CIC Commercial Property

Flash Cards generated based on 2024 CIC Commercial Property Study Guide by Risk Insurance & Education Alliancce

Who may cancel or change the policy under the Common Policy Conditions?

Only the first Named Insured, with the insurer's consent.

How long after the policy period may the insurer examine the insured's books and records?

Up to three years after the end of the policy period.

Must the insurer conduct safety inspections under the Common Policy Conditions?

No. The insurer has the right to conduct inspections or not conduct them, as it sees fit.

For what purpose are inspections and surveys conducted under the Common Policy Conditions?

For insurability purposes only.

Who receives return premiums under the Common Policy Conditions?

The first Named Insured.

What consent is needed to transfer policy rights and duties?

The insurance company's consent.

What is the exception to the consent requirement for transferring policy rights and duties?

The death of an individual Named Insured.

A building is worth $1,000,000 and has 80% coinsurance. What minimum limit avoids a coinsurance penalty?

$800,000 ($1,000,000 × 80%).

What ratio does the study guide use for the coinsurance penalty in its building-loss example?

Limit carried ÷ minimum limit required; then multiply that ratio by the loss amount and subtract the deductible.

In the study guide example, what is the settlement for a $100,000 loss, $600,000 limit, $800,000 required limit, and $10,000 deductible?

$65,000: ($600,000 ÷ $800,000) × $100,000 − $10,000.

Under Legal Action Against Us, when may the insured sue the insurer?

After complying with all coverage-part terms; legal action must be brought within two years, subject to state provisions.

What does Insurance Under Two Or More Coverages prevent?

Payment greater than the actual amount of loss, regardless of the number of applicable coverages.

What does No Benefit To Bailee provide?

A person other than the insured who has custody of Covered Property cannot benefit from the policy.

What territory is specified by Policy Period And Territory?

The United States, its territories and possessions, Puerto Rico, and Canada, during the policy period.

What happens if the insured conceals or misrepresents information about coverage or a claim?

The Coverage Part is void under Concealment, Misrepresentation Or Fraud.

How does Other Insurance respond to insurance with the same terms and conditions?

On a pro-rata basis.

How does Other Insurance respond to insurance with different terms and conditions?

On an excess basis.

When does Liberalization broaden coverage?

When newly insured policies receive broader coverage without additional premium.

When may the Named Insured waive rights of recovery against another party before a loss?

In writing before the loss.

How does Control Of Property protect unaffected locations?

Actions beyond the Named Insured's control do not affect the policy; a breach at one location does not affect coverage at unaffected locations.

Against whom may rights of recovery be waived after a loss?

In writing against another insured, a business owned and controlled by the Named Insured, a business that owns and controls the Named Insured, or a tenant of the Named Insured.

What five rights and duties does the guide list for the first Named Insured?

Cancel; receive cancellation notice; change the policy with insurer consent; pay all premiums; receive return premiums.

If $400,000 is carried but $800,000 is required, what is the payment on a $100,000 loss with a $10,000 deductible?

$40,000: (400,000 ÷ 800,000) × 100,000 − 10,000.

Is an addition under construction covered as Building if it is not covered by other insurance?

Yes.

Is a furnace affixed to the roof classified as Building?

Yes, it is a fixture.

Is an indoor entrance rug that services the building classified as Building?

Yes, as property used to service the building or premises.

Are building materials 500 feet from the described premises included as Building in the guide's unendorsed-form example?

No.

Is a conference table Building or Your Business Personal Property?

Your Business Personal Property; it is furniture.

How is outdoor furniture used to service the premises classified?

Building.

How are owned appliances used for laundering classified?

Building, as property used to maintain or service the building or premises.

How is an industrial sewing machine intended for removal classified?

Your Business Personal Property, because it is not permanently installed.

Are underground pipes, flues, or drains Covered Property under the unendorsed BPPCF?

No; they are Property Not Covered.

