OC2: Ch9 and 10

commercial property basic/broad form additional coverage:

(basic and broad) limited coverage for fungus/wet rot/dry rot/bacteria: -limit = 15000 in aggregate for 12 month policy period (broad) collapse: abrupt falling down of building/part o building that can then no longer be occupied for intended purpose. insurer pays for collapse if caused by the following: -covered cause of loss -hidden, unknown decay -hidden insect/vermin damage -weight of people/personal property -weight of rain collecting on roof -use of defective materials/construction if abrupt collapse happens during construction -also covers loss to property because of collapse of personal property inside building (racks) if it's because of the above reasons

commercial property special form: trees/shrubs/plants/lawns that are part of vegetated roof

-BPP includes these as covered property, and covers items w/o limits and restricted perils applying to other trees/shrubs and plants under BPP Outdoor property coverage extension -special form has own restrictions cause of loss for these (but covers loss from windstorm or anything not listed below): --Dampness or dryness of atmosphere or of soil supporting the vegetation; --Changes in or extremes of temperature; --Disease; --Frost or hail --Rain, snow, ice or sleet

commercial property conditions: concealment/misrepresentation/fraud -what it does -concealment/misrepresentation/material definitions

-CP coverage part void if insured commits any fraudulent act related to coverage OR conceals/misrepresents any *material* fact pertaining to coverage part, covered property or insured interest in covered property --misrepresentation: active, deliberate misstatement of fact --concealment: intentional failure to disclose a material fact -coverage can be provided even if misrepresentation or concealment happens if it's not material (if knowledge of it would cause insurer to charge higher premium/decline to write coverage)

BPP optional coverages

-agreed value -inflation guard -replacement cost -extension of replacement cost to personal property of others

ISO Commercial Property Endorsement: flood coverage -2 sources -max limit/deductibles

-all three commercial property insurance cause of loss forms exclude flood available from 2 sources: -NFIP: federal government resource providing insurance for properties in eligible communities (administered by federal insurance administration, part of FEMA) --max NFIP limit is 500,000 for building and 500,000 for contents of building --sold through private insurers/agents and backed by govt -private insurers w/o federal participation --(most private insurers unwilling to provide flood coverage for commercial property in zones with > 100 year flooding probably risk aka zone A) --outside of high-hazard flood zones, flood coverage written by endorsement subject to substantial deductible (25,000) --may only provide excess flood coverage to NFIP limit

commercial property conditions

-attached to any of the commercial property coverage forms to which they are attached (including BPP) -concealment/misrepresentation/fraud -control of proeprty -insurance under 2+ coverages -legal action against us -liberalization -transfer of rights of recovery against others to us -no benefit to bailee -other insurance -policy period, coverage territory

commercial property conditions: no benefit to bailee

-bailee is person/business organization that has temp custody of the property of another -become legally liable to bailors for damage to property to hold, and might try to limit liability with contractual provisions stating they're not responsible for damage if damage is recoverable under insurance carried to bailor -this condition reinforces insurer's right of subrogation against bailee

causes of loss to property -cause of loss definition

-cause of loss adversely affects property/leaves in altered state --or may not alter property itself but affects person's ability to possess/use property (theft) --fire is the greatest risk of large/total property loss

Other factors affecting premiums -construction -occupancy -protection -external exposure -location

-construction: frame, joisted masonry, noncombustible, masonry noncombustible, modified fire resistive, fire resistive (used in rating) -occupancy: some occupancies riskier than others and rate is higher accordingly -protection: internal (sprinklers give rate reduction) or external (local fire department, graded one (best) to ten to indicated availability of fire fighting personnel and equipment) -external exposure: properties adjacent to building can increase probability of loss to insured building/contents (charge included only if specific rate calculated for particular location but always taken into account for underwriting) -location: risk of loss caused by windstorm/theft/earthquake/other perils depends on location

types of personal property: examples, whether it's covered under commercial property insurance -contents -property in transit -property in possession of others -floating property

-contents: --'personal property' is contents of building --'business personal property' is contents of commercial building -- includes personal property of others in care of insured, property often covered even if not in building -property in transit: property being shipped to others/received --coverage for property in transit may exist but often inadequate if significant transit exposures -property in possession of others: if organization places property in temp possession of others for any reason --usually only nominally covered since probability of loss @ temp location may differ greatly from normal -floating property: property that doesn't remain at fixed work site/is in transit between work sites (cameras, contractor tools) --not covered, may need special inland marine policy

commercial property conditions: policy period, coverage territory -when coverage starts -where property is covered

-coverage begins on effective date/ends on expiration date in declarations (12:01 @ insured's mailing address shown in declarations, even if insured property might be in different time zone) -insured property covered only while in US + territories, Puerto Rico or Canada

6 additional coverages in BPP

-debris removal -preservation of property -fire department service charge -pollutant cleanup/remova -increased cost of construction -electronic data

commercial property declarations -info it has

-description property insured -kinds/amounts of coverage provided and covered cases of loss (basic/broad/special) -list of mortgagees (if any) -The deductible amount -list of the property coverage forms and endorsements attached to the policy -applicable coinsurance percentage(s) -Any optional coverages -supplemental declarations/schedules can be added on separate pages if needed

