Chapter 8 commercial property insurance

How much can be paid under the Business and Personal Property Coverage Form for debris removal due to a covered loss? A 25% of the loss B $5,000 C 15% of Coverage A D $1,000

A 25% of the loss

The Builder's Risk Coverage form automatically ends at the earliest of all of the following, except: A 60 days after construction is complete B Policy expires C Property is abandoned D Property is sold

A 60 days after construction is complete

The Condominium Commercial Unit-Owners Coverage covers each of the following, except: A Personal property B Fixtures C Improvements D Appliances

A Personal property

Which of the following perils is not one of the three included on the Broad Causes of Loss Form? A Steam boiler explosion B Weight of ice, snow or sleet C Water damage from accidental discharge D Falling objects

A Steam boiler explosion

Loss Conditions

Abandonment Appraisal Duties in the Event of Loss or Damage Loss Payment Recovery of property

The Condominium Association Coverage Form is used in place of which coverage form when insuring a condo building insured by the association? A Condominium HO-6 policy B Building and Personal Property Coverage form C Dwelling property D Homeowner Policy

B Building and Personal Property Coverage form

What is the limit of coverage for business personal property away from the premises under the Business and Personal Property coverage form? A $15,000 B $10,000 C $5,000 D $1,000

B 10,000

Covered Property: building

Completed additions, fixtures and permanently installed machinery Personal property used to service and maintain insured buildings, structures, and the premises materials, supplies, equipment, or temporary structures on or within 100 feet of the described premises

Builders risk- limit of insurance

Completed value- anticipated value of completed project Builders risk reporting form- endorsement added when limit of insurance is adjusted monthly

Water Damage Caused by Accidental Discharge

Coverage for water damage is provided when accidental discharge or leakage of water or steam occurs as the direct result of the breaking apart or cracking of a plumbing, heating, air conditioning, or other system or appliance that is located on the described premises and contains water or steam. Coverage is NOT provided for discharge or leakage from an automatic sprinkler leakage system, a sump or related equipment, roof drains, gutters, downspouts, etc. Coverage also will not be provided if continuous or repeated seepage or leakage of water takes place over a period of 14 or more days. Plumbing is not covered. The Causes of Loss - Broad Form contains the same exclusions, additional coverages, and limitation found in the basic form; however, it also includes the Additional Coverage - Collapse.

Peak Season Limit of Insurance (CP 12 30)

Coverage is provided for a specified increase in the business personal property limit of insurance during a designated period of time, such as the Christmas shopping season. The insured chooses the property for which the value will be increased, the amount of the insurance, and the applicable time period.

Spoilage (CP 04 40)

Coverage is provided on perishable property in the care, custody, or control of the insured at the insured premises. This endorsement includes losses due to breakdown, contamination and power outage.

In the Business Income Coverage Form, Period of Restoration begins _______ after the time of loss. A 86 years B 55 days C 100 months D 72 hours

D 72 hours

The Common Policy Conditions in commercial property insurance include all of the following, except: A Changes B Transfer of Rights and Duties C Inspections and Surveys D Fire Department Service Charge

D Fire Department Service Charge

The Ordinance or Law Coverage endorsement covers each of the following losses, except: A Clearance of the undamaged parts of a building B Demolition of the undamaged parts of a building C Increased cost of repairing damaged parts of the building D Loss of value in the damaged portion of the building

D Loss of value in the damaged portion of the building

Which of the following is excluded under the Basic Causes of Loss form? A Sinkhole collapse B Sprinkler leakage C Volcanic action D Utility services

D Utility services

A building is considered vacant unless what percentage of the building's total square footage is rented or used to conduct customary operations? A 10% B 20% C 26% D 31%

D 31%

Each of the following is covered under the Legal Liability Coverage Form; except: A Damage to real or personal property owned by others when it is in the insured's care B Defense costs C Loss of use D Loss of income

D loss of income

Falling Objects

Damage caused by falling objects, but not to the object itself. Coverage for the interior of the building and its contents is only if the exterior of the building is first damaged by the falling object.

