CIC Flashcards
(90 cards)
1
Q
(6) Components of CPP
A
PSCACT - PS… Im a Colorado Athletic Club TANK
Premiums / Surveys / Cancellation / Audits (exam books) / Changes / Transfer of rights and duties
- Premiums
- Inspections and Surveys (Surveys)
○ Any time
○ Not inspection company (insurance purposes only)
- Cancellation
- Examination of Books and Records (Audit)
○ Up to 3 years
- Changes
- Transfer of Your rights and duties under this policy
- Need consent
2
Q
(6) CPP Decs
A
FBNAPP
- Forms - Biz Descriptions - NI - Address - Policy Period - Premium for Coverage Parts
3
Q
5 Rights of NI
A
(5 C’s)
- Cancel
- Cancel Notice
- Changes
- Pay Change $
- Get Change $
4
Q
(8) Property Coverage Decs
A
(DEN COD MF) denver cod mofo
- Deductible
- Effective Date
- NI
- Coverages
- Optional Coverages
- (3) Description of Premises
○ Where
○ What
○ Who
- Mortgagee Holders
- Forms Applicable
5
Q
(5) Coverages on Property
A
Kobe Coral (CoBCoRL)
- Coinsurance
- 3 B's: Building / BPP / BI
- CCOL
- Rates
- Limits
6
Q
Coinsurance Penalty Formula
A
• (Limit / What they should have) * Loss Amount = Recovery - Deductible
- Do has / should has times the loss
7
Q
(5) Optional Coverages - Property
A
Telapae AIRBA
- Agreed Value
- Inflation Guard
- Replacement Cost
○ Like kind, like quality today
- Business income
- Actual Cash Value
○ Value minus depreciation
8
Q
(9) Property Conditions
A
(CCTTLLOON)
• Concealment Misrep or Fraud
• Control of Property
• Territory and Policy
• Transfer of Rights
• Legal Action against Us
- Can't sue unless terms are met
• Liberalization
• Other Insurance
- Pro-rata or excess when two coverages apply the same
• Other Coverages (2 or more)
- Coverage will only pay for loss amount. Won't pay twice for two policies
• No Benefit to Bailee
- Policy won't respond to a bailee claim (subcontractor in care of property)
9
Q
• (4) BPP Coverage Form: Coverage A
A
PIPP
- Preamble - Insuring Agreement - Property Covered - Property Not Covered
10
Q
Insuring agreement (4)
A
CCDP
- Covered Property - Covered Cause of Loss - Direct - Premises
11
Q
• (3) Property Covered
A
Building
BPP
Personal Property of Others
12
Q
Building Coverage (7)
A
(AAAAMMF)
○ Additions (Completed)
- Additional Property Not Covered
○ Additions (Not completed if no Builders Risk policy)
○ Additional Building Property Form
○ Machinery and Equipment
○ Maintenance or service equipment
§ Fire Extinguisher
§ Outdoor Furniture
§ Floor Covering
§ Cooking appliances
○ Fixtures
13
Q
(8) Business Personal Property
A
(SMLLOFTP) Smell of Toilet Paper
○ Stock: finished goods, raw materials, storage
○ Machinery or equipment (not permanently installed)
○ Labor and material put into customer property
- Leased property with contractual obligation to insure
○ Out of structure by 100 feet, In structure or in vehicle in 100 feet
○ Fixtures (removable)
○ TIB
○ Personal Property used in business
14
Q
(3) Property of Others
A
(CCCODD)
○ Care Custody or Control
○ On premises
- Direct Damage / no loss of use
15
Q
Property Not Covered
A
(4AP, 2FLER)
• 17 Categories
○ Accounts
○ Animals
○ Autos
○ Airborne or waterborne property
○ Pipes / underground
○ Property Elsewhere