BPP: personal property of others -what it's designed to do/who it's important for -when property is covered -if insured didn't buy this coverage

-designed to protect insured against loss of/damage to personal property of others while such property in custody of insured --important for businesses (bailees) that have customers' property in their custody -covers property only while in insured's care/custody/control and in/on building described in declarations/within 100 feet of building or structure or within 100 feet of described premises whichever is greater --applies even if insured not responsible for damage -even if insured didn't buy this coverage, BPP provides coverage extension for personal property of other's limited to 2500 @ each insured location

BPP conditions: appraisal -what it does -what it doesn't apply to

-establish method for insurer/insured to resolve disputes on insured property's value/amount of loss: either party can issue written demand for appraisal -does not apply to policy coverage disputes

ISO Commercial Property Endorsement: earthquake/volcanic -where it's limited in availability -2 ISO endorsements

-expensive and limited in availability in area with high probability of earthquake damage (CA and location near New Madrid Fault) -2 ISO endorsements to add earthquake/volcanic eruption as covered perils: --earthquake and volcanic eruption endorsement: include coverage for full policy limit, contain coinsurance condition --earthquake and volcanic eruption endorsement (sub-limit form): subject to sub-limit that is lower than regular policy limit, does not contain coinsurance condition

commercial property conditions: other insurance

-if insured has more than one policy covering given loss, total recovery from ALL insurance should not be in excess of actual loss sustained -if other insurance provided by additional policy subject to same plan/terms/conditions, each policy pays in relation to all applicable policies. -if policy not subject to all conditions of commercial property part, the commercial property policy is excess

BPP conditions: recovered property -first thing that happens if property recovered -insured's options and insurer obligation under each

-if insurer/insured recovers property that insurer has paid a loss on, party making recovery is obliged to notify the other party --insured can take recovered property + refund loss payment, meaning insurer pays cost of recovering property and repairing it --insured can elect not to take recovered property, which one insurer can then dispose of in any way

ISO Commercial Property Endorsement: peak season limit of insurance -why it is necessary -what it covers (same effect as...) -when it's attached and how premium works

-if organization experience wide fluctuation in personal property value (especially value of goods held for sale) --if carry high limit to cover max, overinsured for much of year (too much in premium) and if carries less than max, underinsured during peak period -covers fluctuating values of business personal property by giving different amounts of insurance for certain time frames during policy period --same effect as endorsing policy to increase coverage before peak season and endorsing again later to reduce (eliminate transactions and possibility that they might be overlooked) -attached when policy issued and pro rata premium charged for period limit is increased

common policy conditions: cancellation -insured -insurer -state endorsement

-insured: can cancel policy at any time by mailing/delivering written notice of cancellation to insurer (only first named insured can do this) -insurer: can cancel policy by mailing/delivering written notice to first named insured --for nonpayment: send notice 10 days in advance --any other reason: send notice 30 days in advance --if cancelled policy results in return premium, insurer sends refund to first named insured condition maybe superceded by state law and endorsement modifies provision to comply (address permissible reasons for cancellation/longer advance notice period)

aspects of coverage affecting premium: how rates are calculated for each in general -limit of insurance -covered cause of loss (basic/broad/special) -coinsurance % -deductible amount -optional coverage

-limit of insurance: represent exposure against which the applicable rate is multiplied to calculate the premium --Limit of insurance (LOI) rates decrease as insured value increases (since most losses are partial and don't increase proportionally with value of insured property): -covered cause of loss: --basic form: Group I rate (for fire/lightning/explosion/vandalism/sprinkler leakage) and Group II rate (for all other causes of loss covered) --broad form: addl rate added to basic form rates for additional perils of broad form --special form: same as broad but even higher additional rate -coinsurance percentage: rates calculated with assumption 80% coinsurance (rate reduced when policy requires higher coinsurance to reflect reduced likelihood loss reaches insured amount and to encourage person of higher limits) -deductible amount: rate developed with assumptions that policy subject to 500 deductible (many PH willing to have higher deductible to make risk more desirable to UW and rate is reduced accordingly) -optional coverage: adding optional coverages increases rates (can be because limit of insurance increased to cover additional property value (replacement cost) or separate rate applied to insurance)

BPP deductibles -order deductible applied in -if BPP covers 2+ categories of property

-limits are applied to loss in excess of deductible --coinsurance condition/agreed value optional coverage reduces loss by penalty BEFORE applying deductible -std deductible is 500 -BPP typically covers 2+ categories of property (two buildings, or a building and business personal property etc) --losses are not combined in determining application of deductible but deductible is applied once per occurrence --(if combined total > deductible but each loss is not, no payout. If one loss is > deductible, insurer pays excess over deductible for that loss and then all of the rest of the losses since the deductible has been applied once )

BPP electronic data -what it provides/limitations -why coverage is limited

-many insurers think this exposure could be better treated by other forms of insurance -subject to limit too low to provide meaningful coverage for most business, represents most insurer will pay per policy year regardless of # occurences/locations --policy year defined by year occurrence began even if loss continues

commercial property special form: if non-excluded cause of loss is similar to the ones in basic/broad

