CISR COMMERCIAL PROPERTY INSURANCE QUESTIONS WITH 100 % CORRECT ANSWERS | VERIFIED

eal property is - Answer-comprised of buildings, structures and fixtures that are tangible. Real property can be seen. Give examples of Real Property - 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 - 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 - 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 - 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 - 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): - 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: - Answer-The cost to repair or replace damaged property with like kind and quality without taking into account depreciation. Functional Replacement Cost: - 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: - 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 - 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? - 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? - 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? - 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 - 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