Commercial Property Flashcards
(32 cards)
What 3 things make up commercial property?
Building
Stock
Equipment
What are the two ways of covering commercial property?
- Scheduled
2. All property (property of every description) = 1 big limit for stock, equipment and building
What are the three ways to determine actual cash value?
- RC - Depreciation
- FMV
- Combo of 1 &2
Pair and set and parts rule apply
How is replacement cost determined?
Cost to repair replace with like kind and quality
No depreciation but needs appraisal
Most common
How do you determine book value?
Invoice price minus depreciation. It’s good for taxes but shows low insurance amount
What does COPE determine?
commercial property rates
Construction
Occupancy
Protection
Exposure
What does your building need to have to be classified as fire resistive
The walls, floors, roof are all fire-resistive materials. Example concrete, brick or other non-combustible materials with fire resistant insulation
What are the five types of occupancy?
- Assembly
- Care/ detention
- Business/ personal services
- Mercantile
- Industrial ( low, medium, high)
What are the two types of fire protection?
Public- proximity to fire hydrant, full-time or volunteer fire department, enough water
Private protection - gets you discounts
Fire extinguisher, sprinklers, detection system
Name 3 factors when looking at exposure or location of business
- Distance to other buildings
- Construction, occupancy of nearby
- Neighbourhood, dangerous?
What is the Fire rate?
The rate needed to ensure dollar amount worth of property against fire. Example charge $1 per hundred dollars
What is a loading rate?
Additional rate for other perils for example you want broad coverage or theft coverage.
What does the indemnity agreement state?
That the insurer pays for the minimum of
- value of damaged property
- insurable interest * how much of the property you own*
- limit of insurance
If there’s more than one deductible, which one do you pay?
The highest one
When is co-insurance waived?
If the loss is 2% of the limit or $5,000 coinsurance is waived
What is the coinsurance penalty formula?
Did
——– X loss - deductible
Should
When would you want to have a stated amount of co-insurance clause?
It’s when you buy the limit equal to 100% of the property. No coinsurance. You must file an update a comprehensive list of commercial property on a regular basis. Good if you have a very large amount of property subject to inflation
What is the maximum refund allowed under a premium adjustment?
50%
What does the verification of values Clause allow the insurer to do?
Inspect property and Records to verify the information given at any reasonable time during the policy. And one year afterwards.
What does the reinstatement Clause state?
That limits are restored after a loss is paid. Unearned premiums may not be fully returned if loss occurs.
What are 5 extensions of coverage for commercial property?
- Property necessarily removed- temp location
- debris removal- from insured peril
- personal property of employees officers
4 building damaged by theft or vandalism - growing outdoor plants- caused by named peril
Provide 5 examples for common peril exclusions
- Application of Heat
- Artificial electricity AK a power surge
- Nuclear incident
- Radioactive contamination
- War
Provide 4 examples of common property exclusions
- Bylaws- increase costs because new building materials are required
- Money, bullion, Securities, stamps
- Illegal property
- Vacant for more than 30 days
What does accounts receivable form coverage provide?
- Amounts not collected due to damage to records
Interest payments - Extra collection expenses for example in sure will hire a collection agency or collect funds
- Other reasonable expenses to re-establish records for example hiring an account
