Miscellaneous Commercial Insurance - Chapter 19

*(Miscellaneous Commercial Insurance - Chapter 19)* Parties included to a Surety Bond:

- Principle, obligee, and surety

*(Miscellaneous Commercial Insurance - Chapter 19)* Which of the following are coverage's that are AUTOMATICALLY provided by the Farm Liability Coverage Form include:

- Personal Liability - Liability arising out of farming exposures - Medical Payments

*(Miscellaneous Commercial Insurance - Chapter 19)* With respect to JUST Utility Interruption Coverage, there is no coverage for loss resulting from (whether or not the insured has coverage under another policy):

- Acts of sabotage - Collapse - Deliberate acts of load shedding by a supplying utility - Freezing caused by cold weather - Impact of aircraft, missile, or vehicle - Impact of objects falling from an aircraft or missile - Lightning - Riot, civil commotion, or vandalism - Sinkhole collapse - Smoke - Weight of snow, ice, or sleet

*(Miscellaneous Commercial Insurance - Chapter 19)* Which of the following would be covered by Aviation Physical Damage Insurance?

- Airframe - Engine - Navigation and Communications Equipment

*(Miscellaneous Commercial Insurance - Chapter 19)* For the following coverage's, the policy will automatically provide up to $25,000 per breakdown (unless a higher limit (or the word included) is shown in the declarations):

- Ammonia Contamination - Consequential Loss - Data and Media - Hazardous Substance - Water Damage

*(Miscellaneous Commercial Insurance - Chapter 19)* Exclusions under Business Income and/or Extra Expense AND Utility Interruption Coverage's:

- Any business activity that would not or could not have been carried on if the breakdown had not occurred - The insured's failure to use due diligence and all reasonable means to operate the business as nearly normal as practicable - The suspension, lapse, or cancellation of any contract following a breakdown extending beyond the time business could have been resumed if the contract has not lapsed, has not been suspended, or was not cancelled

*(Miscellaneous Commercial Insurance - Chapter 19)* Common types of Contract Bonds:

- Bid Bonds - Performance Bonds - Payment Bonds - Supply Bonds - Completion Bonds

*(Miscellaneous Commercial Insurance - Chapter 19)* Two classes of Judicial Bonds

- Fiduciary Bonds - Court Bonds

*(Miscellaneous Commercial Insurance - Chapter 19)* Perils covered under the Farm Property Causes of Loss-BASIC section include:

- Fire - Lightning - Windstorm or hail - Explosion - Riot or civil commotion - Aircraft - Earthquake or flood loss to livestock - Vehicles - Smoke - Vandalism - Theft - Volcanic action - Sinkhole collapse Also covers collision that results in damage to covered farm machinery or other farm personal property and death of covered livestock.

*(Miscellaneous Commercial Insurance - Chapter 19)* What Coverage's are typically provided in aviation policies?

- Liability - Physical Damage

*(Miscellaneous Commercial Insurance - Chapter 19)* Farm Liability Coverage Form Exclusions:

- Losses arising out of pollutants; - Losses arising out of injury to farm employees; motor vehicles, except as specifically described in the policy; - Losses arising out of the insured's performance of or failure to perform custom farming operations for others; - Losses arising out of the insured's own products; and - Losses arising out of aircraft spraying.

*(Miscellaneous Commercial Insurance - Chapter 19)* The term Breakdown DOES NOT include:

- Malfunction, including but not limited to adjustment, alignment, calibration, cleaning, or modification - Defects, erasures, errors, limitations, or viruses in computer equipment and programs, including the inability to recognize and process any date or time or provide instructions to covered equipment - Leakage at any valve, fitting, shaft seal, gland packing, joint, or connection - Damage to any vacuum tube, glass tube, or brush - Damage to any structure or foundation supporting the covered equipment or any of its parts - The functioning of any safety or protective device (such as one that turns off equipment to prevent further damage) - The cracking of any part of an internal combustion gas turbine exposed to the products of combustion

*(Miscellaneous Commercial Insurance - Chapter 19)* This form provides coverage only for that portion of loss or damage that is a direct result of a breakdown to covered equipment. Each of the following coverages is provided only if either a limit or the word included is shown for that coverage in the declarations. If neither a limit nor the word included is shown, then that particular coverage is not provided. An insured may select from among the following coverages:

- Property damage - Expediting expenses - Business income and/or extra expense - Spoilage damage - Utility interruption - Newly acquired premises - Ordinance or law - Errors or omissions - Brands and labels - Contingent business income and/or extra e

*(Miscellaneous Commercial Insurance - Chapter 19)* Other types of Bonds

- Public Official Bonds - License and Permit Bonds

*(Miscellaneous Commercial Insurance - Chapter 19)* Three conditions that must be met before Surplus Lines Insurance may be obtained from an unauthorized insurer.

