Unit 11 (Commercial Property)

An insured purchases a commercial property policy with a causes of loss - special form that covers risks of direct physical loss. The policy has a $5,000 deductible. an earthquake causes $150,000 in damages to the property. what amount will the policy pay?

$0 (basic broad and special forms all exclude earthquakes)

The insured is a tenant in a shopping mall. A fire starts in the insured's store, resulting in the following damages: business personal property, $15,000; damage to fixtures installed by the insured, $2,000; damage to property belonging to customers, $1,000; and smoke damage to the ceiling and walls, $8,000. How much will the insured's building and personal property coverage form pay for this loss? A) $18,000.00 B) $15,000.00 C) $17,000.00 D) $26,000.00

$18,000 (the policy will pay for all of the loss except for the damage to the ceilings and walls, which are part of the building owned by the landlord)

If the policy limits of the building and personal property form have been exhausted, how much additional coverage is available for debris removal? A) $10,000.00 B) 25% of the policy limit. C) 25% of the amount of the actual loss. D) $25,000.00

$25,000

Regina chose to add the outdoor property coverage extension to her building and personal property coverage plan. There was a horrible storm that destroyed her fence and the estimate to repair it is $3,000. What amount will the insurer pay to Regina for this damage?

$1,000 (maximum payable is $1,000 with a $250 limit applying to any one tree plant or shrub)

The insureds business sustains $25,000 damage in a fire. the fire department that was called to the scene billed the insured $1,000. The business is insured under the building and personal property coverage form for $500,000 with a $5,000 deductible. How much will the insurance company pay for this loss?

$21,000

Which commercial property cause of loss form does NOT cover collapse?

Basic

Which business income coverage form covers expenses that that insured incurs to reduce loss?

Business income without extra expense coverage

which of the following is covered under the builders risk coverage form? -the foundation - trees, shrubs, or plants -land -signs not attached to the building

the foundation

all of the following are excluded from coverage under the building and personal property form EXCEPT -the insureds merchandise -lawns and growing crops -the foundation of a building -autos for sale

the insureds merchandise

Which of these conditions describes how losses will be settled by the insurance company? -the actual cash value condition -the valuation condition -the loss payment condition -the duties in the event of a loss condition

the valuation condition

Coverage for the loss of business income over a period of time that results from a direct physical loss is also known as

time element coverage

Which of the following properties is EXCLUDED from coverage in the building and personal property coverage form? -outdoor fixtures -completed additions -outdoor furniture -underground pipes

underground pipes

the condominium association coverage form may include all of the following property EXCEPT -alterations that are part of the building -unit owners personal property -owners business personal property -refrigerators, dishwashers, or stoves that are within the individual units

unit owners personal property

under the building and personal property coverage form, how much will an insurer pay for fire department service charges?

up to $1,000

Joe's marina has fluctuating inventory and property that often moves from one location to another. in order to avoid any problems with underinsurance or overinsurance, Joes marina should purchase which of the following forms?

value reporting

An insured buys a business income policy with a maximum policy limit of $100,000 and a 25% monthly limit of indemnity. How much can the insured collect if the lost income is $40,000 in the first month and $10,000 in the second month? A) $50,000.00 B) $65,000.00 C) $35,000.00 D) $25,000.00

$35,000 (the monthly limit of indemnity restricts how much the insured can collect in a single month to a specified percentage of the policy limit. The insured will collect $25,000 for the 1st month and $10,000 for the 2nd month)

An insured has a commercial property policy with a cause of loss - broad form with a $250 deductible. During a snowstorm, a $750 rooftop sign is destroyed. How much will the policy pay for the sign

$500 (signs attached to the building are covered to $1,000 - depreciation)

What is true about collapse additional coverage

-collapse is defines as an abrupt falling down or caving in of the building or part of the building that results in te building being unusable -the collapse is covered if it was caused by falling objects -the collapse is covered if it was caused by the weight of snow, ice, or sleet

Condo association coverage form insures a condo association against a direct physical loss or damage to all of the following

-personal property of others in the care, custody, or control of the association while it is at the premises -business personal property -buildings

Business personal property is covered while it is in the building, outside the building, or in a vehicle within how many feet of the premises?

100

An insured with an extra expense coverage form will be paid how much of the lost business income if the restoration period was over 60 days?

100%

Under the earthquake and volcanic eruption endorsement, all earthquake shocks or volcanic eruptions that occur within a certain number of hours constitute a single earthquake or volcanic eruption. What is that period?

168 hours

The loss payment condition states that the insurance company will give the insured notice of how it intends to value the loss within how many days after it receives the insured sworn statement of loss

30 days

the insured must send a signed statement of loss to the insurance company within how many days?

