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41 Cards in this Set
- Front
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What are the eight named perils included in Commercial Property Common Policy Form? |
- Fire - Lightning (including loss or damage to electrical devices) - explosion - impact by air craft, spacecraft or land vehicle - riot, vandalism, or malicious acts - smoke due to a sudden, unusual & faulty operation of any stationary furnace - leakage of fire protection equip - windstorm or hail |
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Commercial Property Insurance Broad Form (IBC 4037) insures against "all risks of direct physical loss or damage" subject to policy conditions & exclusions. Coverage includes: (6 things) |
1. vehicle impact damage to insured's building, even when caused by insureds or employees. 2. all sources of smoke damage, excluding agricultural smudging or industrial operation 3. water damage from freezing or rupture of water lines. (Exclusions: flooding, overflow or any body of water, seepage through basement walls & floors, sewer backup) 4. theft 5. Collapse. This will be important coverage in areas where large amounts of snow can accumulate over a short period of time. (Exclusions: earthquake, the cost of making good, fault, or improper material, workmanship or design) 6. ALL OTHER PERILS NOT SPECIFICALLY EXCLUDED |
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Determination of Premium. To arrive at the premium to be charged, the insurer will first determine the basic fire rate. The basic fire rate is calculated on the bases of cost per $____ of the insurance. |
$100. Ex. A basic fire rate of .70 means that the insurer is charging $.70 for every $100 of insurance purchased to insure against loss by fire. |
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When determining the basic fire rate to be charged, the insurer will consider all of the following factors: (5 things) |
- Construction (masonry products vs. wood) - Protection (availability & type will affect the fire rate) - Occupancy (garages, restaurants, nightclubs pay a higher fire rate than a retail book or clothing store) - Location - Claims history (those businesses having the greatest number & severity of fire losses will be charged more) |
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Protection-- the availability & type of fire protection will affect the fire rate. The insurer will require info regarding: (2 things) |
- Public Protection (proximity to fire hall and fire hydrants, established fire department, sufficient water supply, year-round accessibility to water supply) - Private Protection (fire extinguishers, fire detection systems, automatic sprinkler) |
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Clauses of Commercial Property Insurance Forms
Building means: the buildings described on the "declarations page" and includes: (5 things) |
1. Fixed structures pertaining to the buildings and located on the premises (metal perimeter fencing, pole sign, yard signs) 2. Additions and extensions communicating and in contact with the buildings. 3. Permanent fittings and fixtures attached to and forming part of the building. (heating, plumbing, AC, wall to wall carpeting, lighting fixtures, burglar alarms wired into the building, built-in wall or display shelving) 4. Material, equipment and supplied on the premises for maintenance of, and normal repairs and minor alterations to the building or for building services (janitorial supplies, carpentry tools, paint supplies, and carpeting remaining from an earlier installation) 5. Growing plants, trees, shrubs, or flowers inside the building used for decorative purposes when the insured is the owner of the building. |
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Clauses of Commercial Property Insurance Forms Stock means: (3 things) |
1. Merchandise of every description usual to the insured's business 2. packing, wrapping, and advertising materials 3. similar property belonging to others which the insured is under obligation to keep insured or for which he is legally liable. ( the law normally holds employers legally liable for damage caused by employees to the property of others) |
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Clauses of Commercial Property Insurance Forms Equipment mens: (3 things) |
1. generally all contents usual to the insured's business including furniture, furnishings, fittings, fixtures, machinery, tools, utensils and appliances other than building or stock. (office furniture, staff room furnishings, portable shelving units, photocopies etc, forklift and tractor) 2. similar property belonging to others which the insureds are under an obligation to keep insured or for which they are legally liable. (Coverage is subject to the same conditions as are applied to property of others insured as stock) 3. tenant's improvements which are defined as building improvements, alterations, and betterments made at the expense of the insured to a 'building'. To elaborate on 3-- Not all insureds operate out of the buildings owned by them. Normally, the space rented to the tenant is unfinished & requires improvements & betterments prior to opening for business (carpeting, lighting fixtures, etc). **Were the insureds to own, rather than rent the premises, the value of such betterment and improvements would have been insured as building*** Because tenants do not own or have an insurable interest, the are not entitled to place insurance on it... instead, all improvements and betterments made by tenants must be insured as equipment! |
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Clauses of Commercial Property Insurance Forms Co-Insurance Clause applies _______ losses only. |
Partial. ex. A fire which is extinguished before it totally destroys the building, stock, and equipment. |
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Clauses of Commercial Property Insurance Forms What is the formula applied to all partial losses? |
Did/Should X Amount of Loss = Settlement
Did= amount of insurance purchased Should= % of insurance required (usually 80% of ACV) X ACV |
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Clauses of Commercial Property Insurance Forms Why a Co-Insurance Clause? Insurers often found that they were paying: Insureds benefit because their ______ won't increase due to other people who don't buy adequate coverage. |