- The business must be obtained through a licensed surplus lines broker - It is determined after a diligent search that the full amount of insurance cannot be obtained from authorized insurers who market the insurance in the state. - Coverage may not be obtained as a surplus lines coverage solely for the purpose of obtaining a better contract or a lower premium than an authorized insurer could provide. Although surplus lines insurers are unauthorized, many states issue an approved list of surplus lines carriers and require brokers to place surplus lines business with those insurers.

*(Miscellaneous Commercial Insurance - Chapter 19)* The Boiler and Machinery Policy will consist of (whether issued as a monoline policy or as part of of a package)

- The common policy declarations; - The common policy conditions; and - A boiler and machinery coverage part (and one or more other coverage parts, if it is a package policy)

*(Miscellaneous Commercial Insurance - Chapter 19)* The Boiler and Machinery COVERAGE PART will consist of:

- The equipment breakdown protection coverage declarations; - The equipment breakdown protection coverage form; and - Any applicable endorsements

*(Miscellaneous Commercial Insurance - Chapter 19)* A Commercial Umbrella Insurance Policy provides coverage for three basic types of situations:

- The policy limits applying to a loss under an underlying policy have been exhausted. - A loss is excluded under an underlying contract but not excluded under the umbrella (the insured must first meet the retention limit). - Previous losses reimbursed under an underlying policy have reduced its aggregate limit so that a subsequent loss is not fully covered.

*(Miscellaneous Commercial Insurance - Chapter 19)* Which of these statements about professional liability policies are CORRECT?

- They cover the insured's liability arising out of rendering or failing to render services of a professional nature. - They are tailored to fit specific occupational needs. - Professional Liability policies are referred to by several different names.

*(Miscellaneous Commercial Insurance - Chapter 19)* To be deemed an Act of Terrorism, the act must:

- be a violent act or an act that is dangerous to human life, property, or infrastructure; - have resulted in damage within the United States, or outside of the United States in the case of an air carrier, vessel, or the premises of a US mission; - have been committed in an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the US Government by coercion; not be committed during the course of a declared war (except for workers' compensation coverage); - result in property and casualty losses exceeding $5 million dollars; and - be certified as an act of terrorism under TRIA by the Secretary of the Treasury, in concurrence with the Secretary of State and the US Attorney Genera

*(Miscellaneous Commercial Insurance - Chapter 19)* Aviation Liability insurance for owners of aircraft includes coverage for:

- bodily injury liability to persons other than passengers; - bodily injury to passengers; - property damage liability; and - medical payments (payable for injuries to passengers, regardless of whether the insured is liable for their injuries).

*(Miscellaneous Commercial Insurance - Chapter 19)* (Exclusions) If coverage is provided by another policy, whether collectible or not, there WILL BE NO coverage for any loss caused:

- by a limited number of the broad form perils found on commercial property causes of loss forms. - losses caused by aircraft, vehicles, freezing, lightning, sinkhole collapse, smoke, riot, civil commotion, vandalism, or the weight of snow, sleet, or ice. (This exclusion only applies if there is other coverage; if it is not otherwise covered, the equipment breakdown protection form will provide coverage within the scope of its provisions).

*(Miscellaneous Commercial Insurance - Chapter 19)* A ______________ bond gurantees that certain acts will not be committed; a ___________________ bond emphasizes that certain things will happen.

- fidelity - surety

*(Miscellaneous Commercial Insurance - Chapter 19)* Conditions for Federal Payments - No payment may be made under the TRIA program with respect to an insured loss that is covered by an insurer, unless:

- the person that suffers the insured loss, or a person acting on behalf of that person, files a claim with the insurer; - the insurer provides clear and conspicuous disclosure to the policyholder of the premium charged for insured losses covered by the program; - the insurer processes the claim for the insured loss in accordance with appropriate business practices, and any reasonable procedures that the Secretary may prescribe; and - the insurer submits to the Secretary a claim for payment of the Federal share of compensation for insured losses under the program, written certification of the underlying claim, and of all payments made for insured losses, and certification of the insurer's compliance with all applicable provisions of the law. (15 U.S.C. s 6701)

*(Miscellaneous Commercial Insurance - Chapter 19)* Typical exclusions under the Employment Practices Liability Insurance include:

- wrongful termination practices committed with dishonest, fraudulent, criminal, or malicious intent; mass layoffs of employees; - deliberate fraud or purposeful violation of laws, rules, or regulations; - BI or PD other than emotional distress, mental anguish, or humiliation; - liabilities of others assumed under contract, except employment contracts; and - circumstances reported under prior EPL policies.

*(Miscellaneous Commercial Insurance - Chapter 19)* Farm Property-Causes of Loss Form

A separate document that lists the perils property is insured against. This form offers three separate levels of coverage within the same form: BASIC, BROAD, and SPECIAL. The declarations indicates what level of coverage the insured has selected for each form. The insured may obtain coverage against earthquake by purchasing the separate earthquake causes of loss form.

