[h] CPCU 551 – Module 10
[a] A real estate development consisting of a group of units.
[q] Condominium unit
[a] The portion of a condominium owned solely by a unit owner.
[q] Condominium association agreement
[a] A document that describes what each condominium unit owner has purchased and explains the rights of the unit owners and the association.
[q] Bare-walls concept
[a] An approach in determining the dividing line between the condominium unit owners and association interests in which the association has no ownership interest within the unit’s bare walls.
[q] Single-entity concept
[a] An approach in determining the dividing line between the condominium unit owners and association interests in which the association is the owner of all property contained in the unit as sold to original purchaser.
[q] All-in concept
[a] An approach in determining the dividing line between the condominium unit owners and association interests that is similar to the single-entity concept, except this concept includes improvements made by the unit owner.
[q] Cooperative corporation
[a] A type of ownership of real property in which the real property is owned by a corporation. The tenants of the real property are the shareholders of the corporation.
[q] Planned unit development
[a] A real estate development in which each occupant has ownership of its own unit and the land that the structure occupies.
[q] Fee simple
[a] A type of property ownership that represents a full ownership interest in the property by an individual.
[q] Condominium Association Coverage Form
[a] A coverage form that closely resembles the building coverage of the BPP Coverage Form. The form covers buildings and business personal property of condominium associations.
[q] Your Business Personal Property coverage
[a] Coverage under the Condominium Association Coverage Form that covers business personal property either owned by the association or indivisibly owned by all unit owners.
[q] Personal Property of Others coverage
[a] Coverage under the Condominium Association Coverage Form that covers up to $2,500 property of others at each described location, provided 80% or higher coinsurance is in effect.
[q] Unit-Owner’s Insurance condition
[a] A condition under the Condominium Association Coverage Form that indicates the association’s policy is primary if a unit owner also has coverage applying to the same property.
[q] Waiver of Rights of Recovery condition
[a] A condition under the Condominium Association Coverage Form that states the insurer agrees not to subrogate against any unit owner.
[q] Condominium Commercial Unit-Owners Coverage Form
[a] An ISO form that covers business personal property and building property exposures of nonresidential condominiums.
[q] Loss assessment coverage
[a] An optional coverage in which the insurer agrees to pay the condominium unit owner’s share of any assessment charged to all unit owners by the association when the assessment is made as a result of damage caused by an insured peril.
[q] Miscellaneous real property coverage
[a] An optional coverage that covers real property that pertains to the named insured’s condominium unit, or real property the named insured has a duty to insure.
[q] Businessowners policy
[a] A type of policy that typically covers most of the property and liability loss exposures that can be insured by ISO commercial policies, other than coverage for autos.
[q] Typical BOP eligibility criteria
[a] Examples of typical criteria:
Total floor area.
Building height in stories.
Annual gross sales.
Occupancy or business type.
Characteristics of the applicant’s operations.
[q] Typical BOP ineligible businesses
[a] Businesses that are typically ineligible:
Buildings occupied for manufacturing.
[q] BOP valuation provision
[a] The typical valuation provision for buildings and personal property is replacement cost. Most insurers offer actual cash value as an option.
[q] Insurance to value
[a] A provision of the BOP that stipulates that to be covered on a full replacement cost basis, the insured must carry insurance equal to at least 80% of the replacement cost of the covered property immediately before the loss.
[q] Reasons the list of property not covered in the BOP is shorter than the list of property not covered in the BPP
Some exclusions in the BPP are not needed in the BOP because they apply to businesses not eligible for BOP coverage.
Insurers are willing to offer broader coverage in the BOP because insureds eligible for the BOP are generally lower-risk.
[q] Automatic seasonal increase provision
[a] A provision of the BOP that automatically increases the amount of insurance when the value of the insured’s personal property exceeds the limit of insurance shown in the policy.
[q] Business income and extra expense coverage
[a] Coverage that is included automatically under the BOP. Typically, this coverage under the BOP is not subject to coinsurance, a monthly limitation, or a total dollar limit.
[q] Farm Dwellings, Appurtenant Structures and Household Personal Property Coverage Form
[a] An ISO coverage form that provides the following coverages:
Coverage A – Dwellings.
