Commercial Property Policy Flashcards
(91 cards)
1
Q
Five rights and duties of the first NI
A
- Authorized to cancel
- Receive notice of cancellation
- Make changes with insurer consent
- Responsible for payment of premiums
- Payee for return premiums
2
Q
Coinsurance Formula
A
Did/Should x Loss = Recovery
Recovery - DED = Settlement
3
Q
Transfer of Rights Of Recovery Against Others to Us
A
NI may waive their rights of recovery in writing against anyone prior to a loss.
NI may waive their rights of recovery after a loss in writing but only to:
* Another insured
*A business owned and controlled by the NI or a business that owns or controls the NI
* A tenant of the NI
4
Q
What are the conditions that must be met in order for the policy to pay
A
- Must be direct physical loss or damage.
- Loss or damage must be to covered property
- Covered property must be at the premises in the Dec
- Loss or damage must be caused by a result from a covered cause of loss
5
Q
What are the 3 categories of covered property
A
- Building
- Your Business Personal Property
- Personal Property of Others
6
Q
What is included in Building
A
- Buildings and structures; completed additions
- Fixtures including outdoor fixtures.
- Permanently installed machinery and equipment (ie. generator)
- Personal property used to service the building or structure or its premises (fire extinguishing equipment, outdoor furniture, floor coverings, cooking appliances, refrigerators etc.
- Additions under construction including alterations and repairs to the building or structure - if not covered by other insurance
- Building materials, supplies and temporary structures (as long as they are on or within 100 feet of the described premises or used to complete an addition alteration or repair to the building or structure - if not covered by other insurance
7
Q
What are the types of Your Business Personal Property
A
- Furniture and fixtures
- Machinery and equipment
- Stock
- All other personal property owned by you and used in your business
- Labor, materials or services furnished or arranged by you on personal property of others
- Use value to a tenant of improvements and betterments
*Leased Property that you have a contractual obligation to insure
8
Q
Additional Building Coverage CP 14 15
A
Used to clarify that certain items which might be in a gray area are covered under Building ie. machinery and equipment bolted to the floor that might be BPP will now be Building
9
Q
Additional Property Not Covered CP 14 20
A
Used to add specific types of property to the list of “Property Not Covered” if the NI or insurer does not want or need to cover such property ie. TIB.
10
Q
Leased Property CP 14 60
A
Used to insure business personal property leased to the NI as BPP instead of categorizing it as PPO when there is no contractual obligation to insure them.
Can be written with AV, most leases require
11
Q
Your Business Personal Property – Separation of Coverage BP 19 10
A
This endorsement can separate out and specify a Limit of Insurance for any of the seven categories of BPP.
12
Q
Personal Property of Others
A
Applies to property that has been entrusted to the NI
* To work on
* On consignment
* Has been sold but not delivered
* Has been leased to the NI
Only covers the personal property of others for direct damage, not for loss of use.
13
Q
Property Not Covered
A
- It is customarily insured under more specialized policies
- It is relatively unsusceptible to loss
- It is more susceptible to loss
*Certain types of property held for sale by the NI that were not intended to be covered by the Building and Personal Property Coverage form
14
Q
Specific property not covered examples
A
*Accounts, bills, currency, food stamps or other evidence of debt, money, notes of securities, lottery tickets held for sale
*Cost of excavations, grading, backfilling or filling
*Foundations of buildings, structures, machinery or boilers if their foundations are below the lowest basement floor or the surface of the ground if there is no basement
*Retaining walls that are not part of a building
*Underground pipes, flues or drains
*Bridges, roadways, walks, patios or other paved surfaces
*Certain outdoor property
15
Q
What is certain outdoor property not covered
A
- Fences
- Trees - Outdoor trees, shrubs and plants
- Antennas - radio or television antennas
16
Q
What are the 3 methods of writing Commercial Property Insurance
A
- Specific
- Scheduled
- Blanket
17
Q
Specific Coverage
A
Applies a specific limit to a building or personal property at a single location.
Single location
18
Q
Scheduled Coverage
A
When a policy shows separate limits of insurance applied to two or more individually listed properties. There is still a specific amount of insurance that applies to each type of property at each separate location
Multiple locations
19
Q
Blanket Coverage
A
Includes the value of all reported properties. This total limit is available to pay losses regardless of which property or location has suffered the loss.