*(Miscellaneous Commercial Insurance - Chapter 19)* Farm Property Causes of Loss-BROAD section:

Adds additional perils. Some that are unique to the farm risk include: - electrocution of covered livestock; - attacks on covered livestock by dogs or wild animals; - drowning of covered livestock; - accidents involving loading or unloading; and - accidental shooting of covered livestock.

*(Miscellaneous Commercial Insurance - Chapter 19)* Insurer (defined for the purpose of the TRIA act)

Any entity and affiliate that is licensed or admitted to engage in the business of providing and casualty insurance on a primary or excess basis in any state, including eligible surplus line carriers and residual market insurance entities. All are required to participate in the Terrorism Insurance Program and make available coverage for the insured losses in all of their covered commercial lines policies.

*(Miscellaneous Commercial Insurance - Chapter 19)* Completion Bonds

Guarantee that when contractors borrow money to fund construction products, the project will be carried out and the work will be derived free and clear of liens or encumbrances.

*(Miscellaneous Commercial Insurance - Chapter 19)* Insured Loss (defined for the purpose of the TRIA act)

Any loss resulting from an act of terrorism, including an act of war (in the case of workers compensation losses) that is covered by primary or excess property and casualty insurance issued by an insurer if the loss occurs: - within the United States; - in an air carrier or to a US flag vessel regardless of where the loss occurs; or - at the premises of a US mission

*(Miscellaneous Commercial Insurance - Chapter 19)* Deductibles under the Equipment Breakdown Protection Coverage Form

Apply separately for each applicable coverage, unless the deductibles are shown as combined for any two or more coverage's. If a combined deductible applies, the insurer will subtract the combined deductible amount from the aggregate amount of loss to which the combined deductible applies. Coverages may be subject to a dollar deductible, in which case the insurer will subtract the deductible amount from any loss it would otherwise pay. Certain coverages may be subject to a time deductible, which is usually expressed as a number of days. If a time deductible applies, the insurer is not responsible for any loss that occurs during the deductible period immediately following a breakdown. For example, if business income coverage is elected with a time deductible of seven days, coverage would not begin until after the business has been shut down for more than seven days. Deductibles may be expressed as a percentage of loss, in which case the insurer would not be liable for the indicated percentage of an aggregate loss. For example, if a coverage was written with a percentage of loss deductible of 15%, the insurer would only be obligated to pay 85% of any covered loss. Business income coverage may also be written with a multiple of daily value deductible, and with minimum or maximum deductible amounts that apply to the coverage.

*(Miscellaneous Commercial Insurance - Chapter 19)* Public Official Bonds

Are required by law, guarantee that public officials will handle public money correctly and otherwise perform their duties faithfully and honestly.

*(Miscellaneous Commercial Insurance - Chapter 19)* License and Permit Bonds

Are sometimes required in connection with the issuance of licenses by government agencies. They guarantee that the person who posts the bond will comply with all applicable laws pertaining to their activities.

*(Miscellaneous Commercial Insurance - Chapter 19)* Brands and Labels Coverage

Available for businesses that carry branded or labeled merchandise. If such property is covered property and is damaged in a breakdown, the insurer may take all or any part of the property at an agreed or appraised value. In such cases, the insured may stamp the word salvage on the merchandise or its containers, or may remove the brands and labels, if doing so will not physically damage the property. The insurer will pay the reasonable costs for stamping or removing labels, but the total paid for these costs and the value of the damaged property will not exceed the applicable limit of insurance for such property.

*(Miscellaneous Commercial Insurance - Chapter 19)* Contract Bonds

Guarantee the fulfillment of contractual obligations.

*(Miscellaneous Commercial Insurance - Chapter 19)* Segueing Surety Bonds

Before a Surety Bond is issued, the principle must submit an application that contains only the information needed for underwriting, but also an indemnity agreement through which the principle agrees to indemnify the surety for any loss sustained. This is necessary because suretyship does not anticipate losses, although they do occur. Instead, it is expected that the principle will perform as agreed and, that the principle will otherwise make it up to the obligee. If the principle does default, however, the surety company will indemnify the obligee and then attempt to collect from the principle. The premium paid is actually a charge for using the credit of the surety bond, without allowance for losses. In addition, in some cases the surety may require that the principle deposit money, called collateral security, to protect the surety against possible loss.

*(Miscellaneous Commercial Insurance - Chapter 19)* Error and Omissions (E&O) Insurance

Broad term that refers to professional liability policies written for other professionals, such as insurance agents, accountants, architects, stockbrokers, engineers, consultants, and attorney's. Also appropriate for directors and officers of corporations who may be sued as individuals by stockbrokers. Directors and officers have coverage under a CGL for personal liability and no coverage under the homeowners contract for liability arising out of business pursuits. This exposure is properly insured under a type of E&O insurance called directors and officers liability

*(Miscellaneous Commercial Insurance - Chapter 19)* Aviation Physical Damage Coverage

Called hull insurance, is much like the comprehensive and collision coverage's provided by auto insurance. It covers the complete aircraft including it air frame, engines, controls, and electronic navigation and communications equipment. It does not cover personal effects. Either fixed dollar or a percentage of the loss deductible usually applies. Coverage can be provided while the aircraft is: - in the air or on the ground; - on the ground only; and - not in motion under its own power The declarations indicate what coverage applies and any special restrictions or deductibles.

