Ch 8 commercial Property Insurance

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

A 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.

A Commercial Package policy must include: A Common Policy Declarations, Common Policy Conditions, two or more coverage forms B Basic Cause of Loss form, Broad Cause of Loss form, Earthquake Cause of Loss form C Building and Personal Property Coverage form, Commercial Inland Marine Coverage form, Commercial General Liability Coverage part D Common Policy Declarations, Interline Endorsements, Basic Cause of Loss form

A Common Policy Declarations, Common Policy Conditions, two or more coverage forms A Commercial Package Policy has 4 key components consisting of the following: Common Policy Declarations, Common Policy Conditions, Interline Endorsements, and Coverage Parts. The Common Declarations and Conditions are simply common to all coverage parts in the entire package. Interline endorsements are used to connect all of the coverage parts to the Common Declarations and Conditions. Normally, A CPP has two or more coverage parts, which makes it a package, however, one coverage part may be purchased by itself making it a stand alone policy. When this happens, there is no need for interline endorsements.

Which of the following is included in the building coverage provided by the Building and Personal Property Coverage Form? A Completed additions, fixtures, including outdoor fixtures, permanently installed machinery and equipment B Furniture, fixtures, machinery and equipment C Tenant's interest in Improvements and Betterments D Property that is located in or on the building described in the Declarations or in the open (or in a vehicle) within 100 feet of the premises

A Completed additions, fixtures, including outdoor fixtures, permanently installed machinery and equipment The building or structure described in the Declarations, includes completed additions, outdoor fixtures, permanently installed fixtures, machinery, and equipment.

Under the Commercial Package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? A First named insured B All of the answers listed C Any additionally named insured D Second named insured

A First named insured Although there may be other insureds listed in the policy, only the first named insured has rights and responsibilities such as: canceling or making changes to the policy.

Which Commercial Property coverage form covers damage to the property of others in the insured's care, custody, or control for which the insured is legally liable? A Legal Liability coverage form B Business Income coverage C Time Element coverage D Cause of Loss broad for

A Legal Liability coverage form The Legal Liability coverage form covers the insured for liability arising out of negligent damage to the property of others in the care, custody or control of the insured. Such as: having custody of the property of a customer's goods, (example: items on consignment) or maybe an employee using their own tools in the insureds business, etc.

The Extra Expense form pays the necessary expenses incurred by the insured during which of the following? A Period of Restoration B Rebuilding Period C Builders Risk Period D Claim period set by the insurer

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

The Builder's Risk Coverage Form will not cover which of the following? A Roof antenna B Fixtures that will be attached to the completed structure C Service equipment D Building materials within 100 feet

A Roof antenna Coverage does not include land, lawns, trees, shrubs, plants, and outside antennas or signs that are not attached to the structure.

Which statement is correct concerning the Agreed Value optional coverage under the Building and Personal Property Coverage Form? A Agreed Value coverage eliminates the deductible in loss payment B Agreed Value coverage suspends the coinsurance requirement C Agreed Value coverage requires coinsurance of at least 90% D The Agreed Value is the amount of loss agreed upon by the insurer and the adjuster

B Agreed Value coverage suspends the coinsurance requirement The Agreed Value optional coverage is used when insuring rare or unusual property, the value of which is difficult or impossible to determine. The coinsurance clause is suspended when this optional coverage applies. The insured and insurer agree on a value specified on the Declarations page.

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

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

The Extra Expense coverage form provides: A Coverage for the insured's legal liability for loss or damage to personal property of others in the insured's care, custody and control B Coverage that will permit the insured to continue in business without interruption following a property damage loss C Coverage for business personal property while it is temporarily away from the premises at a location the insured does not own D The business net income loss that would have been earned plus operating expenses

B Coverage that will permit the insured to continue in business without interruption following a property damage loss Extra Expense coverage provides necessary additional expenses that are incurred during the period of restoration which would not have incurred had there been no direct physical loss. It permits business continuation without interruption

Under the Common Policy Conditions of the Commercial Package Policy the insurer does not have the right to do which of the following? A Cancel the policy B Examine the insured's records at any time up to 5 years after the policy expiration C Inspect the insured property D Require written consent of insurer before the insured's rights can be transferred .