Two types:
* One limit that applies to more than one type of property (coverage) ie. Building plus BPP
* One limit that applies to one or more types of property (locations) ie. 2 locations, Building plus BPP
* Typically requires 90% or 100% coinsurance
* Must file SOV every year
* Rate re-calculated every year
* Can be written for specific categories only if desired
20
Q
What are advantages of Blanket coverage
A
- Can apply insurance where needed
- Handles fluctuating values between locations
- Reporting forms may be easier to handle
- Insured may have 100% insurance to value for each location but only required to carry 90% insurance to value for all locations combined
21
Q
Disadvantages of Blanket Coverage
A
- 90% or 100% coinsurance is required
- May not be possible due to UW restrictions
- SOV is required listing each item and the amount of coverage - must be redone each year
- Rates are for one year only
- Must have the same causes of loss for all covered property
- When there are multiple locations all ownership interests must be listed
22
Q
Coinsurance requirement for Blanket Coverage
A
90% or 100%
23
Q
Limitation On Loss Settlement – Blanket Insurance CP 12 32 (Margin Clause)
A
Limits the maximum amount payable for any item to the percentage shown in the Schedule multiplied by the value reported on the last SOV, applying to Building and BPP only, percentages are 105%, 110%, 120%, 130%
*Blanket killer
24
Q
Peak Season CP 12 30
A
Allows the NI to increase coverage for a specified number of days to reflect predictable (planned or expected), season increases in BPP. May be written for any number of periods within the policy term but cannot extend beyond the policy term. AP is pro-rated for selected periods.
25
Value Reporting Form CP 13 10
Designed for NI’s with fluctuating BPP values or changing locations. Provides a means to accurately measure changing values of BPP in order to provide adequate coverage and charge appropriate premium
26
Value Reporting Form – Premiums
Premium paid at inception is advance premium (deposit premium). Final premium determined at the end of the policy period, based on average reports of value submitted by the NI. At the end of the policy term the difference between the advance premium and the final premium is calculated and either there is AP or RP.
27
Reporting Provisions – New Policy
On a new policy, the first report is due 60 days after the end of the “reporting period,” and the second is due concurrent with the first with daily, weekly or monthly reporting forms
28
Reporting Provisions – Renewal Policy
The first report is due 30 days after the end of the first reporting period
29
Reporting Provisions – Subsequent Reports
All subsequent reports must be filed within 30 days of the end of each reporting period.
30
Additional Reporting Provisions
Daily, weekly and monthly values must be reported within 30 days of each month in which they fall.
Quarterly reports must be reported within 30 days of the last day of the quarter, based on the inception date.
Policy year reports are due within 30 days at the end of the policy anniversary date.
31
Correct Reporting
Even if the loss amount exceeds the reported amount, the entire policy limit is available when the loss follows an accurate report.
32
Full reporting
Reports must be accurate, if they are inaccurate, the coinsurance penalty will apply.
33
Reports in Excess of the Limit of Insurance
Reports in excess of the limit of insurance will be used to determine the final premium but the policy will not pay more than the limit of insurance.
34
Failure to submit reports
Reports must be on time. If the first report is not filed, the policy will not pay more than 75% of what it would otherwise would have paid.
35
Subsequent Reports Late
If the NI begins reporting but fails to file subsequent report, the policy will pay no more than the values shown on the most recent report for that location.
36
Additional Coverages
1. Debris Removal
2. Preservation of Property
3. Fire Department Service Charge
4. Pollutant Clean-Up and Removal
5. Increased Cost of Construction
6. Electronic Date
37
Debris Removal
Pays to remove debris of Covered Property. Loss must occur during the policy period and debris removal expenses must be reported to insurer in writing within 180 days of the date of direct physical loss or damage.
38
How is Debris Removal paid
25% of the amount the insurer pays for direct physical loss or damage plus the deductible.
Policy will pay up to an additional $25K if the Limit of Insurance is exhausted or debris removal expense exceed 25%
39
Debris Removal Additional Insurance CP 04 15
Provides a way to increase the $25K for additional debris removal expense. Replaces that limit
40
Preservation of Property
Covers any direct physical loss or damage to Covered Property that is moved from the described premises to preserve it from loss or damage from a Covered Cause of Loss.
All risk coverage.
Pays for loss or damage to property while it is in transit or while in temporary storage at another location and within 30 days after the property is first moved.
Does not increase the limit of insurance
41
Fire Department Service Charge
Pays up to $1K for fire department services at each described premises unless a higher limit is shown in the Dec.
42
Pollutant Clean-Up and Removal
Covers the cost of extracting pollutants from the described premises, does not cover the cost of testing for monitoring or assessing the effects of pollutants as long as the release or seepage is a result of a covered cause of loss.
43
How must does Pollutant Clean-Up and Removal pay?
The most the policy will pay is $10K for the sum of all covered expenses within a 12 month period and expenses will only be paid if reported within 180 days of the occurrence of the covered cause of loss.
44
Increased Cost of Construction
Applies only to buildings to which the Replacement Cost Optional Coverage applies, pays for increased costs incurred to comply with the minimum standards of an ordinance or law in the course of repair, rebuilding or replacement of damaged parts.
Will not pay if the insured was required and failed to comply with an ordinance or law before the loss or damage
Will not pay for a loss resulting from pollutants or fungus or the costs related to clean up and testing.
