CIC COMMERCIAL PROPERTY TEST 4
CERTIFICATION PREPARATION GUIDE
◉ What are the four primary areas of Insurable interest.
Answer: 1. Ownership
2. Contractual requirement to carry insurance
3. Bailment
4. Factual expectations (son has expectation to inherit father's
business, rare)
◉ What is coinsurance.
Answer: A rating and underwriting concept designed to encourage
an insured to purchase an amount of insurance equal to the full
value of the property being insured.
◉ When is the value of the building determined for coinsurance
purposes?.
Answer: At the time of loss
◉ What is the formula for property coinsurance?.
Answer: Amount Carried (did) / Amount Required (should) X Loss =
Recovery - Deductible = Settlement
,◉ What are the four optional coverages contained in the commercial
property declarations?.
Answer: AIRE
A - Agreed Value
I - Inflation Guard
R - Replacement Cost
E - Extension of Replacement Cost to Property of Others
It is important to understand that these are not endorsements but
rather are activated from the Declarations
◉ What effect does Agreed Value have on the Coinsurance clause?.
Answer: It suspends it until the expiration date. Will not last longer
than 12 months, when it will need to be agreed upon again.
◉ What does the Control of Property policy condition state?.
Answer: That acts of others beyond the Named Insured's direction
or control will not affect coverage
◉ List the 8 Commercial Property Conditions.
Answer: POLCLINC
,P - Policy Period, Coverage Territory
O - Other Insurance
L - Legal Action Against Us
C - Concealment, Misrepresentation of Fraud
L - Liberalization
I - Insurance Under Two or More Coverages
N - No Benefit to Bailee
C - Control of Property
◉ What does the Insurance Under Two or More Coverages condition
state?.
Answer: Policy will not pay more than the actual loss amount,
regardless of how many coverages might apply
◉ What does the Legal Action Against Us condition state?.
Answer: Insured must comply with all rules of the policy and bring
suit within 2 years of the date on which the direct physical loss
occurred
◉ What does the Liberalization condition state?.
Answer: Any revision that broadens coverage without adding
premium that is added within 45 days of policy period is
automatically applied
, ◉ What does the No Benefit to Bailee condition state?.
Answer: In bailment situations in which the insured has entrusted
their personal property to another party, the policy only protects the
Named Insured
◉ Which condition is also known as the waiver of subrogation?.
Answer: Transfer Of Rights Of Recovery Against Others To Us
◉ What does the Transfer Of Rights Of Recovery Against Others To
Us condition state?.
Answer: If you collect from the insurer, any rights to recover
damages from another are transferred to the insurer. Unless you
waive your rights against another party in writing...
1. Prior to loss
2. After loss only if (a) someone insured by this insurance (b)
business that owns or controls insured, or business that insured
owns or controls (c) insured's tenant
◉ How and when can a Named Insured waive their rights of
recovery against another party?.
Answer: 1. Prior to loss
CERTIFICATION PREPARATION GUIDE
◉ What are the four primary areas of Insurable interest.
Answer: 1. Ownership
2. Contractual requirement to carry insurance
3. Bailment
4. Factual expectations (son has expectation to inherit father's
business, rare)
◉ What is coinsurance.
Answer: A rating and underwriting concept designed to encourage
an insured to purchase an amount of insurance equal to the full
value of the property being insured.
◉ When is the value of the building determined for coinsurance
purposes?.
Answer: At the time of loss
◉ What is the formula for property coinsurance?.
Answer: Amount Carried (did) / Amount Required (should) X Loss =
Recovery - Deductible = Settlement
,◉ What are the four optional coverages contained in the commercial
property declarations?.
Answer: AIRE
A - Agreed Value
I - Inflation Guard
R - Replacement Cost
E - Extension of Replacement Cost to Property of Others
It is important to understand that these are not endorsements but
rather are activated from the Declarations
◉ What effect does Agreed Value have on the Coinsurance clause?.
Answer: It suspends it until the expiration date. Will not last longer
than 12 months, when it will need to be agreed upon again.
◉ What does the Control of Property policy condition state?.
Answer: That acts of others beyond the Named Insured's direction
or control will not affect coverage
◉ List the 8 Commercial Property Conditions.
Answer: POLCLINC
,P - Policy Period, Coverage Territory
O - Other Insurance
L - Legal Action Against Us
C - Concealment, Misrepresentation of Fraud
L - Liberalization
I - Insurance Under Two or More Coverages
N - No Benefit to Bailee
C - Control of Property
◉ What does the Insurance Under Two or More Coverages condition
state?.
Answer: Policy will not pay more than the actual loss amount,
regardless of how many coverages might apply
◉ What does the Legal Action Against Us condition state?.
Answer: Insured must comply with all rules of the policy and bring
suit within 2 years of the date on which the direct physical loss
occurred
◉ What does the Liberalization condition state?.
Answer: Any revision that broadens coverage without adding
premium that is added within 45 days of policy period is
automatically applied
, ◉ What does the No Benefit to Bailee condition state?.
Answer: In bailment situations in which the insured has entrusted
their personal property to another party, the policy only protects the
Named Insured
◉ Which condition is also known as the waiver of subrogation?.
Answer: Transfer Of Rights Of Recovery Against Others To Us
◉ What does the Transfer Of Rights Of Recovery Against Others To
Us condition state?.
Answer: If you collect from the insurer, any rights to recover
damages from another are transferred to the insurer. Unless you
waive your rights against another party in writing...
1. Prior to loss
2. After loss only if (a) someone insured by this insurance (b)
business that owns or controls insured, or business that insured
owns or controls (c) insured's tenant
◉ How and when can a Named Insured waive their rights of
recovery against another party?.
Answer: 1. Prior to loss
