CIC COMMERCIAL PROPERTY UPDATED
ACTUAL QUESTIONS AND CORRECT
ANSWERS COMPREHENSIVE STUDY GUIDE
●● Apply the coinsurance formula to calculate a commercial property
loss settlement
Answer: Amount Carried (Did) / Amount Required (Should) X Loss =
Recovery - deductible = settlement amount
To get the Should: Building Value at time of loss X Coinsurance amount
= Amount Required (Should)
●● Explain the application of the Transfer Of Rights Of Recovery
Against Others To Us condition
Answer: Commonly known as the Waiver of Subrogation Clause, prior
to a loss the condition states that the Named Insured may waive their
rights of recovery (in writing) against anyone prior to a loss. After a loss,
the condition permits the Named Insured to waive their rights of
recovery if in writing and only to certain persons such as 1. Another
Insured. 2. A Parent Company of the Named Insured. 3. A Subsidiary
Company of the Named Insured. 4. A tenant of the Named Insured.
●● Three Types of Covered Property
Answer: 1. Building- includes the completed building, fixtures,
permanently installed machinery or equipment, personal property used
,to service the building, additions under construction, and building
materials or supplies on or within 100 feet of the premises.
2. Your Business Personal Property- defined as being located in or on the
building structure or in the open (or in a vehicle) within 100 feet of the
building or structure or within 100 feet of the premises, whichever
distance is greater. This includes furniture, fixtures,
machinery/equipment not permanently installed, stock, your use interest
as tenant improvements and betterments, labor or materials arranged by
you on personal property of others, and leased property that you have a
contractual obligation to insure.
3. Personal Property of Others- applies to property that has been
entrusted to the Named Insured to: 1. Work on. 2. On consignment. 3.
Sold but not delivered. 4. Leased to the Named Insured. This only covers
the personal property of others for direct damage.
●● Property Not Covered
Answer: 17 different types excluded because it's insured under more
specialized policies, is relatively unsusceptible to loss, more susceptible
to loss, or certain types of property held for sale by the Named Insured.
Examples include autos held for sale, contraband, money, bridges or
fences.
●● 5 types of Endorsements that modify the definitions of Building and
Your Business Personal Property
Answer: 1. Additional Building Property
2. Additional Property Not Covered
,3. Leased Property
4. Your Business Personal Property Separation of Coverage
5. Additional Covered Property
●● Additional Building Property Endorsement
Answer: may be used to clarify that certain items which might be in a
gray area are covered under building (a refrigerator used in a
commercial restaurant)
●● Additional Property Not Covered Endorsement
Answer: used to add specific types of property to the list of "Property
Not Covered" if the Named Insured or insurer does not want to cover
such property (tenants' improvements and betterments for the owner of
the building where the lease requires the tenant to provide such
insurance). This endorsement can also modify Your Business Personal
Property. The Named Insured can add "stock" to the Property Not
Covered.
●● Leased Property Endorsement
Answer: used to insure business personal property leased to the Named
Insured as Your Business Personal Property instead of categorizing it as
Personal Property of Others. (When there is a contractual responsibility
for loss but not a contractual obligation to insure such as a leased
printer.)
, ●● Your Business Personal Property Separation of Coverage
Endorsement
Answer: can separate out and specify a limit of insurance for any of the
seven categories of Your Business Personal Property. This can be used
for tenant's improvements and betterments. (A tenant who rents a
building but added tenants' improvements and betterments with the
intent to use them).
●● Additional Covered Property Endorsement
Answer: expands the definition of Covered Property and can be used to
buy back coverage for certain property that is included in Property Not
Covered. Must include the values in the limit of insurance.
●● Three methods of writing commercial property insurance
Answer: 1. Specific Coverage
2. Scheduled Coverage
3. Blanket Coverage
●● Specific Coverage (Commercial Property Form)
Answer: applies to a specific limit to a building or personal property at a
single location. If a loss occurs, the specific limit is the most the insurer
will pay to repair or replace it.
