Exam 2

Question 1

REAL Property

Answer 1

Land, all structures permanently attached to the land and whatever is growing on the land

Ex: include building, attachments to buildings, crops

Question 2

PERSONAL Property

Answer 2

Anything that is not Real Property
Ex: plane, lamp

Question 3

Types of Property Loss Exposures

Answer 3

• Contents → personal property inside structure ex: desk in classroom
• Property in transits
• Property in the possession of others
• “Floating property”

Question 4

Financial Consequences of PR Loss

Answer 4

• Cost to repair/replace damaged pr
• Business income lost while damage is repaired or item is replaced
• Extra expenses incurred to resume operations

Question 5

THE BPP consists of..

Answer 5

At least 5 forms required:

1. Declarations
2. BPP form discusses types of pr covered
3. Covered causes of loss form describes perils that are covered
4. Conditions
5. Endorsements

Question 6

What does the Building and Personal Property Coverage Form (BPP) tell you?

Answer 6

Form tells you WHAT PROPERTY is covered

Question 7

What are broad categories of covered property?

Answer 7

• Building
• “Your” business personal property (Not fixed to walls, decorations)
• Personal property of others

Question 8

What is included in BPP: Building?

Answer 8

• building/structure described in the declarations
• Competed additions
• Permanente installed fixtures, machinery, and equipment
• Outdoor fixtures
• Personal property owned by you used to service/maintain the premises
• Additions under construction, alternations, and repairs to the building or structures
• Material, equipment, supplies, and temporary structure within 100 feet of the premises used for additions, alterations, or repairs to the building or structure

Not for traditional buildings of 4 walls and a roof
Need to be properly described in the definitions

Included:
Outdoor furniture, fire-extinguishing equipment, materials, equipment, supplies and temporary structures within 100 feet of the premises used for additions, alternations, or repairs to the building or structure

Question 9

BPP: Your Business Personal Property (Contents)

Answer 9

Property owned by the insured:
1. Furniture and fixtures
2. Machinery and equipment
3. Stock
4. All other personal property owned by you and used in your business
5. Labor, material, or services furnished on property of others but not the property that actually belongs to someone else
6. Improvements and betterment
7. Leased personal property
1. Must be leased
2. Insurance must be required
Improvements & betterments vs. trade fixtures vs. fixtures

Question 10

What is Personal Property of Others?

Answer 10

– In your care, custody or control; and
Located in or on the building or structure described in the decorations + 100 feet
– Payment made to owner of property NOT to the insured
– Coverage extensions provide $2500/location. If you need more, include a higher limit in personal property of others

Question 11

BPP: Where Coverage Applies

Answer 11

Designed premises
100 ft of described premises

Question 12

BPP: Property NOT Covered

Answer 12

Buildings and other real property
Land
Water
Bridges
Roadway, walks, patios
Retaining walls
Piers, wharves, or docks
Cost of excavations, grading, back fillings, or filling
Pilling
Underground foundations
Underground pipes, flutes, or drains
Plants and outdoor property
Growing crops and lawns
Outdoor grain, hay, and crops
Outdoor trees, shrubs, plants
Outdoor fences, radio, TV antennas/towers
unattached , outdoor signs
Coverage extensions adds back some coverage
Other Personal NOT Covered
Money, securities, and similar property
Electronic data & valuable papers
Vehicles, watercraft, aircraft
Animals
Property more especially described elsewhere
Airborne or waterborne personal property
Contraband
Exception to these exclusions and coverage extensions exists

Question 13

Why do we have BPP Additional Coverages?

Answer 13

Available to ALL insureds. Some aspects of a claim that the insurance company will pay under special conditions or under limited terms/dollar amounts. These will be deleted in the coverage sections and added back with the special conditions under the additional coverages

Question 14

1. Debris Removel

Answer 14

only if debris is due to a direct loss form from a covered cause of loss. Sublimit of 25% of direct loss plus deductible + $25,000 if the combined debris removal and direct loss exceed the limit of insurance.

