CPCU 551- Addressing Commercial Property Risk

Homeowners flood

$250,000 per single family dwelling, $100,000 contents

regular flood program

$500,000 for non-residential property, $500,000 for personal property

available coinsurance

% of business income- 50, 60, 70, 80, 90, 100, 125%

lost payment =

(amount of insurance carried / amount of insurance required) * loss amount

insurer must notify to pay or deny a claim within

30 days

pool

A group of organizations that band together to insure each other's loss exposures.

general lessee

An entity that leases the entire building and subleases portions of the building to others.

Fixture

Any personal property affixed to real property in such a way as to become part of the real property. Boilers and machinery constitute a special class of property

coverage extensions under BPP

BPP coverage extensions apply only if at least 80% 80 PERCENT coinsurance or a value reporting period symbol is shown in the declarations. Value Reporting Form operates by Basing an insured's premium for business personal property on the average of the values that the insured reports. provide a way to avoid over-insuring or under-insuring fluctuating merchandise values Extension List Below: -newly acquired or constructed property- f the policy covers a building, the Newly Acquired or Constructed Property extension will provide automatic coverage if a new building is constructed at the premises described in the declarations. Automatic coverage is also provided for newly acquired buildings at other locations, provided the purpose of the newly acquired building is similar to the use of the building described in the declarations or the newly acquired building will be used as a warehouse. The coverage extension states a maximum amount of coverage that applies to each building. -personal effects and property of others- (The Personal Effects and Property of Others extension provides a limited amount of coverage for personal effects (such as a coat or jewelry) owned by an individual insured or a partner, a member, an officer, a manager, or an employee of the insured while on the premises described in the declarations. Personal effects are NOT COVERED for loss by theft.) -valuable papers and records ( other than electronic data)- (such as records of accounts receivable, mailing lists, legal documents, medical records, specifications, and drawings are covered as business personal property. However, the coverage is only for the cost of blank records plus the labor to transcribe or copy duplicate information. This extension does not apply to electronic data, as its name would imply.) -property off-premise, - (This extension DOES NOT apply to property in or on a vehicle or in the custody of the insured's salespersons unless the property in custody is at a fair, trade show, or exhibition.) -outdoor property- The Outdoor Property extension covers loss to outdoor fences; radio and television antennas (including satellite dishes); and trees, shrubs, and plants in most instances. (Unlike the other coverage extensions, the Outdoor Property extension has its own list of covered causes of loss, which includes only fire, lightning, explosion, riot or civil commotion, and aircraft. Some of the more likely causes of loss to outdoor property, such as windstorm, vehicles, and vandalism, are NOT COVERED) -non-owned detached trailers,- (The coverage DOES NOT apply while the trailer is attached to any motor vehicle or motorized conveyance, whether or not it is in motion. Nor does it apply during hitching or unhitching operations or when a trailer becomes accidentally unhitched from a motor vehicle or conveyance.) -business personal property temporary and portable storage units- (Coverage ends 90 days after the property is placed in the unit. Moreover, the coverage DOES NOT apply if the unit has been in use at the described premises for more than 90 days. Unless a higher limit is shown in the declarations, $10,000 is the most that the insurer will pay). Property Off-Premises- When covered property is taken away from the premises described in the declaration, the Property Off-Premises extension provides coverage. In addition to property that is temporarily at locations that the insured does not own, lease, or operate, the extension also covers property in storage at a location the insured leased after the inception of the current policy and covered property that is taken to a fair, trade show, or exhibition. This extension does not apply to property in or on a vehicle or in the custody of the insured's salespersons unless the property in custody is at a fair, trade show, or exhibition. The Increased Cost of Loss and Related Expenses for Green Upgrades endorsement- covers expenses required to obtain experts to recertify the building

agent

In the agency relationship, the party that is authorized by the principal to act on the principal's behalf.