*(Miscellaneous Commercial Insurance - Chapter 19)* Malpractice Insurance

Commonly applied to medical professional liability policies written for medical professionals or institutions, including physicians, nurses, dentists, surgeons, opticians, opticians, optometrists, chiropractors, and veterinarians.

*(Miscellaneous Commercial Insurance - Chapter 19)* Fiduciary Bonds

Commonly used to bond guardians, administrators, trustees, and executors, all of whom are fiduciaries, or persons appointed by a court of law to manage the property of others.

*(Miscellaneous Commercial Insurance - Chapter 19)* Farm Property Coverage Forms

Cover direct physical loss to a variety of properties. The insured can select any combination of three separate forms.

*(Miscellaneous Commercial Insurance - Chapter 19)* Property Damage

Coverage applies to direct damage to covered property located at a premises described in the declarations. The only difference between this coverage and commercial property coverage is the covered causes of loss-the damage must be caused by a breakdown of covered equipment (rather than fire, lightening, windstorm, and so forth)

*(Miscellaneous Commercial Insurance - Chapter 19)* Deductibles and Marketplace Aggregate Retention (under TRIA)

Coverage for an insurer's losses are subject to a deductible EQUAL TO 20% of the insurer's direct earned premiums during the prior calendar year. The insurance marketplace aggregate retention is $27.5 billion.

*(Miscellaneous Commercial Insurance - Chapter 19)* Expediting Expenses

Coverage will pay extra costs necessarily incurred by the insured to make temporary repairs and to expedite the permanent repairs or replacement of the damaged property.

*(Miscellaneous Commercial Insurance - Chapter 19)* Coverage G-The Barns, Outbuildings, and Other Farm Structures Coverage Form

Covers barns, silos, fences, radio equipment, and other farm buildings and structures that are not dwellings.

*(Miscellaneous Commercial Insurance - Chapter 19)* Mobile Agricultural Machinery and Equipment Coverage Form (specialized coverage form)

Covers mobile agricultural equipment and machinery separately from other property.

*(Miscellaneous Commercial Insurance - Chapter 19)* Farm Personal Property Coverage Form

Covers scheduled and unscheduled farm personal property. Contains the following coverage's: - Coverage E-Scheduled Farm Personal Property covers property for the limit shown in the declarations. Examples of property that can be covered include grain, farm products, poultry, livestock, machinery, and vehicles and equipment incidental to farm use. - Coverage F-Unscheduled Farm Personal Property covers farm personal property on a blanket basis both on and off the insured premises.

*(Miscellaneous Commercial Insurance - Chapter 19)* Computer Equipment

Means the insured's programmable electronic equipment that is used to store, retrieve, and process data, and associated peripheral equipment that provides communications including input and output functions (such as printing) or auxiliary functions (such as data transmission).

*(Miscellaneous Commercial Insurance - Chapter 19)* How do the deductibles apply in the Equipment Breakdown Coverage Form?

Deductibles apply separately for each applicable coverage unless the deductibles are shown as combined for any 2 or more coverage's.

*(Miscellaneous Commercial Insurance - Chapter 19)* Joint or Disputed Loss agreement Condition

Designed to facilitate payment when both a commercial property policy and equipment breakdown protection policy are in effect, damage occurs to property that is covered under both policies, and there is disagreement between the insurers as to whether there is coverage or as to the amount of the loss to be paid under its own policy.

*(Miscellaneous Commercial Insurance - Chapter 19)* Commercial Umbrella Insurance

Designed to provide catastrophic liability coverage for business risks. Because the umbrella policy is not designed to handle usual or everyday exposures, the insured must have underlying coverage, such as commercial auto or commercial general liability coverage, before an umbrella policy will be issued.

*(Miscellaneous Commercial Insurance - Chapter 19)* END OF FARM INSURANCE

END OF FARM INSURANCE

*(Miscellaneous Commercial Insurance - Chapter 19)* Surety Bonds

Emphasize that certain things will happen. In broad terms, this type of bonding guarantees that: - Someone will faithfully perform whatever that person agrees to do; or - Someone will make a payment as agreed upon

*(Miscellaneous Commercial Insurance - Chapter 19)* A business that wants coverage for its liability for employment-related acts can obtain it by purchasing

Employment Practices Liability Insurance

*(Miscellaneous Commercial Insurance - Chapter 19)* The Federal Terrorism Risk Insurance Act of 2002 (TRIA)

Enacted in 2002 as a result of the 9/11 terrorist attacks. This federal law provides a federal backstop for defined acts of terrorism and imposes certain obligations on insurers. It is designed to limit the exposure of individual insurers and the insurance industry as a whole, and to make insurance available and affordable, under a system where the federal government participates and shares the risk of loss. The act voids terrorism exclusions, and state approval of such exclusions, in property and casualty insurance contracts to the extent that they exclude losses that would otherwise be insured losses.