●● Scheduled Coverage (Commercial Property Form)
ACTUAL QUESTIONS AND CORRECT
ANSWERS COMPREHENSIVE STUDY GUIDE
●● Apply the coinsurance formula to calculate a commercial property
loss settlement
Answer: Amount Carried (Did) / Amount Required (Should) X Loss =
Recovery - deductible = settlement amount
To get the Should: Building Value at time of loss X Coinsurance amount
= Amount Required (Should)
●● Explain the application of the Transfer Of Rights Of Recovery
Against Others To Us condition
Answer: Commonly known as the Waiver of Subrogation Clause, prior
to a loss the condition states that the Named Insured may waive their
rights of recovery (in writing) against anyone prior to a loss. After a loss,
the condition permits the Named Insured to waive their rights of
recovery if in writing and only to certain persons such as 1. Another
Insured. 2. A Parent Company of the Named Insured. 3. A Subsidiary
Company of the Named Insured. 4. A tenant of the Named Insured.
●● Three Types of Covered Property
Answer: 1. Building- includes the completed building, fixtures,
permanently installed machinery or equipment, personal property used
,to service the building, additions under construction, and building
materials or supplies on or within 100 feet of the premises.
2. Your Business Personal Property- defined as being located in or on the
building structure or in the open (or in a vehicle) within 100 feet of the
building or structure or within 100 feet of the premises, whichever
distance is greater. This includes furniture, fixtures,
machinery/equipment not permanently installed, stock, your use interest
as tenant improvements and betterments, labor or materials arranged by
you on personal property of others, and leased property that you have a
contractual obligation to insure.
3. Personal Property of Others- applies to property that has been
entrusted to the Named Insured to: 1. Work on. 2. On consignment. 3.
Sold but not delivered. 4. Leased to the Named Insured. This only covers
the personal property of others for direct damage.
●● Property Not Covered
Answer: 17 different types excluded because it's insured under more
specialized policies, is relatively unsusceptible to loss, more susceptible
to loss, or certain types of property held for sale by the Named Insured.
Examples include autos held for sale, contraband, money, bridges or
fences.
●● 5 types of Endorsements that modify the definitions of Building and
Your Business Personal Property
Answer: 1. Additional Building Property
2. Additional Property Not Covered
,3. Leased Property
4. Your Business Personal Property Separation of Coverage
5. Additional Covered Property
●● Additional Building Property Endorsement
Answer: may be used to clarify that certain items which might be in a
gray area are covered under building (a refrigerator used in a
commercial restaurant)
●● Additional Property Not Covered Endorsement
Answer: used to add specific types of property to the list of "Property
Not Covered" if the Named Insured or insurer does not want to cover
such property (tenants' improvements and betterments for the owner of
the building where the lease requires the tenant to provide such
insurance). This endorsement can also modify Your Business Personal
Property. The Named Insured can add "stock" to the Property Not
Covered.
●● Leased Property Endorsement
Answer: used to insure business personal property leased to the Named
Insured as Your Business Personal Property instead of categorizing it as
Personal Property of Others. (When there is a contractual responsibility
for loss but not a contractual obligation to insure such as a leased
printer.)
, ●● Your Business Personal Property Separation of Coverage
Endorsement
Answer: can separate out and specify a limit of insurance for any of the
seven categories of Your Business Personal Property. This can be used
for tenant's improvements and betterments. (A tenant who rents a
building but added tenants' improvements and betterments with the
intent to use them).
●● Additional Covered Property Endorsement
Answer: expands the definition of Covered Property and can be used to
buy back coverage for certain property that is included in Property Not
Covered. Must include the values in the limit of insurance.
●● Three methods of writing commercial property insurance
Answer: 1. Specific Coverage
2. Scheduled Coverage
3. Blanket Coverage
●● Specific Coverage (Commercial Property Form)
Answer: applies to a specific limit to a building or personal property at a
single location. If a loss occurs, the specific limit is the most the insurer
will pay to repair or replace it.
●● Scheduled Coverage (Commercial Property Form)