Weight of Ice, Snow, or Sleet

Does not include coverage for personal property outside of buildings or structures.

Components of a Commercial Package Policy

Every CPP includes a Common Policy Declarations and Common Policy Conditions form. These policy sections apply to the entire policy, regardless of the types of coverage written. For example, one client may wish to package Crime and Commercial General Liability coverages; another client may wish to package Inland Marine and Business Auto coverages. Although each client will have different and specific coverage forms, their policies will contain the same common policy declarations and common policy conditions form. The CPP contains four key components explained on the subsequent slides.

Extra Expense Coverage Form

Extra expense means the necessary additional expenses incurred during the period of restoration, and which the insured would not have incurred if there had been no direct physical loss. Examples of such expenses include relocation expenses and costs to equip a temporary location. Extra expense coverage may be purchased without business income coverage by clients that will not suffer a consequential loss of business income after a property loss, but that would incur additional expenses.

Personal Property of Others

For coverage to apply, the property must be in the care, custody, or control of the named insured AND be located in or on a building shown on the Declarations, in the open (or in a vehicle) within 100 feet of the described premises. Any claim payment will be made only to the owner of the insured property.

Vacancy

If, at the time of loss, the building where loss or damage occurs has been vacant for more than 60 consecutive days before the loss, there is no coverage for loss resulting from the following perils: vandalism, sprinkler leakage, building glass breakage, water damage, and theft or attempted theft. For all other covered causes of loss, loss payment will be reduced by 15%. Except theft, Sprinkler leakage, Glass breaking

Increased Cost of Construction

In the event of damage to a covered building for a loss to which Replacement Cost Optional Coverage applies, the insurer will pay the increased costs, up to a $10,000 aggregate limit, incurred to comply with enforcement of an ordinance or law regulating the repair, rebuilding, or replacement of damaged parts.

Causes of Loss - Special Form

Instead of providing coverage for named causes of loss, the special form provides coverage for risks of Direct Physical Loss unless the peril or cause of loss is specifically excluded or limited. Coverage under the Special Causes of Loss Form is on an open perils basis. The Limitations section of the Special Causes of Loss Form contains language not found in the Basic and Broad Forms, such as:

Debris Removal

Pays the expense of removing debris following a covered loss and is subject to a maximum of 25% of the coverage applying to direct physical loss. However, in the event of a total loss where the limit of insurance on the building is exhausted, the policy will pay up to an additional $10,000 for debris removal.

Pollutant Clean up and Removal

Pays the insured's expense, up to $10,000 aggregate limit, for each described location in a policy period, to extract pollutants from land or water at the described premises if the discharge or escape of the pollutants is caused by or results from a covered cause of loss.

Electronic Data

Pays up to $2,500 aggregate in any one policy year, regardless of the number of locations, for the cost to replace or restore electronic data that has been destroyed or corrupted by a covered cause of loss.

Preservation of Property

Provides open peril coverage for a maximum period of 30 days on insured property that is being moved or temporarily stored at another location because of endangerment by a covered peril.

Fire Department Service Charge

Provides, as an additional amount of insurance, up to $1,000 for the payment of fire department service charges when the department is called to protect insured property. No deductible applies to this coverage.

Causes of Loss - Basic Form

The Basic Form provides coverage for the following causes of loss (perils): fire, lightning, windstorm, or hail, smoke, aircraft, riot or civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.

Building and Personal Property Coverage Form

The Building and Personal Property Coverage Form describes how property coverage applies to the following classes of property: buildings, business personal property of the insured, and personal property of others. There is no liability coverage provided by this form.

Covered Causes of Loss

The Building and Personal Property Coverage Form requires the insured to select one or more of the cause of loss forms to be attached. These forms vary and allow the insured to select the appropriate form for a particular class or type of property. For example, the insured may want building items to be insured under a special causes of loss form and business personal property to be insured under a broad causes of loss form.