*(Miscellaneous Commercial Insurance - Chapter 19)* The insured knows it may take up to several months for his damaged turbine to be fully repaired, so he authorizes $500 for temporary repairs so production can resume. This expenditure would be covered under which coverage in the Equipment Breakdown Protection Coverage Form?

Expediting Expense

*(Miscellaneous Commercial Insurance - Chapter 19)* Farm Insurance

Farmers' businesses and homes are often at the same location, so they need insurance that will cover both their personal and business exposures to loss. The farm coverage part, which can be written as a monoline policy or included in the CPP, includes several farm property coverage forms that cover both the personal and business property of the farmer and a farm liability coverage form for the personal and business liability exposures of the farmer.

*(Miscellaneous Commercial Insurance - Chapter 19)* Supply Bonds

Guarantee that a supplier will furnish supplies, products, or equipment at an agreed upon price and time.

*(Miscellaneous Commercial Insurance - Chapter 19)* Payment Bonds

Guarantee that bills for labor and materials will be paid by the contractor as they are due. These are sometimes called Labor and Materials Bonds, and are frequently included as part of a Performance bond.

*(Miscellaneous Commercial Insurance - Chapter 19)* Bid Bonds

Guarantee that if a contractors bid is accepted, the contractor will enter into a contract and provide the required Performance bond.

*(Miscellaneous Commercial Insurance - Chapter 19)* Performance Bonds

Guarantee that jobs will be completed by the contractor according to the contract specifications.

*(Miscellaneous Commercial Insurance - Chapter 19)* Judicial Bonds

Guarantee that the principle will fulfill certain obligations set forth by law.

*(Miscellaneous Commercial Insurance - Chapter 19)* Newly Acquired Premises

If coverage for this is written, the insurer will automatically provide coverage at any newly acquired premises the insured purchases or leases. Coverage begins as soon as the premises is acquired and continues only for the number of days for this coverage shown in the declarations. However, as a condition of the coverage, the insured is required to notify the insurer, in writing, of the new premises and agree to pay an additional premium.

*(Miscellaneous Commercial Insurance - Chapter 19)* Cap on Annual Liability (under TRIA)

If the aggregate insured losses exceed $100 billion during any program year under the shared program, the federal government will not be liable for any portion of insured losses in excess of $100 Billion, and no insurer that has met the deductible requirement will be liable for the payment of any portion of the insured losses that exceeds $100 billion. The Secretary will notify congress no later than 15 DAYS after an act of terrorism stating if terrorism losses are expected to exceed this amount.

*(Miscellaneous Commercial Insurance - Chapter 19)* Utility Interuption

If the insured has business income and/or extra expense coverage, spoilage coverage, or both, coverage for this may be covered. This coverage extends the business income, extra expense and/or spoilage coverage to apply to loss resulting from an interruption of utility services due to a breakdown of equipment that is not the insured's. It applies when there is a breakdown of equipment owned, operated, or controlled by a public or private utility that directly generates, transmits, distributes, or provides utility services received by the insured that are used to supply electric power, communication services, air conditioning, heating, gas, sewer, water, or steam to the insured's premises. When this coverage is written, a waiting period (stated in hours) must be shown in the declarations. Once the waiting period is met, coverage will commence from the initial time of interruption and will be subject to any applicable deductibles.

*(Miscellaneous Commercial Insurance - Chapter 19)* Key difference b/w Surety Bonds and Fidelity Bonds (Issuing Surety Bonds)

In Fidelity Bonding, it is the obligee (the employer) who seeks and pays for the bond. The principle (the employee) often does not even know the bond exists. With Surety Bonds, the principle is always the party that both arranges and pays for the bond for the benefit of the obligee.

*(Miscellaneous Commercial Insurance - Chapter 19)* Farms Dwellings, Appurtenant Structures and Household Personal Property Coverage Form

Is similar to Section I of the Homeowners policy. Contains the following coverage's: - Coverage A-Dwellings - Coverage B-Other Private Structures Appurtenant to Dwellings - Coverage C-Household Personal Property - Coverage D-Loss of Use Coverage D includes coverage for additional living expenses and fair rental value. A special limit of $250 per occurrence limit applies to loss or damage to outdoor radio and TV antennas and satellite dishes. In general, growing crops, trees, plants, shrubs, and lawns are excluded. However, a coverage extension for Coverages A, B, and C allows limited coverage for trees, plants, shrubs, or lawns within 250 feet of the covered residence, but only against loss by specified perils. Also covers collision that results in damage to covered farm machinery or other farm personal property and death of covered livestock.

*(Miscellaneous Commercial Insurance - Chapter 19)* Under the Equipment Breakdown Protection Coverage Form, which of the following causes of damage to covered equipment would NOT be a covered breakdown?