Indemnitor

Party in a hold-harmless agreement who assumes the other party's liability

Indemnitee

Party in a hold-harmless agreement whose legal liability is assumed by the indemnitor

liquid assets

Property that can be quickly and easily converted into cash.

replacment cost

Replace with new or like kind materials

Regular Program

Second phase of the National Flood Insurance Program in which the community agrees to adopt flood-control and land-use restrictions and in which property owners purchase higher amounts of flood insurance than under the emergency program.

boiler

The most common type of fired pressure vessel constructed of cast iron or steel in which water is heated to produce steam or hot water.

common carriers

airlines, railroads, or trucking companies that transport any thing to any member of the public an exception to common-carriers liability? Inherent vice

net loss

expenses exceeding revenues

ACV (Actual Cash Value)

replacement cost - depreciation

Building

-Completed Additions to covered buildings -Fixtures (including outdoor fixtures) -Permanently installed machinery and equipment -personal property owned by the insured and used to maintain or serve the building or its building or premises (example- fire extinguisher)

4 elements to property loss exposures

-assets exposed to property loss -the causes of loss -the potential financial consequences of loss -the parties that can be affected by loss- (Property Owners, Secured Lenders, and Property Holders)

personal property of others

-while the property is in the insureds care, custody, or control -while the property is in or on the buildings described in the decs or within 100 ft of either the building or structure or of the described premise, whichever is greater By endorsement, insurance can be made available for almost all of the items listed in the Property Not Covered section. Only contraband or property in the course of illegal transportation or trade is totally uninsurable.

jurisdictional inspections condition

A condition in equipment breakdown policies that provides that the insurer will perform required inspections of boilers and other equipment on the insured's behalf

Buffer Layer

A level of excess insurance coverage between a primary layer and an umbrella policy.

Agreed value method

A method of valuing property in which the insurer and the insured agree, at the time the policy is written, on the maximum amount that will be paid in the event of a total loss. Business Income Agreed Value coverage option Suspends the coinsurance clause as long as the insured carries an amount of business income insurance that is equal to the value agreed on by the policyholder and the insurer Most risk management professionals regard the combination of the Agreed Value option with blanket insurance as the preferred method to provide property insurance. The Agreed Value option avoids any coinsurance penalty, and if separate locations are involved that are not subject to the same loss, the danger of underinsurance is greatly reduced.

Inherent Vice

A quality of or condition within a particular type of property that tends to make the property destroy itself.

recreational vehicle

A vehicle used for sports and recreational activities, such as a dune buggy, all-terrain vehicle, or dirt bike.

business income worksheet

A worksheet for calculating the amount of insurance necessary to comply with the Coinsurance condition of business income insurance forms, for reporting business income values to the insurer, or for providing underwriters with information they need to evaluate an organization's business income loss exposure.

Personal Property

All tangible or intangible property that is not real property.

Discounting

Calculating the present value of a future amount The process of finding the present value of a cash flow or a series of cash flows; discounting is the reverse of compounding.

trip Transit

Covers a single shipment-one time, one way

owners goods on owners trucks

MTC policy that covers damage to its own cargo any type of organization can purchase

A pool is made up of

Member organizations

time value of money

Money's potential to grow in value over time. The relationship between time, money, a rate of return, and earnings growth.

Bailee

The party temporarily possessing the personal property in a bailment.

coinsurance basis

The sum of the insured's estimated net income and operating expenses for the twelve months following policy inception, minus only those expenses listed in the business income worksheet. Coinsurance for business income-Net income plus all operating expenses except certain deductible items

Jointly considering frequency and severity distributions

Total claims distribution

Mobile Equipment

Various types of vehicles designed for use principally off public roads, such as bulldozers and cranes.

characteristic of an organization that would be more appropriate for risk transfer than risk retention