-most exclusions of forms, but when it doesn't have an exclusion equivalent to one contained in basic/broad it provides broader coverage: --vehicle peril: basic/broad excludes damage from vehicles owned by named insured while Special form doesn't exclude this --windstorm: basic/broad excludes damage to interior by rain etc. unless roof/walls first damaged by covered cause of loss, special form does the same but also excepts if loss results from melting of ice/sleet/snow on building (ice damming...)

commercial property special form -what it covers -advantages to insured

-most frequently selected loss form -cover direct physical loss unless loss excluded/limited (open peril) advantages to insured: -causes of loss omitted/excluded under broad form not excluded (most significantly: theft of covered property) -covers direct physical losses other than those specifically excluded (can cover losses insured didn't anticipate) -shifts burden of proof from insured to insurer (basic/broad insured proves loss caused by covered cause, special form accidental loss to covered property assumed to be covered unless insurer proves otherwise)

BPP Limits of Insurance -most insurer has to pay -how payment is reduced -how payment can be increased -specific vs blanket limit

-most insurer has to pay for loss in one occurrence is shown on dec page --total commercial property losses very rare, forms contain other limitations reducing paid out amount --coverage extensions and most additional coverages are paid IN ADDITION to limit of insurance (total payment for one loss possible to exceed limit) -specific limit: declaration shows separate limit for each covered building/personal property @ each location -blanket limit: one amount of insurance to all property covered by policy --can also have blanket limit on different locations or combinations of location/type of insurance blankets

ISO commercial property endorsement selections (7)

-ordinance/law coverage endorsement -Spoilage Coverage Endorsement -Flood Coverage Endorsement -Earthquake and Volcanic Eruption Coverage -Endorsement -Peak Season Limit of Insurance Endorsement -Value Reporting Form

BPP increased cost of construction -why it's needed -what coverage is provided and condition -what is not included

-ordinance/law exclusion exists in case of loss forms attached to BPP: excludes increased cost to comply with ordinances/laws regulating repair/rebuild/replacement of covered building -this coverage provides insurance for this situation = min(10000, 5% amount of insurance) in addition to the policy limit --applies only if replacement cost option coverage is selected -does NOT include coverage for --loss to undamaged portion of building that ordinance/law does not permit to remain in use --cost to demolish undamaged

common policy conditions: changes -what it states -in practice and why that is -power of the first named insured

-policy constitutes entire contract between insurer and named insured, policy can only be changed by written endorsement issued by insurer -in practice: changes often made by verbal communication and confirmed afterwards in writing --verbal communication is binding because authorized agent of insurer viewed as having power to waive written endorsement requirement -only first named insured has authority to request policy changes, insurer authorized to make changes on request of first named insured w/o specific permission of any other insured

commercial package polity (CPP) -what it is -discount

-policy covering 2+ LOB by combining ISO commercial coverage parts --commercial property coverage can be one of the 2+ coverage prats included, or a single coverage part in a monoline policy -discount: insured might get package discount --premium first determined like each coverage part is monoline, then if both property and liability included premium may be multiplied to package/modification/factors (to reflect efficiency of issuing single package policy vs. several monoline)

types of property

-property: item with value -2 types of property: --real property (realty): tangible property of land/attached to land or structure/grows in land (buildings, driveway, underground piping, paneling, elevators) --personal property: all tangible/intangible property that's not real property (vehicles, oil in pipelines)

what BPP endorsements are useful for (4)

-provide coverage enhancements that insureds might want but others don't need/can't afford -eliminate coverage for certain exposures (enabling UW to accept applications they would usually decline) -change policy provision to match specific characteristics of certain industries/insured -amend policy to comply with state insurance regulations

Rating fundamentals -what rating is (and calculation) -specific rating vs. class rating

-rating: process of applying rate to particular exposure/performing calculation to determine appropriate policy premium calculation: rate / unit * amount = amount of insurance / unit amount * rate -specific rating: each building/contents inspected individually and rates reflecting exposure to los published by rating bureaus (still used for large businesses/unusual exposures) -class rating: use rates reflecting average probability of loss for business within large groups of similar risks (no need to inspect specific building)

3 components of commercial property loss exposures

-types of property -cause of loss to property -financial consequences of property losses

BPP newly acquired/constructed property -w/ building coverage -w/ business personal property -when this terminates

-w/ building coverage: --provide automatic (subject to max) coverage for new building being constructed at premises described in declarations -- for newly acquired building @ other location if purpose of newly acquired building is similar to use of building described in dec page OR newly acquired building used as warehouse -w/ business personal property coverage: automatic coverage for --BPP @ any newly acquired location other than fairs/trade shows/exhibitions --BPP @ newly constructed/acquired buildings at location described in declarations terminate automatically @ earliest of 3 days: -expiration date of policy -30 days after acquisition of new location/start of construction of new building -date insured notifies insurer of new location/new building

commercial property conditions: control of property (2 parts)

1. coverage under policy not affected by acts/omissions of persons other than the insured if those persons aren't acting under the direction/control of insured 2. violation of policy condition at one location will not affect coverage at any other location

