CISR COMMERCIAL PROPERTY INSURANCE 30 Questions with Answers,100% CORRECT

Document Content and Description Below

CISR COMMERCIAL PROPERTY INSURANCE 30 Questions with Answers Identify the types of Commercial Property exposed to loss: - CORRECT ANSWER Real & Personal List parties that could have an insurable... interest in the property: - CORRECT ANSWER Owners, Mortgage, Lessees, Signers of a Contract What is the difference between direct and indirect loss? - CORRECT ANSWER Direct: Damage to Tangible Property / Indirect: Loss of Income/Extra Expense Define ACV - CORRECT ANSWER Replacement cost minus depreciation Define Replacement Cost - CORRECT ANSWER Amount needed to replace with like kind and quality Define Functional Replacement Value - CORRECT ANSWER Like kind/quality not feasible - limit needed to serve the same purpose Coinsurance Formula - CORRECT ANSWER did/should x loss = loss payment - deductible How do you find "should" in coinsurance formula? - CORRECT ANSWER should = limit x coinsurance % Define agreed value - CORRECT ANSWER Up front agreement on a fixed value - suspends coinsurance if conditions are met What's the difference between specific, schedule, and blanket coverage? - CORRECT ANSWER Specific: one location, fixed amount separately to each item. Schedule: multiple locations, specific limit per type of property at each location. Blanket: one limit applies to two or more items regardless. Name 3 ways to provide coverage for fluctuating business PP values: - CORRECT ANSWER Blanket, Peak Season Endorsement (CP 12 30), Value Reporting How do you calculate accounts payable under the Value Reporting Form? - CORRECT ANSWER 75% of premium is advanced at start of policy based on insured's projected sales, insured turns in reports throughout year with sales, carrier takes all reports and comes up with an average and charges premium based on average at end of year. (Additional/Return Premium) Explain the components of the Commercial Property policy - define it's component parts - CORRECT ANSWER Common Decs/Common Conditions/Coverage Parts/Commercial Property Coverage/ Commercial General Liab Identify the rights and responsibilities of the First Named Insured - CORRECT ANSWER Cancellation Requests - Obligatory Cancel Notice - Receives any Prem Refunds for Cancel - Only person to Able to Change - Responsible for Payments - Receives refund due to Changes List conditions that apply under Commercial Property Conditions CP 00 90 - CORRECT ANSWER Concealment, Misrepresentation , Fraud Control of Property Insurance under 2 or More Coverages Legal Action Against Us Liberaliation No Benefit to Bailee Real property is - CORRECT ANSWER comprised of buildings, structures and fixtures that are tangible. Real property can be seen. Give examples of Real Property - CORRECT ANSWER Land is real property, but it is generally not the subject of insurance. Buildings are real property. They have walls and a roof. You can probably envision many types of buildings, ranging from a small one-story office to a skyscraper. Structures. A structure is any construction, including buildings. However, examples of structures that are not buildings include a 3-sided lumber yard storage shed or a gazebo. Another example can be seen in the picture to the left. A stadium is an example of a structure. Outdoor Fixtures. These are man-made objects, other than buildings or structures, that are attached to land in some manner Personal Property - CORRECT ANSWER The insured's personal property is also known as Your Business Personal Property. Some of the commercial property coverage forms define what is covered as business personal property. In general, this includes most of the equipment, supplies, stock, machinery, etc., and material used to operate the named insured's business. Office equipment is an example of Your Business Personal Property Insurable Interest - CORRECT ANSWER Owner: Business owners stand to lose their investment in their building and other property as well as their source of income. Mortgage or Lien Holder: The mortgage or lien holder has an insurable interest when there is an unpaid balance on the property loan. Lessees or Tenants: When tenants sign leases, they are granted the right to occupy the designated premises for a stipulated period of time. This right-to-use creates an insurable interest for the tenant. Signers of Contractual Agreements: Certain contracts, such as those signed when leasing phone systems, copy machines or even entire buildings, may require the lessee to provide direct damage insurance on the leased property. This contractual arrangement creates an insurable interest. Direct loss is - CORRECT ANSWER loss or damage as a direct result of a covered cause of loss. Example: A building that burns because of a fire (a covered peril) illustrates a direct loss. The building was directly affected by the fire. Indirect Loss - CORRECT ANSWER A loss of income resulting from a direct loss to property is an indirect loss. Example: A tornado destroys the business (a direct loss). Now the business cannot operate and loses income (indirect loss) until the business can rebuild or move to another location. Actual Cash Value (ACV): - CORRECT ANSWER A method of establishing the value of property wherein depreciation and obsolescence are deducted from the value of the property. Formula: replacement cost minus depreciation = actual cash value (ACV) (CISR, CSRM Glossary) Replacement Cost: - CORRECT ANSWER The cost to repair or replace damaged property with like kind and quality without taking into account depreciation. Functional Replacement Cost: - CORRECT ANSWER An insurance valuation option based on use instead of construction of the property. The limit of insurance usually reflects the value to replace with less costly property or materials than the existing property. Selling Price Clause for Stock Sold, But Not Delivered: - CORRECT ANSWER A property insurance provision that changes the value on finished goods to that of their selling price rather than their actual cash value or replacement cost; therefore, profit is included in the insured amount. Valued policy law - CORRECT ANSWER A number of states have legislation governing valuation of certain property in the event of a total loss. If the insured's property is totally destroyed by a peril specified in the state law, the amount stated in the Declaration Page is considered to be the value of the property at the time of loss and is payable in full. What is Coinsurance? - CORRECT ANSWER is an insurance-to- value requirement wherein the insurer stipulates that the insured must carry an amount of insurance equal to a specified percentage of the value of the property. These specified percentages may be 80%, 90% or 100%, and either Actual Cash Value or Replacement Cost may be used in valuation of the property. As long as the insured carries the required amount of insurance, there is no penalty. If the insured carries less than the required amount of insurance, a penalty applies. This means that the insured will not collect the full amount of the loss. for the Insured? - CORRECT ANSWER Adequate limits of insurance in the event of a loss Lower rate per $100 of insurance, making it more economical to buy the higher amount required Why is Coinsurance desirable the Insurer? - CORRECT ANSWER Better premium level per risk insured Prevents the purchase of insurance for the payment of small maintenance losses Insures rate adequacy over time Draw the coinsurance formula - CORRECT ANSWER What should they have? replacement x ??%= amount they should have. If they have it great . If not ... what % of the amount are they at ? amount they have divided by replacement does over should x loss= the settlement amount [Show More]

Last updated: 1 year ago

Preview 1 out of 5 pages