CPCU557 Chap 1 Questions with correct Answers

Three ways of analyzing commercial property loss exposures - Answer- types of property causes of loss to property financial consequences of property losses Two types of property - Answer- real property personal property real property - Answer- tangible property consisting of and, all structures permanently attached to the land, and whatever is growing on the land ex: buildings, land, underground piping, radio transmission towers property that is permanently attached to structure also considered (built-in appliances) personal property - Answer- all tangible or intangible property that is not real property. Has 4 categories (contents, property in transit, property in the possession of others, "floating" property Contents - Answer- Generally for property insurance policies this would cover the contents of the building (office furniture, equipment, stock) Property In Transit - Answer- Coverage for items shipped to others (merchandise) or received from others (raw materials, supplies). Often inadequate coverage for significant transit exposures. Property in the possession of others - Answer- Property that is placed in possession of others for processing, cleaning, repairing, etc (temporary). Usually only a nominal amount of insurance for property at other locations because risk is different. "Floating" Property - Answer- Property that normally does not remain at a fixed work site or that is in transit between work sites (wedding photographer's camera, building contractor's equipment). Coverage available under special inland marine policies Five components of commercial property coverage part - Answer- Commercial property declarations one or more commercial property coverage forms one or more causes of loss forms commercial property conditions any applicable endorsements Commercial property coverage part - Answer- Commercial package policy (CPP) coverage endorsement that provides a broad range of coverages to "middle market" or larger firms to insure buildings and business personal property Commercial package policy (CPP) - Answer- Policy that covers two or more lines of business by combining ISO's commercial lines coverage parts Monoline Policy - Answer- Policy that covers only one line of business Package modification factors - Answer- factors that are applied to the regular policy premiums for certain coverage parts of a CPP that includes both property and liability coverages, resulting in premium discounts for those coverage parts Commercial policy declarations page - Answer- a required commercial property overage part component that provides basic information about the policyholder and the insurance provided. Commercial property coverage form - Answer- a commercial property coverage part component that can be any of several commercial property forms containing an insuring agreement and related provisions. Different forms typically created for insured's buildings, and business income, etc. Building and Personal Property Coverage Form (BPP) - Answer- Commonly used commercial property coverage form that is used to insure buildings, business personal property of the insured, and personal property of others in the insured's custody. Three types of causes of loss forms - Answer- basic, broad and special Causes of loss form - Answer- a required component of the commercial property coverage part that specifies perils covered Commercial policy conditions - Answer- A required component of the commercial property coverage part that contains conditions applicable to all commercial property coverage forms (Unless a coverage form provides a condition to the contrary) Three categories of property covered by BPP - Answer- Building Your Business Personal Property Personal property of others Building (BPP) - Answer- Category of coverage under BPP - Covers all buildings or structures listed in declarations - completed additions to covered buildings -fixtures (including outdoor fixtures) -perm installed machinery and equipment - Personal property owned by the insured and used to maintain or service the building or its premises If not otherwise insured, may also cover materials equipment and supplies used in connection with repairs/alterations/additions to buildings Your Business Personal Property (BPP) - Answer- Covers personal property owned by the insured and used in the insured's business Coverage applies only when the property is located in or on the described building or in the open within 100 feet of described premises (except for if there is an extension) - Fixtures, furniture, machinery, equipment, stock and all other personal property owned by the insured and used in the insured's business (expect if indicated on property not covered section) - Also includes labor, materials or services furnished by the insured on personal property of others - Includes improvements and betterment, leased personal property for which the insured has a contractual responsibility to procure coverage (ex: phone or computer related equipment) Improvements and betterment - Answer- Alterations or additions made to the building at the expense of an insured who does not own the building and who cannot legally remove them. Insured under Your Business Personal Property. Personal Property of Others (BPP) - Answer- Coverage designed to protect the insured against loss or damage to the personal property of others while such property is in the custody of the insured. (Only applies when in building in declarations or within 100 feet of premises) Property Not Covered (BPP) - Answer- Section of BPP that lists classes of property or kinds of property that do not qualify as covered property. Not totally excluded, exceptions may provide coverage or excess coverage in certain situations. Ex include: illegal items, building foundations below the lowest basement floor or ground surface, retaining walls, money -securities-automobiles-aircraft (all usually covered under separate policies Six types of additional coverages under BPP - Answer- Debris Removal, Preservation of property, fire department service charge, pollutant cleanup and removal, increased cost of construction, electronic data Debris Removal - Answer- Additional coverage under BPP that covers the cost of removing debris of covered property resulting from a covered loss during the policy period. Preservation of Property - Answer- Additional coverage under BPP that extends the policy to protect covered property while it is being moved and for up to 30 days at a new location. Broader than the normal coverage under the policy. (not limited to location) Fire Department Service Charge - Answer- Additional coverage under BPP that pays fire department charges up to the specified limit if they are required by local ordinance or are assumed by contract before the loss occurs Pollutant Cleanup and Removal - Answer- Additional coverage under BPP that provides limited coverage for the cleanup and removal of pollutants from land or water at the described premises. Pays the insured's expenses if the release is the result of a covered cause of loss that occurs during the policy period. Increased Cost of Construction - Answer- Additional coverage under BPP that provides a small amount of insurance to cover this loss exposure. Paid in addition to the policy limit. Only applies if the replacement cost optional coverage has been selected No coverage applies to loss to any undamaged portion of the building that an ordinance or law does not permit to remain in use or the cost to demolish the undamaged portion of the structure and removed its debris. Electronic Data - Answer- Additional coverage under BPP that covers electronic data damage. Limit is too low to provide meaningful coverage for most businesses and is the most the insurer will pay per policy year regardless of the number of occurrences 6 types of coverage extensions under BPP - Answer- Newly acquired or constructed property, personal effects and property of others, valuable papers and records (other than electronic data), property off-premises, outdoor property, non-owned detached trailers Applies only if at least 80% coinsurance or a value reporting period symbol is shown in the declarations Newly acquired or constructed property - Answer- If BPP covers a building, this additional coverage extension under BPP provides automatic coverage for a new building being constructed at the premises described in the declarations Also provided for newly acquired buildings at other locations, provided the purposes of the newly acquired building is similar to the use of the building described in the declarations or used as a warehouse. Personal Effects and Property of Others - Answer- Type of coverage extension under BPP, provides a limited amount of coverage for personal effects (such as coat or jewelry) owned by an individual insured or a partner, a member, an officer, a manager, or an employee of the insured while on the premises described in the declarations. Also covers property of others in the care, custody or control of an insured. Not covered for loss by theft. Valuable Papers and Records (other than electronic Data) - Answer- Type of coverage extension under BPP, that provides coverage for valuable papers and records but only for the cost of blank records plus the labor to transcribe or copy duplicate information. Does not apply to electronic data. Property off-premises - Answer- Type of coverage extension under BPP, that provides coverage for property while away from the described premises. Also covers for property in storage at a location leased after the inception of the current policy and property at any fair, trade show or exhibition. Does not apply to any property in or on a vehicle or in the custody of an insured's salesperson (unless at trade show) Outdoor Property - Answer- Type of coverage extension under BPP, that covers losses to outdoor fences, radio and tv antennas trees, shrubs, plants. Has its own list of covered losses. (fire, lightning, explosion, riot or civil commotion, and aircraft). Non-owned detached trailers - Answer- Type of coverage extension under BPP, that will provide coverage to trailer that is used in