Caib 2 Chapter 3 Questions

Front 1

All FIRE policies must include what?

Back 1

They must include DIRECT LOSS OR DAMAGE from FIRE, LIGHTENING & EXPLOSION of NATURAL , COAL or MANUFACTURED GAS

Front 2

Fire policies are rarely used but it is important that all brokers understand the workings of it, describe why?

Back 2

The FIRE policy serves as the MODEL for other BROADER Commercial Property forms

Front 3

Identify 1 CONDITION which serves to increase increase the physical hazard present in a risk & for which coverage is EXCLUDED by the fire policy?

Back 3

VACANCY- when the normal occupant is absent & contents have been removed

Front 4

Summarize the BY-LAW EXCLUSION

Back 4

Any increase to rebuild, repair or replace the insureds building after a loss which incurred in order to comply with a law or by a law are NOT insured by this policy

Front 5

Briefly outline the provisions outlined in the Removal Clause

Back 5

Coverage is provided for property @ a location not listed on the policy AS long as the insured is ABLE to show the following:

1-Property was NECESSARILY removed to prevent loss

2-In the event of a loss at the UNNAMED location the amount of insurance remaining after the payment of any losses at the property stated on the dec pages

3-Limited to the LEAST of 7 days OR the remaining amount of the unexpired policy term

Front 6

Summarize the coverage provided for DEBRIS REMOVAL Clause

Back 6

Covers removal of debris from the insureds premises after loss or damage to the insured property as long as its caused by an insured peril

Front 7

PERILS EXCLUDED on Fire Policies

Back 7

1- Loss or damage to electrical devices appliances, or appliances or wiring caused by artificially generated electrical currents; arching (ENSUING damage covered if fire or explosion) Direct damage caused to electrical devices or appliances caused by Brown-outs or electrical currents is excluded

2-Loss or damage to goods occasioned by or happening through their undergoing any process involving the application of heat

(the following business have an exposure to this Bakeries, laundries, Machining & fabricating shops, garages)

3- Loss or damage caused by War, invasion, act of foreign enemy, hostilities (whether war be declared or not) civil war, rebellion, insurrection of military power. (The payment of FIRE losses would bankrupt most Insurers, considered an uninsurable)

4- Loss or damage caused directly or indirectly by Nuclear incident or by Contamination of radioactive materials(Explosions due to the operation of a nuclear facility are also excluded.)NIAC- provides coverage for specialized risks

Front 8

PROPERTY EXCLUDED on Fire Policies

Back 8

-Money, bullion special metals, securities

-Autos, marine, aircraft

-Property at locations which to the knowledge of the insured are vacant or unoccupied or shut down for more than 30 consecutive days

-Loss directly/indirectly by the enforcement of a by-law regulation

Front 9

NAMED PERILS- provides for direct physical loss or damage caused by the following perils:

Back 9

1-Fire or Lightening ( coverage includes damage or loss to electrical appliances caused by lightening)

2-Explosion

3-Impact by Aircraft or Spaceship or Land Vehicle

4-Riot, Vandalism, or Malicious Acts

5-Smoke

6-Leakage from Fire Protective Equipment

7-Windstorm or Hail

Front 10

NAMED PERILS EXCLUSIONS-

EXPLOSION

Back 10

Except with respect to the explosion of natural, coal or manufactured gas there is NO coverage for the following

-portions containing steam or water

piping & apparatus or parts normally containing the steam

-combustion chambers or fire boxes of steam generating boilers

-smelt dissolving tanks(extraction of metal from ore through a melting process)

-vessels that exceed 103kilopascals (15psi)

-Moving or rotating machinery (damage caused by centrifugal force)

-Any vessels while undergoing pressure tests

-Gas turbines

Front 11

NAMED PERILS EXCLUSIONS

IMPACT BY AIRCRAFT, SPACE CRAFT OR LAND VEHICLE

Back 11

There shall in NO event be any liability for cumulative damage or for loss or damage caused by:

-Land vehicles belonging to the insured or employees

-to aircraft, spacecraft or land vehicles causing the loss

-caused by any aircraft, spacecraft when being taxied or moved inside or outside of a BUILDING

(coverage is paid on an OCCURRENCE as opposed to a CUMULATIVE basis)

Front 12

IMPACT BY AIRCRAFT, SPACE CRAFT OR LAND VEHICLE- covered ONLY

Back 12

Will only pay claims resulting directly from IMPACT or the STRIKING of the insured property by Aircraft, spacecraft or land vehicle. (damage caused by stones thrown up by the tires of customers automobile does not qualify as impact)

