Commercial Property Insurance - Chapter 13

*(Commercial Property Insurance - Chapter 13)* Extra Expense Coverage Form Limits are applied to recovery depending on the period of restoration. Limits might be stated in the declarations as 40%/80%/100%. This means that if the restoration period was:

- 30 days or less, 40% of the full amount of insurance would be paid off - 31-60 days, 80% of the full amount of insurance would be paid; or - over 60 days, 100% of the full amount of insurance would be paid

*(Commercial Property Insurance - Chapter 13)* Optional Coverage provided under the Building and Personal Property Coverage Form

- Agreed Value (optional coverage) - Inflation Guard (optional coverage) - Replacement Cost (optional coverage) - Builders Risk Coverage Form (optional coverage) An additional premium is charged for each optional coverage selected.

*(Commercial Property Insurance - Chapter 13)* Collapse of a building, part of a building, or a building that contains covered property is covered only when it is caused by one of the specified broad form perils or any of the following additional perils:

- Breakage of glass - Hidden decay - Hidden insect or vermin damage - Weight of people or personal property - Weight of rain that collects on a roof - Use of defective material or methods in construction, remodeling, or renovation if the collapse occurs while the construction, remodeling, renovation is in progress Collapse that results from hidden decay or hidden insect or vermin damage is not covered if the insured knew about the damage before the collapse occurred. If collapse occurs after construction, remodeling, or renovation is completed and is caused by a covered peril, the loss or damage is covered even if the use of detective materials or methods contributed to the collapse.

*(Commercial Property Insurance - Chapter 13)* Types of Property Coverage Forms:

- Building and Personal Property - Builders risk - Condominium Association - Condominium commercial unit owners - Business Income with extra expense - Business Income without Extra Expense - Extra Expense - Legal Liability

*(Commercial Property Insurance - Chapter 13)* Two Types of Business Income Forms

- Business Income With Extra Expense - Business Income Without Extra Expense

*(Commercial Property Insurance - Chapter 13)* The Commercial Property Coverage Part must include (in addition to the common policy declarations and conditions):

- Commercial property declarations form - commercial property conditions form - One or more of commercial property coverage forms - Causes of loss form; and - Any mandatory endorsements

*(Commercial Property Insurance - Chapter 13)* The insured may select coverage for one or more of these categories under the BUILDING AND PERSONAL PROPERTY COVERAGE FORM:

- Completed Additions - Fixtures, including outdoor fixtures - Permanently installed machinery and equipment - Personal Property used to maintain or service the premises, such as fire extinguishers - Outdoor Furniture, floor coverings, and certain appliances; and - If not otherwise covered, additions under construction and alterations or repairs to the building, including materials, equipment, supplies and temporary structures within 100 feet of the described premises

*(Commercial Property Insurance - Chapter 13)* Conditions listed in Building and Personal Property Coverage Form:

- Duties in the Event of A Loss Condition - Loss Payment Condition - Valuation Condition - Vacancy Condition - Mortgageholders Condition - Coinsurance Condition

*(Commercial Property Insurance - Chapter 13)* Causes of Loss - Broad Form

- Falling objects (does not cover damage to interior property unless the exterior of the building is damaged first) - weight of snow, ice, or sleet - Water damage (accidental discharge or leakage of water or steam as a result of the cracking or breaking of a water or steam system or appliance) Coverage also includes the cost of tearing out or replacing any part of a building to repair damage to the system from which the water or steam escaped, and costs to repair the system itself. Not covered are the costs to repair any defect that caused the loss, loss from continuous seepage over 114 days or more, or loss caused by freezing unless proper precautions were taken to prevent freezing.

*(Commercial Property Insurance - Chapter 13)* Covered perils in the Causes of Loss-Basic Form:

- Fire - Lightning - Windstorm or Hail - Explosion - Riot or Civil Commotion - Aircraft or Vehicles - Smoke - Sprinkler Leakage - Vandalism and Malicious Mischief - Volcanic Action - Sinkhole Collapse

*(Commercial Property Insurance - Chapter 13)* Business Personal Property Includes

- Furniture - Fixtures - Machinery - Equipment - Stock - Other owned personal property used in the business - The value of labor, parts, or services on the personal property of others - If the insured is a tenant, the improvements and betterment's added by the insured; and - Leased personal property that the insured has a contractual responsibility to insure, unless otherwise covered.

*(Commercial Property Insurance - Chapter 13)* Business Income from Dependent Properties - Broad Form provides coverage for:

- Insureds who depend on another business as their sole supply of merchandise or raw materials may suffer a loss if their supplier is forced to cut back or eliminate shipments because of a direct physical loss. This form protects the insured against loss due to loss at such a CONTRIBUTING location. - Insureds who depend on a particular business income from as the primary buyer for their products are covered under this form if direct physical loss at such a RECIPIENT location causes the insureds to suffer. - Insureds may depend on a manufacturer to deliver certain products or components to the insureds customers under a sales contract. Should the MANUFACTURING location be unable to fulfill the contract because of direct physical loss, insureds may suffer a loss of income that can be covered under this form. - Insureds may depend on another business to attract customers to their own business. Loss to such a LEADER location may cause insureds to suffer a loss of earnings that can be covered under this form.