Leakage at any valve, fitting, shaft, seal, gland packing, joint, or connection

*(Miscellaneous Commercial Insurance - Chapter 19)* Professional Liability (Types of Policies)

Liability arising out of rendering or failing to render services of a professional nature, is excluded under the CGL policies. Special professional liability policies have been developed for many professionals, such as physicians, surgeons, dentists, lawyers, insurance agents, architects, accountants, and directors and officers of corporations. Each policy is tailored to fit a specific occupational need.

*(Miscellaneous Commercial Insurance - Chapter 19)* Types of explosions INCLUDED under the Equipment Breakdown Coverage:

Loss or damage caused by an explosion of any covered - steam boiler - electric steam generator - steam piping - steam turbine - steam engine - gas turbine - or moving or rotating machinery when the explosion is caused by centrifugal force or mechanical breakdown

*(Miscellaneous Commercial Insurance - Chapter 19)* Covered Property

Means property that the insured owns, or which is in the insured's care, custody, or control and for which the insured is legally liable. Covered Equipment includes: - equipment built to operate under internal pressure or vacuum other than the weight of contents; - electrical or mechanical equipment that is used in the generation, transmission, or utilization of energy; - communication equipment and computer equipment; and - any equipment that is owned by a public or private utility and used solely to supply utility services to the insured premises.

*(Miscellaneous Commercial Insurance - Chapter 19)* One Breakdown

Means that if an initial breakdown causes other breakdowns, all will be considered a single breakdown. All breakdowns, at any one premises, that manifest themselves at the same time and are the direct result of the same cause will be considered one breakdown.

*(Miscellaneous Commercial Insurance - Chapter 19)* Breakdown

Means the following types of direct physical loss that cause damage to covered equipment and necessitates its repair or replacement (unless the loss or damage is otherwise specifically excluded within coverage): - Failure of pressure or vacuum equipment - Mechanical failure, including rupture or bursting caused by centrifugal force - Electrical failure, including arcing

*(Miscellaneous Commercial Insurance - Chapter 19)* Surplus Lines of Coverage

Not available or cannot be procured from authorized insurers within a state. Although considered an unregulated area of insurance, the business must be procured and conducted in accordance with the surplus lines insurance law of the state.

*(Miscellaneous Commercial Insurance - Chapter 19)* Suspension Provision (Boiler and Machinery/Equipment Breakdown)

One of the unique things about boiler and machinery insurance is that the insurer or any representative of the insurer may immediately suspend the insurance against loss by breakdown for specific equipment whenever that equipment is found to be in, or exposed to, a dangerous condition. Advance notice is not required, but the insurer must mail or deliver written notice of the suspension to the insured's last known address or the address where the covered equipment is located. The suspension will only apply to the particular equipment. Once in effect, the suspension may be lifted and the insurance reinstated only by an endorsement for that equipment. If insurance is suspended, the insured will be entitled to a pro rata refund of premium for the period of suspension.

*(Miscellaneous Commercial Insurance - Chapter 19)* Fiduciary Liability Policy

Protects those who manage private pension and employee benefit plans against liability for violation of the federal ERISA law.

*(Miscellaneous Commercial Insurance - Chapter 19)* Difference in Conditions Insurance (DIC)

Provides broad coverage to fill the gaps excluded in the commercial property coverage part. It is written to exclude the basic fire and extended coverage perils but include most other insurable perils. Consequently, it is written in conjunction with policies providing the basic coverage excluded by this policy. These policies are usually written on large risks with a high deductible. Insurance companies issue their own DIC policies since there is no standardized form for this type of coverage.

*(Miscellaneous Commercial Insurance - Chapter 19)* Employment Practices Liability Insurance

Provides coverage for losses arising out of wrongful termination, discrimination, sexual harassment, and other employment related practices. This insurance may be issued as an endorsement or to a directors and officers liability policy or as a separate policy. Although standard ISO forms are available, many companies issue their own policies. Policy provisions differ greatly among insurers, particularly those regarding the types of wrongful employment acts covered. Most policies cover wrongful acts committed by the employer and its employees.

*(Miscellaneous Commercial Insurance - Chapter 19)* Farm Property Causes of Loss-SPECIAL section:

Provides open peril coverage, among the EXCLUDED losses are: - dishonest or criminal acts; - pollutants or contaminants; - transfer of property due to unauthorized instructions; - voluntary parting with property; and - failure to save and preserve property from loss

*(Miscellaneous Commercial Insurance - Chapter 19)* Farm Liability Coverage Form

Provides the following coverage's for liability arising out of farming operations or personal activities: - Coverage H-Bodily Injury and Property Damage Liability - Coverage I-Personal and Advertising Injury Liability - Coverage J-Medical Payments

*(Miscellaneous Commercial Insurance - Chapter 19)* RV Industries has $500,000 in Commercial Auto Coverage and a $1 million Commercial Umbrella Policy. The retention limit under the Umbrella is $100,000. Which of the following losses would be partially or fully paid under RV's Umbrella policy?

