Property of Every Description Basis
Building Stock and Equipment are insured under a single limit of insurance
All Property (Blanket) Basis
All property owned by the insured is insured under a single limit of insurance. All property may insure property at more than one location
Identify five components found in definition of 'building' in commercial property policies
1) Fixed Structures
2) Additions and extensions communicating and in contact with the building
3) Permanent fitting and fixtures attached to and forming part of the building
4) Materials, equipment and supplies on the premises for maintenance of, and normal repairs and minor alterations
5) Growing plants, trees, shrubs or flowers inside the building used for decorative purposes
2) Additions and extensions communicating and in contact with the building
3) Permanent fitting and fixtures attached to and forming part of the building
4) Materials, equipment and supplies on the premises for maintenance of, and normal repairs and minor alterations
5) Growing plants, trees, shrubs or flowers inside the building used for decorative purposes
Identify three components found in the definition of 'stock' in commercial policies
1) Merchandise of every description usual to insured's business
2) Packing, wrapping and advertising materials
3) Similar property belonging to others which the insured is under obligation to keep insured or for which he is legally liable
2) Packing, wrapping and advertising materials
3) Similar property belonging to others which the insured is under obligation to keep insured or for which he is legally liable
Identify three components of 'equipment' found in commercial policies
1) All contents usual to the insured's business other than building or stock as heron defined
2) Similar property belonging to others which the insured is under obligation to keep insured or for which he is legally liable
3) Tenants' improvements which are defined as building improvements, alterations, and betterments made at the expense of the insured to a building
2) Similar property belonging to others which the insured is under obligation to keep insured or for which he is legally liable
3) Tenants' improvements which are defined as building improvements, alterations, and betterments made at the expense of the insured to a building
Explain 'traditional' meaning of ACV
Repair or replacement of lost or damaged property, less the application of any depreciation
Describe two methods used to determine depreciation using Formula/Cost Approach Method?
i. Straight Line Depreciation: applies depreciation based on the normal life expectancy of buildings
ii. Plateau Accelerated depreciation: applies large amounts of depreciation during first few years, then depreciation 'plateaus' or levels out
ii. Plateau Accelerated depreciation: applies large amounts of depreciation during first few years, then depreciation 'plateaus' or levels out
Describe the difference between 'replacement value' and "acv"
Replacement cost is different than ACV because there is no deduction for depreciation
Which method used to value property is the least appropriate for insurance?
Book Value is the most inappropriate method because book value is based on accounting functions only
What is re-insurance?
Re-insurance is an insurance company 'ceding' part of the risk to a re-insurer
What are three considerations used when determining amounts of indemnity?
1) Actual Cash Value of the property as it existed immediately prior to the loss
2) The interest of the insured in the property
3) The amount of insurance as shown on the policy
2) The interest of the insured in the property
3) The amount of insurance as shown on the policy
Which of the above amounts will be paid in the event of insured losses?
Insureds will receive whichever is the least
Why do Co-Insurance Clauses contain waiver provisions?
To waive application of the co-insurance clause when the loss is less than amounts indicated in the waiver. These waivers are applied because tho determine amounts in the co-insurance clause would cause too much work and expense for the insured given the size of the loss
What are the provisions of Waiver of Co-Insurance Clauses?
When losses are less than 2% of the amount of insurance and less than $5,000 the provisions of co-ninsurance clauses will not be applied
Will the Waiver of Co-Insurance Clause apply to the following loss?
Loss- $1,200
Policy Limit- $150,000
ACV of Property- $250,000
YES
What is the purpose of Stated Amount Co-Insurance Clauses?
to replace the provisions of the standard co-insurance clause with the requirements of the stated amount co-insurance clause
What requirements must be met by Insureds' when Co-Insurance Clauses are replaced with Stated Amount Co-Insurance Clauses
i) Insureds must submit a statement of values indicating 100% of all property insured
ii) Values indicated on statement of values must be verified by appraisal or other method acceptable to insured
iii) These values must be insured for the duration of policy period
ii) Values indicated on statement of values must be verified by appraisal or other method acceptable to insured
iii) These values must be insured for the duration of policy period
All policies contain exclusions. List five reasons for exclusions and provide two examples for each
i) Reason: Commercially uninsurable/Examples: War & nuclear accidents
ii)Reason: May be catastrophic/Example: Flood & EQ
iii)Reason: Other forms of insurance may be available/Examples: Automobile & Valuable Papers
iv)Reason: May be expected by the insured or in the control of insured/Examples: Wear and tear
v)Reason: Not exposures common to most insureds/Examples: Outside communication towers & Buildings in the course of construction
ii)Reason: May be catastrophic/Example: Flood & EQ
iii)Reason: Other forms of insurance may be available/Examples: Automobile & Valuable Papers
iv)Reason: May be expected by the insured or in the control of insured/Examples: Wear and tear
v)Reason: Not exposures common to most insureds/Examples: Outside communication towers & Buildings in the course of construction
Insureds will not exercise its right of subrogation against certain parties. Explain
When persons responsible for a loss have an interest in the proceeds of the policy, the insurer will not exercise their right of subrogation against these parties...(bank or other person who lent money to insured and are shown as loss payee on policy)
Identify three requirements placed upon clients by Property Protection System Clauses
i) The insured must notify insurer forthwith any interruption, flaw or defect in any property protection system that comes to their knowledge
ii) The insured must notify insurer forthwith any lapse, cancellation, or non-renewal of any maintenance
iii) notify insurer forthwith when notification of suspension of police service is received regarding response to any property protection system
ii) The insured must notify insurer forthwith any lapse, cancellation, or non-renewal of any maintenance
iii) notify insurer forthwith when notification of suspension of police service is received regarding response to any property protection system
How are losses paid on?
i. unsold stock: paid on the basis of ACV
ii. sold stock: paid on the basis of selling price less any discounts given to the customer
iii. customers' property upon which work is being performed?: value of parts used in repair and the value of the labor
ii. sold stock: paid on the basis of selling price less any discounts given to the customer
iii. customers' property upon which work is being performed?: value of parts used in repair and the value of the labor
What are two types of property receiving Special Basis of Settlement?
i) Tenant's improvements
ii) Records
ii) Records
What is a Warranty?
A warranty is a promise made by insureds that certain facts are truly as represented to be and that they will remain so
Describe the four elements of Locked Value Warranties
i) All property must be in vehicle or in a fully enclosed metal compartment
ii) All doors and windows of the vehicle containing the property insured are securely closed and locked
iii) Force was used to gain access to vehicle containing the property insured
iv) Visible signs of use of force are present on the vehicle containing the property insured
ii) All doors and windows of the vehicle containing the property insured are securely closed and locked
iii) Force was used to gain access to vehicle containing the property insured
iv) Visible signs of use of force are present on the vehicle containing the property insured
What is a Material Fact?
A material fact is a fact which, if it were to be known by the insurer, would induce it to charge a higher premium, add conditions to the coverage or decline the account all together
What are four facts which are material concerning the personal information of clients?
i) Previous Claims
ii) number of loss payables
iii) previous declinations or cancellations from other insureds
iv) fear of persons harbouring ill will against the insured
ii) number of loss payables
iii) previous declinations or cancellations from other insureds
iv) fear of persons harbouring ill will against the insured
What rights do insurers have when misrepresentation occurs?
Insurers may void the policy on which the misrepresentation was linked
No comments:
Post a Comment