Includes limited coverage for pollution

Question 15

2. Preservation of Property

Answer 15

when property must be moved to be protected from further damage, it will be covered for “any direct physical loss or damage”

Subjected to policy limits

Question 16

3. Fire Department Surcharge

Answer 16

some jurisdictions require a surcharge for utilizing the fire department. Addition coverage will pay up to $1,000 for payment required by law or assumed under contract prior to loss

Addition to policy limits

Question 17

4. Pollutants Cleanup and Removal

Answer 17

provides limited coverage for pollutant in land or water, typically $10,000 in the aggregate per location

Must be reported within 180 days

Question 18

5. Increased Cost of construction

Answer 18

provides coverage for increased costs due to changes in ordinance law. Only available if replacement cost valuation. Limit damages to 5% of insurance limit or $10,000 whichever is less

Paid in addition to policy limits

Question 19

6. Electronic Data

Answer 19

aggregate limit of $2,500 per year regardless of number of locations and occurrences

Question 20

6 BPP Coverage Extensions

Answer 20

Apply only when there is a coinsurance clause of 80% of higher OR a value reporting symbol
Coverage limits are in addition to started policy limits
Coinsurance: amount payable= {limit / (value of pr x coinsurance %)} x loss

Question 21

1. Newly acquired or constructed PR - $250,000 building / $100,000 contents

Answer 21

New building must be substantially similar use as building described in dec page

Coverage ends at the first of 3 dates
Policy expiration

30 days after acquisition or start of construction
Date insured notifies insurer of new building

Question 22

2. Personal Effects and Property of Others

Answer 22

provides limited coverage for personal effects owned by an individual insured, employees, partner

Excludes theft $2,500 limit per location

Question 23

3. Valuable Papers and Records

Answer 23

policy only covered cost of blank material and labor to transcribe or duplicate

• Covers costs to research and reconstruction
• $2500

Question 24

4. Property Off Premises

Answer 24

up to $10,000 for property that is away from its described location temporarily

Question 25

5. Outdoor Property

Answer 25

losses to tiens such as fences; antennas; signed not attached to buildings, trees, shrubs, and plants -- Cover of loss form do NOT apply -- Only covered for FLARE → fire, lightning, aircraft, riot/civil commotion and explosion ) -- Max $250 per tree, shrub, or plant/ $1000 total including debris removal

Question 26

6. Non-Owned Detached Trailers

Answer 26

Coverage available only where Insured is responsible for purchasing insurance in accordance with the lease. Unless otherwise, shown in the declarations, maximum coverage is $5,000

Question 27

Causes of Loss- Broad Form- Insuring Agreement

Answer 27

Coverage form will include a coverage provision as “We will pay for direct physical damage loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting form any Covered Cause of Loss Direct Physical Loss and Proxiamate Cause

Question 28

Types of Causes of Loss Forms

Answer 28

Basic form (Named Form) Broad Form (Named form) Special Form (aka “Open Periods or “All Risks”)

Question 29

Basic and Broad Causes of Loss Forms: Perils Covered

Answer 29

Both Forms Cover: 1. Fire 2. Lightning 3. Explosion 4. Windstorm or Hail 5. Smoke 6. Aircraft or Vechicles 7. Riot or civil commotion 8. Vandalism 9. Sprinkler Leakage 10. Sinkhole Collaspe 11. Volanic Action 12. Fungus (additional coverage)

Question 30

Basic and Broad: Fire

Answer 30

Flame or glow and rapid oxidation Hostile fire covered, friendly fire is not Resulting damages Heat, smoke, water damage & damage to property while extinguishing the fire

Question 31

Basic and Broad: Lightning

Answer 31

Naturally generated onl

Question 32

Basic and Broad: Explosion

Question 33

Basic and Broad: Windstorm or Hail

Answer 33

Exterior damage must occur before interior damage Excluding: Frost or cold weather Ice (other than hail), snow or sleet, whether driven by wind or not Loss or damage to interior of any building or structure unless building or structure first sustains damage to its roof or walls --Cant leave widows opens --If storm damages walls or roof then covers inside Loss or damage by hail to lawns, trees, shrubs, or plants

Question 34

Basic and Broad: Smoke

Answer 34

Value is to cover smoke from friendly fires Excludes industrial operations and agriculture smudging

Question 35

Basic and Broad: Aircraft or vehicles

Answer 35

Contact between vehicle and covered property No coverage if vehicle is OWNED by the insured No coverage for vehicles themselves

Question 36

Basic and Broad: Riot or civil commotion

Answer 36

Includes employee strikes Includes resulting looting (stealing)

Question 37

Basic and Broad: Vandalism

Answer 37

Excludes theft Must be willful and malicious

Question 38

Basic and Broad: Sprinkler leakage

Answer 38

Automatic sprinkler systems include all related equipment

Question 39

Basic and Broad: Sinkhole collapse

Answer 39

Must be naturally occurring, water over limestone or dolomite Doesn't fill the sinkhole

Question 40

Basic and Broad: Volcanic action

Answer 40

Excludes volcanic eruption damages (e.g. earth movements) 168 hour period

Question 41

Covered by Broad Form but NOT Basic Form

Answer 41

Falling Objects Weight of Snow, Ice, or Sleet Water Damage - accidental leakage from plumbing or applicances (NOT COVERING FLOODING)