60

Which statement about additional coverages found in the business and personal property coverage form is CORRECT?

Additional coverage forms are automatically included

Loss caused by sprinkler leakage is covered under which commercial property causes of loss form? -basic -broad -special -all

All

Which additional coverage pays for the loss of business income, even after operations have been resumed, until the business has been restored, but for no more than 60 days from the date the business is resumed?

Extended business income coverage

Insureds who depends on a particular business as the primary buyer for their products are covered under what form if a direct physical loss at the primary buyers location causes the insureds earnings to suffer?

Recipient Location

Which cause of loss form provides open peril coverage?

Special

The insured buys an office building next door to her insured business. Is the new building covered under her existing building and personal property coverage form?

Yes, up to $250,000 coverage is available

the builders risk coverage form requires that the insured has limits equal to

actual cash value of the building under construction

actual loss of business income payments by an insurer may include all of the following EXCEPT -amount required to repair property damage that caused suspension of business -payroll expenses -continuing normal operation expenses -net income that would have been earned

amount required to repair property damage that caused suspension of business

Which of the following properties would NOT be excluded under the building and personal property coverage form? -lawn -driveway -cost of excavation -animals held for sale

animals held for sale

all of the following are true EXCEPT -Buildings under construction are considered vacant -if a building has been vacant for more than 60 consecutive days, the insurer will not pau for a loss due to water damage -if a building has been vacant for more than 60 consecutive days, the insurer will not pay for a loss due to vandalism -if a building has been vacant for more than 60 consecutive days, the insurer will not pau for a loss due to theft

buildings under construction are considered vacant

Which of the following is NOT a component of the commercial package policy? -common declarations -common conditions -common exclusions -cause of loss form (basic, broad, or special)

common exclusions

a therapist owns office space in a commercial office building that is legally organized as a condominium. Which of the following best protects the therapists business personal property

condominium commercial unit owners form

building coverage of the building and personal property coverage form insures all of the following things EXCEPT -desks and office equipment -personal property used to service the premises -permanently installed fixtures -floor coverings

desks and office equipment

When an ordinance or law coverage endorsement is added to a property policy, all the following consequential losses are covered EXCEPT: A) direct damage caused by an interruption of utility services. B) increased cost of construction because of stricter building codes. C) demolition costs for the undamaged portions of the building. D) cost to remove the building debris.

direct damage caused by an interruption of utility services

the liberalization condition will automatically apply to the coverage if the revision is adopted by the insurer

during the policy period or within 45 days of the policy's effective date

Which of the following perils are excluded in the broad cause of loss form? -earth movement -collapse -water damage -weight of ice and snow

earth movement

all of the following losses or damages would be covered under the commercial property causes of loss - broad form - EXCEPT -weight of snow or ice -glass breakage -falling objects -earth movement

earth movement

a commercial property policy with the cause of loss - basic form covers all of the following perils EXCEPT -earthquake -sinkhole -sprinkler leakage -volcanic action

earthquake

a fire destroys the new clothes an employee has brought in to work to show her friends. Coverage applies under the insureds building and personal property coverage form because the clothes are an employees personal property. When the insurance company settles, who will receive the payment?

employee

All of the following are examples of property that can be insured under commercial property insurance EXCEPT -office buildings -factories -warehouses -employees home

employees home

Which of the following perils are covered in the causes of loss - basic form? -collapse -explosion -volcanic eruption -weight of snow, ice, sleet

explosion

Boones manufacturing has several long term contracts with customers. These contracts run for 5 years and uniformly provide that they are automatically canceled if Boone is unable to meet supply dates. If boones building is destroyed, it can be rebuilt in 9 months. What form of time element coverage is best suited to protect boones against the potential loss of income from the long term contracts?

extra expense coverage (with extra expense the insurer pays for any necessary extra expenses the business incurs during a period of interruption that follow a direct physical loss to property by a covered cause of loss)

Which of the following forms provides no reimbursement for lost business income but reimburses the insured for extra expenses to remain in operation?

extra expense coverage form

which one of the following forms would be most appropriate to protect against a suspension of business operations for an insured that cannot afford to have its operations interrupted? -business income with monthly limit of indemnity -extended business income insurance -business income with the agreed value option -extra expense insurance

extra expense insurance

Which of the following has special loss valuation requirements under the building and personal property coverage form -buildings -furniture and fixtures -glass -exterior signs

glass

builders risk coverage that is written with the causes of loss basic form will cover loss caused by

hail

Alan owns a landscaping business in which a majority of his personal property is stored off of the premise. Which of the following items would NOT be covered under the building and personal property form? -permanently installed machines and equipment used to manufacture and maintain supplies used for packaging and shipping -landscaped walks, ponds, and bridges located on the property that Alan has created to showcase his work -lawn sculptures birdbaths and fountains that all sells and incorporates into his custom designed projects -furniture and fixtures in his showroom and private offices used for consultations

landscaped walks, ponds, and bridges located on the property that Alan has created to showcase his work