B Examine the insured's records at any time up to 5 years after the policy expiration The time limit for inspection of books and records is 3 years following policy termination

T's office condominium is covered under a Condominium Commercial Unit-Owners Coverage Form. Which of the following is not covered on a primary basis? A Furniture B Fixtures owned by the Association C Improvements D Business personal property

B Fixtures owned by the Association In the event both the unit-owner's policy and the association's policy cover the fixtures, the unit-owner's coverage will be excess.

Choose the false statement regarding the Extra Expense Coverage Form. A It includes costs to equip a temporary location B It provides coverage for direct losses under the policy C It is considered to be a Time Element Coverage D It covers necessary additional expenses incurred during the period of restoration that would not have occurred if there had been no direct physical loss

B It provides coverage for direct losses under the policy Extra Expense coverages pays for the indirect loss of expenses incurred during at the period of restoration following a direct loss.

Choose the correct statement regarding preservation of property under the Building and Personal Property coverage form. A It provides the same coverage as the preserved property would be insured against by the attached Causes of Loss Form B It provides open perils coverage for 30 days on insured property being moved or temporarily stored at another location because of the endangerment of a covered peril C It provides off-premises coverage from covered perils at any time the policyholder is temporarily away from the premises D It stipulates how insured property must be protected when endangered by a covered peril

B It provides open perils coverage for 30 days on insured property being moved or 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 because it is endangered, and to protect the property while it is removed from the premises for this reason. The property is covered for up to 30 days of removal.

Choose the true statement regarding the Value Reporting Form. A The Value Reporting Form contains an 80% coinsurance clause B Late reporting or under-reporting will result in a penalty in the event of a loss C The form may be attached to any Commercial Property coverage forms D The final premium is based on the values reported in the last report of the policy term

B Late reporting or under-reporting will result in a penalty in the event of a loss The insured pays an advance premium at the beginning of the policy period. Reports are filed either daily, weekly, monthly, or quarterly. The final premium is based upon the average values reported and is determined at the end of the policy year. The form may be attached to the Building and Personal Property Form and the Condominium Commercial Unit-Owners Form. The insured is required to report 100% of values with each report. Late reporting or under- reporting will result in a penalty in the event of a loss.

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

B Liability

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 The insured's business personal property B Personal property of others C The building listed in the Declarations D Merchandise held in storage or for sale

B Personal property of others

Which of the following is true regarding Property Off Premises coverage under the Building and Personal Property Coverage Form? A It is offered as an Additional Coverage B Property in a motor vehicle or in the care, custody, and control of a salesperson is included C There is a coverage limit of $5,000 on Property Off Premises D Property Off Premises is covered only for 30 days after its removal from the premises

B Property in a motor vehicle or in the care, custody, and control of a salesperson is included The coverage extension for property off premises provides up to $10,000 of coverage for the insured's covered property (other than stock) while it is temporarily at a location the insured does not own, lease, or operate. This includes property located at a fair, trade show, or exhibition; in or on a vehicle; or in the care, custody, or control of the named insured's salesperson.

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 The Special Form insures against open perils except those specifically excluded D Vandalism coverage is limited to 60 days if the property is vacant

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

Which of the following forms provide coverage for indirect loss? A Legal Liability Coverage Form B Business Income Coverage Form C Commercial Glass Coverage Form D Building and Personal Property Coverage Form

B. Business Income Coverage Form The two indirect loss forms to the Commercial Property Coverage Part are the Business Income Coverage Form and the Extra Expense Coverage Form.

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 $160,000 B $154,000 C $159,000 D $155,000

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.

According to the cancellation condition in the Common Policy Conditions form, if the insurance company is canceling a Commercial Package policy for nonpayment of premium, the insured must be given at least _________ days' notice of cancellation. A 60 B 30 C 10 D 20

C 10

All of the following are time element coverages, except: A Business Income coverage form B Business Income from Dependent Properties form C Accounts Receivable coverage form D Extra Expense coverage form

C Accounts Receivable coverage form Business Income Coverage, Business Income from Dependent Properties, and Extra Expense coverage forms are all considered a type of Time Element coverage because they provide coverage for losses over a period of time that results from direct physical loss. An Accounts Receivable coverage form is a type of inland marine coverage, not time element coverage.

