Unit 10: Commercial Package Policy (CPP) Flashcards
What is a commercial package policy?
The commercial package policy (CPP) usually begins with coverage for property and general
liability insurance and then other forms of insurance are added on to create a “bundle. A majority of commercial risks may be eligible for coverage under the CPP.
Like all package policies, the CPP offers advantages to both the insured and the insurer. Repetitive information is eliminated and the policy is easier to understand. Another advantage for the insured is lower premiums by packaging policies rather than if each risk was purchased independently.
What are some eligible coverages under CPP?
The CPP can include the following:
• Commercial property coverage forms
•Building and personal property
•Builder’s risk
• condominium association
•Condominium commercial unit owners
•business income
•extra expenses
• Commercial inland marine
• Commercial casualty coverage forms
- Commercial auto
- General liability
- Crime
- Farm liability
• The CPP cannot include the following:
• Workers’ compensation
Life insurance
- Health and disability insurance
- Certain types of professional liability
What’s in a CPP?
The coverages that can be included in the CPP have declarations, definitions, insuring agreements, and exclusions. What this means is they can be written as a standalone (monoline) policy, or they can be included inside this package policy called the CPP.
What’s does a CPP contain?
Along with the coverages needed by a business, the CPP also contains:
• common policy declarations;
• common policy conditions and
• two or more coverage parts (property or casualty)
**To call it a package policy, the CPP must include at least one property coverage and one casualty
Coverage **
A CPP might also contain interline endorsements–endorsements that may be used with more than
one line of insurance.
Commercial Package Policy (CPP)
• Think: shopping cart analogy
• Common policy declarations
• Common policy conditions
• Two or more coverage parts
• One property/one casualty
COMMON POLICY DECLARATIONS
WHO?
WHAT?
WHEN?
The common policy declarations contain information about who is insured, when the coverage is in effect, and for what lines (property or casualty).
It includes:
•the name and mailing address of the named insured;
• the policy period, including the time and date coverage begins and ends;
a description of the covered business:
• the forms purchased and their premiums.
CPP-Declarations
•Named insured
• If an individual-includes spouse
• If individual partners-includes spouse
• If a corporation- includes individual officers, directors, and stockholders
COMMON POLICY CONDITIONS
First-named insured
The common policy conditions apply to all of the coverage parts contained in the CPP.
Under the common policy conditions, certain responsibilities and obligations are assigned to the first-
named insured- the verson or business whose name is listed first in the declarations. It is necessary to
specity the first -named insured because the CPP may be issued to more than one named insured. such as business partners or entities. The insurer only corresponds with the hrst-named insured.
CPP Common Conditions
• First-nemed insured
• Acts on behalf of all insured
What is the cancellation condition?
Cancellation
•Notices to first-named insured
• Premium refund to first-named insured
• Request from first-named insured
The cancellation condition sets forth the circumstances under which the policy may be canceled. The first-named insured must cancel the policy in writing, and any premium refund due will be sent to the first-named insured. This refund may be less than a pro rata refund to make up for the expense of issuing the contract.
If the insurance company cancels, it must mail a written notice to the last-known address of the first-named insured. The premium is refunded to the first-named insured on a pro rata basis.
Changes and Premiums
Changes and Premiums
• Change request from first-named insured
• First-named insured responsible for payment of premium
Along with the right to cancel the policy, the first-named insured has other rights and responsibilities.
The changes condition states that only the first-named insured is authorized to make changes in the terms of the policy with the consent of the insurance company. lerms can be amended or waived only by an endorsement issued by the insurer that is made a part of the policy.
‘The premiums condition states that the first-named insured is responsible for the payment of all premiums and will receive any return premiums due.
Examination of Books, Records, Inspections, and Surveys
the examination of your books and records condition states that the company may examine and audit the insured’s books and records at any time during the policy period and for up to three years after the end of the policy period.
The inspections and surveys condition gives the company the right to make inspections or surveys of the insured business at any time. The company may choose to report on the conditions it finds and recommend changes. These inspections are related to insurability and are not considered safety inspections. The insurer will not warrant that conditions are safe or healthful, or comply with laws or regulations.
Transfer of Rights and Duties
Finally, the transfer of your rights and duties under this policy condition states that the insured’s rights and duties under the policy cannot be transferred without the written consent of the insurance company, except in the case of the death of a named insured. This is sometimes called the assignment clause, and it is a common feature of both personal and commercial lines policies.
If the first-named insured dies, the rights are transferred to the deceased’s legal representative, but only while the representative is acting within the scope of the duties of the legal representative. The legal representative is covered by the policy until the next policy renewal date. Until a legal representative is appointed, anyone having proper temporary custody of the property will have the insureds rights and duties as they relate to the property.
Transfer of rights-change of insured
• Insurance company must agree
• Automatic if named insured dies
