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CPCU 551 FINAL REVIE
FINAL REVIEW
| Question | Answer |
|---|---|
| What are the 3 ways the dividing line is set in Condo Association agreements? | Bare- Walls, Single-Entity, All-In. |
| What are the unique exposures of Builders Risk? | Property values increase as work progresses, there are a variety of interests involved, & increased hazards. |
| What property is covered under builders risk | The building under construction, Foundations, Fixtures & Machinery, Equipment used to service building, and building materials within 100 feet of the property. Temporary structures such as scaffolding if not covered elsewhere. |
| Describe a Commercial Package policy. | A CPP is a multiline policy composed of 2 or more coverage parts. |
| Describe a Business owners Policy. | A BOP is a multiline policy with most of the property & liability coverage needed by small & midsize businesses. |
| Describe an Output policy | An Output policy is for larger businesses. It includes several property coverages that a business may need, providing fewer gaps. |
| What are the 6 common policy conditions? | Cancellation, Changes, Examination of Books & Records, Inspections & Surveys, Premiums, and Transfer of Rights |
| Who can transfer of rights be transferred to? | A person handling the insured's estate if deceased or custodian of property. Must have insurer's written permission to do so. |
| What are the 6 commercial property conditions? | Concealment, Misprepresentation, or Fraud; Control of property, insurance under 2 or more coverages, legal action against us, liberalization, no benefit to bailee. |
| What is the co insurance formula for builders risk coverage? | Limit of Insurance divided by completed value times loss minus deductible |
| What happens if insured doesn't have control of the property and is neglected by the tenant? | Neglect of others will not affect coverage. |
| What happens if there are 2 or more coverages that apply? | The carrier will not pay more than loss amount. |
| What must an insured do before taking legal action? | Meet all policy conditions. |
| What is the Liberalization clause do? | If the coverage is broadened during the policy period and generates no extra premium. The insured will benefit from it. |
| What is no benefit to bailee? | Insured will not treat the bailee as an insured. |
| What is the co insurance clause formula: | Deterimine co insurance percentage to come up with "should" be insured for figure. Did divided by should times loss minus deductible. |
| What types of things are covered by the BPP? | Building, Personal property, and personal property of others. |
| What are 7 specific categories of Business Personal Property? | Furniture & fixtures, Machinery & Equipment, Stock, All other personal property owned & used in business, Labor or services performed on property of others, interest in tenant improvements and betterments, Leased property contractually required to cover |
| What Building BPP items are not covered? | Land, water, bridges, roadways, retaining walls, piers, wharves, cost of excavations, foundations below basement, underground pipes. |
| What Business personal property BPP items are not covered? | Money, securities, & similar property... Animals, Electronic data, property better covered elsewhere, airborne or waterbourne personal property, vehicles. |
| What are the 6 additional coverages on the BPP? | Debris removal, preservation of property, Fire department service charge, pollutant clean up, increased cost of construction, electronic data |
| What are the 6 coverage extensions on the BPP when an 80% co insurance is maintained? | Newly aquired or constructed property, personal effects & property of others,valuable papers & records, property off premises, outdoor property, nonowned detached trailers (for certain perils only) |
| What are the BPP conditions? | Limits of insurance, deductibnle, and valuation. |
| What are the BPP optional coverages? | Agreed value, inflation guard, replacement cost, extension of replacement cost to personal property of others |
| What is covered under basic form? | Wind, Hail, Aircraft, riot & civil commotion, vandilisim, explosion, sprinkler leakage (wharves) + volcanic action & lightnening |
| What is covered under broad form? | All of the basic form perils plus falling objects, weight of snow, ice, and sleet, water damage, and collapse caused by certain perils (if endorsed) |
| What is covered under special form? | Anything that is not excluded is covered on special form. |
| What items are specifically excluded on the broad & basic forms? | Anti concurrent causation language, ordinance & law, earth movement, governmental action, nuclear hazard, utility services, war & military action, water, fungus wet rot dry rot & bacteria, aritificially generated energy, mechanical breakdown, and neglect. |
| What endorsement compensates the insured for the profit insured would have made on finished goods had no loss occured? | Manufacter's Selling price endorsement |
| When would the Functional Building Valuation Endorsement be appropriate? | When the building can be repaired or replaced with a less costly building that is functionally equivalent to the original one. |
| When would the Functional Personal Property Valuation endorsement be appropriate? | When insuring older marchinery or equipment that is no longer readily available. |
| Contrast blanket vs specific insurance coverage | Blanket Insurance allows all property to be insured under one limit. It is optimal for clients who have inventory that moves between locations. It also provides increased coverage at it unlikely that damage would occur to all locations simeotaneously |
| Why would the Peak Season Endorsement be used? | Provides fluctuating values of BPP by providing differing amounts of insurance during certain periods of the policy period. |
| What are the 5 reporting period options available on the Value Reporting Form? | DR - Daily, WR - Last day of the week, MR - last day of month, QR- quarterly, PR- policy year |
| What happens on a Value Reporting Form if at the time of loss the first reports are due but not received? | No more than 75% of loss will be paid |
| What happens on the Value Reporting form if at the time off loss the 1st report has been made but the 2nd report is overdue? | No more than the values of the 1st report will be paid |
| What is the formula for calculating the loss when The Value Reporting Form has inaccurate reports? | Value Reported divided by Actual Value x Loss - Deductible |
