[h] CPCU 551 – Module 4
[a] A fired pressure container heated by direct fire of burning fuel.
[q] Fired pressure vessel
[a] A closed container that is heated by the direct fire of burning fuel.
[q] Common types of breakdown losses to fired pressure vessels
[a] Common types of losses:
[q] Equipment breakdown insurance
[a] A type of insurance that covers losses resulting from the accidental breakdown of covered equipment. Also called boiler and machinery insurance.
[q] Commercial property policy coverage for boilers and pressure vessels
[a] Commercial property policies cover the explosion of unfired pressure vessels and also cover combustion explosion (also known as furnace explosion).
[q] Unfired pressure vessel
[a] A closed vessel that can withstand internal pressure but is not heated by the direct fire of burning fuel.
[q] Commercial property policy coverage for electrical equipment
[a] Commercial property policies cover damage resulting from lightning and also cover fire damage that results from any electrical breakdown.
[q] Equipment Breakdown Property Damage insuring agreement
[a] An agreement in which the insurer agrees to pay for direct damage to covered property. Covered property can include:
Property the named insured owns.
Property that is in the named insured’s care, custody, or control and for which the named insured is legally liable.
[q] Defense condition
[a] A loss condition that gives the insurer the right, but not the duty, to defend the insured against suits arising from claims of property owners.
[q] Expediting expenses
[a] Expenses incurred to speed up the repair or replacement of covered property.
[q] Spoilage Damage insuring agreement
[a] An insuring agreement that covers spoilage damage to raw materials or finished products, provided the damage results from the lack or excess of power, light, heat, steam, or refrigeration.
[q] Business Income insuring agreement
[a] An insuring agreement that provides business income coverage and extra expense coverage. The agreement may only cover extra expense coverage if that option has been selected.
[q] Utility Interruption insuring agreement
[a] An insuring agreement that extends any business income, extra expense, or spoilage damage coverage. The agreement covers loss resulting from breakdown of covered equipment owned, operated, or controlled by the local private or public utility or distributor from whom the insured receives electrical power.
[q] Contingent Business Income insuring agreement
[a] An insuring agreement that covers business income and extra expense (or only extra expense) arising from breakdown to covered equipment at the location shown in the declarations that is not owned or operated by the insured.
[q] Newly Acquired Premises insuring agreement
[a] An insuring agreement that extends coverages to property at newly acquired locations purchased or leased.
[q] Ordinance or Law insuring agreement
[a] An insuring agreement that covers losses resulting from the enforcement of laws that regulate the repair or construction of buildings.
[q] Errors and Omissions insuring agreement
[a] An insuring agreement that covers loss due to unintentional errors made in arranging the insurance.
[q] Brands and Labels insuring agreement
[a] An insuring agreement that covers costs to label damaged merchandise as salvage or to remove labels.
[q] Limited Coverage for Fungus, Wet Rot, and Dry Rot
[a] A provision in the Limits of Insurance section of Equipment Breakdown insurance. The limited coverage is subject to a $15,000 aggregate limit unless the declarations show a higher limit for this coverage.
[q] Dollar deductible
[a] The dollar amount shown for the deductible in the declarations.
[q] Time deductible
[a] A deductible used for business income and extra expense coverages that is shown as a specified number of hours or days immediately following the breakdown.
[q] Percentage of loss deductible
[a] A deductible that is most frequently used with spoilage damage coverage. Calculated by multiplying the specified percentage by the gross amount of the loss.
[q] Valuation condition
[a] A condition of the equipment breakdown policy that addresses how much the insurer will pay for a covered loss.
[q] Coinsurance condition
[a] A condition of the equipment breakdown policy that generally applies only to time element coverages. This condition applies only if the insurer does not receive the insured’s annual report of income values within three months of the due date.
[q] Suspension condition
[a] A condition of the equipment breakdown policy that allows the insurer or any of its representatives to immediately suspend the insurance. The insurer can suspend coverage by delivering written notice of suspension to the named insured.
[q] Joint or Disputed Loss Agreement condition
[a] A condition of the equipment breakdown policy that provides a way for the insured to receive prompt payment if a dispute arises between insurers. Each insurer pays the entire amount of loss that each agrees is covered under its own policy, plus one-half of the amount in dispute.
[q] Jurisdictional inspections condition
[a] A condition of the equipment breakdown policy stating that if any covered equipment requires inspection, the insurer will perform the inspection.