Weak financial condition

fraud

an intentional misrepresentation of a material fact designed to induce the person receiving the miscommunication to rely upon it to her detriment, so that a loss is suffered With respect to the Concealment, Misrepresentation, or Fraud condition of the Commercial Property Conditions Form- The commercial property coverage part voids coverage if the insured conceals a material fact pertaining to the covered property

business income options

business income including rental value, business income other than rental value, rental value only

contract carriers

carriers who work only on contracts

peril

cause of loss

causes of loss- equipment breakdown losses

heat, pressure, electrical energy, centrifugal force, and reciprocating motion, explosion, overheating, cracking, and bulging

specific insurance

insurance that covers each building for a specific limit of insurance and personal property at each building for a specific limit of insurance

business income coverage 4 optional coverages

max. of indemnity, monthly limit of indemnity, business income agreed value, extended period of identity

the insurds duties after a loss

notify the police, give the insurer prompt notice, provide information, take all reasonable steps, provide inventories, send sworn proof of loss (60 days), cooperate with the insurer, submit to examination

Fire Wall

self supporting solid wall that prevents a fire from passing through or around it

Internet of Things

the network of physical objects embedded with software or sensors that allow them to gather and distribute data

shipper

the person or organization shipping goods

Cosignee

the person or organization that receives property being transported by a carrier

probable maximum loss

the worst loss that is likely to happen

MTC policy

truckers liability for damage to cargo coverage

profit

when net income exceeds expenses

expediting expenses

-Expenses incurred to speed up the repair or replacement of covered property -Examples of expediting expenses are the payment of overtime wages to make repairs, or the use of overnight shipping to obtain needed parts.

Causes of property loss

-Fire- Heat sources may be electrical, chemical, mechanical, or nuclear. The source of oxygen for most fires is air. As more oxygen is supplied, the fire burns more rapidly. Fuel includes both contents and construction materials used for the building. As more fuel burns, the amount of heat present usually increases. Strong fires create their own air drafts, bringing more oxygen and allowing the fire to spread. As a result, different types of construction affect the way fire spreads. -Explosion- Many explosions are the result of extremely rapid combustion. Examples include explosions of flammable liquids, vapors, or gases; explosions caused by excessive dust (such as that in grain elevators); and the detonation of commercial explosives. Explosion suppressors can activate the instant an explosion begins. They detect a sudden abnormal increase in pressure and automatically flood the incipient (initial) explosion with a suppressing agent. -Windstorm- The energy source in windstorms, such as hurricanes and tornados, cannot be controlled. Although an organization can build facilities away from areas that are prone to severe storms, doing so may be impractical, and no location above ground avoids windstorms entirely. Generally, most well-engineered and properly maintained structures won't incur damage from winds below 50 miles per hour -Water- Water losses are most commonly associated with flooding. But there are numerous other types of water losses that can result in significant damage, and the risk control techniques used for them are often vastly different from those used for flooding. -Earthquake- When an organization is located in a geographic area with a history of earthquakes, most risk control attention is diverted to minimizing damage caused by earthquakes. The effects of an earthquake can be reduced by designing and constructing buildings to withstand the forces of earth movement and by considering the conditions of the soil on which the structure will be built. -Flood- Flooding can occur and cause water damage when low elevation is combined with rising water levels. The best method of treating this exposure is to avoid placing buildings in flood-prone areas. Because construction and altering the landscape change natural water runoff and flood patterns, building plans must assess how these new patterns may affect property. Criminal Acts- Criminal acts are among the most severe and pervasive causes of property loss. Criminal acts encompass things such as: Kidnap, ransom, extortion, Fraudulent impersonation, Computer and funds transfer fraud, and theft.

property not covered under BPP

-Illegal to insure (such as smuggled goods being held for sale) -Much less susceptible to loss by most of the perils insured against (such as building foundations below the lowest basement floor or the surface of the ground, retaining walls that are not part of a building, and underground pipes) -Able to be insured more advantageously under other forms (such as money, securities, automobiles, and aircraft)

inland marine insurance

-Insurance that covers many different classes of property that typically involve an element of transportation. -the main characteristic of inland marine insurance is a broad coverage of perils -Commercial inland marine policies generally cover the transportation perils inland marine FLOATERS- Coverage for property in transit inland marine INSURANCE- broad coverage of perils As a commercial property underwriter, Michelle knows that rates for the traditionally nonfiled classes of inland marine insurance Have become standardized to an extent for policies that are widely written