Front 13

NAMED PERILS EXCLUSIONS

RIOT, VANDALISM OR MALICIOUS ACTS

Back 13

The term riot includes open assemblies of strikers inside or outside the premises who have quitted work or locked or employees

NO COVERAGE:

-due to a cessation of work- change of temperatures

-Flood or due to any explosion(unless covered under Clause 5B)

-due to theft or attempted theft

Front 14

To constitute a RIOT, the following conditions must be present:

Back 14

- There must be an act of violence or threatened violence

-group of no less than 3 involved

-there must have been a clear & present danger of which would result in, damage or injury to property

Front 15

There are 3 coverage EXCLUSIONS that apply to

RIOT, VANDALISM OR MALICIOUS ACTS

Back 15

1. Damage caused by disgruntled employees who have walked off the job/ change in temperature , is not insured

2. Flood

3. Theft or Attempted theft of property

Front 16

NAMED PERILS EXCLUSIONS

SMOKE

Back 16

The term SMOKE means smoke due to a sudden, unusual and faulty operation of any stationary furnace.

Smoke from portable heaters, units used for cooking, as is smoke from a fireplace or from industrial source ARE EXCLUDED

Front 17

NAMED PERILS EXCLUSIONS

LEAKAGE FROM FIRE PROTECTIVE EQUIPMENT

Back 17

1-the leakage or discharge of water or other substances

2-the collapse of;

the rupture due to FREEZING of Fire Protective Equipment for the adjoining structures

(Not intended to pay losses for caused by leakage of domestic appliances or equipment)

MUST BE ACCIDENTAL leakage of water or other substance from fire protective equipment to on the premises

damage to insured property when fire protective equipment FALLS, Breaks or Freezes is insured by this peril.

Front 18

NAMED PERILS EXCLUSIONS

WINDSTORM OR HAIL

Back 18

1-No loss or damage caused to Interior of the Building or Their contents UNLESS damage occurs concurrently with the results from the aperture caused by windstorm or hail

2-Directly or Indirectly caused by any of the following whether driven by wind or due to windstorm (NO SNOWLOAD, iceload, tidal wave, flood, waterborne objects)

(this exclusion eliminates payment for claims due to the movement of land, snow, ice & water, whether driven by wind or due to windstorm

Front 19

COMMERCIAL BUILDING, EQUIPMENT & STOCK

BROAD FORM

unless specifically excluded coverage applies

Back 19

Excluded Property

-Sewers, drains or watermains located beyond outside bearing walls or foundations of the building

-Outside communication towers, antennas & satellites

-Attached equipment, Street clocks, or exterior signs

(This exclusion does not apply to loss or damage caused Directly by Named Perils)

Fire & Lightening, windstorm, hail, explosion, riot, vandalism or malicious acts, smoke, aircraft, space craft, land vehicle

-

Front 20

Sewers, drains or watermains located beyond outside bearing walls or foundations of the building

Are generally owned by the municipality - Coverage is Excluded for-

Back 20

EXCLUDED

all pipes and lines once they extend beyond the bearing walls of the foundations of the building

-Freezing of the system is most common & excluded

Front 21

Outside communication towers, antennas & satellites

-Attached equipment, Street clocks, or exterior signs

ARE not covered for:

Back 21

Collapse resulting from faulty installation or from the weight of ice, sleet or snow

Street clocks, or exterior signs - No coverage for accidental breakage OR when the property is Vacant or unoccupied for more than 30days

Named Perils coverage only

Front 22

Broad Form Policy - excludes animals, fish & birds-

Back 22

However this exclusion does not apply to loss or damage caused directly by a Named Peril or by theft or attempted theft

This form would not be Adequate to cover a PET Store ( as death from natural causes & the disappearance of birds or animals are types of losses addressed by this exclusion)

Front 23

Broad Form - Exclusions

Automobiles, watercraft & amphibious or air craft or space craft, trailers or motors or other accessories

EXCEPTION BEING:

Back 23

this EXCLUSION does not apply to watercraft or amphibious or air cushion vehicles held for SALE, unlicensed autos or trailers used in the business of the insured when ON PREMISES

(coverage for forklift is included)

This form is not designed to insure STOCK of Autos, farm Equip, or Motorcycles or all terrain dealers)

Front 24

BROAD FORM

EXCLUDED PERILS

Back 24

1.EQ

2.Flood

3.Seepage or Leakage

4.Centrifugal Force (Mechanical breakdown & Electrical breakdown) will pay for fire damage resulting from the failure due to Centrifugal Force (Mechanical breakdown & Electrical breakdown)