RV has a $600,000 loss that is excluded by the Commercial Auto coverage. The Commercial Umbrella policy doe snot exclude losses of this nature.

*(Miscellaneous Commercial Insurance - Chapter 19)* Business Income and Extra Expense Coverage (or extra expense coverage only)

Similar to these same coverages under the commercial property coverage part. The only significant difference is the covered cause of loss-the damage must be caused by a breakdown of covered equipment (rather than fire, lightening, windstorm, and so forth).

*(Miscellaneous Commercial Insurance - Chapter 19)* Valuation condition

That the insurer will determine the value of covered property when loss or damage occurs based on the cost to repair, rebuild, or replace the damaged property with property of the same kind, capacity, size, or quality. Some special provisions apply to particular types of property and circumstances.

*(Miscellaneous Commercial Insurance - Chapter 19)* Equipment Breakdown Protection Coverage Form - covered causes of loss

The only covered cause of loss is breakdown to covered equipment

*(Miscellaneous Commercial Insurance - Chapter 19)* Limits of Insurance under the Equipment Breakdown Protection Coverage Form

The primary limit is an overall limit PER BREAKDOWN; this is the most the insurer will pay for loss or damage resulting from any one breakdown under all applicable coverage's. For each applicable coverage, a limit of insurance or the word included must be shown in the declarations. If a limit of insurance is shown, it is the most the insurer will pay for that particular coverage. If the word included is shown for any coverage, the limit for that coverage will be part of, and not in addition to, the limit per breakdown. For some coverages, time limits must be shown in the declarations. If coverage for an extended period of restoration is elected under the business income and/or extra expense coverages, or if coverage for newly acquired premises is elected, a number of days must be shown in the declarations for these coverages. If utility interruption coverage is elected, a number of hours that will apply as a waiting period must be shown in the declarations.

*(Miscellaneous Commercial Insurance - Chapter 19)* General Overview of TRIA Program

The program allows for risk sharing sharing when the proper conditions are met. Generally, insurers are subject to deductibles (amounts they must pay before federal contributions begin), and when multiple insurers are involved in a loss the Secretary will determine the pro rata share of insured losses to be paid by each insurer. The federal government will pay 85% OF INSURED LOSSES that exceed insurer deductibles. However, there is an annual cap on the maximum obligation of insurers and the federal government under the law.

*(Miscellaneous Commercial Insurance - Chapter 19)* Temporary Program (The Federal Terrorism Risk Insurance Act of 2002)

The program is intended to be a temporary federal program that provides a system of shared public and private compensation for insured losses resulting from acts of terrorism, in order to protect consumers by addressing market disruptions and ensure the continued widespread availability and affordability of property and casualty insurance for terrorism risk. The program will terminate December 31, 2014, unless it is extended by Congress.

*(Miscellaneous Commercial Insurance - Chapter 19)* Exclusions under the Equipment Breakdown Coverage Form

There is no coverage for: - earth movement - water - nuclear hazards - war or military action - loss due to fire or combustion explosion - explosions within a chemical recovery type boiler or within the passage from the furnace to the atmosphere - covered equipment undergoing a pressure or electrical test - water or other means to distinguish a fire, even when the attempt is unsuccessful. (obligation for this loss should fall back on property insurance coverage, under the doctrine of proximate cause.) - depletion, deterioration, corrosion, erosion, or wear and tear - a breakdown caused by windstorm or hail. (there is no exception when other insurance does not apply.) - any delay in or interruption of any business, manufacturing, or processing activity (except as provided by the Business Income and/or Extra Expense and Utility Interruption Coverage's) - lack or excess of power, light, heat, steam, or refrigeration (except as provided by the Business Income and/or Extra Expense, Utility Interruption and Spoilage Damage Coverage's) - upgrades to covered equipment. - any indirect loss resulting from a breakdown of covered equipment (except as provided by the Business Income and/or Extra Expense, Utility Interruption and Spoilage Damage Coverage's) - any loss resulting from neglect by the insured to use all reasonable means to save and preserve covered property from further damage at and after the time of loss

*(Miscellaneous Commercial Insurance - Chapter 19)* The production equipment exclusion endorsemen

Used to add an exclusion for certain types of production equipment. When attached, it amends the definition of covered equipment to state that it does not include production or process machines or apparatus that process, form, cut, shape, grind, or convey raw materials, materials in process, or finished products.

*(Miscellaneous Commercial Insurance - Chapter 19)* Livestock Coverage Form (specialized coverage form)

Used to insure livestock separately

*(Miscellaneous Commercial Insurance - Chapter 19)* The refrigeration interruption coverage endorsement

Used to provide coverage for spoilage of the insured's owned refrigerated covered property while in storage due to an excess or lack of refrigeration because of a breakdown of covered equipment that is: - owned by the insured; - owned, operated, or controlled by a private or public cold storage warehouse that the insured has contracted with; and - owned, operated, or controlled by a local private or public utility or distributor that provides utility services to the insured. The endorsement is written on a reporting basis, and the refrigeration interruption—report of values endorsement must be used in conjunction with the coverage endorsement. It is used to schedule the total insurable values (based on current selling price) of covered property by month for a 12-month period at the described premises.