4 dimensions of loss exposure

-Loss frequency- Loss frequency is the number of losses that occur during a specific period. Relative loss frequency is the number of losses that occur within a given period relative to the number of exposure units (such as the number of buildings or cars exposed to loss). -loss severity- The purpose of analyzing loss severity is to determine how serious a loss might be -total dollar losses- The third dimension to consider in analyzing loss exposures is total dollar losses for all occurrences during a specific period, calculated by multiplying loss frequency by loss severity -timing of losses (FSDT)- Money held in reserve to pay for a loss can earn interest until the actual payment is made. This analysis requires considering when losses are likely to occur and when payment for those losses will likely be made

covered perils/ exclusions under equipment breakdown/Territory

-The loss or damage must also occur within the coverage territory, which is defined as the United States (including its territories and possessions), Puerto Rico, and Canada. -air conditioning and refrigeration equipment includes components such as coils -Time deductible- They may be expressed in terms of hours or days. -deductibles in the Equipment Breakdown may be combined for two or more coverages -4 types of deductibles/ four types of deductibles- time dollar multiple of daily value percentage of loss. -deductible comes off the loss, not the limit (For every coverage electrical equipment- include power transformers, switchboards, distribution panels, circuit breakers, cables, motors, and generators. Mechanical equipment—such as compressors, pumps, blowers, fans, engines, turbines, and gear sets—is subject to various types of breakdown Air conditioning and refrigeration systems- include components such as motors, compressors, fans, switchboards, coils, pipes, and vessels. A wide range of causes—such as control failure, vibration, lack of lubrication, improper control settings, and electrical disturbance Office equipment and systems- Damage to a business's computers or phone system can create as many or more problems as damage to its heating or production systems -In equipment breakdown insurance, an example of a piece of mechanical equipment is a Turbine -In equipment breakdown insurance, one common type of loss to electrical equipment is Bearing failure in rotating equipment. covered- Rupture from centrifugal force. Other losses include Mechanical, and electrical breakdown. Commercial property policies exclude loss (other than resulting fire) caused by the explosion of steam boilers, steam pipes, steam engines, and steam turbines that are owned or leased by the insured or operated under the insured's control. Commercial property forms do cover the explosion of unfired pressure vessels, such as air tanks and steam-jacketed vessels used in food and chemical processing operations to heat liquid mixtures, so these are usually excluded under equipment breakdown policies. Commercial property policies also specifically cover combustion explosion, also known as furnace explosion. Equipment breakdown policies exclude combustion explosion unless it is added by endorsement. Commercial property policies exclude damage caused by artificially generated electric current to electrical devices, appliances, or wires. Commercial property policies exclude loss resulting from mechanical breakdown, including rupture or bursting caused by centrifugal force. The mechanical and electrical breakdown exclusions in commercial property policies exclude most breakdown losses to air conditioning and refrigeration equipment. While a commercial property policy provides coverage for damage to office equipment from certain causes of loss, equipment breakdown coverage can provide needed coverage, such as for damage resulting from a power surge. Exclusions -loss caused by the explosion of steam boilers, steam pipes, etc -damage caused by artificially generated electric currents to electrical devices -loss from mechanical breakdown -most AC and refrigeration equipment -no warranty or maintenance contract coverage