What endorsement can buy back coverage for underground pipes, flues, or drains?

Additional Covered Property.

How is a riding lawnmower used to service the premises classified?

Building.

How is a customer's chair in a delivery vehicle 50 feet from the described premises classified?

Covered Personal Property of Others; the vehicle is within 100 feet.

How is store shelving that will be removed when the building is vacated classified?

Your Business Personal Property, as a trade fixture.

How does blanket coverage apply limits across Eddie's two buildings and BPP?

One $1,500,000 limit applies across the two $500,000 buildings and $500,000 of BPP.

What does blanket coverage accommodate?

Fluctuating BPP values and allocation of one limit where needed across covered property.

What coinsurance range does the guide identify as a disadvantage of blanket coverage?

90%–100%.

What statement must be obtained for blanket coverage?

A statement of values.

What cause-of-loss constraint does the guide identify for blanket coverage?

The same cause of loss applies to all covered property.

What other blanket-coverage disadvantages does the guide list?

Rates are good for only one year, and underwriting restrictions may prevent availability.

What happens on the first late value report in the guide's example?

Recovery is limited to 75% of the amount otherwise payable.

What is paid on a $10,000 BPP loss after the first late value report in the guide's example?

$7,500.

How are fixtures, including outdoor fixtures, and permanently installed machinery classified?

Building.

How are a fire extinguisher servicing the building and outdoor fixtures classified?

Building.

How are furniture and a tenant's use interest in improvements and betterments classified?

Your Business Personal Property.

Are retaining walls that are part of a building Covered Property?

Yes.

Are paved surfaces such as a parking lot Covered Property?

No; Property Not Covered.

Are building foundations below the lowest basement floor Covered Property?

No; Property Not Covered.

What endorsement clarifies that specified machinery, equipment, or fixtures are Building property?

Additional Building Property.

What endorsement can buy back coverage for fences?

Additional Covered Property.

What is scheduled commercial property coverage?

Separate limits of insurance apply to two or more individually listed properties.

What endorsement increases a limit during specified planned seasonal periods?

Peak Season Limit of Insurance.

What does the Peak Season Limit of Insurance schedule show?

The dates limits rise and the additional amount needed during the peak season, not the total limit.

What other form can address planned fluctuations in BPP values?

Value Reporting Form.

If a timely value report states $200,000 when $400,000 should have been reported, what portion of a later loss is paid?

50% in the guide's example (reported ÷ actual).

When must debris removal expenses be reported to the carrier?

Within 180 days of the direct physical loss, which must occur during the policy period.

What is the guide's basic Debris Removal Additional Coverage calculation?

25% of the sum of the direct physical loss payment and deductible, subject to the policy limit.

What additional debris removal amount is provided if the limit is exhausted or debris removal exceeds it?

An additional $25,000.

When no covered property sustains physical damage, what debris-removal maximum applies for other property?

$5,000 per location.

Which endorsement can increase the $25,000 additional debris removal limit?

Debris Removal Additional Insurance CP 04 15 10 12.

What limit and time window apply to newly acquired property under the BPPCF Coverage Extension?

Up to $250,000 for 30 days, until values are reported, or until policy expiration, whichever occurs first.

Which endorsement replaces the $250,000 newly acquired property limit with a scheduled amount?

Newly Acquired Or Constructed Property – Increased Limit CP 04 25 10 90.

What is the unendorsed limit for an outdoor sign in the guide's scenario?

$2,500; a $5,000 covered loss to the sign yields at most $2,500 before deductible.

Which endorsement can provide outdoor sign limits over $2,500?

Outdoor Signs CP 14 40 06 07.

Are Increased Cost Of Construction, Fire Department Service Charge, and Electronic Data Additional Coverages or Coverage Extensions?

Additional Coverages.

Are Outdoor Property, Personal Effects And Property Of Others, and Non-owned Detached Trailers Additional Coverages or Coverage Extensions?

