Flashcards in Commercial Property Insurance Deck (62)
Several separate forms must be combined to make up a complete commercial property policy. An ISO standard commercial property policy is composed of:
•a common policy conditions form
•a commercial property conditions form
•other interline endorsements (where applicable)
•one or more coverage form(s)
•one or more causes of loss form(s)
•endorsements (where applicable)
The commercial policy conditions form addresses various issues that apply to all commercial policy forms (not only commercial property forms) concerning:
•examination of the insured's books and records
•inspections and surveys
•transfer of rights and duties under the policy
is attached to nearly all commercial property policies, contains conditions that apply only to coverage under an ISO commercial property policy
The Commercial Property Conditions (CP 00 90) form
The Commercial Property Conditions (CP 00 90) form includes these policy conditions:
•concealment, misrepresentation, and fraud
•control of property
•insurance under two or more coverage parts of the policy
•legal action against the insurer
•no benefit to bailee
•policy period and coverage territory
•transfer of rights of recovery
Commercial: Causes of loss forms describe what causes of loss to insured property are covered, along with any limitations or exclusions that apply to coverage for those causes of loss. There are three causes of loss forms:
- Basic Causes of Loss Form
- Broad Causes of Loss Form
- Special Causes of Loss Form
The ISO building and personal property coverage form establishes three categories of covered property:
•business personal property of the insured
•personal property of others
includes both indoor and outdoor fixtures. In real estate law, a fixture is generally understood as an item that has been physically attached to land or to a building or structure in such a manner as to indicate an intent that it remain part of the real property. Examples of fixtures would include indoor light sconces, signs attached to buildings, a flagpole set in concrete on the insured premises, and light poles in the parking lot.
includes property in the open or in a vehicle within 100 feet of the described premises. Coverage applies not only to furniture and fixtures, machinery and equipment, and stock. category includes leased personal property, such as a photocopier, that the insured is contractually obligated to insure.
Business Personal Property
category of covered property is personal property of others in the insured’s care, custody, or control. This applies to such property while located on or in the premises or in the open or a vehicle within 100 feet of the described premises.
Personal Property of Others
Personal property of others would include:
•property that the insured leases from others
•property lent to the insured
•property of visitors
•property of employees
Additional Coverages: debris removal
Cost of removal of debris of covered property damaged by a covered cause of loss, subject to a maximum of 25 percent of the amount of the direct damage loss, plus the amount of the deductible. An additional $10,000 of debris removal coverage applies if the property damage and debris removal loss together exhaust the limit of insurance.
Additional Coverages: pollutant cleanup and removal
Expenses to remove pollutants from land or water at the insured premises, subject to a maximum of $10,000, provided that the release of the pollutants is caused by a covered cause of loss.
Additional Coverages: fire department service charges
Service charges imposed by a fire department service called to protect property from a covered cause of loss, up to $1,000. The 2007 edition of this form allows for a higher limit if indicated in the declarations.
Additional Coverages: preservation of property
Loss to covered property that must be moved to another location to protect it from damage by a covered cause of loss. Coverage applies during the move and for up to 30 days at the new location.
Additional Coverages: increased cost of construction
Increased costs incurred to comply with ordinances or laws regulating the construction or repair of buildings or establishing zoning or land use requirements, up to $10,000 for each damaged building insured on a replacement cost basis. This coverage applies only to costs associated with damaged property. If coverage is needed for demolition or increased cost of construction of undamaged portions of the property, it must be added by endorsement.
Additional Coverages: electronic data
Cost of replacing or restoring electronic data that has been destroyed or corrupted by a covered cause of loss, including a computer virus, subject to an annual aggregate limit of $2,500.
Coverage Extensions: newly acquired property
Temporary coverage for loss to buildings under construction at scheduled locations and newly acquired buildings at other locations, for up to $250,000 per building; and temporary coverage for loss to personal property at newly acquired premises and newly acquired personal property at scheduled locations, for up to $100,000 per building. Coverage expires 30 days after acquisition or start of construction, when values are reported, or when the policy expires—whichever occurs first.
Coverage Extensions: personal effects and property of others
Loss to personal effects of the insured and the insured's employees, and to personal property of others, for up to $2,500 at each location. No coverage applies to loss of personal effects by theft.
Coverage Extensions: valuable papers and records
Loss to valuable papers and records, including the cost to research and restore information contained in valuable papers and records damaged by a covered cause of loss, for up to $2,500, unless a higher limit is shown in the declarations.
Coverage Extensions: property off-premises
Loss to property at a fair, exposition, or trade show; property in storage at a location leased after the inception of the policy; and property temporarily away from the insured premises at locations not owned, leased, or operated by the insured, for up to $10,000.
Coverage Extensions: outdoor property
Loss to outdoor property, consisting of trees, shrubs, plants, detached signs, fences, and antennas, for up to $1,000. A sublimit of $250 each applies to trees, shrubs, and plants. Covered perils for this extension are limited to fire, lightning, explosion, riot and civil commotion, and aircraft.
Coverage Extensions: nonowned detached trailers
Loss to nonowned detached trailers used in the insured’s business and in the insured’s care, custody, and control, for up to $5,000, unless a higher limit is shown in the declarations
Condominium Association Coverage Form: A unit owner's insurance clause grants permission for a unit owner to have insurance covering the same property and establishes that the coverage provided under the association form is primary. The form also includes a ___.
waiver of subrogation.
Residential condominium units are normally insured under a homeowners policy form ___
Builders Risk Coverage Form. Coverage ends at the earliest of the following five dates:
•when the policy expires or is canceled;
•when the property is accepted by the purchaser;
•when the insured's interest in the property ends;
•when the insured abandons construction with no intention to complete it or 90 days after project completion; or
•60 days after any building is occupied, in whole or in part, or put to its intended use.
Business Income and Extra Expense Coverage: Business income coverage is added to a standard commercial property policy by including either of the two business income coverage forms:
•business income and extra expense coverage form
•business income coverage form without extra expense
Commercial: This can be obtained by using either the combination business income and extra expense coverage form or a separate extra expense coverage form that covers only extra expenses.
Extra expense coverage
Commercial: The insurer will pay the actual amount of loss suffered by the insured, rather than some predetermined sum. The amount of business income loss is determined by considering
•the amount of expense in excess of normal operating expenses that would otherwise have been incurred;
•the salvage value of property purchased for temporary use; and
•expenses that reduce the business income loss.
The amount of the loss that is not payable to the insured as a result of failure to comply with the coinsurance provision is commonly referred to as a