additional coverages under BPP

-preservation of property- 30 day limit (This coverage, which is broader than the normal coverage under the policy, protects against "any direct physical loss or damage" and is not limited to either the covered causes of loss or locations stipulated in the coverage form.) -fire department service charge - In some localities, the fire department may make a charge for its services in controlling or extinguishing a fire. The Fire Department Service Charge additional coverage will pay charges levied by a fire department up to a specified limit at each covered location as long as the charges were required by local ordinance or assumed by contract before the loss occurs. -pollutant cleanup and removal- The Pollutant Cleanup and Removal additional coverage pays the insured's expenses to extract pollutants from land or water at the described premises if the release, discharge, dispersal, seepage, migration, or escape of the pollutants is the result of a covered cause of loss that occurs during the policy period. -increase cost of construction -(The amount of insurance is equal to 5 percent of the amount of insurance or $10,000, whichever is less, and is paid in addition to the policy limit. However, this additional coverage applies only if the Replacement Cost optional coverage has been selected) DOES NOT COVER: Loss to any undamaged portion of the building that an ordinance or law does not permit to remain in use AND The cost to demolish the undamaged portion of the structure and remove its debris. -electronic data- the BPP excludes electronic data in most instances except as provided by the Electronic Data additional coverage. However, this additional coverage is subject to a limit that is too low to provide meaningful coverage for most businesses and is the most that the insurer will pay per policy year, regardless of the number of occurrences or locations covered. debris removal- The consequences of a covered physical loss are rarely neat and tidy. After a fire or a building collapse, there will be plenty of debris to be cleaned up, and the cost of removing it may be substantial. The Debris Removal additional coverage provides reimbursement for the cost of removing debris of covered property resulting from a covered cause of loss during the policy period. BLANKET INSURANCE HAS THIS OVER SPECIFIC.

business income restoration

72 hours after the loss

Fired pressure vessel

A closed container that is heated by the direct fire of burning fuel and can withstand internal pressure. Common types of losses are: Explosion, Overheating (dry-firing) , Cracking, BULGING

Unfired pressure vessel

A closed vessel that can withstand internal pressure or vacuum but is not heated by the direct fire of burning fuel.

Property Loss Exposure

A condition that presents the possibility that a person or an organization will sustain a loss resulting from damage (including destruction, taking, or loss of use) to property in which that person or organization has a financial interest.

bill of lading

A document issued to an exporter by a common carrier transporting merchandise. It serves as a receipt, a contract, and a document of title. It may limit the amount of the cargo carrier's liability to a lesser amount

The cost of risks includes:

Administrative Expenses, Loss Control Expenses, Retained Losses, and Transfer Costs.

Money

Currency, coins, bank notes, and sometimes traveler's checks, credit card slips, and money orders held for sale to the public.

continuing expenses

Expenses that continue to be incurred during a business interruption the expenses that an organization would not have incurred if the business interruption had not occurred -Payroll of key employees -taxes -insurance -rent -licenses -payroll of key employees -interest -debt

noncontinuing expenses

Expenses that will not continue during a business interruption Only expense items listed as deductions in the worksheet can be deducted when calculating the coinsurance basis. But when computing EML, any noncontinuing expenses can be deducted—not just those listed in the worksheet.

vacancy

If the building where a loss occurs has been vacant for more than 60 consecutive days before the loss occurs, the insurer will not pay if the loss is caused by vandalism, sprinkler leakage (unless the sprinkler system was protected against freezing), breakage of building glass, water damage, theft, or attempted theft. And if any other covered peril causes the loss, loss payment will be reduced by 15 percent. If the policy covers a building owner or general lessee, "building" means the entire building, and it is considered vacant if less than 31 percent of its total square footage is used to conduct customary operations by the owner or a lessee.

emergency program

Initial phase of a community's participation in the National Flood Insurance Program in which property owners in flood areas can purchase limited amounts of insurance at subsidized rates, but limited amounts of insurance. Communities that become eligible for NFIP participation are placed in the emergency program until rates are developed.

Blanket Insurance

Insurance that covers either of the following with one limit of insurance: (1) one type of property in one or more separately rated buildings or (2) two or more types of property in one or more separately rated buildings (3) personal property of others in one building. the lowest COINSURANCE limit for blanket is 90%, everything other coverage is 80% some advantages of using blanket insurance over specific insurance are that- Blanket insurance would provide additional debris removal coverage at any single location if needed. Blanket insurance covers two or more types of property in one or more buildings, specific doesn't

business income insurance

Insurance that covers the reduction in an organization's income when operations are interrupted by damage to property caused by a covered peril the period of restoration ends when the property is or should have been restored. Extended business income continues (60 days) after the end period. a specific definition in the business income coverage form- Operations