- Property Outside
○ Piers / Docks
○ Forbidden items / contraband
○ Foundations
○ Land, water, crops, lawns
○ Land Vehicles
○ EDP
○ Excavations
○ Retaining Walls
○ Research / info
16
Q
Methods of Writing CPP
A
• BSPMSV) BullSh** PMS Varies
- Blanket Coverage
- Specific Coverage
○ 1 location
- Peak Season Coverage
○ Increase limits during certain time periods
- Margin Clause
○ Limits loss payment for buildings on a blanket
- Scheduled Coverage
○ 2 Location
- (6) Value Reporting Form (unPPPPPP) Un6P
17
Q
Blanket Coverage Advantages (4) and Disadvantages (6)
A
○ (4) Advantages (FFFF)
§ For anything - apply where neede
§ Fluctuating values between locations
§ Forms for reporting are easy
§ Full limit each location, but only 90% coinsurance
○ (6) Disadvantages (SOSRRR)
§ SOV Required
- Ownership interests at multi locations all listed
§ Same COL for all property
§ Rates - 1 year
§ Restrictions for Underwriting
§ Required Coinsurance 90-100%
18
Q
- (6) Value Reporting Form
A
(unPPPPPP) Un6P
○ Unpredictable PP Values / changing locations
○ Periodic and timely reports
○ Provisional limit
§ Wont pay more than this limit even if report more than it
○ Penalty for under report at time of loss
§ Same as coinsurance. Did / should x loss
- Penalty of 75% of loss paid if report not submitted on time
○ Personal Property Only
19
Q
• 6 Additional Coverages - Property
A
(DIEFPP)
Debris Removal
- 25k 25%
Increased Cost of Construction
- $10K OF 5 % of limit
Electronic Data
- $2,500
- Virus / corruption or destroyed data from COL
Fire Dept Service Charge
- $1k no voluntary
Preservation of Property
Pollutant Clean Up and Removal
- $10k extraction only
20
Q
Debris Removal
A
CDPEEN 25 25
○ CCOL Property on premise
○ (4) Doesn't apply to (PEEN)
§ Polluted land or water
§ Earth and mud
§ Extract pollutants
§ Non-Covered property
○ 25% of limit
○ $25k if hit limit or loss + 25% of limit = greater than limit
§ 80k loss on 90k limit only pays 10k debris expense + $25k
○ ENDORSEMENT
Debris removal Additional Insurance
21
Q
- Preservation of Property
A
(PATBack) they give you a pat on the back
○ Prevent damage
○ All Risk
○ Transit
- Before 30 days
22
Q
- (6) Increased Cost of Construction
A
RPOON 10 /5
○ RC buildings only
○ Pays when replaced
○ Ordinance or Law compliance covered
○ Original premise cost to rebuild if at new premise or ICC limit
- New premise only if ordinance dictates
○ 10k or 5% of building limit
23
Q
• (7) Coverage Extensions -
A
PPPPPNN - 5P 2N
- Personal Effects and Property of Others ○ CCC w/ no theft - Papers Valuable and Records ○ $2500 - Property Off Premise (Trade Shows / storage) - (property Outdoors) Outdoor Property ($1k / $250 / FLARE) - Portable Units- Temp Storage of BPP (100ft / 90 days / 10k) - Non-owned Detached Trailers ○ $5k - Newly Acquired or Constructed Property 250k / 100k / 30 days
24
Q
- Newly Acquired or Constructed Property
A
○ Building 250k
§ On described premises
§ Acquired locations for limited occupancy similar as Decs description or
warehouse
○ BPP 100k
§ Not of others or trade shows
- Period of Coverage 30 days
25
Valuable Papers and Records 4
Replace or restore if no duplicates
No ED
Broad coverage
