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35 Cards in this Set
- Front
- Back
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What are the two types of commercial property forms? |
- named perils form - broad form (all risks) |
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What is commercial property insurance? |
Commercial property insurance involves policies for property and related exposures of business owners operating manufacturing, mercantile, and contracting operations |
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What is included on the named perils form? |
Provide insurance for fire and additional perils named on the policy form Harold's insured are expressly noted in the wording. Can be as limited or expansive as the insurer chooses Can be buildings only, contents only, or both buildings and contents together. Contents generally includes stock including packaging and labeling, equipment, leasehold or tenants improvements, property of others, and generally all contents usual to the business of the named insured |
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What is included on a broad form policy |
Coverage provided on an all-risk basis, subject to policy conditions, limitations, and exclusions Can be building, contents or both combined |
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What categories are the five types of exclusions generally grouped into? |
- generally not insurable - causes that would be of such a magnitude that individual ensures would not have the ability to cover them and remain in business, like war risks or nuclear contamination - loss is not accidental or extraneous, such as losses due to the nature of the property itself or inherent vice, like rusting of metal or deterioration of rubber - losses wholly or partly under the control of the insured, like marring and scratching losses are often excluded because they usually result from carelessness - wear and tear losses - losses excluded because of the particular coverage |
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Define: inherent vice |
A quality within an object that makes it tend to destroy itself |
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What two sections are exclusions separated into? |
- loss or damage to specific property - loss or damage arising out of various perils |
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What are some properties that are commonly excluded? |
- money and other valuable property - automobiles - aircraft (including drones and other types of flying devices) - watercraft - furs or jewelry - property that is vacant for more than a specified number of days - loss or damage to any property undergoing some work process |
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What are 9 perils that are commonly excluded? |
- flood and earthquake - sewer back up and Overland water - bylaws - inventory shortage - pollution - environmental hazards - terrorism - equipment breakdown - cyber risks |
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Describe the peril excluded: flood and earthquake: |
Potential severity of losses due to flood or earthquake lead to these causes of loss being excluded in the standard wordings. Separate coverage can often be purchased for flood and or earthquake for an additional premium (with higher deductibles). In cases where an insured has multiple locations, the insurer will often look to have the insured at the flood and or earthquake coverage on all locations |
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Describe the excluded peril: sewer backup: |
Separate coverage may be available to override the sewer backup exclusion. Certain regions, with a history of sewer backups may not be eligible for sewer backup coverage. When a sewer backup endorsement is purchased, it may be subject to a higher deductible and will often be subject to a sub-limit |
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Describe the excluded peril: bylaws: |
In cases where bylaws lead to an increased cost of repairs, rebuilding, the bylaws exclusion eliminates coverage for these additional costs. The bylaws endorsement coverage overrides these exclusions |
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Most wordings exclude any increase in claim amount due to the operation of building bylaws. Including (4): |
- increased costs due to requirement to demolish and rebuild an undamaged portion of a building - additional cost to rebuild with Superior construction materials - cost to remove the extra debris - increase time to build, resulting in an increased business interruption loss |
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Describe the excluded peril: inventory shortage: |
Shortages of stock that is discovered by way of an inventory are excluded from coverage unless the insured can prove that the stock was 1) in its care, custody and control (documentary evidence is needed as proof) and 2). And unless they can show it was stolen, either as a result of a crime or as a result of employee dishonesty (which requires separate insurance) |
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Describe the excluded peril: pollution |
Coverage for a below ground spill or contamination on the insurance owned property is excluded but a pollution endorsement may be available to override the exclusion. The premium for the pollution endorsement will be tied to the nature of the insurance operation |
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Describe the excluded peril: environmental hazards: |
Losses are rising from mold, fungus, and other biological or environmental perils are generally excluded from coverage |
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Describe the excluded peril: terrorism |
Commercial policies defined terrorism and exclude it under the standard policy |
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Describe the excluded peril: equipment breakdown |
Losses involving equipment breakdowns like a broken air conditioning unit in an apartment building, or a refrigeration unit breakdown in a medical supply company or a restaurant, etc and machinery / equipment breakdown are excluded under standard commercial property wordings separate insurance is generally available |