Declarations Page

The Common Policy Declarations Page shows the Who, What, When, Where, and how much that applies to the insurance provided by the policy. It defines each of the coverage parts included on the policy

Earthquake and Volcanic Eruption Endorsement

The Earthquake and Volcanic Eruption Endorsement must be added to one of the causes of loss forms (basic, broad, or special) and cannot be purchased alone. The only causes of loss provided by this endorsement are earthquake and volcanic eruption. All earthquake shocks and volcanic eruptions that occur within any 168-hour period are considered a single earthquake or volcanic eruption.

Changes

The First Named Insured has the right to request policy changes. Changes can only be made, in writing, with the consent of the insurer.

Premiums

The First Named Insured is responsible for the premium payments and will be the recipient of any return premiums.

Coinsurance

The insured is required to insure all covered property to a percentage of its replacement value; failure to do so results in a penalty in the event of partial losses. The coinsurance percentage is shown on the Declarations; and the standard coinsurance percentage is 80%. Any applicable loss penalty is determined based on the percentage of insurance to value.

Transfer of Your Rights and Duties Under This Policy

The insured's rights may not be transferred without the written consent of the insurer, unless the insured dies, and then rights are automatically transferred to the insured's legal representative.

Inspections and Surveys

The insurer has the right, but is not obligated, to make inspections and surveys at anytime. These surveys are for purposes of underwriting and rating and are not safety inspections.

Examination of Your Books and Records

The insurer may examine the insured's books and records anytime during the policy period and up to 3 years afterward.

Causes of Loss Forms

There are three Causes of Loss forms available to specify the perils covered under the property coverage parts of the policy. More than one Causes of Loss Form may be attached to the coverage part with different causes applying to different locations or classes of property. Most exclusions in the commercial property policy are found in the causes of loss form. Basic, broad, special

Business Income and Extra Expense Forms

These time element coverages provide insurance for two distinct types of indirect loss that result from the necessary suspension of the insured's operations due to a covered property loss: Loss of business income Extra expense

Legal Liability Coverage Form

This coverage form provides coverage for the insured's legal liability for loss or damage to real or personal property owned by others when it is in the insured's care, custody, or control and is damaged by a covered peril. It is most commonly written for the tenant of a commercial building when the tenant, under the terms of a lease, is legally responsible for damage to the building.

Vacancy Permit (CP 04 50)

This endorsement extends coverage on a building that has been vacant or unoccupied beyond the limitation period specified in a policy (usually 30 or 60 days). Usually, the permit is granted free of charge when the structure is in an area with satisfactory fire protection.

Condominium Commercial Unit-Owners Coverage Form

This form is used for commercial unit-owners instead of the personal lines Unit-owners Coverage Form (HO-6), which is used by the owners of residential condominium and cooperative units. Only the business personal property of the unit-owner is insured.

Condominium Association Coverage Form

This form is used in place of the Building and Personal Property Coverage Form when insuring property in the name of a condominium association. Coverage includes the buildings and the fixtures that are a part of the building, such as refrigerators, air conditioners, and other appliances, if the Association Agreement requires the association insure the property.

Value Reporting Form (Full Value Form) (CP 13 10)

Under this form, an insured that owns business personal property that fluctuates in value is protected for the values actually at risk. The insured pays an advance premium at the beginning of the policy period.

Cancellation

Who may cancel and when written notice must be given. The First Named Insured has the right to cancel the policy. The insurance company may also cancel the policy, subject to insurance regulations and the contents of the insurance contract.

Ordance and law coverages

coverage A- for the loss in value of the undamaged portion of the building Coverage B- Demolition cost Coverage C increased cost of construction

Business Personal Property owned by the insured

fruniture, fixtures, machinery, equipment, and stock other personal property owned by the insured and used in the business tenants improve and betterments leased personal property

Coverage extensions

newly acquired or constructed property (250,000 buildings and 100,000 BPP) Personal effects and property of others (2,500) Value papers and records (2,500) property off-premises (10,000) Outdoor property (1,000) Non-owned detached trailers