Chapter 8 - Commercial Property Insurance

15. All of the following are common policy conditions under the CPP, except: A. Interline endorsement B. Cancellations C. Changes D. Examinations of books and records

A. Interline endorsement

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

A. Mechanical breakdown

14. Which endorsement is the best choice to cover a store's holiday inventory? A. peak season B. fluctuating inventory C. excess inventory D. brands and labels

A. peak season

9. Under the Builders Risk Coverage Form, all of the following are true, except: A. There is no vacancy provision in the Commercial Builders Risk Coverage Form B. Coverage includes trees, plants, outside antennas, and signs that are not attached to the building C. Coverage on the structures under construction includes materials, supplies, and equipment intended to become a permanent part of the building D. Coverage terminates 90 days after completion, or when the building is occupied

B. Coverage includes trees, plants, outside antennas and signs that are not attached to the building

12. Which of the following describes the coverage of the Extra Expense Coverage Form? A. It covers the expense of disposing of spoiled merchandise caused by a power outage B. It covers the necessary additional expenses incurred during the period of restoration which would not otherwise have been incurred in the absence of a direct loss C. It covers the expense of removing the debris of a covered direct loss D. It covers the loss of business income during the period of restoration

B. It covers the necessary additional expenses incurred during the period of restoration which would not otherwise have been incurred in the absence of a direct loss

13. Choose the false statement about the Building and Personal Property Coverage Form. A. Building Coverage includes the building structure, completed additions, permanently installed fixtures, machinery, and equipment B. Tenant's improvements that are not legally removable are included in the Personal Property of Others Coverage C. Personal property of others that is in the insured's care, custody, and control is automatically included up to $2,500 under coverage extensions D. Personal property owned and used to service the building is included in the building coverage

B. Tenant's improvements that are not legally removable are included in the Personal Property of Others Coverage

1. Which of the following statements about the CPP is incorrect? A. The first named insured is responsible for the payment of all premiums B. The insured's rights and duties may be transferred to another party without insurer approval C. The insurer may examine the insured's books and records at any time during the policy period D. The first named insured may cancel the policy by mailing advance written notice of the cancellation

B. The insured's rights and duties may be transferred to another party without insurer approval

11. 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 requires coinsurance of at least 90% C. Agreed Value coverage suspends the coinsurance requirement D. The Agreed Value is the amount of loss agreed upon by the insurer and the adjuster

C. Agreed Value coverage suspends the coinsurance requirement

6. Which statement is false regarding the Building Personal Property Coverage Form? A. The optional inflation guard coverage automatically increases the face amount of the policy B. There is no coverage for automobiles that are held for sale C. Preservation of Property Coverage provides named-perils coverage for 10 days D. The optional agreed value coverage negates the coinsurance clause

C. Preservation of Property Coverage provides named-perils coverage for 10 days

5. All the following are true regarding commercial property coverage, except: A. The Broad Causes of Loss Form does not include settling, cracking, bulging, or expansion B. The Special Causes of Loss Form covers open peril of direct loss except those specifically excluded C. The Basic Causes of Loss Form covers water damage D. Vandalism coverage is limited to 60 days if the property is vacant

C. The Basic Causes of Loss Form covers water damage

2. Time Element is best defined as: A. The requirements for either pre-certification or continuing education B. Fair Rental Value and Additional Living Expense C. The period between Notice of Loss and Payment of Loss D. Business Income and Extra Expense Coverage Form

D. Business Income and Extra Expense Coverage Form

4. Which of the following would NOT be found in the Common Policy Declarations page of a Commercial Package Policy? A. The policy premium B. The insured's name and address C. The inception and expiration date D. Exclusions

D. Exclusions

3. Which of the following would be included in the definition of Business Personal Property under the Building and Personal Property Coverage Form? A. Stock on consignment held for sale by the insured B. Accounts, bills, and currency of others on the premises in the insured's trust C. Business Personal Property of others rented to the insured D. Furniture and machinery owned by the insured

D. Furniture and machinery owned by the insured

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

D. 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

8. The Basic Causes of Loss Form under the Commercial Property Coverage Part would not cover which of the following? A. Sinkhole collapse B. Riot or civil commotion C. Sprinkler leakage D. Steam boiler explosion

D. Steam boiler explosion