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Commercial Property
Ga P & C Insurance Exam - Commercial Property
| Question | Answer |
|---|---|
| Define a commercial lines property | Buildings housing other than personal lines activities |
| What is the structure/ format of a Commercial Lines Property Policy? | 1. Decl Page 2. Conditions 3. Cause of loss form 4. Coverage form 5. Endorsements |
| Do the coinsurance rules for calculating loss payments for under-insured, partial losses apply to commercial lines prop policies as with pers prop cov? | yes |
| Is Pro-Rata Liability Coverage available with commercial lines prop policies as with pers prop cov? | yes |
| What are the cancellation terms for a commercial lines prop policy and how do they differ from a pers. policy? | 10 days notice required for non-payment and 45 days for other reasons; pers. line has 30 days for other reasons |
| What is the default method of settlement/ loss payments with a commercial lines prop policy? | ACV; Can be changed to replacement cost at appl by paying more |
| How does replacement cost coverage availability differ among a homeowners and a commercial lines policy? | Homeowners it's automatic with many forms if insuring 80% coverage whereas commercial lines only have when purchased separately. |
| What is the purpose of a coverage form on a commercial lines prop policy? | to describe what properties are covered |
| What are the three main coverages of the Building and Personal Property sub form on a commercial lines prop policy? | Cov A- Building, Cov B- Pers Property, Cov C- Pers Prop belonging to others |
| With a commercial lines prop policy, what does Building and Personal Property sub form's Cov A- Building cover? | commercial building, anything attached or used for maintenance of premises that is damaged in covered loss (i.e. A/C, fire extinguisher, outdoor lights, patio furniture, machinery servicing premises, etc) |
| With a commercial lines prop policy, what does Building and Personal Property sub form's Cov B- Business Personal Property cover? | Contents of insured in commercial building, including desks etc, merchandise inventory, leased equipment and tenant's improvements |
| Which of the three coverages possible with a Building and Personal Property sub form are needed by the following commercial insured: 1. Comm. Tenant 2. Comm. Lessor ("Landlord" to another business) 3. Comm. Owner Occupa | 1. Tenant = Cov B/C 2. Lessor = Cov A 3. Owner Occupant = Cov A/B/C |
| Is property located outside a comm. building covered with a Building and Personal Property sub form's Cov B- Business Pers Prop? | Yes- if located < 100' from premises |
| Define premises | premises = buildings + grounds |
| Give an example of a loss covered by a Building and Personal Property sub form's Cov C- Per Prop of Others | Coke truck parked <100' from premises destroyed by tornado and employee's pers jacket inside truck is damaged (Cov C only applies to jacket) |
| If a delivery truck is >100' from insured's premises and suffers damages, what is the term describing situation and what policy covers the insured's loss? | = Property-in-Transit and covered by Cargo Coverage (form of Inland Marine Insurance) |
| List the limits for the following additional coverages automatically included with a comm. lines prop policy: 1. Removal coverage (Preservation of Property) 2. Debris Removal 3. Fire Dept Service Charges | 1. 30days 2. lessor of 25% Cov A or $10k 3. $1k |
| Can the land or anything under it typically be covered with a comm lines property policy? | No |
| Can money and securities be covered with a comm lines property policy? | Yes, but only with a Money & Securities Endorsement |
| Can bridges, tunnels, docks & peirs be covered with a comm lines property policy? | No- needs Commercial Inland Marine Policy (category Fixed Properties- Transportation) |
| Can a footbridge connecting two buildings be covered with a comm lines property policy? | Yes |
| What is the term for a policy that is created and customized for a specific client's needs (typically large co's) | manuscript policy |
| What are the 3 types of limits available to choose from for a comm lines property policy? Where in policy are they listed? | 1. Specific 2. Blanket 3. Schedule ;Decl Page |
| What does a specific limit for a comm lines property policy imply? | limits are specific amounts for Cov A/B/C at a single insured location |
| What does a blanket limit for a comm lines property policy imply? | single, specific limit set for Cov A and Cov B/C are included; paid per occurrence for single or multiple insured locations |
| What does a schedule limit for a comm lines property policy imply? | limits are specific amounts for Cov A/B/C for each location in a policy covering multiple locations |
| In what scenario would an underwriter only want to offer a schedule limit instead of blanket for a comm lines property policy? | blanket coverage is too broad for some risks |
| Do coinsurance rules apply to comm prop policies as with pers prop policies? | Yes |
| Are comm lines prop loss payments figured by ACV or replacement? | ACV unless purchasing the Replacement Cost Cov Endorsement |
| What are the cancellation terms of a comm line prop policy? | 10 days notice for non-payment and 45 days notice for other reasons |
| What are the 3 types of Cause of Loss Forms available o a comm lines prop policy? | 1. Basic 2. Broad 3. Special |
| Do all three cause of loss forms have theft coverage? | No- only special |
| Which of the three cause of loss forms is best and why? | Special- has all risk coverage including theft coverage |
| Name 3 additional perils listed on a broad Cause of Loss Form that are not included on a Basic. | 1. Weight of ice, snow & sleet 2. Discharge of H2O (plumbing) 3. Falling objects |
| Is explosion coverage included with all three Cause of Loss Forms? | Yes, but NOT for steam boiler explosion |
| What does a business need to cover steam boiler explosions and what must it be accompanied by? | Boiler and Machines Form; 1 of 3 Cause of Loss Forms |
| What is the term for an explosion that originates outside a steam boiler and will any of 3 Cause of Loss Forms cover it? | the other explosion; Yes- all three |
