Commercial Insurance

Question 1

which forms contain theft peril?

Answer 1

all homeowners, condo, tenants

Question 2

out of theft, burglary and robbery, which is technically the best?

Answer 2

theft covg. if its gone its covered

Question 3

what is the definition of burglary?

Answer 3

if stolen, there is only coverage when there is a visible sign of forced entry

Question 4

burglary coverage is common on what?

Answer 4

mercantile stock policies

ex: in a retail store. otherwise, shoplifting would be covered

Question 5

of theft, burglary and robbery, which is the least comprehensive coverage?

Answer 5

robbery

Question 6

for robbery to be covered, what must take place?

Answer 6

there must be a legitimate threat of danger to the employee who works there

Question 7

robbery coverage is commonly placed on…

Answer 7

banks and money exchange places with known cash on hand

Question 8

commercial property risks on office building contain…

Answer 8

theft covg as there is no threat of shoplifting

Question 9

stores with small merchandise, and seasonal cottages often have…

Answer 9

burglary coverage not theft

Question 10

banks insurers would only offer this type of coverage because of the exposure…

Answer 10

robbery

Question 11

what are the 2 types of commercial prop insurance?

Answer 11

-named perils form
-broad

Question 12

commercial property insurance premium rates are calculated by.

Answer 12

underwriter at rate/$100

Question 13

what is taken into consideration when calculating a premium for a commercial property policy?

Answer 13

-construction (is it wood framed vs metal)
-accessibility to public protection services (ie: is there a full service firehall or just seasonal volunteer firemen)
-occupancy (of this premises and neighbouring premises)
-things like can the occupants take protective measures themselves as well (can they use fire extinguishers etc)

Question 14

what is loading?

Answer 14

an additional charge included in an insurance rate to reflect a hazard not contemplated in the base rate

Question 15

what is the purpose of loading?

Answer 15

to cover more perils

Question 16

what does loading do to the premiums?

Answer 16

increases premiums

-sometimes, can be a surcharge for additional premium required

Question 17

what is the definition of building?

Answer 17

Building means the building(s) described on the Declarations Page and includes…

i) fixed structures pertaining to the bld(s) and located on the premises
ii) additions and extensions pertaining to and in contact w the bldg (ex: balconies)
iii) permanent fittings and fixtures attached to and forming part of the bldgs
iv) materials, equipment, and supplies on the premises for maintenance of and normal repairs/alterations to the bldg or for bldg services
v) growing plants, trees, shrubs, or flowers inside the bldg

Question 18

what are some examples of what would be classified as “building”?

Answer 18

ladders, tools, vacuum cleaners, cleaning supplies, built in shelving, flooring etc

Question 19

what is the definition of stock?

Answer 19

“stock” means…

i)merchandise of every description usual to the insured’s business
ii) packing, wrapping and advertising materials
iii) similar property belonging to others which the insured is under obligation to keep insured or for which he is legally liable

Question 20

what are some examples of stock?

Answer 20

giveaway items, paper cups, utensils, anything that the customer would carry out of the building including foodstuffs

Question 21

what is the definition of equipment?

Answer 21

“Equipment” means:
i) generally all contents usual to the insured’s building including furniture, fixtures, furnishings, fittings, machinery, tools, utensils and appliances that are not already qualified as building or stock
ii) similar property belonging to others which the insured is under obligation to keep insured or for which he is legally liable (ex: leased equipment)
iii) tenants’ improvements, which are defined as building improvements, alterations and betterments made at the expense of the insured to a building occupied by the insured but provided the insured is not the owner of such building. if the insured purchased the use interest in tenants’ improvements made by a predecessor tenant, this form applies as though such tenant’s improvements had been made at the expense of the insured

Question 22

what is covered on a POED form?

Answer 22

-bldg
-equipment
-stock

Question 23

what is covered on a COED form?

Answer 23

-equipment
-stock

Question 24

what is the basis of the indemnity agreement on commercial broad form and named peril forms?

Answer 24

-there is no replacement cost
-so then the claims are based on the LEAST OF the ACV, insureds interest in property (whatever they could sell it for) or the insurance limit

Question 25

on a commercial policy, which section of the wording would signal that there is no replacement cost?

Answer 25

‘indemnity agreement’

Question 26

what are the insured perils on a commercial named perils form?

Answer 26

-fire or lightning
-explosion
*except: if explosion of apparatus that exerts more than 15 psi (would need boiler/machinery coverage)
- impact by aircraft, spacecraft, land vehicle (except if you do it yourself, and actual craft/vehicle is not insured)
-riot, vandalism, or malicious acts (includes strikers)
-smoke
-leakage from fire protective equipment
-windstorm or hail

Question 27

what is listed under Excluded Property on a named perils form?

Answer 27

-vacant or unoccupied for more than 30 consecutive days
-electrical devices, appliances, wiring (does not exclude loss or damages caused by resulting fire)
-plants/trees/shrubs growing OUTSIDE except as in clause 7d
-automobiles/watercraft
-illegally acquired property
-roadways, walkways, parking lots (does not apply to first $10,000 of loss)
-equipment or stock undergoing application of heat
-money, cash cards, securities, stamps, etc

Question 28

what is clause 7d on named perils form?