*(Commercial Property Insurance - Chapter 13)* Excluded Property under The Commercial Property Policy

- Money, accounts, food stamps, notes, securities, and related property (lottery tickets held for sale are not securities and are covered) - Animals, unless they are boarded or held for sale - Autos for sale - Bridges, roads, walks, patios, and other paved surfaces - Contraband (property being illegally transported or traded) - Cost of excavations and other ground preparation - Foundations of buildings, structures, machinery, or boilers if their foundation is below the basement level or below ground level if there is no basement - Land, water, growing crops, and lawns - Personal property while it is airborne or waterborne - Bulkheads, pilings, piers, wharves, and docks - Property covered under another policy in which it is more specifically described

*(Commercial Property Insurance - Chapter 13)* Types of outdoor properties covered for collapse only when they are damaged directly by a collapsed building:

- Outdoor radio or television antennas, including satellite dishes, and their lead-in wiring, masts, or towers - Awnings, gutters, and downspouts Yard fixtures - Outdoor swimming pools - Fences - Piers, wharves, and docks - Beach or diving platforms or appurtenances - Retaining walls - Walks, roadways, and other paved surfaces

*(Commercial Property Insurance - Chapter 13)* Additional Excluded Property under The Commercial Property Policy

- Retaining walls that are not a part of the building described in the declarations - Underground pipes, flues, and drains - The cost to replace or restore information contained in valuable papers or records, including those that exist as electronic data, except as provided in the coverage extensions - Vehicles, including watercraft and aircraft, that are licensed for use on public roads or are principally operated away from the premises; this exclusion does not apply to: - vehicles that are manufactured, processed, or warehoused by the insured, - vehicles, other than autos, that the insured holds for sale, or - rowboats or canoes out of water at the described premises - The following property while outside of buildings, except as provided in the coverage extensions - Grain, hay, straw, or other crops - Fences - Antennas (including satellite dishes) - Signs that are not attached to the building - Trees, shrubs, and plants - Electronic data, except as provided as an additional coverage

*(Commercial Property Insurance - Chapter 13)* Causes of Loss-Basic Form excludes:

- Smoke from agricultural smudging or industrial operations is not covered - The windstorm or hail peril does not include damage caused by frost, cold weather, snow, sleet, or ice, other than hail. Damage to the interior of a building or its contents is covered only when the wind or hail first creates an opening in the walls or roof. - The explosion peril includes explosion of gasses or fuel within the furnace or flues of any fired vessel - Vehicle damage caused by vehicles the named insured owns or operates in the course of the insureds business is not covered - Volcanic action includes airborne volcanic blasts or shockwaves, ash, dust, particulate matter, and lava flow. Removal of ash, dust. and particulate matter is not covered if does not cause direct physical loss to the described premises.

*(Commercial Property Insurance - Chapter 13)* Conditions where loss or damage that occurs when personal property falls down or caves in is covered even when there is no building collapse/

- The property must be inside a building - The collapse must result from one of the sepcified causes of loss - The property that collapses must not be one of the items of outdoor property described above. Also, coverage DOES NOT apply if marring or scratching is the only damage that results from the collapse. Settling, shrinkage, expansion, cracking, bulging, leaning, sagging, or bending is not considered to be collapse.

*(Commercial Property Insurance - Chapter 13)* Property covered only if the loss is caused by a specified cause of loss (the same as the broad form perils) or breakage of building glass (Limitations under Causes of Loss - Special Form):

- Valuable papers and records, abstracts, drawings, and data processing, recording, or storage media - Animals, and then only if killed or if it is necessary to destroy them - Breakage of fragile articles, such as statuary, marble, chinaware and porcelain - Building machinery, tools, and equipment that the insured owns or is entrusted with while away from the premises

*(Commercial Property Insurance - Chapter 13)* With either of the business income forms, the insured may select:

- business income coverage, including rental value coverage - business income coverage, other than rental value coverage; or - rental value coverage only

*(Commercial Property Insurance - Chapter 13)* Causes of Loss-Basic Form more exclusions:

