Chapter 7 Flashcards
(14 cards)
Which category of commercial property do tenant improvements fall into?
Equipment
True or false:
Named perils forms covers explosions of boilers and pressure vessels greater than 15 psi.
False
Which form covers vehicle impact when it is caused by the insured(s) or their employees?
Broad form
What damages does broad form cover?
All sources of smoke damage, water damage due to freezing or rupture, theft, and collapse of building.
What is a loading?
An additional rate charged for increased coverage outside of the basic coverage required by law.
Which of the following is NOT part of the definition of a building in the commercial property context?
A) Fixed structures related to the building
B) Permanent fixtures attached to the building
C) Renovations that you make to a rented unit.
D) Materials for maintenance or normal repairs
C. Tenant improvements are insured under Equipment
The insured has $1MM worth of property and buys an insurance policy with a $350k limit and an 70% co-insurance requirement. If there is a $1MM fire loss, what is the amount of coverage the insured would get?
$350k. You can calculate coinsurance like this:
(Current insurance coverage/required insurance amount) x Loss or repair cost
True or false:
Common carriers are excluded from following the locked vehicle warranty
True
What is the most broad definition of crime where property is stolen? Please use the insurance definitions of the words as they differ slightly from the legal or casual definition.
Theft.
Theft is defined as all forms of taking without the owner’s consent.
Burglary is theft that involves using force to enter a building without anyone witnessing.
Robbery is theft involving using force on a custodian or a theft that was witnessed by a custodian.
True or false:
Under a Mechanical Breakdown policy, the insurer can inspect objects before and during the policy period
True
Which business interruption form provides the most comprehensive coverage?
Profits form
There are many factors that can affect the “fire rate” charged to insure Commercial Property. Pick 3 and give a brief explanation of each.
1) Building Construction: some materials are more fire resistant than others.
2) Protection: having private protection (ex. sprinklers) installed or having ready access to public protection (ex. near fire hydrant or fire hall) would decrease your propertys risk of loss.
3) Occupancy: what’s happening inside the building and if it affects its risk of fire (think like restaurant vs school)
4) Location: where the building is located as well as the proximity to other buildings can seriously affect the risk profile (ie. being near a fireworks factory is bad).
5) Claims History: underwriters look at both the loss history for that type of business and of the applicant to try to predict future risk and set premiums based on that estimation of risk.
What is the locked vehicle warranty?
There is no coverage for property stolen from a vehicle unless:
1. The vehicle has a fully enclosed metal body,
2: The doors/windows were locked at the time,
3. There was evidence that force was used to enter the vehicle.
A LVW is commonly applied if the property being insured is valuable.
What are the 2 types of business interruption insurance? Give a short explanation of each.
1) Earnings form: provides loss of income payment until the property is reinstated or 12 months has passed (whichever is sooner)
2) Profits form: provides loss of income payment until income is restored to the same level prior to loss or 12 months has passed (whichever is sooner)