ISO Commercial Property Endorsement: Ordinance/Law coverage -3 coverages included -limit -what unendorsed forms include

3 coverages for losses resulting from the endorsement of building endorsement -Coverage A: cover value of undamaged portion of building that must be demolished (changes partial to total loss) -Coverage B: cover cost to demolish undamaged portion of building/remove its debris when demolition required by building code -Coverage C cover increased cost to repair/rebuild the property resulting from the enforcement of building/zoning/land use law Coverage B/C are provided under one blanket limit -unendorsed forms exclude all losses except a small amount of coverage for Coverage C

commercial property conditions -definition -which coverages this applies to -where this is specified

A required component of the commercial property coverage part that contains conditions applicable to all commercial property coverage forms -printed as separate form, apply to all coverage forms in commercial property coverage part unless coverage form contains condition to contrary -do not require reiteration in each coverage form

commercial property basic/broad form: exclusions

Apply to losses caused directly/indirectly by any of these perils even if another covered cause contributed to loss 1. Ordinance or Law: eliminate coverage for consequential losses resulting from enforcement of building ordinance/law 2. Earth Movement: excludes earthquakes, landslides, mine subsidence and everything except sinkhole collapse (ensuing losses from fire/explosion are covered!) 3. Government Action: exclude seizure/destruction of property by governmental action (exception is destruction of property to stop spread of covered fire) 4. Nuclear Hazard (exception is loss by fire from nuclear whatever) 5. Utility Services: exclude loss caused by power failure/other utility service if failure originates away from described premises (overhead power line way from premises), or if only failure involves equipment supplying utility service to described premises from source way from described premises (overhead power line on premises) -exception is loss from covered peril resulting from power failure 6. War and Military Action (except terrorism) 7. Water: exclude flood/surface water/tide/wave/overflow of water/mudslide, backing up of sewer/drain/sump, underground water seeping through anywhere -exception is damage by fire/explosion/sprinkler leakage caused by above. 8. Fungus, Wet Rot, Dry Rot, and Bacteria: exception is if it's from fire/lightning (subject to anti-concurrent causation), each cause of loss form has additional coverage for this which has most amount of insurance Other (not subject to anti concurrent causation wording) -electrical/magnetic/electromagnetic energy damaging electrical devices (except for resulting fire damage) -rupture/burst of water pipes unless caused by covered cause of loss (except sprinkler leakage, exclusion only in basic form) -leakage of water/steam -explosion of steam boiler/pipe/turbine/engine owned/leased/operated by insured -mechanical breakdown -neglect

common policy conditions

Attached to every CPP/monoline policy, applying to all coverage parts in policy unless stated otherwise -cancellation -changes -examination of books/records -inspections/surveys -premiums -transfer of rights and duties under this policy

BPP conditions

abandonment appraisal duties in event of loss loss payment recovered property vacancy valuation mortgageholder coinsurance

BPP Addl Covgs/Covgs Ext Special Limits -how limits can be increased (+exceptions)

all BPP additional coverages/coverage extensions (except Preservation of property) have special dollar limits) -most of the time these limits are insufficient -limits can be increased by getting higher limit in declaration, add endorsement or buy another type of policy --Pollutant Cleanup/Removal or Electronic Data usually can't have a higher limit under BPP

commercial property special form additional coverages/coverage extensions

also in broad form: -collapse -fungus unique: -property in transit -glass extension -water/damage

BPP optional coverages: agreed value -where it's shown -what the insured gets out of it -what the insured probably needs to submit and UW have to be careful -what happens when limit of insurance < agreed value, and when limit of insurance >= agreed value -when coverage ends and renewal

amount entered under agreed value heading in dec page for each category of property to which option applies -insured removes uncertainty as to whether amount of insurance carried complies with coinsurance condition as both insured/insurer agreed in advance amount in declarations is adequate -UW must be careful since insured is tempted to underinsure (esp cause losses usually partial), insured will probably submit signed statement of value if limit of insurance > agreed value, pay loss in full up to limit if limit of insurance < than agreed value, loss payment reduced proportionally: loss payment = (limit / agreed value) * loss - deductible coverage goes until agreed value expiration date shown on declarations or policy expiration (whichever first) and needs renewal, or else coinsurance conditions reinstated

BPP Coverage extensions: when it applies, what each does/does not covers -newly acquired/constructed property -personal effects/property of other -valuable papers and records (other than electronic): what it covers -property off premises -outdoor property -non-owned detached trailer -business personal property temporarily in portable storage units