| What is the term for an explosion that originates inside a steam boiler and will any of 3 Cause of Loss Forms cover it? | steam boiler explosion; No, needs Boiler and Machines Form |
| Besides steam boiler explosions, what does the Boiler and Machines Form cover? | Mechanical breakdown losses (only sudden and unexpected) |
| What types of losses are covered with the mechanical breakdown section of the Boiler and Machines Form? | Sudden and unexpected breakdown related to: 1. Motor burnout 2. Metal fatigue 3. Loose wiring connections |
| What types of equipment are covered with the mechanical breakdown section of the Boiler and Machines Form? | 1. Mechanical 2. electrical 3. Turbine 4. Refrigeration |
| What is expediting expenses coverage with regard to the mechanical breakdown section of the Boiler and Machines Form? Limit? | pays the extra cost to expedite repairs so insured is back in business ASAP; limt = $25k |
| What does the Immediate Suspension Provision of the mechanical breakdown section of the Boiler and Machines Form state? | If a loss control inspector finds a problem with insured machinery, then it can be shut down and policy IMMEDIATELY suspended until fixed (only suspends it for that particular piece of equipment) |
| Is new machinery covered automatically? | Yes- for 90 days |
| Does the Boiler and Machines Form cover leased equipment? | Yes |
| Does the Boiler and Machines Form cover loss of income due to equip loss? | Yes; Actual Loss Sustained = covers actual amt of actual loss of income due to machinery breakdown |
| What is the deductible when using Actual Loss Sustained? | 72 hour waiting period |
| What is the limit when using Actual Loss Sustained? | limit expressed as time period of coverage and accountants later determine the $ amt loss during that time period |
| What is the standard deductible for the Boiler and Machines Form? | $250 |
| What rule/ method is used to pay losses covered by the Boiler and Machines Form? | replacement cost |
| What does the Builder's Risk form cover? | covers losses to building materials during construction or renovation |
| What do consequential losses forms cover? Are they automatically part of a comm lines prop policy? What are four examples? | losses resulting from physical destruction; No- must be added; 1. Business Income Form (Bus Interruption Form) 2. Bus Income form Dependent Parties Form 3. Value Reporting Form 4. DIC = Difference in Conditions Form |
| What are the 3 coverages included with a Business Income Form (Business Interruption Form)? | 1. Loss of Business Income Coverage 2. Extra Expense Coverage 3. Civil Authority Coverage |
| With Loss of Business Income coverage in the Business Income Form (Business Interruption Form), what are the limits, how are limits set, and what is covered? | 30, 60 or 90 day limit; limit chosen by applicant; covers payroll, payments to creditors, tax payments |
| With Extra Expense Coverage in the Business Income Form (Business Interruption Form), is the limit a $ amt or timed? What is covered? | limit set as $ amt; covers extra expenses incurred to expedite repairs and avoid shutdown |
| With Civil Authority Coverage in the Business Income Form (Business Interruption Form), what is covered? What is the limit? What is the waiting period? | covers loss due to business shutdown order by civil authorities; limit < 3wks; waiting period = 72hrs |
| What does the Business Income from Dependent Properties Form (Contingent Business Interruption Form) cover? | covers loss of income due to direct loss at location that insured depends upon for business |
| What types of locations where a loss occurs can qualify for the Business Income from Dependent Properties From (Contingent Business Interruption Form)? | 1. Contributing Location (loss at location that supplies or distributes to insured) 2. Recipient Location 3. Manufacturing Location 4. Leader Location (loss at larger store that insured, smaller store depends upon) |
| What are the limits for the Business Income from Dependent Properties Form (Contingent Business Interruption Form)and how are the limits set? | 30, 60, 90, 120 days; chosen by applicant |
| What is the purpose of the Value Reporting Form and how does it benefit the insured? The ins co? | To track fluctuating inventory of insure; protects insured from under-insured loss and protects ins co from exposure to unpredictable risk |
| How is inventory tracked with the Value Reporting Form? | insured must submit accurate reports every 30 days (even if no change in inventory) |
| What is the % value coverage needed to avoid coinsurance with the Value Reporting Form? | 100% |
| What is the purpose of the Difference in Conditions Form (DIC)? | allows inc co to manuscript coverage for unique needs of large commercial accounts (i.e. flood) |
| What are Commercial Package Policies (CPP)? | single policy that contains more than 1 coverage |
| Why are comm package policies preferred over a set of separate policies? | more efficient due to less bills than same coverages on separate policies |
| What are four coverages/forms that cannot be packaged? | 1. Workers Comp 2. Ocean Marine 3. Aviation 4. Professional Liability |
| What is the purpose/ benefit of a Business Owner's Policy (BOP)? | To insure small, low-risk businesses with a simple pre-packaged policy |
| What coverages come with the BOP package and are any optional? | None are optional; 1. Property 2. Liability 3. Business Income |
| List the eligibility requirements for the following small businesses in order to qualify for a BOP: 1. Apt buildings 2. Office buildings 3. Services biz 4. Restaurants 5. Contractors | 1. Apt ≤ 25k sq ft 2. Office ≤ 100k sq ft and ≤ 6 stories 3. Services ≤ 25k sq ft and annual rev ≤ $3 mil 4. restaurants < full kitchen and annual rev ≤ $3 mil 5. Contractors: only trade contractors w/ ≤ $3 mil annual rev |
| What is the format/ structure of a BOP? | 1. Decl Page 2. one of two forms: Standard or Special Form |
| List 7 examples of businesses not qualified for BOP's | 1. Auto dealers 2. Auto repair shops 3. Amusement Parks 4. Banks 5. Bars 6. Bowling allies 7. Movie theaters |
Created by:
jkbick
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