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Describe the excluded peril: cyber risks |
Malicious persons and organizations can attempt to harm the insurance operations with viruses, worms, and ransomware that can hold a company hostage for a ransom payment. These can be catastrophic for a business There are costs involved in correcting these computer issues, and there is a potential that the data may never be recovered or that the entire system may need to be replaced depending on how destructive the virus is Lost or damage caused directly or indirectly by a data problem is excluded in less cause directly by resultant fire, explosion, smoke, or leakage from Fire protective equipment |
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I data problem is defined as (3)? |
Erasure, destruction, corruption, misappropriation, or misinterpretation of data Error in creating, amending, entering, deleting or using data Inability to receive, transmit, or use data |
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Define: replacement cost value |
The current market value of the cost to replace the lost or damaged insured property |
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Define: coinsurance clause |
A distinct section or provision in an insurance policy that requires an insured (property owner) to carry separate insurance for a specified amount stated in the policy to be eligible for full coverage. If there's insufficient coverage, the insured must pay part of the loss |
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What are the four extensions on the CPBF wording? |
- temporary locations - newly acquired locations - transit - sales representatives |
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Describe the temporary locations extension: |
Provides a limited amount of insurance for contents while at locations not named on the policy. Principally it is used to ensure property that is occasionally off-premises, such as files or laptop computer that an employee takes home from work, or to ensure goods at an exhibition or trade show. It can also cover unplanned overflow of stockware equipment that is stored off-site. Little or no premium charge |
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Describe the newly acquired locations extension' |
Two similar extensions involving newly acquired locations: buildings at newly acquired locations, and contents at newly acquired locations. Both provide Insurance in the amount specified on the deck page for property within Canada for a period of 30 days, or the date when the newly acquired location is added to the policy, or the policy expiry date whatever comes first. |
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Describe the transit extension |
Coverage is extended to property while in transit to or from the insurance premises while within Canada and the continental United States. Limit of coverage is generally small so if the transit exposure for an insured is significant, then they are best to buy specific coverage for property and transit |
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Describe the sales representatives extension: |
Insurance contents in the custody of the sales representatives while in transit and at unnamed locations within Canada and the continental United States. Limits of insurance are generally very small. There may be no coverage for samples left in an unattended vehicle. |
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Define: statement of values |
The information required when a single rate is to cover more than one item or building. To determine a correct average, the reading bureau requires the policyholder to give the value of each separate risk and its contents |
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Describe valuation: |
- Commercial property forms allow the insured to choose between ensuring property for ACV or replacement cost - replacement cost conveys and added benefit to the insured (new for old) but they will be required to carry higher limits and since more coverage is purchased, the premium will be higher |
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What is the stated amount coinsurance clause? |
It encourages Insurance to maintain a minimum value of insurance. The insured submits a statement of values (often prepared with assistance of its accountants and supported by appraisals), and they agreed to carry limits of coverage equivalent to 100% of the amount reflected in the statement of values. So long as they do so then no coinsurance penalty will be applied |
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What are POED and COED? |
POED - property of every description COED - contents of every description |
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Describe blanket limits: |
Instead of buying separate limits for building, stock and equipment, insurance can buy a blanket POED. In cases where the insured does not own the building, they could buy a blanket COED |
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What are fluctuating values? |
Some businesses have wide fluctuations in their stock values over the course of a policy term. To solve this challenge, the policy may be subject to a stock reporting requirement or peak season endorsement |
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What is a stock reporting basis? |
The policy limit for stock is set to reflect the highest anticipated value. The insured files monthly, quarterly or annual stock value reports and the premium is adjusted at year end |
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What is the peak season endorsement? |
This increases the limit of insurance for a specified period of time (maybe you're revised limit or may allow an extra 25% of the stock limit) for example from October 1st to December 31st. The peak season endorsement is best suited to businesses that have predictable fluctuations in their stock values from one year to the next |
