CIC COMMERCIAL PROPERTY NEW
EXAMINATION UPDATED QUESTIONS AND
ANSWERS SURE A+
✔✔Landlord building vacancy def - ✔✔building is vacant unless at least 31% of its total
square footage is rented to a lessee or sublessee and used by the lessee or sublessee
to conduct its customary operations; and or used by the building owners to conduct
customary operations
✔✔Vacancy Provisions - ✔✔if the building has been vacant for more than 60
consecutive dates coverage excludes
1. vandalism
2. sprinkler leakage
3. building glass breakage
4. water damage
5. theft
6. attempted theft
payment reduces by 15% for other covered causes of loss
✔✔endorsements available for vacancy provisions - ✔✔vacancy permit
-used to waive the vacancy loss condition (allows beyond the 60 day limit) can still
exclude vandalism or sprinkler leakage
Vacancy Changes
,-used to change the 31% minimum
-all other conditions remain unchanged
✔✔loss conditions-valuation - ✔✔a. ACV except as otherwise provided
b. Building damage $2,500 or less/coinsurance satisfied, pays cost of repairs or
replacement NOT including increased costs of construction
The following is ACV even when attached to a building
1. Awnings or floor coverings
2. certain appliances
3. outdoor equipment or furniture
c. Stock (sold but not delivered) at selling price minus expenses not incurred
d. glass at cost of any required saftey glazing materials
e. special valuation for tenants improvements and betterments
(if there is RC on building then RC replaces ACV in this valuation loss conditions)
✔✔endorsements available for valuation conditions - ✔✔Manufacturers selling price
-insured paid for the profit that would otherwise have been earned from the sale if it
hadnt been damaged in claim
Market Value Stock
-insured to be paid the market value of stock that is bought and sold
Manufacturers consequential loss assumption
-insured to recover the reduction in value of undamaged stock in the process of
manufacture that is caused by damage to other stock (for sets of products)
Functional personal property valuation (other than stock)
-allows insured to replace personal property with the most closely equivalent property
available
coinsurance does not apply
✔✔coinsurance - ✔✔policy will not pay the full amount of any loss if the value at the
time of loss times the coinsurance percentage shown in the dec is greater than the limit
of insurance for the property
✔✔coinsurance vs 80% insurance to value - ✔✔coinsurance penalizes the insured in
the event of a partial loss, The BOP or homeowners clause uses the same formula for
the basis for loss payment, but payment will not be less than the actual cash value
✔✔Mortgageholders - ✔✔Separate rights
separate duties
, ✔✔The valuation loss condition under the BPPCF automatically provides coverage on
an actual cash value basis except as otherwise provided True or False? - ✔✔True?
✔✔What are the four optional coverages - ✔✔1. agreed value
2. inflation gaurd
3. replacement cost
4. extension of replacement cost to personal property of others
✔✔optional coverage- agreed value - ✔✔Suspends Coinsurance, this does not remove
it but SUSPENDS it.. coinsurance reinstates when the policy renews or at the agreed
value expiration date
(there is an additional premium charge of 5%)
✔✔Optional Coverages- Inflation Guard - ✔✔limit of insurance increased by the
percentage shown in dec
-the amount increased changes daily throughout the policy period (pro rata premium
charge e.g. 8% annual increase- 4% additional premium)
✔✔optional coverages- replacement cost - ✔✔a. replaces ACV in loss condition-
valuation
b. Does NOT apply to:
- personal property of others
-contents of a residence
-works of art rare articles etchings pictures statuary marbles bronxes porcelains and bric
a brac or
-stock unless the including stock option is shown in the dec
c. claim may be made for aCV-intent to make RC claim within 180 days
d. must be repaired/replaced as soon as reasonably possible
-special provision for tenants betterments and improvements
e. least of:
-the limit of insurance applicable
-the cost to replace with other property
(a) of comparable material and quality and
(b) used for the same purpose or
3. the amount actually spent that is necessary to repair or replace
f. DOES NOT APPLY to "increased costs of construction"
✔✔optional coverages- extension of replacement cost to personal property of others -
✔✔two actions required for this optional coverage to apply
1. must have replacement cost on named insureds property
2. must "trigger" replacement cost for personal property of others
Payment limited to lesser of amount required by contract/ replacement
✔✔causes of loss- basic form - ✔✔includes eleven named causes of loss