apply if at least 80% coinsurance or value reporting period symbol shown in declarations -payable in addition to overall limits shown in declaration (subject to special limits) -newly acquired/constructed property -personal effects/property of others: limited coverage for personal effects owned by individual insured/partner/member/officer/manager/employee of insured while on premises described in declarations --also covers property of others in care/custody/control of insured --not covered for loss/theft -valuable papers and records (other than electronic): covered for cost of blank records + labor to transcribe/copy duplicate information --accounts receivable, mailing lists, legal docs, medical records, specifications, drawings -property off premises: coverage for covered property while away from described premises --includes property temporarily @ location insured doesn't own/lease/operate, property in storage @ location leased after inception of current policy, property @ fair, trade show, exhibition --does not include property in/on vehicle or in custody of salesperson except @ fair/trade show -outdoor property: cover loss to outdoor fences, radio/TV antenna, trees/shrubs/plants --has own list of covered causes of loss: only loss by fire/lightning/explosion/riot/civil commotion/aircraft -non-owned detached trailer: extends 'your business personal property' to leased trailer if it's used in insured's business and in insured's care/custody/control and insured must have contractual responsibility to pay for loss/damage to trailer --does not apply if trailer attached to motor vehicle/conveyance and during hitching/unhitching operations -business personal property temporarily in portable storage units: temp insurance for BPP while stood in portable storage unit (trailer or actual unit) --must be located within 100 feet of building/structure described in declarations or 100 feet of described premises (whichever greater) --ends 90 days after property placed in unit or if unit in use at premises for > 90 days --limit 10000 regardless of # of units

BPP optional coverages: inflation guard

automatically increase limit of insurance by % of annual increase shown on dec page -pro rata from date limit of ignorance became effective to date of loss before loss payment is computed -separate annual increase for buildings and personal property

commercial property basic/broad form: covered causes of loss

both are named perils: broad form covers all perils in basic +3 (most insureds choose broad even though it is slightly more expensive) -fire -lightning -explosion -windstorm/hail (doesn't include damage to interior unless building damaged by wind first, also doesn't include hail damage to vegetated roof) -smoke (sudden and accidental, not from industrial or smudging) -aircraft/vehicles (aircraft physical contact only, vehicle physical contact or contact from object thrown by vehicle) -riot/civil commotion -vandalism (except from entry/exit of burglars) -sprinkler leakage -sinkhole (not cost of filling sinkhole) -volcanoes (all eruptions in 168 hour period are one occurrence so one deductible/limit, not earthquake from eruption) -broad form only: --falling objects (only if roof/wall first damaged by falling object) --weight of ice/snow/sleet (not to vegetated roof or property in open) --water damage (from water/steam leakage from breaking apart/cracking of plumbing/heating/aircon/other system in covered building), also covers cost to tear out/replace building to repair leaky system. Will not cover cost to repair defect causing loss or repair gradual damage of 2 weeks or more

Building (BPP definition) -what the definitions include -fixtures

buildings/structures listed/described in declarations, including -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 service the building or its premises (eg. fire extinguishing equipment; outdoor furniture; floor coverings; equipment for refrigeration, ventilation, cooking, dishwashing, or laundering) -if not already insured, includes addition/alteration/repair in progress including materials/equipment/supplies used within 100 feet of described premises fixtures: attached to building/land in a way they can't e easily removed (plumbing, electrical, light poles etc) -things like fences/signs usually excluded

BPP debris removal -what it does -what coverage includes -what coverages DOES NOT include

cover cost of removing debris of covered property resulting from covered cause of loss during policy period -includes: --cost to cleanup pollution at insured's premises caused by insured peril (fire causes toxic chemicals on floor of insured building) --(maybe) cost to remove debris of property that is not covered property (neighbor's house blown onto premises) -does NOT include: --costs for cleanup/removal of pollutants from land or water --cleanup of off premises pollution even if covered loss

commercial property water damage/other liquids/powder or molten material damage extension -what it covers -does not pay for -does pay for

cover cost to tear out/replace any part of building necessary to repair appliance/system from which water or another liquid has escaped -does not pay for repair of defect the resulted in leakage -does pay for repairs to fire extinguishing equipment if damage results in discharge of substance from automatic fire protection system/is directly caused by freezing

ISO Commercial Property Endorsement: spoilage -what it covers -other aspects

cover damage to perishable stock resulting from: -power outage -on premise breakdown, -contamination of insured refrigerating, cooling, humidity control power outage should be caused by condition beyond insured's control, not subject to coinsurance, cannot be provided under blanket limit

commercial property glass extension

cover expense of installing temporary glass plate/boarding up opening when repair/replacement of damaged glass has been delayed -also pays for cost to clear obstructions (not window displays) preventing replacement of glass

ISO Commercial Property Endorsement: value reporting form -what it covers/is paid out and why this is good -penalties for failure and what they are -the process of this endorsement -when insurers refuse to add endorsement

cover fluctuating value of business personal property by providing insurance for insured's max expected values and require insured to periodically report property values to insurer (frequency of reporting indicated by symbol in declarations) --as long as reporting is accurate/on time, insurer pays full amount of any loss that occurs (subject to limit) even if values are greater than reported @ time of loss penalties for failure apply if: -no report is made (loss payment reduced to 75% of otherwise collectible loss) -1+ reports past due after initial (loss payment limited to last reported value) -reports are inaccurate (loss reduce by proportion value reported fears to correct value process: insured pays advance premium @ policy inception, advance premium based on 75% of limit -final premium determined after policy anniversary based on reported value (not obligated to pay more than limit even if reported values higher) --(this way insured has adequate limit to cover max personal property value/pay premium on reported) may not be issued for smaller insured since premium might not be large enough to warrant added expense of processing reports/final premium calculation