$2500
26
Outdoor Property (3)
($1k / $250 / FLARE
$1k
FLARE
$250 for trees, shurbs, radio and antennaes
27
Non-owned Detached Trailers
○ $5k
○ Biz use / CCC / Contract
Must be Unattached
28
- Portable Units- Temp Storage of BPP
(100ft / 90 days / 10k) (Distance/ time / limit)
○ 100 feet
○ 90 days
10k
29
• Exclusions and Limitations
```
- Limits
○ $2500 for signs
- Deductible
○ After Coinsurance
○ Only once
○ ENDORSEMENTS
§ Wind Hail
§ Multi Deductible
§ By Location
```
30
• (7) Loss Conditions
```
(LADRAVV) The lads Rav4
- Loss Payment
- Abandonment
○ No Abandonment to us
- Duties in Event of Loss (PDNSPICS) Please Do Not Send Pics)
- Recovered Property
○ Notice required
○ Insured can accept or deny
- Appraisal
○ Value of property
○ 2 Appraisers, 1 Ump
○ Either party
- Vacancy
- Valuation (ACV unless under 2.5k. Floor Outdoor doesn't APPLY(ances)
○ ACV unless under $2,500 loss
○ Always ACV
§ Floor covering, outdoor equipment, appliances
```
31
Duties in Event of Loss (7)
```
(PDNSPIC) Please Do Not Send Pics
○ Police
○ Description of loss
○ Notice to carrier
- Sworn proof
○ Protect Property
○ Inspection at any time
○ Cooperate
```
32
Loss Payment (4)
○ Carrier will…
§ Pay Value
§ Pay Cost to repair or replace
§ Take property
§ Repair or rebuild with like kind and quality
○ 30 days for CO to decide
○ Contacting owner of property if needed or party wall
- May defend insured at CO cost
33
Vacancy (Owner, Tenant, Time, Exclusions, Valuation)
```
○ Tenant - no BPP
○ Owner - Less than 31% rented
○ 60 Days
§ Excluded (Theft / Water / Glass / Vandalism)
□ Vandalism
□ Sprinkler
□ Glass
□ Water
□ Theft
□ Attempted Theft
- Valuation (ACV unless under 2.5k. Floor Outdoor doesn't APPLY(ances)
○ ACV unless under $2,500 loss
○ Always ACV
Floor covering, outdoor equipment, appliances
```
34
- Valuation
( ACV unless under 2.5k. Floor Outdoor doesn't APPLY(ances)
○ ACV unless under $2,500
Always ACV
Floor covering, outdoor equipment, appliances
35
• (4) Optional Coverages - Property
```
(I ARE) I are optional Coverages
- Inflation Guard (ProPP)
○ Pro Rata through Policy Period
- Agreed Value
○ Removes Coinsurance
○ 5% AP
- Replacement Cost
- Extension of RC to PP of Others
○ Must have RC on NI property
○ Must trigger RC for Personal Property
```
36
- Replacement Cost (3)
```
○ Doesn't Apply to (RAPS)
§ Residence Contents
§ Art, antiques etc
§ PP
§ Stock
○ ASAP
○ Least of
§ Limit
§ Replace with like kind and quality
- Repair and Replace cost
```
37
(3) Causes of Loss
- Basic
○ 11 Named COL
○ Add Coverages of Fungus, wet rot, bacteria
- Broad
○ Plus Falling Objects, Weight of Snow, Water Damage and Collapse
- Special
○ Everything that isn't excluded
38
Anti Concurrent Causation Verbiage
Tries to exclude any damage if one of the exclusions are involved
39
(8) Special Form Exclusions
OGREWUNW (OGRE 1 Wins)
§ Ordinance or Law Movement
□ Extra cost or loss from enforcement of laws or ordinances
§ Governmental Action
□ Only coverage to prevent fire spread
- (ROT) Fungus, Wet Rot, Dry Rot and Bacteria
§ Earth Movement
□ EQ or Volcanic activity.
- War and Military Action
§ Utility Services
§ Nuclear Hazard
□ Only cover for fire spread.
