CIC COMMERCIAL PROPERTY TEST 4
COMPREHENSIVE STUDY GUIDE
◉ What is the Coinsurance Formula.
Answer: (did/should x loss) - deductible
Should is value at loss times CI%
◉ What are the three different ways of writing commercial property
and explain how they work.
Answer: Specific Coverage - single location specific limit
Scheduled Coverage - two or more individually listed properties
Blanket Coverage - one limit that applies to more than one type of
property: minimum of 90% CI
◉ What are Advantages and Disadvantages of Blanketing.
Answer: Advantages:
- The NI can apply insurance where needed when more than one
type of property is covered
- Handles fluctuating values between locations
- Reporting forms can be easier to handle
,Disadvantages:
- 90% or 1005 CI required
- Blanket may not be possible because of form restrictions
- A statement of values must be obtained from the NI
- Rates are for one year only
- The NI must have the same causes of loss for all covered property
◉ What endorsements handle fluctuating values, including
reporting provisions?.
Answer: Limitation on Loss Settlement - Blanket insurance (Margin
Clause): this limits the maximum amount payable for any item to the
percentage shown in schedule x value reported (105%, 110%,
120%, 130%)
Peak Season - this endorsement increases coverage for specific
number of days during predictable seasonal increases. Can be any #
of periods within a policy term. additional premium is pro-rated for
those select periods
Value Reporting Form - for fluctuating personal property values or
changing locations. meant to provide adequate coverage and
appropriate premium. Eligible for BPP, PPO, and Stock only. Requires
TIMELY and ACCURATE periodic reports. First missed report pays
75% of what it could, after that it goes back to the most recent
TIMELY and ACCURATE report (Did over should)
, ◉ What are the 6 Additional Coverages in the Building and Personal
Property Coverage Form and how coverage applies?.
Answer: 1) Debris Removal - (Loss Paid + Deductible) x 25%.
Additional coverage of $25,000.
2) Preservation of Property - True "all risk" coverage. For
transit/temporary storage within 30 days after the property is first
moved. DOES NOT INCREASE LIMITS OF INSURANCE
3) Fire Department Service Charge - $1,000 unless a higher limit is
shown. Covers charges assumed by contract/agreement before loss
or local ordinances
4) Pollutant Clean-up And Removal - $10,000 most paid: includes
extraction of pollutants from described premises. No costs for
testing, monitoring, assessing effects. Release, seepage, etc. of
pollutants must be the result of a covered cause of loss.
5) Increased Cost of Construction - $10,000 or 5% of building value,
whichever is less: must have replacement cost option to apply.
Increased costs incurred to comply with minimum enforcement of
an "ordinance or law", repair, rebuilding, or replacement of damaged
parts. ordinance of law at time of loss. Will not pay if insured was
required and failed to comply with ordinance.
COMPREHENSIVE STUDY GUIDE
◉ What is the Coinsurance Formula.
Answer: (did/should x loss) - deductible
Should is value at loss times CI%
◉ What are the three different ways of writing commercial property
and explain how they work.
Answer: Specific Coverage - single location specific limit
Scheduled Coverage - two or more individually listed properties
Blanket Coverage - one limit that applies to more than one type of
property: minimum of 90% CI
◉ What are Advantages and Disadvantages of Blanketing.
Answer: Advantages:
- The NI can apply insurance where needed when more than one
type of property is covered
- Handles fluctuating values between locations
- Reporting forms can be easier to handle
,Disadvantages:
- 90% or 1005 CI required
- Blanket may not be possible because of form restrictions
- A statement of values must be obtained from the NI
- Rates are for one year only
- The NI must have the same causes of loss for all covered property
◉ What endorsements handle fluctuating values, including
reporting provisions?.
Answer: Limitation on Loss Settlement - Blanket insurance (Margin
Clause): this limits the maximum amount payable for any item to the
percentage shown in schedule x value reported (105%, 110%,
120%, 130%)
Peak Season - this endorsement increases coverage for specific
number of days during predictable seasonal increases. Can be any #
of periods within a policy term. additional premium is pro-rated for
those select periods
Value Reporting Form - for fluctuating personal property values or
changing locations. meant to provide adequate coverage and
appropriate premium. Eligible for BPP, PPO, and Stock only. Requires
TIMELY and ACCURATE periodic reports. First missed report pays
75% of what it could, after that it goes back to the most recent
TIMELY and ACCURATE report (Did over should)
, ◉ What are the 6 Additional Coverages in the Building and Personal
Property Coverage Form and how coverage applies?.
Answer: 1) Debris Removal - (Loss Paid + Deductible) x 25%.
Additional coverage of $25,000.
2) Preservation of Property - True "all risk" coverage. For
transit/temporary storage within 30 days after the property is first
moved. DOES NOT INCREASE LIMITS OF INSURANCE
3) Fire Department Service Charge - $1,000 unless a higher limit is
shown. Covers charges assumed by contract/agreement before loss
or local ordinances
4) Pollutant Clean-up And Removal - $10,000 most paid: includes
extraction of pollutants from described premises. No costs for
testing, monitoring, assessing effects. Release, seepage, etc. of
pollutants must be the result of a covered cause of loss.
5) Increased Cost of Construction - $10,000 or 5% of building value,
whichever is less: must have replacement cost option to apply.
Increased costs incurred to comply with minimum enforcement of
an "ordinance or law", repair, rebuilding, or replacement of damaged
parts. ordinance of law at time of loss. Will not pay if insured was
required and failed to comply with ordinance.