- fungus, wet rot, dry rot, and bacteria (except as provided as an additional coverage); does not apply when they result from fire or lightning; - ordinance or law; - earth movement (does not include a fire or explosion resulting from earth movement); - government action; - nuclear hazard; - failure of power or other utility services occurring away from the insured's premises; - war and military action; - water, including flood, sewer backup, mudslides, or seepage of ground water; - artificially generated current; - rupture or bursting of water pipes (other than automatic sprinklers); - leakage or discharge of water or steam resulting from breaking of water or steam system or appliance (does not apply to automatic sprinklers), including continuous or repeated seepage or leakage or the presence or condensation of humidity, moisture, or vapor that occurs over 14 days or more; - explosions of steam boilers, pipes, engines, or turbines; and - mechanical breakdow

*(Commercial Property Insurance - Chapter 13)* In addition to exclusions contained in other forms, such as earth movement, war, and nuclear hazard, the special form excludes:

- wear and tear; - rust, corrosion, fungus, decay, deterioration, and hidden or latent defects; - smog; - pollutants (unless the release, discharge, or dispersal is caused by a specified cause of loss); - settling, cracking, shrinking, or expansion; - damage caused by insects, birds, rodents, or other animals; - mechanical breakdown; - explosion of steam boilers, pipes, and engines; - dishonest or criminal acts of the insured or the insured's employees; - voluntary parting with property if induced to do so by fraud or a trick; - rain, snow, ice, or sleet damage to personal property that is not in a building; - loss resulting from acts or decisions, or the failure to act or decide; - collapse (other than that specifically included under the - - collapse additional coverage); and - faulty planning, development, design, specifications, workmanship, or repair Both the limited mold coverage and the collapse additional coverage's are included in the special form.

*(Commercial Property Insurance - Chapter 13)* Business Income from Dependent Properties - Broad Form Locations EX: RECIPIENT

A group of insureds are in the business of handcrafting one-of-a-kind articles that are sold primarily to one larger retailer.

*(Commercial Property Insurance - Chapter 13)* Time Element Coverage

A type of coverage provided under the business income form. It provides coverage for the loss of business income over a period that results from direct physical loss. Business Income includes net income that would have been earned if the loss had not occurred and the costs of continuing normal operations, including payroll.

*(Commercial Property Insurance - Chapter 13)* Monthly Limit of Indemnity (optional coverage) provided under the business income coverage forms

Allows the insured to establish the amount of reimbursement for loss of business income during each 30-day period. The insured selects a fraction that is multiplied by the limit of insurance to determine the maximum that could be paid for each 30 days. EX: The insured wants to limit the amount of reimbursement available in each 30-day period.

*(Commercial Property Insurance - Chapter 13)* Business Income from Dependent Properties - Broad Form Locations EX: CONTRIBUTING

An insured has developed a very successful pharmaceutical business that serves nursing homes and depends on a particular drug producer to supply orders quickly.

*(Commercial Property Insurance - Chapter 13)* Business Income from Dependent Properties - Broad Form Locations EX: MANUFACTURING

An insured has invented a radically different computer, which another company manufactures for delivery to the insured's customers.

*(Commercial Property Insurance - Chapter 13)* Business Income from Dependent Properties - Broad Form Locations EX: LEADER

An insured operates an ice cream parlor recently developed commercial area and relies on the proximity of a toy store that is part of a nationwide chain to attract many of the shop's customers.

*(Commercial Property Insurance - Chapter 13)* Newly Acquired or Constructed Property (coverage extension)

Applies to Coverage A and Coverage B. Up to $250,000 for each new building may be extended for up to 30 DAYS to cover new buildings being constructed at the same location, and buildings newly acquired at other locations that are intended for use as a warehouse or a use located at newly acquired locations (other than fairs, trade shows, or exhibitions) and newly acquired or constructed buildings at the location described in the declarations. The maximum amount payable is $100,000 at each building.

*(Commercial Property Insurance - Chapter 13)* Coverage Extensions

Apply only if the insured has agreed to meet an 80% or higher coinsurance requirement or has purchased a reporting form. These provide additional limits of insurance.

*(Commercial Property Insurance - Chapter 13)* Commercial Property Coverage Part

Consists of a number of separate components that can be combined to provide the appropriate property coverage for a wide variety of commercial insureds.

*(Commercial Property Insurance - Chapter 13)* Commercial Property Coverage Forms:

Contain descriptions of the specific coverage being provided to the business. Each form defines what property is covered, what property is not covered, how limits and deductibles apply, and what special conditions apply.

*(Commercial Property Insurance - Chapter 13)* Coinsurance Clause

Contained in the Business Income Coverage Forms, applies to Business Income Coverage but not to extra expense.

*(Commercial Property Insurance - Chapter 13)* Limited Coverage for fungus, wet rot, dry rot, and bacteria (additional coverage) cont'ed

Coverage is limited to $15,000 for all losses or damage arising out of all occurrence's of covered causes of loss that take place in a 12-month period, regardless of the number of claims. The 12-month period starts with the beginning of the present annual policy period. If a particular loss results in mold, the insurer will not pay more than a total of $15,000 even if it continues to be present or active or recurs in a later policy period. This additional coverage does not increase the applicable limit of insurance on covered property.

