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CPCU 551 Chapter 5

Chapter 5 Notes

QuestionAnswer
Condominium Definition A real estate development consisting of groups of in which the air space within those groups is owned by individuals and all remaining real and personal property is owned by all unit owners.
Condominium Common Elements Definition Areas of the condo that are jointly owned by all unit owners (foundations, exterior walls, central power, pools etc.)
Condo Association Agreement Agreement that describes what each unit owner owns and what the owner's rights are.
Bare Walls Concept Under this the association has no ownership interest within the units bare walls.
Single Entity Concept Under this concept the association is considered to be the owner of all property inside the unit.
Condominium Definition A real estate development consisting of groups of in which the air space within those groups is owned by individuals and all remaining real and personal property is owned by all unit owners.
All In Concept Similar to single entity but with this if improvements are made by owner the association has to cover insurance at the increased value.
Condominium Common Elements Definition Areas of the condo that are jointly owned by all unit owners (foundations, exterior walls, central power, pools etc.)
Cooperative Corporation Definition A form of real property ownership in which the real property is owned by a corporation whos shareholders are the tentants.
Condo Association Agreement Agreement that describes what each unit owner owns and what the owner's rights are.
Bare Walls Concept Under this the association has no ownership interest within the units bare walls.
List the two coverage forms specific to condos? Condo Association Coverage form, Condo Commercial Unit Owners Coverage Form
Single Entity Concept Under this concept the association is considered to be the owner of all property inside the unit.
What three coverages exist uner the Condo Association Coverage Form? Building, Your Personal Property, Personal Property of Others
All In Concept Similar to single entity but with this if improvements are made by owner the association has to cover insurance at the increased value.
Cooperative Corporation Definition A form of real property ownership in which the real property is owned by a corporation whos shareholders are the tentants.
Planned Unit Developments (PUD) Same as homeowners association. Indivdiuals own house and land and the surrounding land, curbs, parks, pools etc. are owned by the association.
List the two coverage forms specific to condos? Condo Association Coverage form, Condo Commercial Unit Owners Coverage Form
What three coverages exist uner the Condo Association Coverage Form? Building, Your Personal Property, Personal Property of Others
Condo Association Building Coverage Rules Resembles regular BPP, Coverage only applies within units if specified in association agreement.
Condo Association Your Business Personal Property Rules Coverage applies to personal property not covered by building, does not apply to personal property owned by a unit owner.
Condo Association Personal Property of Others Rules Coverage is same as BPP, if 80% coinsurance is in effect it covers up to $2500.00.
Three conditions of condo insurance Loss payments made to a trustee, association insurance is primary if unit owner also has coverage, Insurer agrees not to subrogate against an individual owner.
List the two condo commercial unit owners optional coverages provided by endorsement? Loss Assessment Coverage, Miscellaneous real property coverage.
Builders Risk Coverage Form (Defined) Provides coverage for buildings that are in the course of being constructed.
List coverered property under builders risk coverage form? Foundations, fixtures and machinery, building materials and supplies, (potentially temporary structures if not covered by other insurance).
What is covered under builders risk form that is typically not under BPP? Underground pipes, flues and drains.
List the two coverage extensions under builders risk form? Building materials and supplies of others (up to $5k), Sod, Trees extension $1k for any one loss and up to $250 for any one tree.
Covered Causes of Loss for builders risk form? Same as BPP the form must be combined with causes of loss (basic, broad, or special) form.
List the two valuation approaches for builders risk insurance? Completed value approach, need for adequate insurance approach
Complete value approach definition? An amount equal to the full completed value of the building.
Need for adequate insurance definition In effect a 100% coinsurance clause the amount payable = limit of insurance/completed value x loss- deductible
What method for valuation is rarely used under builders risk form? Value reporting basis
When does coverage cease for builders risk insurance? 60 days after after an insured building is occupied or 90 days after construction is completed.
Define the Standard Property Policy? A commercial property policy form for covering buildings and business personal property on restricted terms. Generally used for unfavorable risk property, self contained monoline.
Covered Property under SPP? Listed in the declarations specifically, all coverage is on an actual cash value.
Perils covered under SPP? Fire, lightning, explosion (Mandatory) All others need to be added
Conditions of the SPP? (3 of them) Occupancy (no pay if vacant more then 60 days), Increase in Hazard (no coverage when hazard has been increased due to something under insureds control), Cancellation (only 5 days notice needs to be given to insured.
Define Legal Liability Coverage Form A commercial property coverage that provides legal liability coverage on buildings or personal property of others in the insureds care.
Legal Liability Coverage Form insuring agreement states? No coinsurance, no deductible applies, insurer pays defense related expenses.
Premium Rates for Legal Liability Coverage? Generally less then other coverages.
Define the Leasehold Interest Coverage Form? A commercial property coverage for insuring a tentants financial losses resulting from cancellation of the tentants lease due to damge the the property by a covered loss.
Created by: GARYSCHILD
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