Marine insurance

Insurance that, in the U.S., includes both ocean and inland marine coverage and in the rest of the world is limited to insurance for vessels and cargo. Perils of ocean policy- Stranding, Collision, Groundings

annual Transit policy

Policy that covers all shipments made or received by the insured throughout a one-year policy period. Coverage territory: Many annual transit policies cover only within the continental United States and Canada, including airborne shipments between these places. The "continental United States" does not include Hawaii, Puerto Rico, or any overseas territories. This language precludes the insurer from having to cover air or water shipments to or from overseas locations. Exclusions Contraband is not insurable as a matter of public policy, and most insurance forms make this clear by excluding contraband. Other excluded types of property are commercially insurable, but they are especially attractive to thieves and therefore expensive to insure. Examples are precious metals, furs, jewelry, money, and securities. Additionally, a policy may exclude overseas shipments made by the insured either once the shipment is placed on the overseas vessel or after ocean marine insurance attaches to the shipment (whichever occurs first). Similarly, import shipments are usually excluded as long as ocean marine insurance applies to the shipment. Extensions: Annual transit policies contain various coverage extensions, such as providing coverage for the insured's property while in the course of transit back to the insured if the shipment was rejected by the buyer. Covered perils: Most annual transit policies cover on an open perils basis. The approach used is similar to that of the commercial property Causes of Loss—Special Form. However, an annual transit policy does not contain as many exclusions as the Special Form and thus covers a broader scope of perils. For example, flood and earthquake are usually covered. Valuation: Property covered under an annual transit policy is usually valued at the amount of invoice (including shipping charges) if the property is being transported between buyer and seller. When no invoice applies (such as when a company is shipping property between its own locations), the property may be valued at actual cash value.

DIC policy/covered (Difference in Conditions Policy)

Policy that covers on an "all-risks" basis to fill gaps in the insured's commercial property coverage, especially gaps in flood and earthquake coverage. One of the main reasons for buying a DIC policy is to obtain either primary or excess coverage for earthquake and flood losses. The absence of coinsurance allows the insurer to Write the policy for a lower limit than the full value of the property DIC can have property valued at an amount that is mutually agreeable to the insurer and insured. Most DIC policies are equivalent to Causes of Loss—Special Form DIC policy might exclude basic perils in order to Be classified as an INLAND MARINE POLICY allowing greater flexibility. Fills in gaps where needed and on an all-risks basis for the commercial property policy. Especially fills in gaps in flood and earthquake coverage. Provides coverage for overseas locations. covers: Property in transit, Flood, and earthquake Excludes: Explosion, Jewelry and precious metals, The perils of aircraft and vehicles, Vacant land that is owned. The property covered by a DIC policy generally is the same as the insured's other policies: buildings and business personal property. DIC policies often exclude many of the same types of property excluded in other property forms, such as accounts, records, bills, deeds, money, and securities. Other property that can be readily damaged or stolen may also be excluded, such as jewelry, watches, furs, gems, or fine arts. The exclusions that apply to such types of property vary by insurer and depend on the insured's operations and exposures.

Layers of Insurance

Primary Layer, Umbrella Policy, Excess Layer 1, Excess Layer 2, Excess Layer 3.

Net Income

Revenues - Expenses

Administrative Expense

Risk Management Consulting

Trustee

Someone who has the legal title to a property but is responsible that it be used, handled, and transferred solely for the benefit of the beneficiary.

Nationwide marine definition

Statement of the types of property that may be insured on inland marine and ocean marine insurance forms The Nationwide Marine Definition was no longer needed following the enactment of legislation in the 1950s that Permitted a single insurer to offer fire, casualty, and marine coverages The Nationwide Marine Definition was no longer needed following the enactment of legislation in the 1950s that- Permitted a single insurer to offer fire, casualty, and marine coverages One of the reasons inland marine insurance developed in the United States is that It met a demand for "all-risks" coverage for property in transit

Real property (realty)

Tangible property consisting of land, all structures permanently attached to the land, and whatever is growing on the land.