*(Commercial Property Insurance - Chapter 13)* Order of Civil Authority (additional coverage)

Coverage pays business income and extra expense losses incurred when a civil authority prohibits access to the described premises because property other than the described premises was damaged by a covered cause of loss. Both Business Income and extra expense losses are paid for up to three consecutive weeks. Payment for business income losses begins 72 hours after the action by the civil authority.

*(Commercial Property Insurance - Chapter 13)* Causes of Loss - Special Form

Covers any direct physical not specifically excluded or limited in the form. In other words, it provides open perils coverage. Because of this, the list of exclusions is more extensive and detailed than in other causes of loss forms.

*(Commercial Property Insurance - Chapter 13)* Increased Cost of Construction (additional coverage)

Covers the additional costs required to comply with building codes when a building is damaged by a covered cause of loss. It does not cover costs arising out of the enforcement of any ordinance of law that: - requires demolition, repair, replacement, reconstruction, remodeling, or remediation of property due to the presence of mold; or - requires the insured to test for, clean up, remove, or otherwise respond to or assess the effects of mold This coverage is only available for buildings insured on a replacement cost basis. The maximum amount payable is the lesser of 5% of the amount the building is insured for or $10,000

*(Commercial Property Insurance - Chapter 13)* Pollutant Cleanup Removal (additional coverage)

Covers the cost to extract pollutants from land or water at the insureds premises if the pollution was caused by a covered cause of loss. This coverage is subject to a $10,000 limit per policy period that applies in addition to the policy limit. The expense must be reported to the insurer within 180 DAYS if the loss.

*(Commercial Property Insurance - Chapter 13)* Collapse Additional Coverage under broad form

DOES NOT include a building that is in danger of collapsing or a building or part of a building that is still standing but has separated from another part of the structure or shows signs of instability such as bugling, cracking, leaning, or settling.

*(Commercial Property Insurance - Chapter 13)* Valuation Condition

Describes how losses will be settled. Most losses are paid at an actual cash value basis. However, if the coinsurance conditions are met and costs are $2,500 or less, the policy will pay the cost of building repair or replacement without taking depreciation into account. - Stock already sold is valued at its net selling price. - Glass is valued at the cost of replacement with safety glazing material if this is required law. - Valuable Papers and Records are valued at the cost of blank material needed to reproduce the lost records and labor to transcribe or copy the records. - Tenants Improvements and Betterments are valued at actual cash value if the insured-tenant makes the repairs promptly or at a proportion of the original cost of the improvements if the repairs are not made promptly. If someone besides the insured, such as the building owner, pars for repairs, the insurer will pay nothing for the loss.

*(Commercial Property Insurance - Chapter 13)* Causes of Loss Coverage Form

Explain what property is covered and what coverage's are provided, the causes of loss form states what perils are insured against. It also lists specific exclusions. Three causes of loss forms: - Basic - Broad - Special

*(Commercial Property Insurance - Chapter 13)* Outdoor Property (coverage extension)

Extends a limited amount of coverage to fences, antennas, satellite dishes, signs, trees, plants, and shrubs. The maximum payable is $1,000 with a $250 dollar limit applying to any one tree, plant or shrub.

*(Commercial Property Insurance - Chapter 13)* Property Off-Premises (coverage extension)

Extends up to $10,000 in coverage for covered property that is away from the described premises. Coverage is provided while the property is: - temporarily at a location the insured does not own, lease, or operate - in storage at a location the insured leases; or - at a fair, trade show, or exhibition Property is not covered while it is in or on a vehicle or in the care of a salesperson, except while the sales person is at a fair, trade show, or exhibition.

*(Commercial Property Insurance - Chapter 13)* Improvements and Betterment's

Fixtures, alterations, installations, or additions that are made a part of a building that the insured tenant occupies but does not own, and which are acquired by or made at the expense of the insured but cannot legally be removed by the insured.

*(Commercial Property Insurance - Chapter 13)* Transfer of Rights of Recovery Against Others to Us Condition

Gives the insurance company subrogation rights

*(Commercial Property Insurance - Chapter 13)* Extended Period of Indemnity (optional coverage) provided under the business income coverage forms

Gives the insured extended business income coverage for the number of days stated in the declarations, rather than the 30 days allowed by the extended business income additional coverage. EX: The insured wants to purchase Extended Business income coverage for longer than the 30-day period allowed by the Extended Business Income additional coverage.

*(Commercial Property Insurance - Chapter 13)* Legal Action Against Us Condition

Gives the insured two years from the date that direct physical loss occurred to bring an action against the insurer. Such an action cannot be brought unless the insured has complied with all conditions of the policy.