*(Miscellaneous Commercial Insurance - Chapter 19)* Court Bonds

Used to settles legal arguments that do not involve monetary damages. Their primary purpose is to protect obligees against loss in case principles are not able to prove that they are legally entitled to the legal remedy they sought against the obligees.

*(Miscellaneous Commercial Insurance - Chapter 19)* Turbine units explosion coverage endorsement

Used when coverage is desired for explosion of turbine units. When applicable, it deletes and replaces the definitions of breakdown and covered equipment in the main coverage form, but only for the turbine units listed as covered equipment in the schedule. Turbine units include any: - turbine or auxiliary steam turbine; - combustor, duct, piping, precooler, inter-cooler, regenerator, or heat exchanger forming part of a gas turbine; and - compressor or pump on any shaft of the driving turbine. To be covered, an explosion must be caused by the pressure of gas, liquid, or vapor within a turbine unit, or a breakdown must be caused by the breaking of the casing of a driving turbine or breaking of any spindle, rotor, or shaft of the equipment into two or more parts.

*(Miscellaneous Commercial Insurance - Chapter 19)* The pressure or vacuum equipment endorsement

Used when coverage is desired for pressure or vacuum equipment. When applicable, it deletes and replaces the definition of covered equipment in the main coverage form. Under this endorsement, covered equipment means any equipment built to operate under internal pressure or vacuum, which is subject to mandatory state or municipal jurisdictional inspection, and is located where the inspection requirements can be conducted by an authorized insurance company inspector. Note that the requirement for inspections is part of the definition.

*(Miscellaneous Commercial Insurance - Chapter 19)* Ordinance of Law Coverage

Virtually identical to the coverage available under other property coverage's. If applicable, the ordinance and law exclusion will not apply and the insurer will pay increased costs resulting from the enforcement of laws or ordinances that regulate the demolition, construction, repair, or use of the building or structure. The only difference is that under this form, the loss must result from breakdown of covered equipment (rather than traditional perils such as fire, lightning, windstorm, and so forth).

*(Miscellaneous Commercial Insurance - Chapter 19)* Contingent Business Income and/or Extra Expense Coverage

When applicable, it will pay the insured's losses resulting from a breakdown of covered property at a premises shown in the declarations that the insured does not own or operate. For example, a loss at another premises that prevents the insured from receiving services or materials, or from shipping them to others, or that results in a loss of sales at the insured's premises, might be covered. This is called coverage for dependent properties on commercial property coverage forms.

*(Miscellaneous Commercial Insurance - Chapter 19)* Errors and Omissions Coverage

Will pay for loss or damage, which would not otherwise be payable under the coverage form, solely because of one or more of the following: - Any error or unintentional omission in the description or location of any property shown in in the declarations - Any failure through error to include any premises owned or occupied by the insured at the inception date of the coverage part - Any error or unintentional omission by the insured that results in cancellation of any premises insured under the policy No coverage is provided as a result of any error or unintentional omission by the insured in the reporting of values for requested coverage's. It is a condition of this coverage that errors or unintentional omissions must be reported and corrected when discovered.

*(Miscellaneous Commercial Insurance - Chapter 19)* Boiler and Machinery Declarations

Will show a description of each covered premises, a schedule of the limits of insurance (or time limitations) that apply to each coverage that applies, a schedule of sublimits that may apply to certain exposures, deductibles that apply to various coverage's, a list of the names and addresses of any additional insured's, a list of the forms and endorsements attached to the coverage, and a place for the date and signature of the producer who countersigned the policy.

*(Miscellaneous Commercial Insurance - Chapter 19)* A Difference in Conditions Policy ________________ basic fire and extended coverage perils.

excludes

*(Miscellaneous Commercial Insurance - Chapter 19)* A Difference in Conditions Policy ________________ written in conjunction with policies providing the basic fire and extended coverage perils.

is

*(Miscellaneous Commercial Insurance - Chapter 19)* The Farm Coverage Part insures a farmer's

personal and commercial loss exposures

*(Miscellaneous Commercial Insurance - Chapter 19)* Spoilage Damage

to raw materials, property in process, or finished products may be covered if these items are in storage or in the course of being manufactured at the time of loss, the insured owns or is legally liable for these items under contract, and the spoilage is due to the lack or excess of power, light, heat, steam, or refrigeration. When this coverage applies, the insurer will also pay any necessary expenses incurred by the insured to reduce the amount of loss, but only to the extent that the expenses do not exceed the amount of loss that otherwise would have been payable.

*(Miscellaneous Commercial Insurance - Chapter 19)* The business income—report of values endorsement

used to report actual values of sales, earnings, and net profit for a previous 12-month period and estimated values for the future 12-month period.