CPCU 551 Flashcards – Module 2

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[h] CPCU 551 – Module 2

[q] Commercial package policy

[a] A type of policy that combines coverage for multiple perils, such as liability and property risk.  The policy is customizable and can include general liability, property, auto, and crime policies, among others.

[q] Building and Personal Property (BPP) Coverage Form

[a] An Insurance Services Office, Inc. (ISO) coverage form that can be used to insure any combination of:

Buildings.

Business personal property of the insured.

Property of others in insured’s custody.

[q] Elements included in the BPP definition of building

[a] Elements include:

Fixtures and completed additions.

Permanently installed equipment.

Personal property owned by the insured and used to maintain the building.

Building materials within 100 feet of the building.

[q] Fixture

[a] Personal property affixed to real property in such a way as to become part of the real property.

[q] Your Business Personal Property coverage under the BPP

[a] Covers personal property owned by insureds for use in their business, provided one of the following requirements is satisfied:

The property is located in or on the described building.

The property must be located in the open (or in a vehicle) within 100 feet of the building.

[q] Types of Your Business Personal Property covered under the BPP

[a] Types of property covered:

Furniture, fixtures, and equipment.

Stock.

Other owned, business personal property.

Labor or materials on property of others.

Improvements and betterments.

Leased personal property for which the  insured is required to obtain coverage.

[q] Personal Property of Others coverage under the BPP

[a] Covers property of others in insured’s care, custody, or control.  The property must be located in or on the building or within 100 feet of the building.

[q] Debris removal

[a] An additional coverage under the BPP that provides reimbursement for the cost of removing debris of covered property resulting from a covered cause of loss.

[q] Preservation of Property

[a] An additional coverage under the BPP that protects covered property while it is being moved and for up to 30 days at the new location.

[q] Fire Department Service Charge

[a] An additional coverage under the BPP that pays charges levied by a fire department, as long as the charges were required by local ordinance or assumed by contract before the loss occurs.

[q] Pollutant Cleanup and Removal

[a] An additional coverage under the BPP that pays the insured’s expenses to extract pollutants from land or water at the described premises.  The release of the pollutants must be the result of a covered cause of loss for coverage to apply.

[q] Increased Cost of Construction

[a] An additional coverage under the BPP that provides coverage for costs incurred when complying with an ordinance or law.

[q] Electronic Data

[a] An additional coverage under the BPP that provides a minimal amount of coverage for the loss of electronic data.

[q] Newly Acquired or Constructed Property

[a] A coverage extension under the BPP that provides coverage for a new building constructed at the premises or a newly acquired building.

[q] Personal Effects and Property of Others

[a] A coverage extension under the BPP that provides a limited amount of coverage for personal effects on the premises.

[q] Valuable Papers and Records (Other Than Electronic Data)

[a] A coverage extension under the BPP that covers the cost of blank records plus the labor to transcribe or copy duplicate information.

[q] Property Off-Premises

[a] A coverage extension under the BPP that provides coverage for covered property while it is away from the described premises. Coverage does not apply to property in or on a vehicle, nor does coverage apply to property in the custody of the insured’s salespersons, unless it is at a fair, trade show, or exhibition.

[q] Outdoor Property

[a] A coverage extension under the BPP that covers loss to fences, radio and television antennas, trees, shrubs, and plants, if the loss is caused by fire, lightning, aircraft, riot or civil commotion, or explosion.

[q] Business Personal Property Temporarily in Portable Storage Units

[a] A coverage extension under the BPP that covers property while stored in a portable storage unit, provided the unit is located within 100 feet of the building described in the declarations.

[q] Cause of Loss forms under the BPP

[a] Cause of Loss forms:

Basic.

Broad.

Special.

[q] Basic Form

[a] A cause of loss form under the BPP that uses the named perils approach.

[q] Broad Form

[a] A cause of loss form under the BPP that uses the named perils approach.  Similar to the Basic form, but also covers falling objects, weight of ice, snow, or sleet, and water damage.

[q] Special Form

[a] A cause of loss form under the BPP that uses the open perils approach.

[q] Governmental Action exclusion

[a] An exclusion contained in both the Basic Form and the Broad Form that excludes any seizure or destruction of property by order of governmental authority.

[q] Ordinance or Law exclusion

[a] An exclusion contained in both the Basic Form and the Broad Form that excludes loss resulting from the enforcement of any ordinance or law regulating the construction or repair of any property.

[q] Water exclusion

[a] An exclusion contained in both the Basic Form and the Broad Form that eliminates coverage for damage caused by:

Flood, surface water, tides, waves, tidal water, overflow of a body of water.

Mudslide or mudflow.

Backing up of sewers, drains, or sumps.

Underground water pressing on or flowing or seeping through foundations, walls, floors, basements, doors, windows, or other openings.

[q] War and Military Action exclusion

[a] An exclusion contained in both the Basic Form and the Broad Form that excludes loss caused by war and other hostilities.

[q] Earth Movement exclusion

[a] An exclusion contained in both the Basic Form and the Broad Form that excludes coverage for earthquake and other types of earth movement, such as landslides.

[q] Nuclear Hazard exclusion

[a] An exclusion contained in both the Basic Form and the Broad Form that excludes loss or damage caused by nuclear reaction or radiation.

[q] Utility Services exclusion

[a] An exclusion contained in both the Basic Form and the Broad Form that excludes loss caused by power failure, communication, water, or other utility service supplied to described location.

[q] Exclusions that are not subject to anti-concurrent causation wording

[a] Exclusions:

Mechanical Breakdown.

Explosion of Steam Boilers.

Artificially Generated Electrical Current.

Rupture or bursting of water pipes.

Neglect.

[q] Advantages of Cause of Loss – Special Form

[a] Advantages:

Theft is covered in some situations.

Covers losses the insured may not have anticipated.

Shifts the burden of proof to the insurer.

[q] Open perils coverage

[a] A type of coverage that insures against direct physical loss unless the loss is specifically excluded.

[q] Special Form theft exclusions

[a] Excluded under the theft exclusion:

Dishonest acts of the insured, partners, and employees of the insured.

Theft of construction materials not attached as part of the building.

Loss of property that is missing without explanation or evidenced by an inventory shortage.

[q] Property in Transit coverage

[a] An additional coverage provided by the Special Form that provides up to $5,000 of additional protection for loss to the insured’s property in transit.

[q] Water Damage, Other Liquids, Powder or Molten Materials Damage coverage

[a] An additional coverage provided by the Special Form that covers the cost to tear out and replace any part of a building necessary to repair an appliance or a system from which water or another liquid has escaped.

[q] Glass coverage

[a] An additional coverage provided by the Special Form that covers the expenses of installing temporary glass plates.

[q] Limit of insurance

[a] The most the insurer is obligated to pay under the BPP for loss or damage in any one occur­rence.

[q] Blanket limit

[a] A limit of insurance under a policy in which one limit is applied to all property covered by the policy.

[q] Deductible

[a] An amount of money that an insured is responsible for paying toward an insured loss.

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