Coverage B – Other Private Structures Appurtenant to Dwellings.
Coverage C – Household Personal Property.
Coverage D – Loss of Use.
[q] Farm Personal Property Coverage Form
[a] An ISO coverage form that provides the following coverages:
Coverage E – Scheduled Farm Personal Property.
Coverage F – Unscheduled Farm Personal Property.
[q] Coverage E – Scheduled Farm Personal Property
[a] A coverage option under the Farm Personal Property Coverage Form that covers farm products, livestock, supplies, and farm equipment on a scheduled basis.
[q] Coverage F – Unscheduled Farm Personal Property
[a] A coverage option under the Farm Personal Property Coverage Form. Insures unscheduled farm personal property under a single limit and is subject to an 80% coinsurance requirement.
[q] Barns, Outbuildings and Other Farm Structures Coverage Form
[a] An ISO coverage form that insures all types of farm buildings and structures (other than dwellings and private garages).
[q] Farm Liability Coverage Form
[a] An ISO farm coverage form that combines elements of homeowners liability coverage and commercial general liability coverage.
[q] Farm Umbrella Liability Policy or Farm Excess Liability Policy
[a] An ISO farm coverage form that provides limits of liability in excess of underlying policies.
[q] Crop hail insurance
[a] Insurance offered by private insurers that covers hail damage to growing crops. May also cover crop damage caused by fire, windstorm accompanying hail, damage caused by livestock, and vehicles.
[q] Multiple Peril Crop Insurance
[a] Insurance offered by the federal government that insures farmers against unexpected production losses. For coverage to apply, the loss must be the result of natural causes, such as drought, hail, windstorm, or flood.
[q] Animal mortality insurance
[a] Insurance that covers loss of an insured farm animal by:
Death resulting from accident, injury, sickness, or disease.
Theft (subject to exclusions).
[q] Animal mortality insurance exclusions
[a] Common exclusions:
Neglect in providing the animal with proper care.
Unauthorized instructions to transfer the animal to any person or place.
Seizure by a governmental authority.
War and nuclear risks.
[q] Feedlot insurance
[a] Insurance that covers animals while they are in the custody of a commercial feedlot operator.
[q] Surety bond
[a] A written contract that expresses one party’s promise to answer for another party’s failure to fulfill a promise.
[a] A party to a surety bond that guarantees that the principal will fulfill an obligation.
[a] A party to a surety bond whose obligation is guaranteed by the surety.
[a] A party to a surety bond that receives the surety’s guarantee the principal will fulfill an obligation.
[q] Contract bond
[a] A type of surety bond that is often required of an individual completing work for another. The surety guarantees that the obligations of the contract will be performed; otherwise, the surety will indemnify the obligee.
[q] Bid bond
[a] A type of contract bond that guarantees a contractor bidding on a contract will enter into the contract.
[q] Performance bond
[a] A type of contract bond that guarantees a contractor’s work will be completed according to plans and specifications.
[q] Payment bond
[a] A type of contract bond that guarantees a project will be free of all liens.
[q] Maintenance bond
[a] A type of contract bond that guarantees work will be free from defects in materials and workmanship for a period of time after the project is completed.
[q] License and permit bond
[a] A type of surety bond that provides payment to the state, city, or other public entity for loss resulting from violations of the licensee or permit holder.
[q] Public official bond
[a] A type of surety bond that guarantees a public official will perform his or her duties faithfully and honestly.
[q] Court bond
[a] A type of surety bond that is often required in connection with a lawsuit. The bond guarantees that a person or an organization will faithfully perform certain duties prescribed by law or by a court.
[q] Judicial bond
[a] A type of court bond that is posted by a plaintiff or a defendant to protect the opposing party.
[q] Fiduciary bond
[a] A type of court bond that guarantees persons entrusted with the care of others’ property will exercise their duties faithfully.
[q] Lost securities bond
[a] A type of surety bond that guarantees that an entity that issues replacements for lost securities will be indemnified for loss resulting from the duplication of the securities.
[q] Hazardous waste removal bond
[a] A type of surety bond that guarantees governments that owners of hazardous waste facilities will comply with laws.