BPP: your business personal property -when the property is covered -what kind of property is covered

covers personal property owned by insured/used in in insured's business (applies only when property located in/on described building, in the open (or vehicle) within 100 feet of building/structure or within 100 feet of described premises (whichever distance greater) Includes: -furniture and fixture, machinery and equipment, stock, all other personal property owned by insured/used in insured's business except excluded --stock: merchandise held in storage/for sale, raw materials, finished goods including supplies used in packing or shipping -labor/materials/services furnished by insured on personal property of others -interest in improvements/betterments (even if technically real property) -leased personal property for which named insured has contractual responsibility to procure coverage

commercial property theft related exclusions/limitations

covers theft of property that is NOT specifically excluded excludes: -dishonest/criminal acts of the insured/or partners/members/officers/managers/directors/employees of insured (except acts of destruction by employees) -voluntary surrounding of property as result of fraudulent scheme/trickery (thief tricking salesperson into allowing merchandise removal) -loss of property transferred outside of described premises on basis of unauthorized instructions -loss by theft of construction materials not attached to buildings (unless materials held for sale by named insured) -loss of property that's missing w/o explanation or evidenced by inventory shortage -special limits on theft loss on property that's attractive to thieves (furs, jewelry, precious metal, tickets) theft exclusion endorsement available if underwriter feels risk is unacceptable/insured wants to reduce policy premium

commercial property coverage forms -definition -usually contains -common forms in commercial property (3)

definition: commercial property coverage part component that can be any of several commercial property forms containing an insuring agreement and related provisions usually contains: -insuring agreement -delineation of property covered/not covered -addl coverage and coverage extensions -provisions/definitions applying only to that coverage form commercial property coverage parts usually have >1 commercial property coverage form: -building and personal property (BPP) form: insure buildings, business personal property, personal property of others -addl forms for insuring buildings/personal property in special situations (under construction, condo association/unit owner) -loss of business income/extra expense

commercial property cause of loss forms -definition -types -where these are specified

definition: specify perils covered types: basic, broad, special -CP coverage part can have 1+ causes of loss forms and loss forms can apply to different causes of loss --dec page will indicate which form applies to each type of property @ each location (it's infrequent that different cause of loss forms are actually used in same policy)

BPP preservation of property -what it does -what is covered -limitations

extends policy to cover protect covered property while it is being moved/for up to 30 days at new location -broader than normal coverage: protect against 'any direct physical loss/damage' NOT limited to covered cause of loss/locations in coverage form -still subject to limits of insurance stated in declarations (no protection if limit exhausted)

BPP fire department service charge -why it's a thing -what is paid out

fire departments in some localities might charge for service in controlling/extinguishing fire -pays out charges up to limit @ each location if required by local ordinance/assumed by contract before loss occurs

common policy conditions: premium (who's responsible for paying)

first named insured is responsible for paying policy premiums (refunds go to first named insured too)

anti concurrent causation wording

for basic/broad form exclusions: -losses caused directly or indirectly by any of these perils are NOT covered even if another covered cause contributed to loss unless exclusion specifically states otherwise -to prevent the concurrent causation doctrine: loss covered when caused by 2+ independent perils if only one of perils is covered even if other peril/perils are clearly excluded

BPP conditions: vacancy -non covered causes of loss -definition of vacancy for general lessee vs. tenant

if building loss occurs has been vacant for >60 consecutive days before loss, insurer does not pay if loss caused by: -vandalism -sprinkler leakage (unless protected against freezing) -breakage of building glass -water damage -theft/attempted theft -any other covered perils causing loss will have loss payment reduced by 15% definition of vacancy: -for general lessee (entity leasing entire building and subleasing portions of building to others): 'building' is the entire building and considered vacant unless >=31% of total square footage is rented out and used to donut customary operations --building under construction/renovation is non vacant -tenant: 'building' is the unit rented and is vacant when it doesn't contain enough business personal property to conduct customary operations -general lessee and tenants can be penalized separately

BPP conditions: duties in the event of a loss

if insured fails to perform any of the following, insurer might not have to pay: -notify policy if loss appears to be from violation of law (vandalism/arson/theft) -give insurer prompt (as soon as feasible) notice of loss (including description of property damaged) -provide info on how/when/where loss happened -take all reasonable steps to protect property from further loss -at insurer request, give insurer inventories of damaged/undamaged property and permit insurer to inspect property/records -examination under oath for any matter related t loss -cooperate with insurer in adjustment of loss -send signed, sworn proof of loss (statement of facts) to insurer within sixty days of insurer request for one

BPP optional coverages: extension of replacement cost to personal property of others -what it does -how amount of loss is calculated

if insured lease equipment and agreement makes insured responsible for replacement cost of these items in event they are damaged -insured can extend replacement cost option to personal property of others -amount of loss calculated according to written agreement between insured/owner of property, but can't exceed replacement cost of property or applicable limit of insurance