--fully for losses fro which they were collecting only a portion of the premium The insurer was therefore taking the majority of the risk. rates. |
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Clauses of Commercial Property Insurance Forms The co-insurance clause was designed to apply a _______ for all partial losses when insureds purchased less insurance than specified by the insurer. |
penalty. When insureds fail to meet the percentage requirement specified by the insurer, insured will be paid less than the amount of their loss. |
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Clauses of Commercial Property Insurance Forms Co-Insurance and the Waiver of Co-Insurance This clause applies separate to each item to which a co-insurance percentage is specified on the "declarations page' and only where the total loss exceeds the lesser of ____% of the applicable amount of insurance, or $_____. |
2%
$5,000 ~~~If a loss occurs involving building, stock and equipment and a co-insurance requirement applies to each, then the specified co-insuance % will be applied SEPARATELY to each coverage limit. ~~~The co-insurance clause will be applied only where the amount of loss exceeds either 2% or the applicable insurance or $5,000. |
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Clauses of Commercial Property Insurance Forms Co-Insruance and the Waiver of Co-insurance IT IS IMPORTANT TO NOTE that in the event of any loss under the policy, the insurer will pay the least of: (3 things) |
1. the amount calculated using the co-insurance formula 2. the limit of insurance 3. the amount of the loss |
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Clauses of Commercial Property Insurance Forms Debris Removal-- When there is a significant loss, insureds will incur additional expense in removing the debris from the premises. If the limits of insurance have not been fully used to pay for damage insured by the policy, the insurer agrees to allow insured to use: |
any remaining amounts to pay for debris removal. ** this coverage is not provided when all limits have been used to pay claims. Coverage is also provided for the expense incurred by insureds in removing debris of other property which was not insured by the policy but which was blown onto the premises by windstorm. |
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Clauses of Commercial Property Insurance Forms Reinstatement Clause-- "Loss under any items of this form shall not reduce the applicable amount of insurance" In contract law, the insurer's financial obligation to the insured is: |
OVER when the limits of insurance have been fully used to pay claims. HOWEVER, the unique nature of insurance contracts allows insureds to have as much insurance on property after and insured loss as they had immediately prior to it. **The limits of insurance provided by the policy remain unchanged for the entire policy period, regardless of the number and amounts of claims paid.** |
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Clauses of Commercial Property Insurance Forms Subrogation Clause-- When the insurer pays a claim for damage cause to the insured's property by others, it is entitled to: |
seek recovery from the responsible party. However, the insurer agrees not to ex excise the right of subrogation against any party have an insurable interest in the property insured. (payees, business partners, and subsidiary firms) |
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Clauses of Commercial Property Insurance Forms Property Protection Systems-- The purpose of property protection systems it to: |
prevent losses of to reduce their severity. |
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Clauses of Commercial Property Insurance Forms Property Protection Systems include: (3 things) |
- sprinkler or other fire extinguishing system, or - fire detection system, or - intrusion detection system |
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Clauses of Commercial Property Insurance Forms Property Protection Systems-- Insureds having property protection systems on their premises must notify the insurer immediately when: (3 things) |
1. they know there is an interruption to, or flaw or defect in such system 2. any contract providing monitoring monitoring or maintenance services to such systems has been cancelled or not renewed 3. they have been provided with notification of the suspension of police service in response to any such system When any of the above situations exist, the insurer may: - reduce coverage - change an additional premium - cancel the policy |
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Other Commercial Property Insurance Coverages of Forms:
All property insurance policies contain exclusions of two types: |
1. property excluded 2. perils excluded |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Property Away from the Insured Premises. Two common off premises coverages include: |
- property in transit (for an additional premium, the Commercial Property Broad Form can be extended to cover stock and equip or contents int transit within Canada or the Continental United States) - temporary locations A temporary location is one which is not owned, rented, or controlled by the insured. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Locked Vehicle Warranty. Warranted by the insured that any vehicle in which the property insured is carrier is equipment with a fully enclosed body or compartment and the insurer [shall be/shall not be] liable in case of loss by theft from an unattended vehicle only as a direct result of forcible entry.... the doors of which are securely locked and the windows closed. |
Shall be liable. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Glass Insurance-- provides limited coverage for exterior glass. Even the the best policies exclude breakage: (3 things) |
1. accidentally cause by insureds or others 2. due to earth movement 3. caused by thieves The Insuring Agreement for glass insurance is extremely broad. Many insurers provide as few as 3 exclusions, namely: - fire - war - nuclear energy hazard |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Valuable Papers and Records Insurance. When Valuable Papers and Records Insurance is purchased, coverage is provided for all costs of reproducing lost or damaged goods. The coverage provided by commercial property insurance policies restricts payment for records to their: |
