CPCU 551
Music Store insures it's BPP, including merch, under a Business Personal Property Coverage Form with the Value Reporting Endorsement set up on a monthly reporting basis. The limit of insurance is $750,000 and the deductible is $1,000. On October 25, a fire destroyed all the merch and BPP. The resulting damages totaled $700,000. The store's last report of values was $400,000 on September 30. It was determined that the actual values that should have been reported on 9/30 were $500,000. Based on these circumstances, how much will the store collect for a $700,000 loss?
$559,000 = $400,000/$500,000 x $700,000 - $1,000
A new business, Neighborhood Cleaners, is opening next week. The business is a dry cleaner for clothing and home items. The major concern is protecting its goodwill with customers by having coverage for all of the goods it will be receiving from them. Which is the best coverage choice for them?
A bailees' customer policy because it covers both legal liability and goodwill exposure through one policy
A national manufacturer garages its vehicles at 10 central locations. It self-insures routine automobile physical damage for fender benders and many of the total losses on moderately priced vehicles. It wishes to cover this exposure under a policy other than a business auto policy. What kind of policy would provide this coverage?
An Output policy can cover Auto PD
Wholesale Merchandiser leases 5 warehouses, each in a different city, to supply retail customers in each city with timely service. The average value of the merch at each warehouse is $750,000. Which blanket insurance limit would bear suit the insured's needs while minimizing the cost of over-insuring?
Blanket $3,375,000 is best. (5 x $750,000) x 90% = $3,375,000
The Liability and Medical Expenses Limit in the BOP policy is the equivalent of what limit or limits in the CGL policy?
Both the Each Occurrence limit and the Personal & Advertising Injury Limit
One purpose of the misc. real property coverage which can be added to the Condominium Commercial Unit-Owner's Coverage Form is to insure -
Condominium property that the Named Insured has a duty to insure, such as a storage building
The steam boiler at a hotel explodes due to excessive internal pressure causing damage to the hotel's basement, laundry facility, the first floor rooms, and the parking garage of the mall next door. Which one of those would be excluded from coverage under the Equipment Breakdown Protection Coverage Form?
Damage to the parking garage next door would be excluded.
Adjacent properties can increase the probability of loss to the insured's building and contents. When'd aging commercial property exposures, the term used to refer to the hazard posed by adjacent or surrounding properties is -
External Exposure
What is an exclusion that applies to the Computer and Funds Transfer Fraud insuring agreement?
Fraudulent instructions is a specific exclusion in the Computer and Funds Transfer Coverage Form
A bank obtained a Financial Institution Bond Form 24. What is true about this bond?
If a borrower fails to repay a loan, the bank will only be reimbursed under this bond if employee dishonesty is involved
The rate charged for the Legal Liability Coverage Form is -
Lower than the usual commercial property contents and building rate
What is true about Inside the Premises - Robbery or Safe Burglary of Other Property in an ISO Crime Coverage form?
Money and Securities is NOT included in the Other Property coverage that this form provides.
A burger restaurant has a very expensive neon sign installed outside of its location which is covered under an Inland Marine Signs coverage form. Part of the neon lettering was not lighting due to an internal electrical disturbance, and was being repaired when the middle of the sign cracked. The Signs Coverage Form Will cover what?
Nothing. The Signs coverage form would not cover the damage.
The Condominium Association Coverage Form is designed to insure the building and BPP loss exposures of condominium associations. In addition to the building and the association's BPP, this coverage form also covers this major category of property:
Personal Property of Others
The possibility of the insured incurring an uninsured extra expense loss other than the reduction in business income loss is greatly reduced by -
The BI (and EE) Form
The following is true about the Earthquake and Volcanic Eruption Endorsement (sub-limit form) -
The Ensuing Loss provision of the endorsement eliminates stacking of the policy limits when an earthquake results in fire of another cause of loss covered by the basic policy.
Which endorsement would be particularly useful to companies in the clothing manufacturing business?
The Manufacturer's Consequential Loss Assumption endorsement modifies a commercial property coverage form to cover the increased cost of replacing damaged property with environmentally sound materials or methods.
Smith Stores has net income of $5,000 per month in the 12 months before a covered business income loss. The store is unable to open for 3 months. During that time, continuing expenses totaled $6,000. What is the amount of Smith Stores' business income loss?
The business was interrupted for 3 months for a business income loss of $15,000, plus continuing expenses of $6,000. The BI loss is $21,000.
In determining an organization's estimated maximum loss (EML) of Business Income, what is the most likely starting point?
The coinsurance basis
A company carries a Businessowners Coverage Form (BCF) with coverage extensions for Newly Acquired or Constructed Property and Outdoor Property. A fire causes $275,000 in damage to a building acquired within the last 30 days but not listed on the Declarations page. The fire also causes $250 in damage to each of 10 trees on the insured's listed premises. Ignoring deductibles and assuming sufficient limits, how much will the company be able to collect under the policy?
The company will be able to collect $252,000. The BCF covers newly acquired buildings up to $250,000 for up to 30 days. The Outdoor Property limit is $2500 with a sub limit of $500 for any one tree.
An important feature of the Standard Property Policy (SPP) is -
The flexibility of being able to limit the perils covered.
A building and its contents are insured under Building and PP coverage form with the Agreed Value option in effect. The limit of insurance is $1,000,000 with a $5,000 deductible. The agreed value shown in the policy is $1,500,000. How much will the insurer pay if the insured sustains a $300,000 loss by an insured peril?
The insurer will pay $195,000 = [($1,000,000/$1,500,000) x $300,000] - $5,000
What is the usual practice for setting the limit of insurance for an equipment breakdown policy covering two or more locations?
The limit of insurance is usually set higher than the estimate of the maximum loss at the highest valued location, but less than the total insurable value at all locations.
The Riverview Restaurant insures its buildings and BPP on a CPP with an ISO Flood Endorsement. An insured Flood occurs from the river and the restaurant has the following losses - 1. Silt & Debris on the restaurant floor 2. Boat pier washed away 3. Chairs and tables housed in the fully enclosed carport lost in the river 4. The golf cart used to service the grounds is washed away in the river What best describes the covered losses?
The loss to the boat pier is not covered because it's over the water. All other losses are covered.
An insured has a BI (EE) Coverage form with a Maximum Period of Indemnity coverage option. Following a covered loss and after the period of restoration begins, it takes 120 days to complete repairs and another 60 days for revenue to return to normal. How would the policy provide coverage for this loss of business income?
The policy would provide coverage for 120 days.
For shipments between buyers and sellers, most open cargo policies state that the value of the covered property will include several elements, including -
The value of the covered property will contain an advance equal to 10% of the invoice and freight or a higher percentage if so agreed upon.
An employee of Argot Architects is taking expensive $20,000 drawings to a client's location 30 miles away. While on the way to the company vehicle, a stranger accosts the employee and takes the drawings. How would the limit of insurance apply to this loss under the Outside the Premises insuring agreement of the ISO Commercial Crime Coverage form?
There is a per occurrence limit of $5,000.