□ ENDORSEMENT - Radio active contamination
§ Water
□ No coverage for flood
40
ENDORSEMENT - Ordinance or Law Coverage (A,B,C Coverage)
® Coverage A - Loss to Undamaged Portion of Building
® B: Demolition Cost Coverage
◊ Limit indicated on endt
® C: Increased Cost of Construction
◊ Repair or replace building to be compliant
◊ Intended for same occupancy
◊ Adds back pilings, pipes, drains, excavation and
foundation
Won't add for more ordinance changes post loss
41
Utility Services
□ No coverage away from premise unless results in CCOL
□ No coverage if source is away from premise
□ No power surge coverage
DD and TE losses
42
• PARAGRAPH 2 - (13) Concurrent Causation Exclusions
OFFPERCSNADDS (im off perks and Adderall)
§ Eliminates coverage for only specific causes of loss
§ Exclusions
□ Open Peril Exclusions
§ Wear and tear
□ False Pretense
§ Someone borrowing property w/ permission doesn't give it back
□ Freezing of plumbing
§ Insured need to attempt to maintain building heat or shut off water
□ Pollutants
§ Will cover resulting loss if covered peril
□ Explosion of steam
§ Boilers, pipes, engines, turbines
§ Doesn't exclude fire from explosion
§ Doesn't exclude explosion in flues
□ Rain snow sleet
§ Damage to property in open
□ Collapse
§ Will cover damage if collapse leads to CCOL
□ Smoke vapor or gas
□ Neglect to save or preserve property
□ Artificial Electrical
□ Delay, loss of use or loss of market
□ Dishonest or criminal Acts
§ Anyone during or after work hours even if collusion
□ Seepage or Leakage of Water
§ If more than 15 days and would've been discovered with maintenance
§ No coverage from moisture accumulation unless from fire
43
Concurrent Causation
Eliminates coverage for only specific causes of loss
44
(3) Conditional Exclusions
(AWF) court cases
- Acts or Decisions
○ Acts or decisions of any person group or gov body
- Weather
○ No coverage for weather conditions resulting in OGREWUNW
- Faulty inadequate or defective
45
Special Form Limitations
(SUSS)
(5) Specific Property
Uncovered Specific Perils Unless Caused by specific cause of loss or building glass breakage
- Animals
- Fragile Articles
• Special Limits
Applies to specific property for theft
• Specific Defects
- Won't pay for appliances with water running through
Will pay for fire protective things to be repaired
46
• Special Form Limitations - Specific Property (5)
Water, Water, Water, Watered Roof (vegetation), theft
(Steam, Water Heater, Natural Water to insides, Theft, Vegetated roof)
○ Steam boilers, pipes, engines turbines unless explosion in flues
○ Water heaters unless inside explosion
○ Rain, snow sleet ice, sand dust damage inside of building unless roof and walls damaged by CCOL
○ Theft or missing without evidence of it being taken
○ Vegetated property
47
(4) Special Form - Additional Coverages and Extensions
- Collapse
Fungus (30 day, 15k, Tear, test, remediate)
Property in Transit
Glass
- Will pay for board up if delayed
48
Collapse 3
○ Loss of use of building
○ No coverage for structural integrity
Covers personal property other than aesthetic damage
49
Fungus
(30 day, 15k, Tear, test, remediate)
○ Only for resulting from CCOL
○ Tear out, remediation, testing
○ 15k
30 day max BI and or EE from fungus
50
Water Damage Definition
Discharge or leakage of water or steam from cracking or breaking of appliance other than sump
51
Sinkhole Definition
Collapse from erosion in limestone or dolomite underground
52
• (4) Why not EE and BI Sold
- Hard to get financials
- Hard to understand / visualize
- Not required by lenders
- Costly
53
Financial Elements of BI Loss
(GON) the money is GON!