*(Commercial Property Insurance - Chapter 13)* Property Insurance

Important need for businesses, consists of insurance on real property such as office buildings, factories, and warehouses, and insurance on business personal property such as furniture, fixtures, machinery, and inventory.

*(Commercial Property Insurance - Chapter 13)* Property Covered

Include both the building under construction and its foundation. Fixtures, machinery, equipment used to service the building, and the insureds building materials and supplies can be covered if they will become a permanent part of the building are within 100 feet of the building. In addition, coverage may be extended to cover building materials and supplies owned by others but in the insureds care, custody, or control, provided they are within 100 feet of the described building. The most that will be paid under this extension is $5,000. The following property is not covered: - Land or water - Lawns, trees, shrubs, or plants when outside of buildings - Radio and television antennas when outside of buildings, including lead-in wiring, masts, or towers - Signs when outside of buildings and not attached to buildings (attached signs are covered)

*(Commercial Property Insurance - Chapter 13)* Business Income With Extra Expense Coverage Form

Includes an extra expense coverage that reimburses the insured for money spent to avoid or minimize a business shutdown. It covers only expenses the insured would not have incurred if the property had not been damaged.

*(Commercial Property Insurance - Chapter 13)* Commercial Property Conditions Form

Includes conditions that apply specifically to the commercial property coverage forms.

*(Commercial Property Insurance - Chapter 13)* Builders Risk Coverage Form (conditions)

Includes most of the same conditions found on the building and personal property coverage form, with the following variations: - No vacancy provision because buildings under construction are not considered vacant - There is a clause stating that all property is valued at ACV at the time of the loss. Since actual cash value is paid for all loses, the form does not include options for replacement cost, agreed value, or inflationary adjustment - There is no coinsurance condition (the need for adequate insurance condition serves essentially the same purpose by penalizing insureds who do not have the required amount of insurance when a loss occurs)

*(Commercial Property Insurance - Chapter 13)* Rental Value

Includes the total anticipated rental income from a tenant occupancy, all amounts that are legal obligations of the tenant and would otherwise be the insured's obligations, and fair rental value of any part of the premises occupied by the insured.

*(Commercial Property Insurance - Chapter 13)* Condominium Association Coverage Form

Insures a condominium association against direct physical loss or damage to: - Buildings - Business Personal Property; and - Personal Property of others in the care, custody, or control of the association while it is at the premises It can be used to insure the condominium associations of residential or commercial condominiums.

*(Commercial Property Insurance - Chapter 13)* Condominium Commercial Unit-Owners Coverage Form

Is designed for the owner of a condominium. It covers the condominium's contents and is available only for the owner of a commercial condominium. (Residential condo owners can obtain contents coverage with an HO-6). It covers the unit owner's business personal property and the personal property of others in the insured's care, custody, and control. It DOES NOT cover buildings, this coverage is typically provided under the condominium association coverage form issued to the association.

*(Commercial Property Insurance - Chapter 13)* Definition of Building (under the Condominium Association Coverage Form)

Is extended to cover items such as permanently installed machinery and equipment. It will also cover outdoor fixtures that are apart of the building as well as other specifically named personal property. In general, however, the definition DOES NOT include personal property owned, used, or controlled by a unit owner. Business Personal property includes only property owned by the association or owned invisibly by by all unit owners.

*(Commercial Property Insurance - Chapter 13)* Maximum Period of Indemnity (optional coverage) provided under the business income coverage forms

Limits reimbursement for extra expense or loss of business income to no more than the amount of loss incurred during the first 120 days following the direct loss. EX: The insured wants to limit reimbursement to 120 days following direct physical loss.

*(Commercial Property Insurance - Chapter 13)* Causes of Loss Forms

List the perils that the property is insured against Three Separate Types: - Basic - Broad - Special There are a variety of endorsements that can be added to the policy to modify the coverage. Some are mandatory by law or when particular coverages are written.

*(Commercial Property Insurance - Chapter 13)* A partially constructed duplex is destroyed in a fire. Would the amount paid under the Builders Risk Coverage Form be reduced because the duplex was vacant at the time of the loss?

NO

*(Commercial Property Insurance - Chapter 13)* Replacement Cost (optional coverage)

Overrides actual cash value in the valuation condition by agreeing to pay for loss or damage to covered property on a replacement cost basis, with the exception of certain property listed in the declarations. Replacement costs coverage is subject to the same coinsurance provisions as the standard ACV valuation.

*(Commercial Property Insurance - Chapter 13)* Alterations and New Buildings (additional coverage)

Pays business income and extra expense losses incurred when a covered cause of loss damages a new building or an alteration or addition to a new building. Also covered is damage to machinery, equipment, supplies, or building materials on or within 100 feet of the described premises if these items are being used in construction, alterations, or additions or are incidental to the occupancy of new buildings. If the loss delays the start of the insureds operations, the period of restoration under this coverage begins on the date operations would have begun if the loss had not occurred.

