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FIL 350 - Chapter 5
Other Commercial Property Coverage Forms
| Question | Answer |
|---|---|
| Condominium | A group of units, such as apartments, attached/detached homes, or offices, where the unit owner owns the air space within the boundaries of each unit, and all remaining real and personal property is owned jointly by all the unit owners |
| Condominium Unit | The portion of a condominium owned solely by a unit owner |
| Condominium Association | An entity that manages and owns the common elements in a condominium; composed of the unit owners |
| Common Elements | Parts of a condominium that are jointly owned by all unit owners (land, foundations, exterior walls, interior walls not contained within individual units, structural beams, roofs, lobbies, parking areas, central power systems, etc.) |
| Condominium Association Agreement | A document that describes the land, building and common elements of a condominium, designates what each unit owner has purchased, and clarifies the rights and responsibilities of the unit owners and the association. |
| Bare-Walls Concept | The condominium association has no ownership interest within the bare walls of each individual unit |
| Single-Entity Concept | The condominium association is the owner of all property contained in the unit as sold to the original purchaser or replacements of that property if the replacements are of similar kind and quality |
| All-in concept | The condominium association is the owner of all property contained in the unit as sold to the original purchaser and replacements made by the unit owner whether or not they are of similar kind and quality or improvements |
| Cooperative Corporation | Real property ownership in which the real property is owned solely by a corporation rather than jointly by unit owners, and the tenants are shareholders of the corporation’s stock |
| Planned Unit Development (PUD) | Each occupant has ownership of its own unit as an individual homeowner owns their property; the unit owners make up a homeowner’s association and jointly own the surrounding land and structures |
| What is the difference between the Condominium Association Coverage Form and the BPP in regards to the building coverage? | In the Condominium Association Coverage Form, fixtures, improvements, alterations, and appliances within individual units are only covered if the condominium association agreement requires the association to insure them |
| What does the Condominium Association Coverage Form cover under Your Business Personal Property? | Business personal property that is owned by the association or jointly and indivisibly owned by all unit owners is covered |
| What is the limit of coverage on Personal Property of Others under the Condominium Association Coverage Form? | Similar to the BPP, there is an automatic coverage extension of $2,500 at each location if 80% or higher coinsurance is in effect. |
| In the situation where a unit owner and an association have policies with overlapping coverage, which policy is treated as primary? | The association’s policy is primary. |
| Condominium Commercial Unit-Owners Coverage Form | A coverage form used by unit owners in condominiums used for offices, stores, or other commercial occupancies. |
| Which coverage form is typically used by unit owners in residential condominiums? | A homeowners form HO-6 policy. |
| What are the two provisions contained in the Condominium Commercial Unit-Owners Optional Coverages? | Loss assessment coverage and miscellaneous real property coverage |
| Loss Assessment Coverage | Optional coverage for condominium unit owners with undivided interest where insurer agrees to pay the unit owner’s share of any assessment (due to a direct physical loss from an insured peril) charged to all unit owners by the condominium association |
| Miscellaneous Real Property Coverage | Optional coverage for condominium unit owners where real property that either pertains to the named insured’s condominium unit only or the named insured has a duty to insure according to the condominium association agreement can be covered. |
| Builders Risk Coverage Form | A form used to insure buildings under construction (including alterations to existing buildings) that must be replaced with another property policy once the course of construction is completed |
| Builders Risk Renovations Endorsement | Covers renovations under construction, but specifically excludes the value of the existing property |
| What property is covered under the Builders Risk Coverage Form? | The building, construction materials and supplies intended to become a permanent part of the building, and temporary structures (e.g., scaffolds) assembled on site. |
| What types of property are excluded under the Builders Risk Coverage Form? | Land, water, lawns, trees, shrubs, plants, antennas, and signs not attached to the building. (Underground pipes, flues, and drains are covered if intended to be part of the building). |
| Out of the six additional coverages of the BPP, which four are contained in the Builders Risk Coverage Form? | Debris removal, preservation of property, fire department service charges, and pollutant cleanup and removal (the other two BPP add'l coverages were increased cost of construction and electronic data) |
| What are the two coverage extensions contained in the Builders Risk Coverage Form? | The Building Materials and Supplies of Others extension and the Sod, Trees, Shrubs, and Plants extension |
| Building Materials and Supplies of Others extension | $5,000 of coverage for building materials and supplies owned by others (subcontractor) in the named insured’s care; they must be located in, on, or within 100 feet of the building’s premises and intended to become a permanent part of the building. |
| Sod, Trees, Shrubs, and Plants extension | Coverage for landscaping outside of buildings on the premises for FLARE perils only. ($1,000 per occurrence and $250 for any one tree, shrub, or plant) |
| Collapse During Construction Endorsement | An endorsement that covers collapse caused by faulty construction materials or methods, which is specifically excluded in the standard Builders Risk Coverage Form. |
| Theft of Building Materials, Fixtures, Machinery, and Equipment endorsement | An endorsement that covers theft of building materials and supplies not yet attached while construction is in progress |
| Completed Value Approach | The amount of insurance is issued at policy inception (no later than the date construction starts above the level of the lowest basement floor) for an amount equal to the building’s completed value |
| Need for Adequate Insurance condition | Similar to 100% coinsurance, the insured should carry insurance based on the value of the building on the date it will be completed. |
| Builders Risk Reporting Form endorsement | The Builders Risk Coverage Form provides coverage on a value reporting basis. |
| When does coverage cease under the Builders Risk Coverage Form? | Coverage ceases sixty days after an insured building is occupied, ninety days after the construction is completed if not occupied, when the property is accepted by the purchaser, or when the named insured transfers or abandons the project. |
| What are four alternatives for Builders Risk Coverage? | there is a small amount of coverage under the BPP Coverage Form, Inland Marine Builders Risk Policy, Highly Protected Risk (HPR) Policy, and Owner Controlled Insurance Program (OCIP) |
| Owner Controlled Insurance Program (OCIP) | Provides coverage for large construction projects for property owners and includes general liability, workers compensation, and other coverages in addition to property coverage |
| Standard Property Policy (SPP) | Commercial property policy form that provides coverage for buildings and personal property that have unfavorable aspects in the standard insurance market |
| Which valuation method is applied with the Standard Property Policy (SPP)? | ACV only; there are no options for replacement cost, inflation guard, or agreed value. |
| Legal Liability Coverage Form | Provides liability coverage for damages to property of others that is in the care, custody, or control of the insured including the loss of use |
| Leasehold Interest Coverage Form | Provides coverage for a tenant’s losses from the cancellation of a contract due to damage to the premises by a covered cause of loss |
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FIL350
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