- Gross Revenue
- Operating expenses
○ Continued / discontinued
- Net Profit (or loss)
54
Income Statement Basics
- Gross profit
○ Gross Sales - Cost of goods
- Net Profit (pre tax)
○ Gross profit - operating expenses
55
• 4 ISO Time Element Forms -
BI & EE and Leaseholder interest Coverage form
- BI and EE
- BI W/out EE
○ Only for businesses without extra expenses
- EE
○ Biz that can't stop operations after loss
- Leasehold interest form
○ Tenant who has attractive lease situation
○ Lost financial interest in canceled lease term
56
• 7 Other Methods of Providing BI
```
(BBIMADEE)
- Builder Risk provides time element
- BOP
○ No dollar limit
- (Inland Marine) Contractors (via endt
- Auto (via endt)
- DIC policies (sometimes)
- Equip breakdown
- EDP
```
57
BI Coverage - NICE
- NICE
○ Net Income (net profit or loss before income tax)
○ Continuing and normal operating costs
- Expense
58
• Manufacturers Risk Net Income
- Doesn't include finished goods
| - Based on sales of products would've had ove r time
59
• 3 Coverage BI Options
- BI w/ Rental Value (and)
○ Loss of rent due to loss. Strip mall owner that rents out spaces but also operates in it
- BI other than rental (without)
○ Someone that doesn't lease to anyone
- Rental value
○ For true LRO policies
60
• Rental Value Definition
- NI Rental income
- Obligations by tenant contract like taxes, insurance, utilities assumed by landlord
- Rental cost for NI if they're occupying
61
(3) BI Requirements
Your premise, 100 feet of premise, blocking access or service to premise
- Premise
- 100 feet of building w/ respects to PP in open or vehicle
- Area that services or gives access to your part of building (blocked entrance)
62
(2) Suspension definition
- Slowdown or ceased NI Biz operations
| - Rental value: part or whole needs to be untenantable
63
(4) Period of restoration
(72 / Now / Should be / no extra) 4 When's
- 72 hours after time of loss (but can change)
- EE Begins immediately
- Ends when restoration SHOULD BE repaired or ops start at new premise
- Doesn't include extra time for ordinance or pollution
○ Can add back
64
(6) BI Trigger
(PPPDSC)
- Prove loss amount to BI
- Premise described
- Period of restoration loss occurs during
- Direct physical loss to property
- Suspension of operations Necsessary
- CCOL
65
(4) Dependent Properties (CRML)
```
- Contributing Location
○ Provides goods and services for NI
- Recipient Locations
○ Buys all the NI's goods
- Manufacturing Location
○ Makes NI product and provides to customers
- Lender Locations
○ Attracts customers for business
```
66
Extra Expense
- Essential to avoid or minimize suspension of operations
| - Can either be used to avoid suspension or business or reduce BI and EE loss
67
BI and EE Covered Causes of Loss (1) and Special Exclusions (7)
- OGREWUNW Exclusions apply and can be added back
- (7) Special Exclusions - (Finished stock 2, Licenses 2, Strikers, TV antennaes, anything else)
○ Finished stock
§ Since finished, not part of operations. Only suspension of operations paid.
§ Added back with Manufacturers Selling price
○ Time to reproduce finished stock
§ Falls outside period of restoration (when operations resume)
○ Radio, TV Antennas, lead in wiring, masts or towers
○ Delay caused by strikers
○ Suspension of license, lease or contract unless caused by suspension of operations. Only for period of restoration
○ EE only for period of restoration
○ Consequential Loss - anything else
68
BI and Computer Operations
- Doesn't cover corruption of computers
| - Only applies to data that controls building (AC, security, lighting, heating)
69
BI and EE Additional Coverages
(I ACE) I ACE THIS EXAM
- Civil Authority
○ Government prohibiting access due to loss within 1 mile and CCOL
- Alterations and New Buildings
○ At described premise, loss of income from when operations would have started (pays for delay)
- Extended BI
○ Extends BI to when property repaired AND operations restored
○ Ends when insured COULD restore income level or 60 days after both property and operations restored
- Interruption of Computer operations
○ $2,500
70
Newly Acquired Locations- BI and EE Coverage Extension
```
- Coinsurance 50% or more, can extend to
○ Newly Acquired Locations
§ $100k unless in decs
§ Ends 30 days after construction or property acquired
§ Reported Values
```
71
- Coverages that don't increase BI and EE limit (3)
○ EE
○ Alterations and new buildings
○ Civil authority
- Extended BI
72
Added amounts to BI and EE Limits(2)
○ Interruption of Computer Operations Additional Coverage
| New Acquired Locations Extension
73
(3) BI and EE Loss Conditions (LAD!)