45
How must does Increased Cost of Construction pay?
Coverage is limited to $10K or 5% of the building’s limit of insurance, whichever is less.
46
What are the 7 Coverage Extensions in the Building and Personal Property Coverage Form?
1. Newly Acquired or Constructed Property
2. Personal Effects and Property of Others
3. Valuable Papers and Records (Other than Electronic Data)
4. Property Off-Premises
5. Outdoor Property
6. Non-owned Detached Trailers
7. Business Personal Property Temporarily in Portable Storage Units
47
What are the 3 key parts of the Newly Acquired or Constructed Property extension
1. Buildings
2. Your Business Property
3. Period of Coverage
48
Explain the Buildings extension in Newly Acquired or Constructed Property
Coverage can be extended to new buildings while being constructed on the described premises.
Coverage can be extended to new buildings that are acquired at other locations as long as they are intended for similar use as the building described in the Declarations OR a warehouse
49
What is the limit for Newly Acquired or Constructed Property
$250K for loss or damage at each building
50
Newly Acquired or Constructed Property - Increased Limit
Allows the Newly Acquired or Constructed Property limit of $250K to be scheduled at a different amount.
51
Explain the Business Personal Property extension in Newly Acquired or Constructed Property
Coverage may be extended to include BPP at newly acquired locations. Does not apply at fairs, trade shows or exhibitions.
52
What is the limit for Newly Acquired BPP
$100K
53
What is the Period of Coverage for Newly Acquired or Constructed Property?
Limited to the policy expiration, 30 days after the acquisition or start of construction or when the NI reports values to the insurer.
54
Personal Effects and Property of Others Coverage Extension
Provides BPP coverage to personal effects owned by the NI and others involved in the business such as officers, partners and employees. Does not include theft
55
Valuable Papers and Records Extension
Extends coverage to include the cost for restoring lost information on valuable papers when duplicates do not exist. Coverage is on a named perils basis.
55
What is the limit for Valuable Papers and Records Extension
$2,500
56
Property Off-Premises Extension
Coverage can be applied to covered property while it is away from the described premises if it is:
1. temporarily at a location that is not owned, leased, or operated by the NI
2. in storage at a leased location, only if the lease was executed after the start of the current policy term
3. at any fair, trade show or exhibition
57
What is the limit for Property Off-Premises extension
$10,000
58
Specified BPP Temporarily Away from Premises
CP 04 04
Extends BPP coverage in a schedule that is
1. temporarily away from the described premises in the course of the NI's daily business activities
2. In the care, custody, or control of the NI or an authorized employee
59
Outdoor Property Extension
Extends some limited outdoor property for a limited set of covered perils:
1. Fire
2. Lightning
3. Aircraft
4. Riot
5. Explosion
60
What is F.L.A.R.E.
1. Fire
2. Lightning
3. Aircraft
4. Riot
5. Explosion
61
What is the limit for Outdoor Property extension
$1000 total and not more than $250 for any one tree, shrub or plant.
62
Additional Covered Property CP 14 10
Endorsement used to insure fences as it takes any item shown in the endorsement schedule from Property Not Covered to the Causes of Loss form selected.
63
Radio or Television Antennas CP 14 50
Used to insure radio or television antennas for additional limits and/or additional causes of loss.
64
Outdoor Trees, Shrubs and Plants CP 14 30
Used to insure outside trees, shrubs and plants for increased limits and/or additional causes of loss.
65
Non-owned Detached Trailers Extension
NI may apply BPP to loss to non-owned trailers if:
1. trailer used in the NI business
2. trailer is in the care, custody or control of the NI at the described premises
3. NI has a contractual responsibility to pay for loss or damage to the trailer
66
What are the Non-Owned Detached Trailers exclusions
Will not pay for loss or damage that occurs
1. while the trailer is attached to any motorized vehicle or conveyance
2. during hitching or unhitching operations or if the trailer becomes accidentally unhitched.
67
How much is the coverage extension for Non-owned Detached Trailers
$5K unless a higher limit is shown in the Dec. This is excess over the amount due from any other insurance
68
Business Personal Property Temporarily in Portable Storage Units
Extends coverage to property temporarily stored in portable storage unit including a detached trailer that is within 100 feet of the building or structure or within 100 feet of the described premises whichever is greater. Coverage is provided for a maximum of 90 days from when the storage unit is brought onto the premises.
69
What is the limit for the BPP Temporarily in Portable Storage Units extension
$10K
70
Higher Limits CP 04 08
Can be used to increase the limits for BPP Temporarily in Portable Storage Units
71
Deductible
Reduces the amount of loss, not the Limit of Insurance. If more than one item of Covered Property is damaged and separate Limits of Insurance apply, losses are not combined in determining the application of the deductible however the deductible is applied only once. Deductibles can be modified to reduce the insurance premiums or make a risk more acceptible.
