss caused by a tsunami (huge wave caused by an underwater earthquake or volcanic eruption) if it causes the overflow of tidal waters -does not cover damage to prop in the open unless specified in the flood schedule or declaration -law exclusion applies unless law coverage is added by endorsement either by law endorsement or special endorsement that the insurer has developed -does not cover flood damage unless the flood begins more than 72 hours after the inception of the endorsement but if the coverage increased after the inception date the increase will not be effective for floods that being within the first 72 hours after the request was made and additional policy wording clarifies that these provisions do not apply to renewal policies -does not cover loss caused by the destabilization of land resulting from the accumulation of water in subsurface land areas

limits of ins for flood coverage endorsement

subject to separate limit of ins that may be substantially lower than the regular policy limits -since reinsurance for flood losses can be both scarce and expensive many insurers are willing to provide only $1 million or $2 million of flood ins but to get higher you can get facultative reins -if insurer is unwilling to provide higher limits the insured can obtain higher layers of flood coverage in excess prop or difference in conditions policies

masonry veneer

such as brick facing on a frame structure is particularly vulnerable to earthquakes but the endorsement excludes coverage for loss this unless the veneer is limited to 10% or less of the exterior wall area -this coverage can be added by placing the words including masonry veneer in the the premises description in the declaration and paying an appropriate additional premium

deductible for flood coverage endorsement

the flood zone that the prop is located in determines the deductible -prop not located in special hazard zones insurers sometimes provide flood coverage with a deductible as low as $10,000 or $25,000 -for props located in special hazard zones, flood coverage has a higher deductible -deductibles for special hazard zone could be $100,000 or more and currently they require that the insured carry the max available NFIP ins as primary coverage -fixed deductible is the better choice insureds think -deducitble is shown in declaration or the schedule -if flood results in a covered ensuing loss (such as damage by fire or explosion) only the higher deductible will apply -if the deductible applies excess of NFIP the insurer will not pay any part of the loss attributable to the NFIP policy deductible

specialty policies

these are used by large commercial insureds and have broader coverage provisions than standard commercial prop forms -aviable to provide extended coverage, improved pricing and additional coverage limits: output policies insurance for highly protected risks layered prop ins programs

flat dollar deductible

this is offered in areas with a low probability of earthquake damage -deductible is usually larger than the regular policy deductible -often applies per occurrence rather than per item and many insureds prefer that approach -the same insured would be very unhappy with even a 1% deductible on properties with a total value pf $50 million because that could amount to as much as $500,000 in deductible if all the props were damaged

ensuing loss flood coverage endorsement

to avoid being able to collect for two causes of loss such as fire and flood on the same loss the endorsement states that in the event of an ensuing covered loss (like explosion or a fire resulting from a flood) the most that the insurer will pay is the limit applicable to fire -the insurer will not pay the sum of the fire and flood limits -also if the damage from the flood is more than the limit of ins applicable to flood the payment for the flood loss will be limited to the amount of flood ins

layered prop ins programs

two or ore prop policies arranged in levels of coverage the policies in the second or higher levels provide coverage only when the loss exceeds the coverage afforded by the lower level policies -if an insured wants high limits of liability ins they buy one or more umbrella or excess policies above the insureds primary liability policies -each policy provides $1 million or more of coverage known as layer which can be written for prop and liability ins -this is not as common but it can be a valuable tool and the basic technique is similar to layering liability ins -normally the first layer is intended to cover frequency losses and the upper layers are intended to provide catastrophe coverage -since only larger insureds buy this deductibles are higher than those used in most standard commercial prop policies -the largest accounts often step insure the first layer and purchase only excess layers and deductibles are not used in the second and higher layers because they are intended to eliminate the small losses that should fall within the first layer

underground prop for earthquake and volcanic eruption

underground foundations, underground pipes, flues, drains, and similar types of prop not normally susceptible to fire or other basic causes of loss are excluded from coverage in the in the BPP to reduce the amount of ins needed to meet coins requirements -those prop items are highly susceptible to earthquake damage so when purchasing earthquake coverage the insured should consider using the additional covered prop endorsement to cover those -adding he excluded items insures them against damage peril not just earthquakes -adjustments in policy limits should be made to avoid a coins penalty but some independently developed earthquake coverage forms automatically add coverage for foundations and underground prop

auto physical coverage

used by insureds with large fleets of automobiles that are at risk of a loss involving several vehicles at one time -covering physical damage with a $5,000 or larger deductible eliminates the insurance cost for smaller losses while providing catastrophic protection

other ins DIC

when they were first made most insureds only had fire and extended coverage so DIC is designed to cover additional perils but not provide additional limits for perils covered by fire and extended coverage excluded these perils -because DIC had additional exclusions some perils were covered by the fire and EC policy and other by DIC and others by neither -open perils coverage has made a 4th classification that is perils that are covered by both the commercial prop policy and the DIC where the other ins provision of both are important in determining which policy applies and in which amounts -these clauses normally say that DIC will be in excess over any other ins which handles the cases where the DIC is intended to provide excess insurance as is often the case with flood and earthquake coverage as well as those cases in which CPP duplicates some aspects of coverage also provided in DIC -even if other ins is clearly defined in DIC if it isn't in CPP then there can be problems so each policy provides that it is excess to the other settling the conflict through negotiations -sometimes the commercial prop insurer pays the full amount that would be due under its policy if there were no other ins and takes an assignment of the insureds rights under DIC and settles the conflict through arbitration -if they can't settle they go t court and normally are required to share loss on pro rata basis and others say the excess nature of DIC should hold DIC need not to pay until CPP is exhausted