Property Insurance Unit 10

Commercial Package Policy (CPP)

Usually begin with coverage for property and general liability insurance and then other forms of insurance are added on to create a bundle.

CPP Eligible Coverages

Commercial property coverage forms

• building & personal

• builders risk

• condominium association

• condominium commercial unit owners

• business income

• extra expense

Commercial Inland Marine

Commercial casualty coverage forms

• commercial auto

• general liability

• crime

• farm liability

CPP cannot include

• workers comp 

• life insurance 

• health & disability insurance 

• certain types of professional liability

Along with coverages, CPP also contains

Common policy declarations

Common policy conditions

Two or more coverage parts (property or casualty)

To call it a package policy, the CPP must include

at least one property coverage and one casualty coverage

Interline Endorsements

endorsements that may be used with more than one line of insurance 

Common Policy Declarations

Contains information about who is insured, when the coverage is in effect and for what lines (property or casualty) It includes:

• name and mailing address of named insured

• policy period, including the time and date coverage begins and ends

• a description of the covered business

• the forms purchased and their premiums

Common Policy Conditions

Apply to all coverage parts contained in the CPP.

Certain responsibilities and obligations are assigned to first named insured.

It is necessary to specify the first named insured because the CPP may be insured to more than one named insured, such as business partners or entities. Insurer only corresponds with first named insured.

Cancellation

First named insured must cancel in writing

Any premium refund due will be sent to first named insured

Refund may be less than a pro rata refund to make up for the expense of issuing the contract 

If insurance company cancels, they must mail a written notice to the last known address of first named insured. Premium is refunded to first named insured on a pro rata basis 

Changes Condition

States that only the first named insured is authorized to make changes in the terms of the policy with the consent of the insurance company. Terms can be amended or waived only be an endorsement issued by the insurer that is made a part of the policy

Premiums Condition

States that the first named insured is responsible for the payment of all premiums and will receive any return premiums due

Examination of Books and records Condition

states that the company may examine and audit the insured’s books and records at any time during the policy period and for up to 3 years after the end of the policy period 

Examination of Inspections and Surveys Condition

gives the company the right to make inspections or surveys of the insured business at any time. The company may choose to report on the conditions it finds and recommend changes. These inspections are related to insurability and are not considered safety inspections. Insurer will not warrant that conditions are safe or healthful or comply with laws or regulations

Transfer of Rights & Duties Condition

states that the insured’s rights and duties under the policy cannot be transferred without the written consent of the insurance company, except in the case of death of a named insured.

Sometimes called the assignment clause

If first named insured dies, rights are transferred to the deceased’s legal representative, but only while the rep is acting within the scope of the duties of the legal rep. Covered by policy until the next policy renewal date.

Which section of the CPP varies based on the lines of coverage included? 

Coverage parts