72
Deductibles By Location
CP 03 29
Modifies the Deductible provision to enable an insured to have separate deductibles on different locations. Also enables the insured to have separate deductibles on Windstorm/Hail and Theft at different locations by indicating the appropriate symbol on the Schedule. In the event of a single occurrence at multiple locations, the Deductibles By Location endorsement will apply a single, separate deductible at each location.
73
Multiple Deductible Form
CP 03 20
Enables an insured to have separate deductibles on different locations. Also enables the insured to have separate deductibles on Windstorm or Hail and Theft at different locations by indicating the appropriate symbol on the Schedule. In the event of a single occurrence at multiple locations, only the largest applicable deductible applies.
74
Windstorm or Hail Percentage Deductible
CP 03 21
Modifies the deductible by specifying either a 1%, 2% or 5% deductible for Windstorm or Hail. A deductible is calculated separately for each building and the business personal property at each building. The endorsement provides guidance on how the deductible is calculated for both "specific insurance" and "blanket insurance"
75
Limits of Insurance - Signs
$2,500 per sign in any one occurrence, whether the sign is attached or not.
76
Outdoor Signs
CP 14 40
Can be used to insure outdoor signs for additional limits by replacing the $2,500 limit on signs in the Building and Personal Property Coverage form. Limits must be scheduled on the endorsement.
77
Seven Loss Conditions
1. Abandonment
2. Appraisal
3. Duties in the Event of Loss or Damage
4. Loss Payment
5. Recovered Property
6. Vacancy
7. Valuation
78
Appraisal
Used to determine the value of property or the amount of loss. Appraisal can be requested by the insurer or the Named Insured.
79
Abandonment
Insured cannot abandon any property to the insurer.
80
Appraisal Process
Each of the appraisers will submit separate statements indicating the value of the property and the loss amount. In the event of a disagreement, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each party will pay its chosen appraiser, and the parties will share the cost of the umpire and other appraisal expenses equally. Even though the appraisal decision regarding the value may be binding, the insurance company still retains the right to deny the claim.
81
Duties In The Event Of Loss Or Damage
1. Notify the policy if a law may have been broken.
2. Notify the insurer promptly of the loss or damage.
3. Provide the insurer with a description of how, when, and where the loss or damage occurred.
4. Take all reasonable steps to prevent further damage.
5. Give complete inventories of damaged and undamaged property if requested by the insurer.
6. Allow the insurer to inspect the property and examine
7. Send a signed, sworn proof of loss containing the information requested within 60 days of the request from the insurer.
8. Cooperate with the insurer in the investigation and settlement of the claim.
82
Loss Payment
Outlines the options for the insurer to pay the insured for the loss:
1. Pay the value
2. Pay the cost of repairing or replacing
3. Take some or all of the property at an agreed or appraised value
4. Repair, rebuild, or replace the property with other property of like kind or quality.
Insurers option for payment will be expressed within 30 days after the receipt of the proof of loss
Insurer will not pay more than the Named Insured's financial interest in the property.
83
Loss Payable Provisions
CP 12 18
Adds other persons or organizations to be included in the insurer's payment for loss or damage to BPP
1. Loss payees
2. Lender's Loss Payees
3. Contract Sellers
4. Building Owners
84
Recovered Property
Both the NI and the insurer are responsible for notifying the other party of any property recovered after the loss settlement. NI has the option of accepting the return of the property or not. If the NI chooses to have the property returned, they will be responsible for paying back the amount they received for the property in the loss settlement.
85
Vacancy Terms
When the policy is issued to a tenant
1. Building means the unit or suite rented or leased to the tenant
2. Building is vacant when it does not contain enough business personal property to conduct customary operations.
86
Vacancy Terms
When the policy is issued to the owner or general lessee of the building
1. Building means the entire building
2. The building is vacant unless at least 31% of the total square footage is:
-rented to a lessee or sub-lessee and used by the renter to conduct customary operations and/or
-used by the building owner to conduct customary operations
87
Vacancy Provisions
Apply when the building has been vacant for more than 60 consecutive days before the loss or damage occurs.
First - Coverage excludes
1. Vandalism
2. Sprinkler leakage, unless the system has been protected against freezing
3. Building glass breakage
4. Water damage
5. Theft
6. Attempted theft
Second - Payment the insurer otherwise would pay will be reduced by 15% for all other Causes of Loss.
88
Vacancy Permit
CP 04 50
Used to waive the Vacancy Loss Condition, allowing coverage to continue for a specified period when a building is deemed vacant beyond 60 consecutive days.
*Vandalism and/or sprinkler leakage can still be excluded
89
Vacancy Changes
CP 04 60
Used to change the 31% minimum use requirements by indicating the new percentage (allowable) in the schedule.
90