*(Commercial Property Insurance - Chapter 13)* Debris Removal (additional coverage)

Pays expenses to remove debris of covered property caused by or resulting from a covered cause of loss. It DOES NOT cover extraction of pollutants from land or water. The amount paid for this expense is limited to 25% of the sum of the deductible plus the amount paid for direct physical loss or damage to the covered property that has sustained loss or damage. BUT if the actual expense exceeds the 25% limitation or if the sum of the direct loss and the debris removal exceeds the limit of insurance, the insurer will pay an addition $10,000 for debris removal expense.

*(Commercial Property Insurance - Chapter 13)* Personal Property of Others

Pays for damage to property of others in the insureds care, custody, or control, whether the insured is legally liable for that loss. The person who owns the property receives payment for the loss.

*(Commercial Property Insurance - Chapter 13)* Business Income Coverage Forms

Pays for loss of income that the insured sustains due to a direct physical loss from a peril insured against that forces the insured to suspend operations during the period of restoration. The period begins on the date of the direct physical loss and ends on the date on which the property can be repaired, rebuilt, or replaced with reasonable speed. Suspension means a slowdown or cessation of the insured's business activities.

*(Commercial Property Insurance - Chapter 13)* Preservation of Property (additional coverage)

Pays for loss of property that was removed from the insured location to protect it from a peril insured against. Coverage only applies if the loss occurs within 30 DAYS after the property was removed.

*(Commercial Property Insurance - Chapter 13)* Extended Business Income (additional coverage)

Pays for the loss of business income, even after operations have been resumed, until the business has been restored, but for no more than 30 DAYS from the date business is resumed.

*(Commercial Property Insurance - Chapter 13)* Electronic Data Additional Coverage (additional coverage)

Pays to replace, restore electronic data that have been destroyed or corrupted by a covered cause of loss. Electric data means information, facts, or computer programs stored, created, used on, or transmitted to or from computer software, CD-ROMs, hard or floppy disks, or any other repositories of computer software used with electronically controlled equipment. DOES NOT include the insured's stock of prepackaged software. The loss will be valued at the cost of replacement of the media on which the data were stored with blank media that is substantially identical. The limit under this additional coverage is $2,500 for all loss or damaged sustained in any one policy year.

*(Commercial Property Insurance - Chapter 13)* Fire Department Service Charge (additional coverage)

Pays up to $1,000 for a fire department service charge. This is paid in addition to the limit of insurance; no deductible applies

*(Commercial Property Insurance - Chapter 13)* Valuable Papers and Records-Other than Electronic Data (coverage extension)

Pays up to $2,500 to replace or restore information on damaged valuable papers and records.

*(Commercial Property Insurance - Chapter 13)* No Benefit to Bailee Condition

Prohibits a bailee from being reimbursed by the insured's commercial property insurance if the insureds property is damaged or destroyed while in the bailee's custody

*(Commercial Property Insurance - Chapter 13)* Mortgageholders Condition

Promises to pay losses to any mortgageholders named in the declarations as their interests may appear. This condition protects the interest of mortgageholders by promising advance notice of cancellation. The insurer must provide 10 DAYS written notice if it cancels for nonpayment of premium and 30 DAYS notice if it cancels for any other reason allowed by the policy. If the insurer decides not to renew, it must give the mortgageholder at least 10 DAYS advance written notice.

*(Commercial Property Insurance - Chapter 13)* Additional Coverages

Provided by the Building and Personal Property Coverage Form in addition to the basic coverages

*(Commercial Property Insurance - Chapter 13)* Commercial Property Declarations Form:

Provides additional information about the premises to be insured and the specific forms that will apply. Also includes the name and addresses of any mortgage holders.

*(Commercial Property Insurance - Chapter 13)* Builders Risk Coverage Form

Provides another option with regard to the amount of insurance that must be carried. When this form is attached to the builders risk, the insured is allowed to purchase smaller amounts of insurance that gradually increase as the value of the building under construction increases. This form requires a report of value that must be filed with the insurer each month. The insurance company will not pay more for any loss than the proportion the values last reported before the loss bears to the actual cash value of the covered property on the effective date of the last report.

*(Commercial Property Insurance - Chapter 13)* Limited Coverage for fungus, wet rot, dry rot, and bacteria (additional coverage)

Provides limited coverage for mold that results from a covered cause of loss other than fire or lightning. (Coverage for mold related losses arising out of fire or lightning is provided elsewhere in the form) The loss must occur during the policy period, and all reasonable means must have been used to save and preserve the property from further damage at the time of and after that recurrence. The insurer will pay for: - direct physical loss or damage to covered property caused by mold, including the cost to remove it; - costs to tear out and replace any part of the building or other property if needed to gain access to the mold; and - cost of testing performed after removal, repair, replacement, or restoration of the damaged property is completed, provided there is a reason to believe that mold is present.

