Property and Casualty Assignment 5

Describe the terms used in the Condominium Additional Provisions endorsement for the Notice of Cancellation or Nonrenewal.

The insurer will provide at least 30 days written notice to the first named insured of policy cancellation or non renewal.

How can an insurance producer determine where the dividing line lies between a condominium association's interests and the unit owners' interests?

The producer must become familiar with the applicable state statute governing condominiums and must also look over the particular condominium association agreement.

Describe what other covered perils are included in a Standard Property Policy that has vehicles as a covered peril.

Windstorm, hail, smoke, aircraft, vehicles, riot, civil commotion, sinkhole collapse, and volcanic action can be added by making an appropriate entry in the declarations

In addition to determining who owns what in a condominium, what are two other problems that may arise when arranging insurance for condominiums?

-Measuring insurable values -Purchasing Appropriate amounts of insurance

Describe how the Builders Risk Renovations endorsement, used for insuring additions or alterations to existing buildings, values the existing property.

-The insured property's value increases as the work progresses -The variety of interest involved, such as owners, contractors, and subcontractors -The increased hazards posed by buildings under construction -It excludes the value of the existing property, covering only the renovations under construction

Describe the classifications of individuals that are charged an extra 25% if they are named as additional insureds on the Legal Liability Coverage Form.

An extra premium charge of 25% applies when anyone in the classifications of general lessees, managers or operators of the premises, and employees other than executive officers and partners named as additional insureds.

Explain why an insured may prefer to use the Legal Liability Coverage Form instead of the Building and Personal Property Coverage Form, also referred to as the BPP, to cover property of others.

An insured may prefer to use the Legal Liability Coverage Form over the BPP because the rate is lower than the usual commercial property contents or building rate. Also, the legal liability coverage form covers loss of use of the insured property as well as the physical loss itself. The fact that loss of use is covered means that the insurer will pay for the time element losses that the owner of the property incurs as a result of the physical damage. Such time element losses include the loss of income or extra expenses incurred for rental of replacement property. Coverage for loss of use is an important advantage of Legal Liability Coverage Form. The BPP can be arranged to cover direct damage to property of others regardless of fault, but it does not cover claims for loss of use of the damaged property. The insurer agrees to pay related defense cost and make other supplement payments in addition to the limit of insurance. No deductible applies to the Legal Liability Coverage Form.

Describe what types of property are not covered by the unit owner's policy because of the Coordination With Association Coverage exclusion, which coordinates the unit owner's coverage with the condominium association's coverage when the condominium association agreement requires the association to insure such property.

Fixtures, improvements, alterations, and appliances such as those used for refrigerating and cooking are not covered by the unit owner's policy if the condominium association agreement requires the association to insure such property.

In terms of ownership, how does a planned unit development (PUD) differ from a condominium?

In a PUD, the occupants have exclusive ownership of their own units in the same way that individual homeowners own their property. In contrast, a condominium unit owner owns only the interior of the unit. Additionally, the PUD occupants individually own the land below their structures. In a condominium, the unit owners do not have individual ownership of any of the land.

Explain how a landlord can terminate a lease if the building or premises are damaged by fire or other peril?

Many leases of premises allow the lessor to terminate the lease if the building or premises are damaged by fire or other perils to a stipulated percentage of the value of the building or premises or the amount of time required to repair or replace the damaged property exceeds a stipulated period.

Explain why the Insurance Services Office, Inc. (ISO) Builders Risk Coverage Form (BRCF) does not contain optional replacement cost coverage provisions.

The BRCF does not contain optional replacement cost coverage provisions because the actual cash value and the replacement cost of a building under construction are typically the same.

Explain why the Standard Property Policy (SPP) cannot be part of a package policy.

The SPP is a self contained monoline policy containing all necessary policy provisions in a single document. Only a completed declarations page is needed to complete the contract. As a result, the SPP cannot be a part of a package policy. Any additional coverages, such as general liability coverage, must be obtained separately.

Describe what the Builders Risk Reporting Form requires the insured to report to the insurer.

The endorsement requires the insured to report to the insurer the actual cash value of covered property as of a specified date each month during the policy period

Explain why, despite the fact that leasehold interest insurance fills a need for some insureds, such insurance is seldom bought.

This insurance is seldom bought because many risk managers and producers are unaware it exists. Even when risk managers are aware of the leasehold interest exposure, they may choose to retain it because it is a relatively small exposure for most tenants. Another reason is the form is not used is that lessees find it difficult to conceptualize the exposure even when it is bought to their attention.