Commercial Property Insurance

A fire destroys the new clothes an employee has brought in to work to show her friends. Coverage applies under the insured's building and personal property coverage form because the clothes are an employee's personal property. When the insurance company settles, who will receive the payment? A) Employee. B) Store where the clothes were charged with a credit card. C) Insured business owner. D) Payroll department.

a

Actual loss of business income payments by an insurer may include the following EXCEPT: A) amount required to repair property damage that caused suspension of business. B) continuing normal operation expenses. C) payroll expenses. D) net income that would have been earned.

a

All of the following losses or damages would be covered under the commercial property broad causes of loss form EXCEPT: A) earth movement. B) glass breakage. C) falling objects. D) weight of snow or ice.

a

An insured has a commercial property policy with a Causes 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? A) $500.00 B) $750.00 C) $1,000.00 D) $0.00

a

High winds and severe storms caused power outages and food spoilage totaling $50,000 in a large grocery store. Utility substations serving the store caused the outages. The store had a businessowners special property form policy with a $1,000 deductible. How much of the spoilage loss will the policy pay? A) $0 because the loss is excluded. B) $0 because the utility company must pay for the loss. C) $50,000.00 D) $49,000.00

a

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? 3 A) Weight of snow, ice or sleet. B) Vandalism. C) Attempted theft. D) Building glass breakage.

a

Which one of the following types of property is NOT covered under the building and personal property form? A) Patios and walkways. B) Property that is 75 feet from the insured premises. C) Improvements made by a tenant to the building. D) The cost of labor for work done on customer's property in the insured's possession.

a

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) $65,000.00 B) $35,000.00 C) $50,000.00 D) $25,000.00

b

Builders risk coverage that is written with the basic causes of loss form will cover loss caused by: A) collapse. B) hail. C) falling objects. D) earthquake.

b

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

b

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) Lesser of $100,000 or the actual loss for each month. B) Lesser of $50,000 or the actual loss for each month. C) $50,000.00 D) $100,000.00

b

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

b

Under the building and personal property coverage form, how much will an insurer pay for fire department service charges? A) Up to $500. B) Up to $1,000. C) Up to $2,000. D) Actual charges.

b

A therapist owns office space in a commercial office building that is legally organized as a condominium. Which of the following best protects the therapist's business personal property? A) Commercial package policy (CPP). B) Unit owners form (HO-6). C) Condominium commercial unit owners form. D) Condominium association coverage form.

c

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? A) $150,000.00 B) $145,000.00 C) $0.00 D) $100,000.00

c

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) Blanket policy. B) Value reporting form. C) Peak season endorsement. D) Business income and extra expense endorsement.

c

Orc manufacturing has several long-term contracts with customers. These contracts run for 5 years and uniformly provide that they are automatically cancelled if Orc is unable to meet supply dates. If Orc's building is destroyed, it can be rebuilt in 9 months. What form of time element coverage is best suited to protect Orc against the potential loss of income from the long-term contracts? A) Business Income without extra expense. B) Business income with extra expense. C) Extra expense coverage. D) Leasehold interest coverage.

c

The Building and Personal Property Coverage Form can be used to insure each of the following types of property EXCEPT: A) outdoor fixtures. B) plants and shrubs held for sale. C) money. D) property belonging to others.

c

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) $15,000.00 B) $17,000.00 C) $18,000.00 D) $26,000.00

c

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

c

Which of the following items would be covered under the building and personal property coverage form? A) Land surrounding the business. B) Underground sewer pipes. C) Sign attached to the building. D) Retaining wall separating the insured's building from an adjacent alley.

c

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? A) Extended business income insurance. B) Business income with a monthly limit of indemnity. C) Extra expense insurance. D) Business income with the agreed value option.

c

A commercial property policy with a Causes of Loss basic form covers all of the following perils EXCEPT: A) sinkhole. B) volcanic action. C) sprinkler leakage. D) earthquake.

d

All of the following items are excluded from coverage under a building and personal property coverage form EXCEPT: A) patios or other paved surfaces. B) currency or securities. C) automobiles held for sale. D) outdoor furniture.

d

All of the following items are excluded from the building and personal property form EXCEPT: A) personal property while airborne. B) power boats. C) currency. D) air conditioning units.

d

An insured has a value reporting form that requires monthly reporting. A standard penalty applies for late or underreporting. On June 30, the insured reports that the values as of May 31 were $300,000. When the insured files a claim for a loss that occurred on May 20 in the amount of $60,000, the insurance company checks the actual inventory as of May 31 and finds that it was $500,000. What amount will the insurance company pay? A) $500,000.00 B) $300,000.00 C) $60,000.00 D) $36,000.00

d

Building coverage of the building and personal property form insures all of the following things EXCEPT: A) permanently installed fixtures. B) floor coverings. C) personal property used to service the premises. D) desks and office equipment.

d

The condominium association coverage form may include all of the following property EXCEPT: A) refrigerators, dishwashers, or stoves that are within the individual units. B) alterations that are part of the building. C) owners' business personal property. D) unit owners' personal property.

d

Under a Business Income Coverage form, business income is: A) net income after taxes. B) gross income. C) net income plus continuing expenses, excluding payroll. D) net income plus continuing expenses, including payroll.

d

When a loss occurs, the Causes of Loss special form requires the insurance company to: A) prove that the insured used defective materials if a collapse occurs during construction. B) pay for all losses to the insured property. C) pay for decay or deterioration losses. D) pay for all losses not specifically excluded or limited by the policy.

d