Commercial Property and Crime Insurance Review

Comprehensive vocabulary flashcards covering commercial property definitions, valuation methods, underwriting hazards, specific policy clauses, and crime insurance terms based on the lecture notes.

Scheduled Basis

A basis for providing coverage where each building or item is insured for a specific amount.

Blanket Basis

A basis for providing coverage where one amount of insurance applies over multiple buildings, locations, or categories of property.

Mercantile

A category of buildings including retail stores, shopping malls, grocery stores, and supermarkets.

Manufacturing/Industrial

A category of buildings including factories, warehouses, manufacturing plants, and sawmills.

Building (IBC Commercial Property Broad Form)

Includes the structure, growing plants/trees/shrubs inside for decorative purposes, materials/supplies for maintenance/repair on premises, additions/extensions, permanent fittings/fixtures, and fixed structures pertaining to the building.

Stock

Includes merchandise held in storage or for sale, raw materials, materials in process, finished goods, and packing/wrapping/advertising materials.

Equipment

Includes furniture, furnishings, fixtures, machinery, tools, and appliances not used for processing/manufacturing, as well as tenant's improvements and betterments.

Actual Cash Value (ACV)

A valuation method that takes depreciation into consideration.

Replacement Cost

A valuation method that does not take depreciation into consideration.

Broad Evidence Rule

A method used to determine Actual Cash Value by taking into account many factors including replacement value less depreciation, market value, resale value, building use, and obsolescence.

Straight-Line Depreciation

A type of depreciation approach typically used for buildings.

Plateau Accelerated Depreciation

A type of depreciation approach typically used for automobiles or computer equipment.

Reinsurance

A contract between the primary insurer and a second insurer where all insurers share both the premiums collected and the losses incurred.

Subscription Policy

A policy issued when multiple insurers share premiums and losses on a risk, usually negotiated separately for specialized or high-limit risks.

Minimum Retained Premium

The amount of premium kept by the insurer when a policy is terminated prior to its expiry date to recoup underwriting costs.

Subrogation

The right of the insurer, after paying a loss, to "step into the shoes" of the insured and exercise the insured's rights of recovery against the responsible party.

Premium Adjustment Clause

A clause applicable to stock that allows for premium return claims based on actual monthly values, submitted no later than $6$ months after policy expiry.

Adverse Selection

A situation where applicants likely to suffer a loss are not properly screened, causing an unfavorable risk for the insurer.

Fire Resistive

A class of building construction identified by the IAO.

Non-Combustible

A building class where all structural members including floors, roofs, and supports are constructed of steel, iron, concrete, or other non-combustible materials.

Moral Hazard

Risk arising from the character, financial condition, or associates of the insured, such as a sudden drop in profits leading to a planned fire.

Morale Hazard

Risk arising from the insured's indifference to loss or poor management.

Vacant

A property status defined as being empty.

Unoccupied

A property status defined by the lack of people.

Removal Clause

An extension required by law that covers property moved to prevent further loss for the lesser of $7$ days or policy expiry.

Endorsement

A document that changes the terms or conditions of an insurance policy.

Rider

A document that adds additional coverage to a policy already in place.

Consequential Loss Assumption Clause

Covers loss to stock (such as spoilage) dependent on equipment for continuous cooling if the cooling apparatus or power supply is directly attacked.

Bailee

A person or business who has temporary custody of the personal property of another for purposes such as repair, storage, or delivery.

Common Carrier

A carrier furnished to any person that asks, such as a moving company, responsible for the safe delivery of goods.

Standard Bill of Lading

A document used to establish the liability of common carriers, typically valuing goods at $1.00 per pound.

Burglary (Crime Policy Definition)

The unlawful taking of property from within a premises or safe, requiring visible signs of force at the points of entry or exit.

Custodian

The insured, their spouse, or authorized employees, excluding janitors, guards, or watchmen.

3D Policy

A comprehensive crime policy covering Dishonesty, Disappearance, and Destruction.

Form A (Commercial Blanket Bond)

An employee dishonesty coverage where the limit of insurance is the maximum regardless of the number of employees involved in a loss.

Form B (Blanket Position Bond)

An employee dishonesty coverage where the limit of insurance is available for each employee involved in the loss.