Question 42

Exclusion for Broad and Baisc Form

Answer 42

1. Subject to anti-concurrent causation language 2. Interpreted with the doctrine of concurrent causation

Question 43

1. Subject to anti-concurrent causation language

Answer 43

“We will not pay for loss or damage caused directly or indirectly by any of the following" Some perils insurance companies DO NOT want to pay for regardless of whether or not they occur concurrently with covered perils

Question 44

Perils Subjects to Anti-Concurrent Causation Language

Answer 44

1. Ordinance or law 2. Earth Movement 3. Governmental Action 4. Nuclear hazard 5. Utility Services (off-premises) 6. War and Military Action 7. Water 8. Fungus

Question 45

1. Ordinance or law

Answer 45

- Demolition of undamaged portions - Costs to upgrade to code

Question 46

2. Earth Movement

Answer 46

No coverage for damage caused by earthmovement except sinkhole collaspe if earth movement caused fire or explosion then the damage will be covered

Question 47

3. Govermental action

Answer 47

Seizure or destruction by governmental authority

Question 48

4. Nuclear Hazard

Answer 48

No coverage for nuclear reaction, radiation, or radioactive containmination Fire resulting from these causes is covered

Question 49

5. Utility Services (off-premises)

Answer 49

loss caused by power failure or failure of another utility if power failure caused any covered peril then is covered

Question 50

6. War and Military Action

Answer 50

No coverage for war, revolution, insurrection or anything similar

Question 51

7. Water

Answer 51

excluded floods doesnt apply to damage by fire, explosion, or sprinkler leakage

Question 52

8. Fungus

Answer 52

if fungus is " wet or dry rot ot bacteria resulted ina covered cause of loss --> pay for damage vshdrf by that covered cause of loss DOESNT APPLY WHEN: - when resulted from fire or lightening

Question 53

2. Interpreted with the doctrine of concurrent causation

Answer 53

“We will not pay for loss or damage caused by or resulting from” Courts interpret this language with: Concurrent Causation Doctrine: if 2 or more perils contribute to a loss concurrently and ONE of the cause of loss is covered by the policy then entire loss is covered by the policy

Question 54

Exclusions not subjected to anticurrent causation language

Answer 54

1. Artificially generated electrical current 2. Neglect

Question 55

Additional Coverages

Answer 55

Fungus → Applies to Basic and Broad Collapse → Applies to BROAD ONLY

Question 56

Advantages of Special Form

Answer 56

Agreement simply provides coverage for risks of direct physical loss to covered property Cause of loss not specifically excluded is covered Shifts burden of proof from insured to the insurer for disagreements about covered perils Provides broader coverages: Theft losses Friendly fire Vehicle damage Water damages caused by ice damming *broadest form

Question 57

Exclusions: Special, Basic, and Broad

Answer 57

Ordinance or law Earth movement Governmental action Nuclear hazard Utility services War and military action Water “Fungus”, Wet Rot, Dry Rot, and Bacterial Artificially generated electrical current Steam boiler explosion Mechanical breakdown Neglect

Question 58

Special Form: Open Peril Policy

Answer 58

if something is not excluded, it is covered If we want restrictions on perils that ARE covered, we must list as an exclusion on Special Policy Must add exclusions for things like "maintenance" and “decisions” Ex: Windstorm and Hail is covered exactly the same under Broad, Basic, and Special, But this is listed as a Named peril under Basic and Broad policy forms but as an exclusion under special

Question 59

Special: Maintenance Exclusion

Answer 59

Eliminated coverage for losses typically preventable through normal maintenance or expected through the passage of time Includes (but not limited to) Water & tear Rust, corrosion, decay, deterioration, and hidden or latent defect Smog Settling, cracking, shrinking, or expansion Nesting or infestation or discharge of waste products or secretions by insects, birds, rodents, or other animals

Question 60

Theft is Covered under Special Form, EXCEPT

Answer 60

1. Dishonest acts by certain individuals (employee dishonesty) 2. Voluntary parting → let someone have something and though you would get it back 3. Unauthorized instructions → gave someone a wrong thing 4. Inventory shortages and unexplained disappearances → need more evidence of missing

Question 61

PR covered only for “Specificed Causes of Loss”

Answer 61

“Specificed” = Broad Form Peril Valuable papers and records Animals (value if destroyed or destruction is necessary) Fragile articles (if broken) Ex: glassware, statutory, marbles, chinaware, and porcelain Builder’s equipment -->While away from the described location

Question 62

WHY? BPP FORM AND LOSS FORM

Answer 62

One of these causes of losses forms must be added to the BPP form Causes of loss form tells us the PERILS, while the BPP form tells us which PR is covered