BPP conditions: mortgageholder -loss payment if MH exists -when act of insured doesn't impair rights of MH -options insurer has if making payment to MH -when the insurer has to notify MH of policy cancellation

if mortgage holder shown on declarations, insurer obligated to include mortgage holder in payment for loss to mortgaged property -usually loss payment check/draft made payable jointly to insured/all mortgage holders so they can figure out division of payment -usually loss payment used to repair/rebuild mortgaged property and mortgage continues in force as before act of insured DOES NOT impair rights of mortgage holder if mortgage holder pays premium due insured didn't pay, submits proof of loss and notified insurer of any change in ownership/occupancy/increase in risk that they are aware of -insurer may need to make payment to MH even if coverage denied: --insurer can take over rights of MH to extent of such payment and collect payment from insured --pay off outstanding balance of mortgage and take over rights of MH -insurer must notify mortgage 10 days before cancel policy due to nonpayment (30 days for any other reason) --if no notification, policy remains in force for MH even if no protection for insured

common policy conditions: transfer of rights and duties under this policy -what insured cannot do -when coverage is automatically transferred

insured cannot transfer rights/duties under policy to any other person or organization without the insurer's written consent (new owner of property) -coverage automatically transfered if individual named insured dies to insured's legal representative or any person having proper temporary custody of insured property

BPP conditions: loss payment -4 options -least used option and why -max insurer will pay -when insurer notifies insured

insurer has 4 options to pay: -pay amount of loss/damage -pay cost of repair/replace damaged property (not including increased cost from ordinance/law) -take over all/any part of property and pay agreed/appraised value -repair/rebuild/replace damaged property w/ other property of like kind/quality --(last one is rarely exercised as this may cause insurer to become guarantor of repaired/replaced property, meaning if it is unsatisfactory insurer might be required to make it satisfactory even if cost of that goes over the limit) max insurer will ever pay is insured's financial interest in covered property insurer will notify insured of intent to either pay claim/deny payment within 30 days of satisfactory proof of loss (payment due 30 days after amount of loss established)

common policy conditions: examination of books and records -what it does -why it's included -what the insurer has the right to do

insurer has right to examine/audit insured's books/records related to policy at any time during policy period and up to 3 years after policy termination -included bc many commercial insurance policies issued with estimated premiums and final premium is determined after policy expires (based on final figures that insured reports of some variable premium base) --insurer may accept insured's report w/o verification but has the right to verify by making on-site inspection of books/records

common policy conditions: inspections and surveys -what the insurer has the right to do (and who can do this, why it's important) -disclaimer clauses and why they are a thing

insurer has right/not the obligation to inspect insured's premises and operations @ any reasonable time during the policy period - inspections can be made by insurer own personnel/by another org acting on insurer behalf (determine insurability of insured's property/operations, setting adequate rates, making risk control recommendations) -insurer may inform insured of results/recommendations but doesn't HAVE to disclaimer clauses: insurer doesn't make safety inspections, guarantee conditions are safe/healthful or guarantee insured is in compliance with safety/health regulations -included to protect insurer against suits made by persons who allege their injuries wouldn't have occured but for insurer failure to detect hazardous condition/violation of law

building and personal property coverage form (BPP) -what insurer pays for -categories of covered property

insurer pays for direct physical loss of/damage to Covered Property @ described caused by/resulting from any Covered Case of Loss 3 categories of property (coverage can be provided on any combination of these categories, limits for each category on declarations): -building -your business personal property -personal property of others

commercial property conditions: legal action against us (2 conditions), liberalizations (when it applies)

legal action: 2 conditions insured must meet to bring legal action against insurer to enforce policy 1. insured must have complied with all conditions of policy (in both coverage part and Common policy and loss conditions) 2. action must be brought within 2 years after the date on which the direct physical loss occured liberalization: if insurer adopts revision that broadens (not restrict!) coverage under commercial property coverage part (and no addl premium charge), broader coverage extended automatically to policies already in effect (applies only if amendment adopted during policy term or within 45 days before effective date of policy)

BPP: property not covered -reasons to exclude property from coverage -how some of these items can be insured -property otherwise insured

list classes of property/kinds of property losses that don't count as covered property reasons to exclude property from coverage: -some kinds of property are illegal to insure (smuggled goods being held for sale) -some property may be less susceptible to loss by most of perils insured against (building foundations, retaining walls, underground pipes etc) and are left out to reduce insurance needed to satisfy coinsurance -some property can be insured advantageously under other forms (money, security, auto under other policy) even if excluded, endorsements can maybe make insurance available for these items (except for illegal items) -exceptions exist to provide coverage under certain circumstances for some types of property (animals in pet shop, vehicles) property otherwise insured is covered under BPP in excess of other

BPP pollutant cleanup/removal -what it does and condition for payout

pay insured expense for cleanup/removal of pollutants from land/water @ described premises IF release/discharge/dispersal/seepage/migration/escape of pollutants is result of covered cause of loss that occurs during policy period

financial consequences of property losses -types of consequences

possible adverse financial consequences: -reduction in value of property can be measured: --no remaining worth if property must be replaced --cost of repair/restoration if property can be repaired/restored -lost income: due to property not being able to be used until it's repaired/restored/replaced -extra expenses: may incur if temporary substitute acquired or temporary maintenance of damaged property in usable condition