Freds bike shop wants insurance to cover damage to property of others while in his control, but only if he is legally liable for the damage. Which of the following coverage forms should he purchase?

legal liability

If the monthly limit of indemnity option has been selected under the Business Income form, how much will an insurer pay for loss of business income for each month of loss? (Assume the declarations page shows a limit of insurance of $150,000 and a fraction of 1/3.) A) $100,000 B) Lesser of $100,000 or the actual loss for each month. C) $50,000.00 D) Lesser of $50,000 or the actual loss for each month.

lesser of $50,000 or the actual loss for each month

Which of the following optional coverages limits reimbursement for extra expenses or loss of business income to no more than the amount of loss incurred during the first 120 days following the direct loss? -extended period of indemnity -monthly limit of indemnity -maximum period of indemnity -extra expenses limit of indemnity

maximum period of indemnity

All of the following are one of the 11 covered perils on the basic form EXCEPT -volcanic action -smoke -vandalism -mechanical breakdown

mechanical breakdown

The building and personal property coverage form can be used to insure each of the following types of property EXCEPT -property belonging to others -plants and shrubs held for sale -outdoor fixtures -money

money

the builders risk reporting form requires a report of value that must be reported to the insurer every

month

under a business income coverage form, business income is

net income plus continuing expenses including payroll

Which of the following perils/additional coverages are NOT included in the causes of loss - broad form? -collapse -weight of ice snow sleet -water damage -nuclear hazard

nuclear hazard

Which of the following is an example of real property? -inventory -fixtures -machinery -office buildings

office buildings

All of the following items are excluded from coverage under a building and personal property coverage form EXCEPT -outdoor furniture -patios or other paved surfaces -currency or securities -automobiles held for sale

outdoor furniture

Which one of the following types of property is NOT covered under the building and personal property coverage form? -improvements made by a tenant to the building -patios and walkways -property that is 75' from the insured premises -the cost of labor for work done on customers property in the insureds possession

patios and walkways

When a loss occurs, the causes of loss - especial form requires the insurance company to

pay for all losses not specifically excluded or limited by the policy

Assume that a toy store has a fairly stable inventory except in November and December, when its inventory triples. What is the best way to insure the increase in the amount of coverage needed? A) Business income and extra expense endorsement. B) Blanket policy. C) Value reporting form. D) Peak season endorsement.

peak season endorsement (provides coverage for businesses that are dependent on certain times of the year for their primary income)

Which of the following coverage extensions provides up to $2,500 for coverage of personal effects of the named insured, employees and others?

personal effects and property of others

Extensions of coverage are available under the business and personal property form if the: A) insured carries both building and personal property insurance. B) policy indicates that 80% or higher coinsurance applies or the insured has purchased a reporting form. C) insured has declared an amount of insurance applicable to each extension. D) amount of building insurance is $100,000 or greater.

policy indicates that 80% or higher coinsurance applies or the insured has purchased a reporting form

which of the following would NOT be covered under a builders risk coverage form? -the foundation of a building under construction -equipment used to service the building -signs not attached to the building -a building under construction

signs not attached to the building

What commercial cause of loss form provides open peril coverage?

special

the transfer of recovery rights against others is found in the commercial property condition form and is also known as

subrogation

The form that covers commercial, residential, or farm buildings that are under construction is called

the builders risk coverage form

the condominium commercial unit owners coverage form covers all of the following EXCEPT -the buildings contents -the building -personal property of others in the insureds care -unit owners personal property

the building

What form is not found in a commercial property coverage policy

the declarations form

which of the following endorsements is used to provide coverage based on actual values at certain locations at specific times?

value reporting endorsement

ABC home improvement stores is a nationwide retailer with multiple stores and warehouses located across the country. The value of the property in its stores fluctuates frequently, and merchandise is frequently moved between warehouses. ABC home improvement stores would benefit by adding which of the following endorsements to its commercial property coverage?

value reporting form (used to provide coverage based on actual values at certain locations at specific times)

Airborne volcanic blasts or shockwaves, ash, dust, particulate matter, and lava flow is best described as

volcanic action

if a building has been vacant for more than 60 consecutive days before a loss occurs, which one of the following types of damages will be covered under a building and personal property coverage form? -vandalism -building glass breakage -weight of ice snow sleet -attempted theft

weight of snow, ice, or sleet