Which of the following is not found in the Common Policy Declarations page of a Commercial Package Policy? A The insured B The policy premium C Exclusions D The inception and expiration date

C 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.

Which Cause of Loss form for the Commercial Property Coverage Part will cover loss of sales merchandise due to a burglary? A The Broad Form B The Broad Form and The Special Form C The Special Form D There is no burglary coverage provided by the Commercial Property Policy

C The Special Form The perils of Burglary and Theft are not excluded under the Special Form.

Which is true of the Personal Property of Others coverage provided by the Building and Personal Property Coverage Form? A The policy covers the interest of others in property that the insured is purchasing on an installment plan B The policy covers the property of others against loss by theft C The policy covers property of others that is in the care, custody, and control of the insured D Property of others is covered at up to $5,000 per described location

C The policy covers property of others that is in the care, custody, and control of the insured This coverage extension insures personal effects of the insured and the personal property of others in the insured's care, custody, and control for up to $2,500 at each described premises. Coverage does not include loss by theft.

Under the Building and Personal Property Coverage Form, a limit of how much is applied to business personal property temporarily away from the premises. A $5,000 B $2,500 C $15,000 D $10,000

D $10,000 The limit applies to property at a location not owned, leased, or operated by the insured, such as at a fair, trade show, or exhibition.

A commercial property has a $400,000 Commercial Building and Personal Property policy, and a fire breaks out on the loading dock, causing $80,000 in damage and $20,000 in debris removal. What is the maximum that may be received for the damage? A $80,000 B $400,000 C $90,000 D $100,000

D $100,000 The $80,000 loss plus the entire $20,000 debris removal will pay, since that amount is less than the 25% of coverage limit.

All of the following are covered under the Building and Personal Property Coverage Form, except: A Personal Property owned and used to service and maintain the building B Building materials that are on or within 100 feet of the described premises C Completed additions D Accounts, bills, currency, deeds, evidence of debt, money or securities

D Accounts, bills, currency, deeds, evidence of debt, money or securities Accounts, bills, currency, deeds, evidences of debt, money or securities are not covered under this form, but can be more properly covered under other insurance forms.

When a dry cleaners accepts a customer's suit for cleaning, the dry cleaner becomes a(n): A Customer B Bailor C Obligor D Bailee

D Bailee The Property stays with the Bailee. The Customer is the Bailor.

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

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

The Commercial Property Basic Causes of Loss Form insures against all of the following perils, except: A Sprinkler leakage B Sinkhole collapse C Riot or civil commotion D Mechanical breakdown

D Mechanical breakdown Equipment breakdown coverage is separately available under the equipment breakdown form.

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

Which of the following is not true of the value reporting form under a Commercial Property policy? A Late reporting or under-reporting will result in a penalty in the event of a loss B Reports may be filed daily, weekly, monthly, or quarterly C An advance premium is required at the beginning of the policy period D The insured is only required to report up to 80% of value of the property

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

Which statement about commercial property policies is not correct? A Changes in the terms of the policy can be made only by endorsement issued by the insurer B The first named insured is the payee of any return premiums C The insurer may examine or audit the insured's books any time during the policy period, or within 3 years after the policy ends D The insurer has the obligation to inspect the property

D The insurer has the obligation to inspect the property The insurer has the right, but not the obligation, to inspect the property.

Which is true of the Personal Property of Others coverage provided by the Building and Personal Property Coverage Form? A Property of others is covered at up to $5,000 per described location. B The policy covers the interest of others in property that the insured is purchasing on an installment plan C The policy covers the property of others against loss by theft D The policy covers property of others that is in the care, custody, and control of the insured

D The policy covers property of others that is in the care, custody, and control of the insured This coverage extension insures personal effects of the insured and the personal property of others in the insured's care, custody, and control for up to $2,500 at each described premises. Coverage does not include loss by theft

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

Which of the following statements regarding Commercial Property insurance is false? A The policy limit of the Builder's Risk Reporting Form increases at intervals to correspond with the value of the building B The Building and Personal Property form includes an 80% coinsurance provision C The Condominium Association Form will cover refrigerators, air conditioners and cooking ranges that are owned by the named insured if the Agreement requires it D Time element losses and direct losses are the same

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