Coverage Extensions.

How long does Preservation Of Property protect covered property after it is first moved?

30 days; it is an Additional Coverage.

What endorsement can raise specified Additional Coverage and Coverage Extension limits?

Higher Limits; amounts above stated limits are scheduled without changing how coverage works.

What is the Personal Effects And Property Of Others extension limit?

Up to $2,500 at each location for personal effects of the Named Insured and others involved in the business.

Does the BPPCF's $2,500-per-sign maximum depend on whether the sign is attached?

No; the maximum applies whether the sign is attached or not.

If multiple covered items with separate limits are damaged in one loss, how many deductibles apply?

Only one deductible is applied.

For one occurrence affecting multiple locations, how does Deductibles By Location apply?

A separate deductible at each location.

For one occurrence affecting multiple locations, how does Multiple Deductible Form apply?

Only the largest applicable deductible.

What happens after more than 60 consecutive days of building vacancy under the BPPCF?

Certain Covered Causes of Loss are excluded; payment for other covered causes is reduced by 15%.

Which endorsement uses less costly materials in valuing an older building, and which condition does it change?

Functional Building Valuation; it modifies Valuation.

Which endorsement can add a building owner or other person to the loss payment?

Loss Payable Provision; it modifies Loss Payment.

Does Agreed Value remove or suspend coinsurance, and what additional premium does the guide specify?

It suspends coinsurance for an additional 5% premium.

What happens when the Agreed Value expiration date passes without extension?

The coinsurance requirement is reinstated.

What must appear in the Declarations for Inflation Guard to apply, and how often does the limit increase?

A percentage must be shown; the Limit of Insurance increases daily.

In the guide's example, what is the annual premium impact of 8% Inflation Guard?

4% over the year because the limit rises daily and premium is applied pro rata.

What loss description must the insured provide after loss or damage?

How, when, and where the loss or damage occurred.

When is a signed, sworn proof of loss due after the insurer requests it?

Within 60 days of the request.

How is covered property generally valued under the unendorsed BPPCF?

On an Actual Cash Value basis unless otherwise provided.

How is stock sold but not delivered valued under the unendorsed BPPCF?

Selling price less discounts or expenses that otherwise would have been incurred.

For which four interests does the guide list Loss Payable Provision?

Loss payees, lender's loss payees, contract sellers, and building owners.

What does Functional Personal Property Valuation (Other Than Stock) allow?

Replacement with the most closely equivalent available property; coinsurance does not apply.

When can Replacement Cost extend to Personal Property of Others?

Through the Optional Coverage if Replacement Cost is shown in the Declarations.

Which Causes Of Loss forms cover Weight of Snow, Ice, or Sleet in the guide's roof-loss scenario?

Broad Form and Special Form; not Basic Form.

What three coverages does Ordinance Or Law Coverage CP 04 05 offer?

Coverage A for loss to the undamaged building portion; B for demolition and debris removal of that portion; C for increased construction cost.

What ensuing loss is covered despite the Special Form Earth Movement exclusion?

Fire resulting from earth movement.

Does the Utility Services exclusion address both direct damage and time element loss?

Yes.

What individual exposures can be bought back despite the broad Water exclusion?

Examples in the guide include flood and sewer, drain, or sump discharge.

What fire-related exception applies to the Special Form exclusion for fungus, rot, and bacteria?

Loss or damage resulting from fire or lightning is excepted.

What does Ordinance Or Law Coverage A pay?

Loss to the undamaged portion of the building.

What does Ordinance Or Law Coverage B pay?

Demolition and debris removal costs for the undamaged portion of the building.

What does Ordinance Or Law Coverage C pay?

Increased Cost of Construction.

Is damage from agricultural smudging or industrial operations covered under the cited Group 2 exclusions?

No.

Is theft of property entrusted by the insured to an individual covered under the cited Group 2 exclusions?

No.