CH 11: Property Insurance - Causes of Loss Form(s)

What is the purpose of the cause of loss forms?

Specifies the peril that triggers coverage or ‘what must happen in order for coverage to be available’

What are the four cause of loss forms available?

1. Basic

2. Broad

3. Special

4. Earthquake

The mortgage holder gets ___ days notice for nonrenewal and cancellation due to nonpayment of premium

10 days

If a claim is denied due to the actions of the insured, can the mortgage holder still be entitled to claim payment?

YES

The majority of exclusions for commercial property are found where?

In the cause of loss forms

What forms cover windstorm as a peril?

1. Basic

2. Broad

3. Special

The peril of explosion excludes what?

Machinery and steam boiler explosion

What does the peril of riot/civil commotion also include?

Looting

Where is the peril of theft covered?

On the Special form

What is required if you want BI coverage?

An insured direct loss

Business Income can be purchase with / without what?

Extra Expense

What is BI coverage?

Covers the loss of income when operations are suspended due to damage to the property by an insured peril

Loss of income, rents, tuition are examples of?

BI loss

When does BI coverage start?

72 hours after the loss

BI payment is …

The pre-tax net profit or loss, continuing expenses, including payroll

The peril that triggers BI depends on what?

The cause of loss form listed on the declaration page

What is extra expense?

An indirect coverage that prevents suspension of business operations by paying the extra expenses needed to stay open

Extended BI will continue coverage up to how many days after REOPENING?

30 Days

What is Extended Period of Indemnity?

Extends BI beyond the 30 days after reopening, up to the number of days stated on the declaration page

Net incomes = ?

NI = Revenue - Expenses

What are indirect forms forms listed on the declaration page?

Business Income and Extra Expense

EE can also include _____ expenses

expediting expenses

What are expediting expenses?

Expenses such as overnight shipping, overtime so that repairs speed up

Increased cost of repairs, reconstruction, or demolition that occur due o building code changes and upgrades pertain to?

Ordinance or Law

Ordinance and law is excluded or included in a policy?

Excluded and must be ENDORSED to cover those expenses

What does builders risk cover?

Buildings under construction

Which of the following is NOT covered in builder’s risk?

a) the building

b) materials within 100 feet

c) contractors tools

Contractors tools

Which of the following is NOT a requirement for the termination of Builders Risk coverage?

a) policy expires/cancelled

b) property accepted as is

c) 90 days after construction is complete

d) a claim is made within 30 days

e) 60 days after building is occupied

f) insured’s interest in property ceases

What perils are excluded with property under construction?

Theft and CANNOT be declared vacant

What coverage forms does Commercial General Liability (CGL) consist of?

1. Occurrence

2. Claims-made

What is the major difference between an occurrence form and a claims made form?

The coverage trigger

What is the coverage trigger in an occurrence form?

The policy that was in force when the occurrence happened

What is the coverage trigger in a claims-made form?

When the claim was filed

What can be used instead of a retroactive date in a claims-made form?

A laser beam endorsement

What is the endorsement used to eliminate coverage for certain exposures, projects etc.?

Laser beam endorsement

An undendorsed CGL claims made contains a BERP which is a?

Basic Extended Reporting Period

What is a BERP?

Basic Extended Reporting Period - the insured has up to 60 days after the policy expires to report an incident that happened and have it covered

A claims made CGL can be endorsed with a ________ to extend the reporting period indefinitely

SERP: Supplemental Extended Reporting Period

CGL extends coverage to which loss exposures?

1. Premises and operation

2. Product

3. Completed operations

4. Contractual

5. Contingent

Premises & Operations pertains to?

The exposure for the insured’s location and activities

The CGL has how many limits in which Section?

6 limits in Section III

What are the two CGL’s aggregate limits called?

1. General aggregate

2. Product & completed operations aggregate

All claims are deducted from the ___________ aggregate except ______ ________ claims

General aggregate; except product & completed operations claims

What does Section I of CGI pertain to?