blank value only. Insurance brokers, lawyers, architects, doctors and school will often need to restore documents or records after a loss. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Crime Insurance. When insurance is provided on the Broad Form, _______ coverage is provided for stock and equipment. Commercial property policies only provide coverage for certain criminal acts, include: (2 things) |
theft. (still excludes theft of money, securities, jewelry, furs, and other valuable property) 1. vandalism and malicious acts 2. riot |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. The three types of crime insurance are: |
1. burglary insurance 2. robbery insurance 3. theft |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. The two types of Burglary are: |
1. mercantile stock burglary - the insured property was unlawfully taken from within the premises - that the premises were unlawfully entered or exited - that there were visible signs of the use of force at the point of entry or exit 2. safe burglary - the insured must provide the insurer with evidence that force was used to gain access into the safe. Coverage will also be provided when the entire safe is removed. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Policies providing robbery insurance will pay when: (3 things) |
1. actual or threatened force is used to take insured property from a person having control over it 2. insured property is taken from a custodian who is killed or rendered unconscious 3. the custodian witnessed the taking of insured property by a person not authorized to have it (both on and off premises robbery exposures can be insured by the inside/out robbery rider) |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Theft is the _________ crime coverage available to insureds. To qualify for coverage, insured need only show that the insured property was taken _____________. |
broadest. without their consent. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Crime Insurance--- Theft. Two examples of policies insuring theft include: |
1. broad form (IBC 4037) stock and equip items are insured whenever they are unlawfully taken by outsides. Insured need not prove force was used to take property form the insure's premises or people authorized to have control over it. 2. money and securities (broad form) Provides the broadest coverage for money and securities. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Crime Insurance--- Theft. Money and Securities (Broad Form) insures: (3 things) |
1. actual destruction 2. disappearance 3. wrongful abstraction This refers to any wrongful taking of money and securities. Coverages provided would include safe burglary, robbery, and theft. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. The Boiler and Machinery Policy can be purchased to provide coverage that commercial property excludes, such as: (2 things) |
Loss or damage to buildings resulting from the explosion of the following objects owned, operated or controlled by the insured: 1. boilers 2. pressure vessels operating in excess of 15 pounds/sq inch. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Electrical or mechanical breakdown. The Boiler and Machinery Policy provides this coverage for objects such as: (5 things) |
1. boilers and pressure vessels 2. AC units 3. misc. electrical apparatus (panels and switch gear) 4. electric motors 5. compressors and pumps |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Three types of Contractor's Insurance: |
1. Builder's Risk- Broad Form (IBC 4042) 2. Contractor's Equipment Floater (insured all types of moveable equipment owner, rented, or eased by contractors. ex. road construction, logging, excavating equip) 3. Installation Floater |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Contractor's Insurance. Commercial property insurance policies do/do not insure buildings in the course of construction |
do not. Builder's Risk- Broad Form (IBC 4042) is required to insure this exposure. Builder's Risk provides THE BEST coverage. It can be purchased by the future owner of the building or by the contractor. The value of landscaping, temporary buildings, forms, hoardings and scaffolding can be included. There is no coverage for: - contractor's tools and equip - the cost of making good fault or improper material, workmanship or design, except for resultant damage to other completed work. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. The policy period of Builder's Risk- Broad Form 4042) covers the project only while it is in the course of construction, and automatically ceases when: (2 things) |
1. the project has been left unaltered or when there has been no construction activity for more than 30 consecutive days
2. when the building becomes occupied |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Builder's Risk- Broad Form (IBC 4042) Even though it may be some months before the project is completed, insured are required to purchase insurance which is equivalent to __________ value. |
its completed value. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Builder's Risk- Broad Form (IBC 4042) Under the installation floater, property is insured: (3 things) |
1. while in transit to the job site 2. while awaiting installation at the job site 3. during installation until accepted, or the interest of the insured ceases, whichever first occurs. |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Business Interruption Insurance is designed to: It pays for: |
- restore lost income after a loss to the level it would have been had the loss not occurred. ____________________ - pays expenses - pays a profit |
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Other Commercial Property Insurance Coverages of Forms: -- the following are examples of additional coverage which need to be purchased separately. Types of Business Interruption Insurance: (3 things) |
1. Earnings form. Coverage commences at the time of the loss and continues until the property is rebuilt, repaired or replaced. 2. Profits Form. Coverage commences at the time of the loss and ceases when the income is restored to the level it would have been had the loss not occurred. (The Profits Form is recommended as it provides coverage until business income level is restored) 3. Extra Expense Insurance (IBC 4027) Insures all necessary extra expenses incurred by insureds in continuing normal business operations after a loss. Examples of extra costs include those: - to rent temporary premises - to rent temporary equip - to install telephones - to pay overtime salaries - to pay bonuses for quick service |