EXAMINATION UPDATED QUESTIONS AND
ANSWERS SURE A+
✔✔Landlord building vacancy def - ✔✔building is vacant unless at least 31% of its total
square footage is rented to a lessee or sublessee and used by the lessee or sublessee
to conduct its customary operations; and or used by the building owners to conduct
customary operations
✔✔Vacancy Provisions - ✔✔if the building has been vacant for more than 60
consecutive dates coverage excludes
1. vandalism
2. sprinkler leakage
3. building glass breakage
4. water damage
5. theft
6. attempted theft
payment reduces by 15% for other covered causes of loss
✔✔endorsements available for vacancy provisions - ✔✔vacancy permit
-used to waive the vacancy loss condition (allows beyond the 60 day limit) can still
exclude vandalism or sprinkler leakage
Vacancy Changes
,-used to change the 31% minimum
-all other conditions remain unchanged
✔✔loss conditions-valuation - ✔✔a. ACV except as otherwise provided
b. Building damage $2,500 or less/coinsurance satisfied, pays cost of repairs or
replacement NOT including increased costs of construction
The following is ACV even when attached to a building
1. Awnings or floor coverings
2. certain appliances
3. outdoor equipment or furniture
c. Stock (sold but not delivered) at selling price minus expenses not incurred
d. glass at cost of any required saftey glazing materials
e. special valuation for tenants improvements and betterments
(if there is RC on building then RC replaces ACV in this valuation loss conditions)
✔✔endorsements available for valuation conditions - ✔✔Manufacturers selling price
-insured paid for the profit that would otherwise have been earned from the sale if it
hadnt been damaged in claim
Market Value Stock
-insured to be paid the market value of stock that is bought and sold
Manufacturers consequential loss assumption
-insured to recover the reduction in value of undamaged stock in the process of
manufacture that is caused by damage to other stock (for sets of products)
Functional personal property valuation (other than stock)
-allows insured to replace personal property with the most closely equivalent property
available
coinsurance does not apply
✔✔coinsurance - ✔✔policy will not pay the full amount of any loss if the value at the
time of loss times the coinsurance percentage shown in the dec is greater than the limit
of insurance for the property
✔✔coinsurance vs 80% insurance to value - ✔✔coinsurance penalizes the insured in
the event of a partial loss, The BOP or homeowners clause uses the same formula for
the basis for loss payment, but payment will not be less than the actual cash value
✔✔Mortgageholders - ✔✔Separate rights
separate duties
, ✔✔The valuation loss condition under the BPPCF automatically provides coverage on
an actual cash value basis except as otherwise provided True or False? - ✔✔True?
✔✔What are the four optional coverages - ✔✔1. agreed value
2. inflation gaurd
3. replacement cost
4. extension of replacement cost to personal property of others
✔✔optional coverage- agreed value - ✔✔Suspends Coinsurance, this does not remove
it but SUSPENDS it.. coinsurance reinstates when the policy renews or at the agreed
value expiration date
(there is an additional premium charge of 5%)
✔✔Optional Coverages- Inflation Guard - ✔✔limit of insurance increased by the
percentage shown in dec
-the amount increased changes daily throughout the policy period (pro rata premium
charge e.g. 8% annual increase- 4% additional premium)
✔✔optional coverages- replacement cost - ✔✔a. replaces ACV in loss condition-
valuation
b. Does NOT apply to:
- personal property of others
-contents of a residence
-works of art rare articles etchings pictures statuary marbles bronxes porcelains and bric
a brac or
-stock unless the including stock option is shown in the dec
c. claim may be made for aCV-intent to make RC claim within 180 days
d. must be repaired/replaced as soon as reasonably possible
-special provision for tenants betterments and improvements
e. least of:
-the limit of insurance applicable
-the cost to replace with other property
(a) of comparable material and quality and
(b) used for the same purpose or
3. the amount actually spent that is necessary to repair or replace
f. DOES NOT APPLY to "increased costs of construction"
✔✔optional coverages- extension of replacement cost to personal property of others -
✔✔two actions required for this optional coverage to apply
1. must have replacement cost on named insureds property
2. must "trigger" replacement cost for personal property of others
Payment limited to lesser of amount required by contract/ replacement
✔✔causes of loss- basic form - ✔✔includes eleven named causes of loss