Flood Coverage exclusions

The Flood Coverage Endorsement is subject to all of the exclusions and limitations found in the causes of loss form attached to the policy, subject to these exceptions: Any part of the Water exclusion in the causes of loss form that conflicts with the Flood Coverage Endorsement does not apply to the endorsement. The Flood Coverage Endorsement covers loss caused by a tsunami (a huge wave caused by an underwater earthquake or volcanic eruption) if it causes the overflow of tidal waters. Earthquake coverage usually excludes damage from a tsunami. The Flood Coverage Endorsement does not cover damage to property in the open unless specified in the flood schedule or declarations. The Ordinance or Law exclusion applies unless ordinance or law coverage is added by endorsement—either the Ordinance or Law Coverage endorsement or a special endorsement that the insurer has developed. The Flood Coverage Endorsement does not cover flood damage unless the flood begins more than 72 hours after the inception of the endorsement. If the coverage is increased after the inception date, the increase will also not be effective for floods that begin within the first 72 hours after the request was made. Additional policy wording clarifies that these provisions do not apply to renewal policies. The endorsement does not cover loss caused by the destabilization of land resulting from the accumulation of water in subsurface land areas. An important point is that the flood endorsement does not cover all the causes of loss excluded by the Water exclusion found in the commercial property causes of loss forms. The Water exclusion is often referred to as a flood exclusion, but it excludes more than flood, surface water, and mudslide.

Alternative Risk Transfer (ART)

Those risk financing measures that do not fall into the category of guaranteed cost insurance. Guaranteed cost insurance transfers the financial consequences of loss exposures from the insured to an insurer. Guaranteed cost insurance policies are those in which the premium, deductible, and limits are specified (that is, guaranteed) in advance. In exchange for the premium, the insurer agrees to pay for all of the insured's losses that are covered by the insurance policy, up to the policy's limits. The insurer also agrees to provide necessary services, such as claims handling and legal defense against liability claims.

Business Personal Property form covers 3 types of property/ Territory

Under the BPP, the insured property is covered only while it is located within the United States (including its territories and possessions) or Canada. Loss Payment condition of the Building and Personal Property- The condition states that regardless of the value of the loss, the insurer will pay no more than the insured's financial interest in the covered property Replacement cost- must the insurer be notified within 180 days after the occurrence of loss that a claim will be made under the terms of the optional coverage Almost all property items excluded in the BPP can be insured. Subject to certain exceptions, insured property is valued at its actual cash value (ACV) Insureds who have selected the replacement cost option may also elect to have the personal property of others valued at replacement cost Building Your business personal property Personal property of Others

Securities

Written instruments representing either money or other property, such as stocks and bonds.

Act of God

a natural and unavoidable catastrophe that interrupts the expected course of events

Bailor

a person who delivers personal property to another as a bailment

auto

a vehicle. Trucks, Trailers, busses, fire engines, ambulances.

business income coverage form, extensions

coinsurance basis- The projected net income and all operating expenses except for certain deductible items expenses to reduce loss, CIVIL AUTHORITY( i.e. fire damage to another building makes it unsafe for customers to enter the insured's premises and access is prohibited by the fire department), alternations and new buildings, extended business income, interruption of computer operations(subject to its own limits), and newly acquired locations

The joint or disputed loss agreements

condition that addresses claim situations in which the insured equipment breakdown insurer and the insured commercial property insurer disagree on which insurer covers the loss, each insurer pays half of the loss too quickly indemnify the insured, and sure then resolves their differences

suspension condition

condition that allows the insurer to immediately suspend equipment breakdown insurance on an item of equipment that the insurer determines to be in a dangerous condition

coverage forms for flood/ property not covered

coverage a - building coverage b- personal property coverage c - other coverages - debris removal, lots of avoidance measures, pollution damage coverage d - increased cost of compliance ( ICC) The flood endorsement does not cover these items: -Property in the open unless specifically listed in the flood coverage schedule or declarations -Property not eligible for flood insurance pursuant to the Coastal Barrier Resource Act or the Coastal Barrier Improvement Act -Boathouses and open structures if located on or over a body of water -Bulkheads, pilings, piers, wharves, docks, or retaining walls even if they have been removed from the property not covered list for other causes of loss in the coverage form to which the flood endorsement is attached -Underground Structures - Open Structures -Personal Property of Others