*(Commercial Property Insurance - Chapter 13)* Extra Expense Coverage form

Provides no reimbursement for lost business income but concentrates on reimbursing the insured for extra expense incurred to remain in operation.

*(Commercial Property Insurance - Chapter 13)* Insurance Under Two or More Coverage's Condition

Provides that the insurer will not pay more than the actual amount of loss or damage when two or more of the policy's coverage apply to the same loss.

*(Commercial Property Insurance - Chapter 13)* Personal Effects and Property of Others (coverage extension)

Provides up to $2,500 of coverage for personal effects of the named insured, partners, and employees (excluding loss from theft) and personal property of others. This coverage extension is available even if the insured has not purchased personal property of others coverage, as long as the coinsurance requirement is met.

*(Commercial Property Insurance - Chapter 13)* Business Income without Extra Expense Coverage Form

Replaces the extra expense coverage with an expense coverage with an Expenses to Reduce Loss Coverage that covers expenses the insured incurs to reduce loss, up to the amount the loss is reduced.

*(Commercial Property Insurance - Chapter 13)* Agreed Value (optional coverage) provided under the business income coverage forms

Requires the insured to submit a business income report/worksheet every 12 months that shows financial data for the 12 months prior to the submission as well as estimated data for the 12 months following. As long as a new worksheet is submitted every 12 months, the coinsurance clause will not apply. Instead, the insured is expected to carry insurance to value, or the agreed value established by the worksheets. If the insured fails to file the required financial data, the coinsurance clause is reactivated. EX: The insured wants to bypass the coinsurance condition and instead meet a requirement that insurance be carried to the value established by periodic financial reports.

*(Commercial Property Insurance - Chapter 13)* The Condominium Association Coverage Form is used to insure

Residential or commercial condominium associations against loss or damage to buildings, business personal property, and personal property of others in the associations control

*(Commercial Property Insurance - Chapter 13)* Policy Period, Coverage Territory Condition

States that a loss must occur during the policy period and in the coverage territory to be covered. The coverage territory is the United States, its territories and possessions, Puerto Rico, and Canada.

*(Commercial Property Insurance - Chapter 13)* Duties in the Event of A Loss Condition

States that after a loss, the insured must: - notify the insurer about the loss or damage as soon as possible; the insured must provide a description of the property involved and describe how, when, and where the loss or damage occurred; - notify the police if a law may have been broken; - take reasonable steps to protect the covered property from further damage and keep a record of expenses incurred to protect the property; if possible, the insured should set the damaged property aside for examination; - provide a complete inventory at the insurer's request; - allow the insurer to inspect the property, examine books and records, and take samples of the property at its request; - testify under oath with regard to the claim if requested by the insurer; and - send a signed, sworn statement of loss within 60 days of the insurance company's request.

*(Commercial Property Insurance - Chapter 13)* Control of Property Condition

States that an act of neglect of a person beyond the insureds direction or control will not affect the insurance. In addition, if the insured violates a condition of the policy with regard to a specific location, the insurance applicable to other locations will not be affected.

*(Commercial Property Insurance - Chapter 13)* Liberalization Condition

States that any revision that broadens coverage without requiring additional premium will automatically apply to the coverage part if the revision is adopted by the insurer during the policy period or within 45 DAYS if the policy's effective date.

*(Commercial Property Insurance - Chapter 13)* Vacancy Condition

States that if a building has been vacant for more than 60 consecutive days before the loss, the insurer will not pay for loss due to vandalism, water damage, theft or attempted theft, building glass breakage, or sprinkler leakage (unless the system has been protected against freezing). In addition, any amount that would otherwise be paid for a covered loss will be reduced 15%. Note that buildings under construction are not considered vacant.

*(Commercial Property Insurance - Chapter 13)* Concealment or Fraud Condtion

States that the commercial property coverage part is void if the insured intentionally conceals or misrepresents a material fact concerning the coverage part, the covered property, the insureds interest in covered property, or a claim.

*(Commercial Property Insurance - Chapter 13)* Loss Payment Condition

States that the insurance company will give the insured notice of how it intends to settle the loss within the 30 DAYS after it receives the insured's sworn statement of loss. As long as the insured has complied with all of the terms of the coverage part and has reached agreement with the company on the amount of the loss, the insurer will pay the loss within 30 DAYS after it receives the sworn statement of loss.

*(Commercial Property Insurance - Chapter 13)* Coinsurance Condition

States that when the insured's amount of coverage at the time of loss does not meet the required coinsurance percentage, the company reduces the payment it would otherwise make in the same proportion as the insurance carried bears to the insurance required. The standard deductible is $500.