[q] Builders Risk Coverage Form
[a] An ISO coverage form that can be used to insure any building in the course of construction, including farm buildings and dwellings that will not be eligible for coverage under the BPP when completed.
[q] Builders Risk Reporting Form endorsement
[a] An endorsement to the Builders Risk Coverage Form which requires the insured to report to the insurer the actual cash value of covered property as of a specified date each month during the policy period.
[q] Legal Liability Coverage Form
[a] An ISO coverage form that provides liability coverage on buildings and personal property of others in the insured’s care. Unlike the BPP, this form covers Loss of Use.
[q] Standard Property Policy
[a] A commercial property policy covering buildings and business property on restricted terms. Designed to cover properties with unfavorable attributes.
[q] Standard Property Policy conditions
Increase in hazard.
[q] Additional Covered Property endorsement
[a] An endorsement to the BPP that covers many types of property normally excluded from coverage, including foundations below lowest basement floor, bridges, walkways, and underground pipes.
[q] Limited Coverage for Unmanned Aircraft endorsement
[a] An endorsement to the BPP that cover physical loss to covered drones.
[q] Scheduled Building Property – Tenant’s Policy
[a] An endorsement to the BPP that insures commercial tenants. The endorsement covers building glass, building fixtures, and permanently installed machinery and equipment.
[q] Ordinance or Law Coverage endorsement
[a] An endorsement to the BPP that covers losses from enforcement of building laws. Coverages:
Coverage A – covers reduction in value of undamaged portion of building that must be demolished.
Coverage B – covers cost to demolish undamaged portion of structure and remove its debris.
Coverage C – covers increased cost to repair or reconstruct damaged property.
[q] Utility Services – Direct Damage endorsement
[a] An endorsement to the BPP that covers damage to property caused by the interruption of utility service. To be covered, the loss must result from damage by a covered peril to water or power supply property.
[q] Spoilage Coverage endorsement
[a] An endorsement to the BPP that covers perishable stock for losses due to power outage, contamination, or mechanical failure of equipment.
[q] Discharge From Sewer, Drain, or Sump endorsement
[a] An endorsement to the BPP that covers direct physical loss to covered property caused by the discharge of water or waterborne material from a sewer, drain, or sump on the described premises.
[q] Equipment Breakdown Cause of Loss endorsement
[a] An endorsement to the BPP that adds breakdown of covered equipment as a covered cause of loss. This endorsement can only be used with the Causes of Loss – Special Form.
[q] Functional Building Valuation endorsement
[a] An endorsement to the BPP that covers the cost to repair or replace a building with a less costly building that is functionally equivalent to the original one.
[q] Functional Personal Property Valuation endorsement
[a] An endorsement to the BPP that provides functional valuation on personal property other than stock.
[q] Limitations on Coverage for Roof Surfacing endorsement
[a] An endorsement to the BPP that enables an insurer to change the valuation of roof surfacing to actual cash value.
[q] Increased Cost of Loss and Related Expenses for Green Upgrades endorsement
[a] An endorsement to the BPP that pays for the extra cost to replace damaged property using materials that are environmentally friendly.
[q] Increase in Rebuilding Expenses Following Disaster endorsement
[a] An endorsement to the BPP that covers the higher costs incurred as a result of labor and materials being in short supply after a widespread disaster.
[q] Manufacturer’s Selling Price endorsement
[a] An endorsement that compensates the insured for the profit that the insured would have made on finished goods had no loss occurred.
[q] Manufacturers’ Consequential Loss Assumption endorsement
[a] An endorsement that provides coverage for a situation in which stock in the process of manufacture is damaged or destroyed and the physical loss decreases the value of other stock that is undamaged.
[q] Brands and Labels endorsement
[a] An endorsement that permits an insured to stamp salvage on damaged merchandise or its containers or remove the brands or labels.
[q] Peak Season Limit of Insurance endorsement
[a] An endorsement that provides differing amounts of insurance for selected time periods during the policy term, as indicated by dates shown in the endorsement. This endorsement eliminates the need for extra transactions to change value based on fluctuating inventory.
[q] Value Reporting Form endorsement
[a] An endorsement that avoids costs of over or under insuring business personal property. Under this endorsement, the insured reports values to the insurer at periodic intervals specified in the form. As long as the insured reports values accurately, the insurer will pay the full amount of any loss.