Answer 28

form extended to insure loss of or damage to growing plants, trees, shrubs or flowers outside the building caused directly by the insured perils except loss or damage caused by windstorm or hail.
for up to $500/plant, and
up to $5000 for any on occurrence

Question 29

what are the extensions of coverage on named perils form?

Answer 29

-Removal: if have to remove any insured property from the premises to avoid further loss or damage, for 7 days
-debris removal: amount payable under this extension shall not exceed 25% of the sum of… total amount payable for direct loss/damage, and amount of the applicable deductible
-Removal of windstorm debris (excluding pollutants)
-personal property of officers and employees (can be covered under equipment if insured wants, except if property is already insured by owner, and then at a limit of $250 per officer/employee, and only if it happens AT premises)
-growing plants/trees/shrubs outside (clause 7d)

Question 30

describe premium adjustment?

Answer 30

if within 6 months of expiry or renewal of the policy the insured files a premium adjustment application form, the actual premium for the policy period shall be calculated at the rate applying o each premises for the average amount of the total values declared. if the premium charged was over this average amount, the insurer must issue a refund cheque to insured up to a maximum of 50% of the premium paid

Question 31

give an example of premium adjustment:

Answer 31

if at sportchek they have more stock in for christmas than is average during the rest of the year, the premium will not be calculated off the value of the premises for the christmas season

Question 32

what does verification of values mean?

Answer 32

insurance company reserves the right to verify the values stated by insured

Question 33

what is the basis of valuation for unsold stock?

Answer 33

actual cash value

Question 34

what is the basis of valuation for sold stock?

Answer 34

selling price after allowance for discounts

Question 35

what is covered on a broad form commercial policy?

Answer 35

-building
-equipment
-stock
-contents
-all property
-temporary location
-building at newly acquired location
-contents at newly acquired location
-property in transit
-sales rep

Question 36

what is temporary location coverage?

Answer 36

contents other than at a specified location EXCEPT while in transit or outside canada

Question 37

describe ‘bldg at newly acquired location’ coverage:

Answer 37

anywhere in canada, either for 30 days from time of acquisition, until form is endorsed to add location, or until policy expired, whichever comes first

Question 38

how long are contents at a newly acquired location covered for?

Answer 38

30 days until form endorsed or policy expires

Question 39

where is property in transit covered on a broad form policy?

Answer 39

within Canada or the continental US until delivered (alaska but not hawaii)

Question 40

what is locked vehicle warranty?

Answer 40

stuff stolen is only covered if vehicle was actually locked and there needs to be visible signs of forced entry

Question 41

what are the excluded perils on a commercial broad form policy?

Answer 41

-earthquake
-flood/tsunami/surface water etc
-pollution
-rodents/insects
-delay, loss of market, loss of occupancy
-war
-nuclear incident
-dishonest or criminal act of employee
-snowslide, landslide
-explosion
-settling, expansion, shifting, cracking
-by-law

Question 42

any boiler operating in excess of ______pSi will need its own policy, and any loss or damage caused by a boiler operating in excess of this will not be covered by any commercial policy

Answer 42

15

Question 43

what are some things that would need a boiler and machinery policy

Answer 43

boiler, air conditioning, heater, pressure vessels, switchgear, electric motors

Question 44

what does a boiler and machinery policy provide coverage for?

Answer 44

-equipment breakdown

why? because equipment breakdown may have an impact on income levels

Question 45

business interruption coverage will only kick in if….

Answer 45

property policy covers the peril that causes the business to be interrupted

Question 46

what does business interruption insurance cover?

Answer 46

difference of income lost

Question 47

what is needed to purchase business interruption insurance?

Answer 47

-few years’ previous financial statements

Question 48

what is the earnings form?

Answer 48

cuts off insured from business interruption insurance payments the second the business returns to normal/reopens

Question 49

what is the profits form?

Answer 49

continues business interruption insurance until the business resumes/maintains pre-loss income

-commonly what the coverage timeline is for this is 12 months, or until the end of the profits form, whichever comes first

Question 50

what is contingent business interruption insurance?

Answer 50

-a form of small business insurance that provides financial assistance when the loss of a primary supplier, partner, or customer affects your ability to do business

Question 51

what is an example of contingent business interruption insurance?

Answer 51

walmart burns and parking lots of all other surrounding businesses are also cordoned off as a result

Question 52

the earnings form policies require the building to be insured only for up to what percentage of coinsurance?

Answer 52

50 to 80%

Question 53

the profits business interruption form requires the property insurance on the building to be insured to….

Answer 53

100% of the building

Question 54

broad form covers theft of _______________ , unless…

Answer 54

stock/equipment, unless its mercantile stock and they might need a burglary policy

Question 55

what is safe burglary coverage?

Answer 55

-when internal theft by employees if visible signs of forced entry
-also called fidelity insurance
-covers damage to the building caused by actual or attempted burglary or robbery
-covers money and securities, locked cash drawers within premises, cash boxes and registers provided visible signs of forced entry
-lottery tickets, bus tokens, anything with street value should be in the safe

Question 56

what is covered under crime insurance?

Answer 56

-safe burglary
-unlawful acts of employees

Question 57

what is the bylaws and zoning regulation exclusion?

Answer 57

dont cover the costs of having to get a damaged/lost property up to code by bylaw or zoning regulation
-would need an endorsement for such properties (older buildings, heritage homes etc)