Chapter 8-Commercial Property Insurance

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

A. Utility Services

Which of the following is not a common policy condition on a commercial property policy? A Transfer of Rights and Duties B Abandonment C Inspection and surveys D Premiums Good Job!

B. Abandonment

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

B.25% of the loss

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

C. utility Services

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

B. Personal Property

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.

Commercial Property Coverage-Cause of loss forms

basic, broad, special

Covered property

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

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.

When

The policy period, which includes the effective and expiration dates. Commercial package policies are written for terms of one year.

Interline Endorsements

These endorsements coordinate the coverage contained in one coverage part of the policy with other coverage parts to prevent duplication.

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.

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. Each coverage part also contains its own unique declarations page:

Peak Season Limit of Insurance

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

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. Breakdown or contamination includes changes in temperature or humidity as the result of mechanical failure of refrigeration, cooling, or humidity-control equipment at the insured location. Power outage includes changes in temperature or humidity as the result of interruption of electrical power either on or off the insured premises.

Coinsurance Formula Example

(Amount of Insurance Carried ÷ Amount of Insurance Required) x Amount of Loss = The amount the insurer pays (Carried) $40,000 ÷ (Required) $80,000) x $10,000 (Amount of loss) = $5,000 (Amount the insurer pays)

Covered personal property

1. Furniture and fixtures - Such as office furniture and shelving. 2. Machinery and equipment - Such as refrigerators and telephone systems. 3. Stock - Merchandise held in storage or for sale, raw materials, and supplies used for packing or shipping such stock. 4. Any other personal property owned by the named insured and used in the named insured's business. 5. Tenants' improvements or betterments made to the part of a building occupied, but not owned, by the named insured. 6. Leased personal property for which the named insured has a contractual obligation to insure, unless insured elsewhere on the policy.

What

A description of the business being insured.

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

A. $10,000

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

A. 31%

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

A. Property in a motor vehicle or in the care, custody, and control of a salesperson is included

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

B. Earth Movement

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

B. Fire Department Service Charge

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

B. steam boiler explosion

Time element coverage form

Business Income and Extra Expense Forms

The Outdoor Property coverage extension under the Building and Personal Coverage Form insures against which of the following perils? A Windstorm, hail, explosion, and vehicles B Windstorm, hail, riot, and civil commotion C Explosion, riot, and civil commotion D Riot, civil commotion, and vandalism

C .Explosion, riot, and civil commotion

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

C. $10,000

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

C. 72 hours

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

D. 25% of the loss

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

D. Building and personal property coverage form

Which of the following is not covered under the Condominium Commercial Unit-Owners Coverage Form? A Improvements B Appliances C Business personal property D Building exterior wall

D. Building exterior wall

Which of the following is correct concerning the Commercial Property Special Causes of Loss Form? A Coverage is included for loss of Business Income B Coverage is included for the peril of Earthquake C Other than coverage for some additional perils, the coverage is identical to that of the Broad Form D Coverage is provided for all losses except as specifically limited or excluded

D. Coverage is provided for all losses except as specifically limited or excluded

Which of the following business personal property is not covered under a Condominium Commercial Unit-Owners Coverage Form? A Alterations B Improvements C Fixtures D Leased appliances

D. Leased Appliances

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

D. Steam boiler explosion

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.

Broad Form-

Includes the perils contained in the basic form, plus 3 additional causes of loss: falling objects, weight of ice, snow or sleet, water damage caused by accidental discharge

How Much

On the common declarations, this includes the total premium charged for each coverage part as well as the total policy premium. If a premium does not appear next to a coverage part on the common declarations, no coverage is provided.

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. i.e. If a building insured for $100,000 suffers $80,000 of direct fire damage and incurs debris removal costs of $15,000, the policy will pay $95,000.

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.

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.

Who

The Named Insured, which is the individual or business entity for whom insurance is provided.

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.

Loss Payment

The insurer has the option of making payment for the value of the lost or damaged property or the cost to repair or replace. If it chooses, it may also take the property at an agreed or appraised value or actually arrange for the repair, rebuilding, or replacement of damaged property.

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.

Recovered Property

The insured, not the insurance company, has the option of keeping any recovered property and reimbursing the insurer for the amount of the loss settlement already received. Regardless of who retains the recovered property, the insurer pays the costs of recovery and any expenses required to repair the recovered property, subject to the limit of insurance.

Where

The mailing address of the named insured

Vacancy Permit

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. The perils of Vandalism and sprinkler leakage are excluded under this endorsement.

Value reporting form

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.

Fire department service

automatically included as additional coverage

covered property continued....

business personal property owned by the insured-Some business personal property is only insured if it is located in or on a building described on the Declarations OR within 100 feet of it (i.e., in the open or inside a vehicle). Covered business personal property includes:

Common Policy Conditions

contains the legal obligations and duties of the insured and insurer

Special Form

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.