cause of loss - basic and broad form

covered: fire, lightning, explosion(EXPLOSION INCLUDES the explosion of gases or fuel in a furnace or flue), wind storm or hail, smoke, aircraft or vehicles, riot or civil commotion, VANDALISM(excludes loss for theft) , sprinkler leakage, sinkhole collapse, volcanic action, falling objects ( broad form only), weight of ice, snow (BROAD FORM), or sleet(excludes property in the open) (Broad form only), water damage ( broad form only) Sudden and accidental discharge of water from the breaking apart of an insured's water pipe (Broad form only) Damage to the interior of the building caused by melting of ice, sleet, or snow(special form only. excluded on basic form) under basic form, There is coverage for building damage caused by burglars breaking in or exiting the insured's property basic form excludes loss caused by earth movement, other than by sinkhole collapse Additional coverages Any of the covered causes of loss. Hidden decay, unless such decay is known to an insured before the collapse occurs. Hidden insect or vermin damage, unless such damage is known to an insured before the collapse occurs. Weight of people or personal property. Weight of rain that collects on a roof. Use of defective materials or construction methods if the collapse occurs during the course of construction. Collapse of a completed building caused by defective materials or construction is covered only if it is caused in part by any of the causes of loss listed here.

100% - 100% - 100% 40% - 80% - 100% 35% - 70% - 100%

factor of 3.40 factor of 1.70 factor of 1.62 When the "period of restoration" is: a. 30 days or less, the first percentage applies b. 60 days or less, but more than 30 days, the second percentage applies c. More than 60 days, the third percentage applies

cause of loss excluded under basic and broad form

ordinance or law Earth movement ( Earthquake) government action nuclear hazard, utility services war or military action water, ( Flood, surface water, tides, waves (including tidal wave and tsunami), tidal water, overflow of a body of water, or spray from any of these Mudslide or mudflow, Backing up of sewers, drains, or sumps, Underground water pressing on or flowing or seeping through foundations, walls, floors, basements, doors, windows, or other openings) fungus, Wet Rot, Dry Rot, and Bacteria Other Exclusions electrical, magnetic, or electromagnetic energy that damages or otherwise interferes with any electrical or electronic wires or devices, including devices, appliances, systems, or networks using cellular or satellite technology. However, if a fire results, the damage it causes is covered. Rupture or bursting of water pipes, unless caused by a covered cause of loss. This exclusion does not apply to sprinkler leakage and is included only in the Basic Form. Leakage of water or steam from any part of an appliance or system containing water or steam (other than an automatic sprinkler system) unless caused by a covered cause of loss. Explosion of steam boilers, steam pipes, steam turbines, or steam engines owned by, leased to, or operated by the insured. However, if the explosion causes a fire or a combustion explosion, the damage caused by the resulting fire or combustion explosion is covered. Mechanical breakdown, including rupture or bursting caused by centrifugal force. Loss resulting from the neglect of the insured to use all reasonable means to save and preserve property at and after the time of loss. This exclusion reinforces the insured's duty to protect covered property after a loss.

Types of extra expense

the expenses that an organization would not have incurred if the business interruption had not occurred- extra expense Expenses, in addition to ordinary expenses, that an organization incurs to mitigate the effects of a business interruption. The only material difference between the extra expense coverage provided by the Business Income (and Extra Expense) Coverage Form and the extra expense coverage provided by the Extra Expense Coverage Form is -The Limits on Loss Payment condition found only in the Extra Expense Coverage Form -Cost to rent temporary office space, relocation, payroll, utilities, equipment Extra Expense covers Continue operations at any cost and do not want to cover loss of business income The form is intended to meet the goals of organizations that, when suffering a loss, must continue their operations at any cost examples: relocation, payroll, Utilities, Equipment

your business personal property

the property must be located in or on the describe building, the property must be located in the open ( or In a vehicle) within 100 ft of either the building or structure or the described premise, whichever is greater The exception to these requirements is an extension that provides limited coverage for property while away from the insured premises