BPP conditions: abandonment -what it does

prohibit insured from abandoning damaged property to insurer for repair/disposal -making arrangements for repair/disposal of covered property is insured's responsibility unless insurer chooses to exercise its option under the loss payment condition

commercial property property in transit extension -what it does -named perils

property in transit extensions: up 5000 of additional protection for loss to insured's property in transit (must be in/on vehicle owned/leased/operated by insured and can't be in custody of insured's sales personnel AND loss must occur in coverage territory) -named perils: fire/lightning/explosion/windstorm/hail/riot/civil commotion/vandalism/upset and overturn of vehicle/collision of vehicle with another vehicle or object -theft also covered if entire bale/case/package stolen by forced entry into securely locked body/compartment of vehicle (need marks of forced entry) low coverage limit, restricted covered perils (may need different inland/ocean marine policy)

BPP optional coverages:replacement cost -what it does and what insurer has to pay -when payment is made and the process for insured to get it -coinsurance condition/what is valued @ replacement -what condition does not apply to

replace phrase ACV with replacement cost in valuation condition -insurer obligated to pay cost to replace damage/destroyed property with NEW property of like kind/quality (w/o deduction for depreciation/obsolescence) -payment not made until property repaired/replaced and only if it was done in reasonable time (based on ACV if it takes too long) --insured can make claim on ACV basis and the difference between ACV/replacement made after completion of repair/reconstruction (if insurer notified within 180 days after occurrence) -coinsurance condition still applies but amount of insurance required based on replacement cost not ACV -- tenant improvements/betterments also valued @ replacement cost if tenant repairs/replaces @ own cost when reasonably possible after loss -condition does not apply to property of others (another coverage), contents of residence, manuscripts, works of art, antiques, rare articles --stock not included (unless stated in declaration): merchandise, raw materials, goods in process and finished goods

BPP conditions: coinsurance -what it does -loss payment while underinsured calculations

requires insured to car insurance equal to at least specified % (shown in declarations) of covered property ACV (or replacement cost if that optional coverage is in effect) -loss payment reduced if amount of insurance doesn't meet the %: (did/should)*loss - deductible, subject to policy limit --should = property ACV (or replacement cost) immediately before loss occurred * coinsurance percentage

BPP conditions: valuation -what it does -valuation for different kinds of property

rules for establish value of insured property, usually valued @ ACV (can be changed to replacement cost using optional coverage) -property other than specifically listed: ACV -building damage < 2500: replacement except awning, floor cover, appliance, outdoor equipment/furniture -stock sold/not delivered: selling price less discounts/unincurred costs -glass: replacement cost for safety glazing if required by law -valuable papers/records excluding electronic data: cost of blank media+cost of transcription/copying (2500 coverage extension to replace/restore los info -improvements and betterments --replaced by other than insured: not covered --repalced by insured: ACV --not replaced: % cost on remaining life of lease -electronic data (only under additional cover with 2500 annual aggregate limit) --replaced: cost to replace/restore that's been destroyed or corrupted by covered loss --not replaced: cost to replace media w/ identical blank media

commercial property special form unique exclusions

specifically excludes difficult to insure perils (insurer still pays if one of these excluded causes of losses results in a specified cause of loss insured under Broad form) -Wear and tear -Rust, corrosion, decay, deterioration, or hidden or latent defect -Smog -Settling, cracking, shrinking, or expansion -Infestations and waste products of insects, birds, rodents, or other animals -Mechanical breakdown -Dampness or dryness of atmosphere, changes or extremes in temperatures, or marring or scratching (applicable to personal property only) -weather conditions contributing to other excluded causes of loss (flood waters from high winds) -acts/decisions including failure to act/decide of any person/group/organization/government (authorities don't take flood control measures) -fault/inadequate planning/zoning/surveying/siting/design/specifications/workmanship/repair/construction/renovation/remodeling/grading/compaction/materials/maintenance -loss or damage to products: exclude coverage for damage to merchandise from production errors (exception is loss from covered cause of loss because of production error) -release/discharge/dispersal of pollutants (exception is release of pollutants from any specified cause of loss and glass damaged by chemicals applied to glass)

commercial property special form: losses covered only if caused by specified cause of loss

specified meaning cause of loss insured under Broad form -Valuable papers and records -Animals, and then only in the event of their death -Fragile articles if broken, such as glassware, statuary, marble, chinaware, and porcelain (but not including building glass and containers of property held for sale) -Builders' machinery and equipment owned or held by the insured unless on or within 100 feet of the described premises

commercial property conditions: transfer or rights of recovery against others to us -when insurer might not have to pay loss -when insured is allowed to waive right of property and when they're not

subrogation: -if insured takes any action that eliminates insurer right of recovery (other than one authorized), insurer may not be required to pay loss --insured allowed to waive right of recovery against any other part provided waiver made in writing before loss occurs --insured can waive right of recovery after loss ONLY to party insured under same policy, parent/subsidiary company or tenant of insured property

components of commercial property coverage part

what it is: commercial package policy coverage component providing broad range of coverage to middle market/larger firms to insure buildings/business personal property Components: -commercial property declarations -1+ property coverage forms -1+ causes of loss forms -Commercial Property Conditions -Any applicable endorsements