5.Dampness or Dryness, changing in extreme temperatures, interruption of the supply of electricity or water or gas or steam

(This exclusion addresses losses to property arising out of Failure to control temperature or humidity, trade losses or other losses)

Front 25

BROAD FORM

EXCLUDED PERILS (continued)

Back 25

trade losses- types of losses which might be expected as part of the everyday operation

losses excluded: leakage of contents, exposure to light, change in color or texture, marring, scratching or crushing

-Other losses excluded: Pollution, Contamination

-Rodents, insects, Vermin

-Dishonest criminal act on the part of the insured or employees

(if the employee returns after the business is closed and causes damage then the coverage would respond)

-Cylinders or tanks having an internal diameter of 24 inches or less used for heating and domestic use ARE INSURED

Bylaws Exclusion is common to all commercial property insurance policies

Front 26

BROAD FORM

POLLUTION EXCLUSION:

Back 26

Loss or damage caused by directly or indirectly by any actual or alleged spill, discharge, seepage or leakage

EXCLUSION wont apply if: the spill discharge seepage or leakage is caused by a peril not otherwise excluded by this form it would be covered

Front 27

BROAD FORM

DATA EXCLUSION

Back 27

This form DOES not insure data, or loss or damage caused directly or indirectly by a data problem

Note: The data problem causing the EXPLOSION would not be covered, however if a transformer blew up causing the loss to data that would be covered

Front 28

BROAD FORM

OTHER LOSSES EXCLUDED

Back 28

1. Wear & Tear

2. Rust & Corrosion

3. Gradual Deterioration, hidden or latent defect any quality in property that causes it to damage or destroy itself

Front 29

BROAD FORM

OTHER LOSSES EXCLUDED

Mysterious disappearance or shortage of equipment or stock DISCLOSED on taking inventory

Back 29

(In order to deny coverage on the result that the loss was a result of a mysterious disappearance the INSURER must PROVE that the property disappeared: under circumstances which cannot be explained (for example if the evidence points to theft the exclusion DOES NOT APPLY)

NOTE: If the shortage of inventory is disclosed by taking of the INVENTORY no coverage will apply) Even if later the INSURED is able to prove that the loss was caused by an INSURED PERIL, coverage will not apply as it was disclosed during the taking of inventory

Front 30

BROAD FORM

ADVANTAGES

Back 30

1. Water damage due to the rupture and freezing of waterlines (including freezing damage to waterlines)

2. Impact of land vehicles driven by Insureds & Employees

3. All sources of smoke damage (Excludes agricultural smudging & industrial operations)

4. Expansion & Rupture of hot water heaters less than 24 inches in INTERNAL diameter & used for domestic purposes only (regardless of the pressure they operate)

5. All other losses not specially excluded

6. Theft or attempted theft

7. Roof collapsed from various causes

Front 31

BROAD FORM

EXTENSIONS OF COVERAGE:

What was the purpose of incorporating extensions of coverage into the policy?

Back 31

Extensions were incorporated by insurers to broaden coverage & make their policy more competitive

Front 32

Identify 4 coverage's ordinarily included in Commercial Insurance Packages.

Back 32

1. Property Insurance

2. Business Interruption

3. Liability Insurance

4. Crime Insurance

Front 33

List 5 Qualities of a risk which will influence the amount of the rate credit provided to an insured under a commercial package policy

Back 33

1. Newer Construction

2. Sprinklered

3. Alarm local/central

4. Sole Occupant

5. Increased Deductible

Front 34

Provide 2 Advantages & 2 Disadvantages of the package policy approach to Commercial Property Insurance.

Back 34

Advantage

1. Simplicity of the application

2. Cost of insurance to the consumer on the spot

Disadvantage

1. One size does not fit all

2. no standard package policy

Front 35

BROAD FORM EXTENSIONS ARE:

Back 35

Debris Removal- will not exceed 25% of the direct loss or damage

Personal Property of Employees: $250 max on the business premises ONLY (example photos, radio, awards, plaques)

Building Damage Caused by THEFT: MAX RECOVERY $2500, and the insured must be the tenant of the building NO GLASS COVERAGE

Growing Plants & Trees & Shrubs: Outside the building caused directly by Named Perils EXCLUDES WINDSTORM & HAIL. INCLUDES Vandalism & Vehicle Impact. $500 per tree with a $5000 Occurrence limit