| What 3 coverage items does the Green Endorsement provide? | 1- Increased cost of replacing damaged items with more enviornmentally sound materials or methods. 2- Additional amount for expenses related to green updates. 3- Extends period of restoration 30 days for increased construction time due to green updates |
| What does the Spoilage coverage endorsement cover? | Damage to perishable stock due to power outage or change in tempurature due to mechanical breakdown. Power outage must be out of insured's control |
| What does the Business Personal Property Limited International coverage provide? | Extends the insured's BPP coverage to certain property in, or enroute to & from a foreign coverage territory. Endorsement time limit applies & cannot be held for sale in foreign country. |
| What does the Property In Process of Manufacture by others limited international coverage provide? | Covers insured's personal property coverage to include raw materials & in process goods while be manufactured in a foreign country at premises not owned by insured. |
| What does the Manufacturer's Consequential Loss Assumption endorsement provide? | This covers loss to undamaged items with a "missing pair" damaged by a covered peril. |
| What does the Brands and Labels Endorsement provide? | Pays for cost of salvage items to have the labels and brands removed for resale. |
| What are the 2 coverage items provided in Ordinance and Law endorsement? | A - The value of the undamaged portion of the building that must be demolished. B- Undamaged portion demolision + debris removal. C- Increased cost to rebuild property |
| What does the Utility Services Direct Damage endorsement cover? | Damage to covered property caused by interruption of utility services (water, communications, or power) to insured premises. |
| What does the Radioactive Contamination Endorsment cover? | Covers physical loss to property due to sudden & accidental radioactive contamination. Does not cover nuclear reactors. For incidental exposure such as an X-Ray facility. |
| What is the Standard Property Policy? | Policy used for distressed properties. (Select DP1 is an SPP). No coverage for vandilisim if vacant after 30 days & other perils after 60 days. |
| What does the Legal Liability Coverage Form protect? | Property of others in the insured's care, custody, control that insured is leagally liable for. |
| Compare & Contrast the Legal Liability Coverage form with the CGL | LLC covers insured's liability for propery & building in insured's care, custody, control. CGL excludes dmage to property of others. LLC has broad range of perils for rented property for over 7 days. CGL under 7 days. LLC also applies to personal property |
| What endorsement provides coverage to a tenant's financial loss resulting from cancellation of lease because of damage to premises by covered loss? | Leashold Interest Coverage Form |
| Describe the ways the ISO Flood Coverage Endorsement can provide broader coverage than the NFIP? | Replacement cost (rather than ACV), broader coverage (including loss of use), and a greater variety of property is covered |
| Identify 3 optional coverages available under Output policies that are normally not included in standard commercial policies. | Worldwide coverage, Owned auto, Equipment breakdown, FLood & EQ |
| Identify 4 types of dependency that can creat a business income exposure involving property away from the insured premises | Oursourcing, Depending on key buyers, Depending on key suppliers, and Leader properties. |
| What 2 factors affect the duration of business interruption? | Time to repair/replace the property & time to get clients to return. |
| What key requirements must be met for business income to apply? | Actual loss of income sustained due to necessary suspension of operations during period of restoration caused by direct physical loss by covered peril. |
| When does the period of restoration begin & end? | 72 hours for business income ends when it should reasonably be expected to be restored. Extra expense has no wait period |
| What property must be damaged for business income to apply? | Property within 100 ft of location |
| What must happen for Civil Authority additional coverage to apply? | Must be office premises, within 1 mile of location, blocking egress, must be due to danger or access for emergency personnell. |
| How does regular business income differ from Extended business income (EBI)? | EBI starts after period of restoration and lasts for 30 days. |
| Under the maximum period of indemnity option, what limitations ar placed on recovery? | Cannot exceed 120 days or policy limit. |
| In the Business INcome form what does a form covering monthly limit of indemnity basis with a 1/4 fraction being show on dec page? | Will pay no more than 1/4 limit of insurance for each 30 day consecutive period. |
| What distinguished filed and non filed classes of business? | Filed rates apply to a large # of insureds with similar loss exposures. |
| Identify an advantage to open perils coverage in inland marine policies compared to the same coverage offered in standard commercial property forms. | The open perils coverage on inland marine is subject to fewer exclusions. |
| Under what circumstances would an underwriter offer invoice value valuation on an inland marine policy? | Where the policy is being used to cover property in transit between buyers & sellers. |
| What are the 5 exceptions to cargo liability that apply to common carrier of goods in surface (land) transit? | Acts of God, Acts of public enemy, excercise of public authority, shippers fault or negligence, & inherent vice. |
| How can a common carrier limit the amount of it's cargo insurance? | By a released bill of lading, throu which the carrier charges a lower rate in return for the shipper's acceptance of loss limitation. |
| What is COSGA? | Regulations that determine the carrier's liability for goods shipped in foreign trade to and from the US |
| What are the priniciple warranties (exclusions) that apply to an ocean cargo policy? | 1- Loss caused by taking of the vessel 2- Loss resulting from labor dispute 3- Loss from delay (spoilage) |
| What perils are covered under a named perils open cargo policy? | Covers perils of sea, fire, jettison, assailing theives, barratry, and similar perils. |
| What persils are added by the inchmaree clause? | Bursting of boilers, breakage of shafts, laten defects, and errors in navigation |
| How are shipments between buyer & seller usually valued? | Invoice plus 10% advance |
| What are 2 types of motor cargo insurance? | Motor truck cargo liability (covers their liability for loss of client cargo) & goods on owners' truck insurance (covers property owner for shipments made on the owner's vehicles) |
Created by:
lisadharma