A: Bodily injury and property damage

B: Personal & advertising injury

C: Medical payments

Supplementary payments are provided for Coverage __ &__ and paid in addition to policy limits

Coverage A & B

In Coverage C: Medical payments pays all expenses within ___ year/s

Within 1 year only, NOT 3 years

Unauthorized release of confidential information would be covered under?

Personal injury

What is the difference between personal injury and bodily injury?

Personal injury can include an unauthorized release of confidential information while bodily injury cannot

Should a bodily injury occur during a false arrest or wrongful eviction, it would be included in the?

‘Offense’ category and be covered as a personal injury

The insured contracts/incidentals include?

1. Lease

2. Agreement to indemnify a municipality

3. Sidetrack (railroad) agreement

4. Elevator maintenance

Which of the following are NOT mobile equipment?

Forklifts

Earth movers

Automobiles

Automobiles

CGL defines an automobile as?

NOT licensed for public roads

CGL defines mobile equipments as

Licensed for public roads

Which of the following is NOT covered under the CGL?

Host liquor

Forklifts

Automobiles

Mobile equipment

Automobiles

What is the requirement for host liquor to NOT be excluded under the CGL?

If the insured is a alcoholic business

Which of the following are EXCLUDED under the CGL?

Injuries to customers/patrons

Pollution

Injuries to employees

Pollution & injuries to employees (this is worker’s comp)

Who is insured under the CGL?

• Named insured and spouse

• Officers, directors, stockholders

• Employees

• Real estate

• Volunteer workers

• Named insured legal rep upon their death

“Everything is covered unless it’s excluded” is which form?

Special Form

Which form would you buy if you wanted to buy a Contingent Business Interruption form?

Business income from Dependent Properties

Breakage, ornamentation, chemical damage are all covered perils under the Glass Coverage form but NOT FIRE, why?

Fire damage is already covered under all three Causes of Loss forms on the CPP

What is the limit for glas coverage under the Glass Coverage form/endorsement?

Coverage provided without limitation but is settled on an ACV basis

Aggregate limit refers to?

The most an insurer will pay in any one policy period

Which are NOT exclusions under the CGL policy - why?

• Products and completed operations coverage

• Auto liability coverage

• Professional liability coverage

• Liquor liability coverage

Products and completed operations coverage because it is a necessary coverage for someone like a contractor

The Commercial Broad Form Causes of Loss include all of the following EXCEPT:

• Collapse

• All of these are included

• Ordinance or Law

• Breakage of glass

Ordinance or Law is a common exclusion in all 3 Causes of Loss forms

In the Definitions Section of a CGL policy, “occurrence” means:

• An event that is not discovered until years later

• A one time event

• An accident involving continuous or repeated exposure to the same general harmful conditions

Coverage A of the CGL policy covers:

Bodily Injury and Property Damage Liability

What form could cover tenants for financial loss resulting from the cancellation of a lease due to property damage?

Leasehold Interest Coverage Form

The peril that trigger coverage under the BI form are found:

On the declarations page

Glass Breakage under a broad Form Cause of Loss is covered for up to:

$500 per occurrence

What Commercial Property cause of loss form has the broadest coverage?

Special Causes of Loss

Not subject to the per occurrence limit on the CGL would be:

Personal & Advertising

This form covers risk of direct physical loss subject to exclusions pertains to?

Special form

A cause of loss form that doesn’t list the covered losses is named all of the following except:

• All risk

• Special

• Open peril

• Broad form

Broad form

The Glass Coverage form pays:

ACV without limitation per plate or pane, unless stated as replacement cost on the policy

All of the following are exclusions on the Commercial Causes of Loss Special form policy EXCEPT:

• Wear and tear

• Faulty workmanship

• Insects, birds, rodents

• Sinkhole collapse

Sinkhole collapse - it is covered on all 3 Causes of Loss forms

Which of the following is NOT a covered peril under the Specified Cause of Loss form?

• Water damage from accidental discharge of water or steam

• Leaking from fire extinguishers and equipment

• Volcanic Action

• Falling objects

Leaking from fire extinguishers and equipment

An exclusion section that limits the application of covered perils is found in:

All causes of loss forms: special, broad and basic