*(Commercial Property Insurance - Chapter 13)* Other Insurance Condition

States that when there is other insurance written on the same basis, the policy pro rates with the other policies. If there is other insurance covering the same loss but subject to a different plan or coverage, the policy is excess over the other insurance.

*(Commercial Property Insurance - Chapter 13)* Debris Removal (additional coverage) Example:

Suppose a tornado strikes the insured's business, resulting in $75,000 in damages to the building and $25,000 in debris removal expenses. The building is insured for $200,000 with a $5,000 deductible. The insured will receive $23,750 for the debris removal expenses (75,000 × 25% = 18,750; 18,750 + 5,000 = 23,750).

*(Commercial Property Insurance - Chapter 13)* Agreed Value (optional coverage)

Suspends the coinsurance requirement for the covered property designated and substitutes an agreement to cover any loss in the same proportion that the limit of insurance carried bears to the stated value. The insured is required to submit a form stipulating the value of the property. If the agreed value on an item is stated to be $50,000 and the limit is $50,000, then any loss is covered in full. If the limit carried was only $25,000, then only 50% of any loss would be covered. (The standard coinsurance clause would pay the proportion of the loss that the limits carried bear to the value at the time of the loss, rather than the agreed value.)

*(Commercial Property Insurance - Chapter 13)* The Condominium Commercial Unit-Owners Coverage Form is use to insure

The contents of a commercial condominium

*(Commercial Property Insurance - Chapter 13)* Limitations under Causes of Loss - Special Form

The form imposes limitations on coverage for certain types of losses. The form covers theft, but coverage for various classes of property is limited to the following amounts: - $2,500 for furs, fur garments, and garments trimmed with fur - $2,500 for jewelry, watches, jewels, pearls, precious and semi-precious stones, gold, silver, and platinum (does not apply to jewelry and watches worth less than $100 per item) - $2,500 for patterns, dies, molds, and forms - $250 for stamps, tickets, lottery tickets held for sale, and letters of credit

*(Commercial Property Insurance - Chapter 13)* Inflation Guard (optional coverage)

The insured and the insurance company agree on one fo several percentages that will apply annually to the limits of insurance. EX: If 8% is selected, the total limits of insurance will gradually increase on a pro rata basis until, at the end of the year, the available limit is 8% higher than the limits shown initially. The coverage form includes a precise formula for determining the amount of increase at any given time during the policy period.

*(Commercial Property Insurance - Chapter 13)* Stock

The insured merchandise. Includes items stored or offered for sale, raw materials for manufacturing, materials, in the process of being manufactured, manufactured items, and supplies used in packaging and shipping.

*(Commercial Property Insurance - Chapter 13)* Amount paid under the builders risk form

The insurer agrees to pay the ACV of the loss; however, it will not pay a greater share of any loss than the proportion that the limit of insurance bears to the value of the building on the date of completion. This is stipulated in the need for adequate insurance condition. Consider this EX: the value of a building on its date of completion is $200,000. The limit of insurance carried is $100,000, with a $500 deductible. The amount of loss is $80,000. The company will pay $39,500. Calculation: $100,000 > ----------------- = .50 $200,000 > ($80,000)(.50) = $40,000 > $40,000 - $500 = $39,500

*(Commercial Property Insurance - Chapter 13)* Building and Personal Property Coverage Form

The most commonly purchased form, and the form that is the core of the commercial property coverage part. Covers buildings, the insureds business and personal property, and the personal property of others located at the business premises. Coverage is only provided for coverage's that have a limit of insurance shown in the declarations.

*(Commercial Property Insurance - Chapter 13)* Builders Risk Coverage Form (optional coverage)

This form covers commercial, residential, or farm buildings that are under construction. Coverage begins: - on the date construction begins if the building does not have a basement; or - on the date construction starts above the lowest basement floor if there is a basement Coverage is written for one year but ceases whenever any of the following occur: - The property is accepted by the purchaser - 90 days have elapsed since construction was completed - The building is occupied or put to its intended use - The insureds interest in the property ceases - The insured abandons the construction with no intention of completing it

*(Commercial Property Insurance - Chapter 13)* Nonowned Detached Trailers (coverage extension)

Trucking companies that make deliveries to businesses sometimes leave the trailer for the insured to unload and return later to pick up the empty trailer. Some businesses also use rented trailers as storage facilities. In both cases, the insured is usually responsible for damage to the trailer while it is on their premises. This coverage extension applies to such losses. There is no coverage that applies while the trailer is attached to the vehicle or while it is being hitched or unhitched from a vehicle. The limit is $5,000 unless a higher limit is shown in the declarations.

*(Commercial Property Insurance - Chapter 13)* EX: The insured buys an office building that is next door to her insured business. Is the new building covered under her existing Building and Personal Property Coverage form?

Yes, up to $250,000 coverage is available under the Newly Acquired or Constructed Property coverage extension