CAIB 2, Chapter 5 - Commercial Property Insurance-Miscellaneous Property Forms

Define 'Bailee for Hire'

Persons or organization who has temorary custofy of the personal property of another for a purpose other than sale and who is compensated as a condition of such custody

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Identify three types of Bailees and provide an example of each

i) Repair of personal property (television repair shop)
ii) Storage of personal property (public storage warehouse)
iii) Delivery of personal property (Courier service)

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Define 'Ordinary Care'

Requirement to take the same care of the goods of others as would be taken by a prudent and diligent owner of such goods

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When could bailees be responsible for damage to customer's property?

Bailees may be responsible for damage to customer's property when negligent in common law or in contract

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Other than stock coverage found on Bialee's commercial property policies, what are two other policies that could be used to insure customer's property?

i) Separate policy covering legal liability of bailee
ii) Specialized policy insuring customer's property which ignores requirement for legal liability

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By knowing answers to certain questions, brokers should understand whether the carrier or the owner of property should purchase insurance when selling Inland Transportation Insurance. What are these questions?

i) WHo would be responsible for loss to property
ii) What is the extent of responsibility

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Define Common Carrier

Common carriers are those transportation companies that will provide transportation services to any person needing their services

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What is the general rule regarding the responsibility of common carriers?

Common carriers are responsible for the safe delivery of property in their care

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Common carriers will not be held responsible for all losses to goods in their possession. Identify five of those losses

i) Acts of God reasonably forceeable
ii) Acts of public enemies
iii) Acts of public authority
iv) Neglect or default of shipper
v) Inherent vice of property transported

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What documents are used by common carriers to limit their liability to owners?

Bills of Lading

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Describe a Released Bill of Lading

Released Bills of Lading removes carrier from any responsibility for their shipment

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Define a 'Contract Carrier'

Contract Carriers will carry the goods of contracted customers only, unlike common carriers that will carry anybody's property

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Define a 'Private Carrier'

Private Carriers carry their own goods or goods given to them as bailees

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When property is insured by a Transportation Floater Broad Form, when does coverage begin and when does coverage end?

Coverage begins when property leave premises and continues until property is unloaded at final destination

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When would insureds purchase a Trip Transit Policy?

When clients only require coverage for a single shipment

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What is a Catastrophe Limit and why is it used?

Catastrophe limits are the most an insurer will pay in any one occurrence of loss. Insurers, to limit coverage in large losses, use catastrophe limits

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What are four problems which could occur when owners rely on carrier's insurance?

i) Carriers may not have amounts of coverage needed to properly insure customer's property
ii) Carriers may have limited perils insured
iii)Carriers may have violated policy condition which negates coverage
iv) Carriers may not have renewed policy or may have cancelled policy

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What are four advantages for owners when they purchase their own insurance on goods being transported?

i) Owners are able to claim from own insurers which speeds claims settlement
ii)Owner's policy will insure actual value of shipment, not amount carrier is responsible by law or bill of lading
iii)Coverage provided by owner's policy may insure more perils than carrier's insurance
iv) Owners will have lower premies than carriers insurance

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What are two key exclusions found in the Tool Floater?

i) Loss or damage to electrical apparatus caused by artificial electricity
ii) Loss caused by mysterious disappearance

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Identify types of property insured by Contractor's Equipment Floaters?

Contractor's Equipment Floaters insure all kinds of moveable equipment owned, rented, or leased by clients

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Why would insurers impose a Catastrophe Limit on Contractor's Equipment?

Insurers are worried about large losses because of the high values insured

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What guidance should brokers provide when Catastrophe Limits are used on Contractor's Equipment policies?

Brokers should advise clients not to store all of their equipment in ways that may expose all equipment to one occurrence

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What are three conditions of coverage on Newly Acquired Equipment found on Contractor's Equipment Floaters?

i) Equipment insured by this extension must be similar to what is insured on policy
ii) Coverage for this newly acquired equipment is insured only for 30 days from date of acquisition
iii) Amount of coverage provided for newly acquired equipment is limited as to amount

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What are three types of property insured by Builder's Risk policies?

i) All Materials which will enter into and form part of the completed project
ii) All landscaping including growing trees, plants or shrubs which will form part of the completed project
iii)Temporary buildings and structures required to complete project to the extent these temporary buildings are structures are needed for project completion

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What are two key exclusions found in Builder's Risk policies?

i) There is no coverage for contractor's tools and equipment
ii) There is no coverage for cost of making good faulty or improper material, workmanship or design. Resultant damage is insured

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When does coverage normally cease on Builder's Risk policies?

Coverage ends when project comes into use or is occupied

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When will coverage automatically cease on Builder's Risk policies?

i) When project is left unattended for more than 30 consecutive days
ii) When there has been no construction activity for more than 30 consecutive days

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What limit of insurance must be purchased when buying Builder's Risk policies?

Completed value

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When is coverage provided by Installation Floaters?

i) While in transit
ii) While awaiting installation
iii) During installation until work accepted or until client's interest end, whichever is first

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How are premiums calculated on Installation Floaters?

Premiums are based on gross annual receipts of clients