- Appraisal
○ Appraiser for each side and Ump (shared cost)
- Duties in Event of Loss (PDNSPICS)
- (4) Loss Determinations
74
Loss Determination - BI Recovery (4)
§ Net income before loss and
§ Likely net income if no loss
§ Operating expenses, including payroll, necessary to resume operations with same quality
- Financial info that’s relevant
75
Loss Determination - EE Recovery Basis (3)
§ Amounts that exceed normal operating expenses MINUS
§ Salvage value of property for temp use MINUS
EE paid by other insurnace
76
Loss Determinations - Resumption of operations (3)
§ BI will be reduced to extent insured can resume operations
§ EE will be reduced to extent insured can return operations and discontinue EE
§ Operations not resumed
§ Insured not obligated to resume operations or expedite.
- Only pays for how fast they COULD anyways
77
Loss Determination - BI and EE Loss conditions
BI Recovery, EE Recovery, Resumption of Operations, Loss Payment
78
BI and EE Coinsurance Formula - Additional Condition
○ Net income + ALL Operation Expenses TIMES Coinsurance percentage
○ Every 12 months report
- Adjust values if business operations increase
79
Expenses to deduct from operating expenses - BI and EE Coinsurance Condition
```
○ Prepaid freight
○ Returns and allowances
○ Discounts
○ Bad debts
○ Raw stock and factory supplies consumed
○ Merchandise sold
○ Heat and power expenses discontinued
○ Services from outsiders
○ Payroll Expenses
- Special reductions for mining properties
```
80
Determining Limit for BI and EE
(BI and EE Restore Income Minus Excl Expenses)
○ BI Income loss during period of restoration
§ Peak season
§ Growth
- EE expenses
○ Expected period of restorations
○ How long for income to go back to normal
○ Excluded operating expenses
81
Selecting Coinsurance Percentage
- Consistent income
○ (Annual Net income + Annual Operating Expenses) * (Expected POR / 1 Year)
- Inconsistent Income
○ (Annual Net Income + Operating Expenses) * (% of net income for highest amount during expected POR)
- Round down
82
Avoiding Coinsurance Penalties
- (3) Optional Coverages
○ Maximum Period of Indemnity
○ Monthly limit of indemnity
○ Business Income Agreed Value
83
(4) BI and EE Optional Coverages
Max, Monthly, Agreed, Extended
- Max Period of Indemnity
- Monthly Limit of indemnity
- Business Income Agreed Value
- Extended Period of Indemnity
84
- Max Period of Indemnity (3)
○ How long policy pays
○ Coinsurance gone
○ Max recovery lesser of limit or BI and EE during first 120 days
85
Monthly Limit of indemnity
○ 30 day consecutive periods
○ Only for BI and not EE
○ Appears as fraction and can't pay more than that each month
- Coinsurance gone
86
Business Income Agreed Value (2)
○ BI Report Worksheet
| ○ Suspends coinsurnace for 12 months
87
Extended Period of Indemnity (3)
○ Increases time period for Add Coverage - Extended BI will apply
○ Doesn't increase limit
○ Doesn't get rid of coinsurance
88
BI Without EE (2)
- Additional Coverages
| - Expenses only paid for reducing BI
89
EE with no BI
- Same as BI and EE
- Actual and necessary EE sustained
- Pays during period of restoration
- Limit on loss
○ Multiple %'s for how much EE for POR
- Won't let use whole limit for a 1 month POR
90
Leasehold Interest Coverage Form - 4 Triggers and 4 Covered Leasehold Interests
- 4 Triggers
○ Actual loss of covered leasehold interest
○ Cancellation of lease
○ Direct loss to premise
○ CCOL
- 4 Covered Leasehold Interests
○ Tenant's Lease Interest
§ Additional rent to get comparable premise
○ Bonus Payments
§ Unamortized value of any bonus payments to secure premises unrefundable
○ Improvements and Betterments
§ Unamortized portion of value of TIB that insured made at own expense
○ Prepaid rent
§ Unrefundable prepaid rent
