09.05. Commercial Property Endorsements

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Author:
COC2
ID:
214484
Filename:
09.05. Commercial Property Endorsements
Updated:
2013-04-19 09:52:23
Tags:
Commercial Property Endorsements
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Description:
Commercial Property Endorsements
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  1. Usage of BPP Endorsements
    • provide coverage enhancements
    • eliminate coverage for certain exposures
    • change policy provision to meet insured's needs
    • amend policy to comply with state law
  2. Ordinance or Law Coverage
    • Coverage A: covers value of undamaged portion of a building that must be demolished
    • Coverage B: covers the cost to demolish and remove debris when demolition is required by law
    • Coverage C: increased cost to repair or rebuild property
    • Blanket: Coverages B and C can be provided under a blanket limit
  3. Spoilage Coverage
    • covers damage to perishable stock due to power outages, on-premise breakdown, contamination of equipment
    • power outage must be caused by conditions outside of the insured's control
  4. Flood Coverage
    • National Flood Insurance Program (NFIP): for eligible communities, max limit of $500K per building and $500K for contents; sold by brokers, backed up by US government
    • Private insurers: most insurer don't write flood in zones where freq is greater than once-in-100-years; deductible is often $25K and more; can also offer excess of NFIP
  5. Earthquake and volcanic eruption coverage
    • limited coverage and availability in high risk area such as California, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, and Tennessee
    • generally available but overlooked in other areas
    • 2 ISO endorsement: one with coinsurance and full policy limit, one with sub-limit (usually lower) and no coinsurance
  6. Peak season limit of insurance endorsement
    covers the fluctuating value of business personal property
  7. Value Reporting Form
    • provides insurance for the insured's maximum expected value and requires the insured to periodically report property values to the insurer
    • penalties apply for failure to report (loss payment reduced to 75%), or past due reports and inaccurate reports
    • premium advance is based on 75% of limit of insurance
    • should select high enough limit to cover large reported values
    • limitations: small insureds may not have sufficient accounting system procedures and sophistication to generate reports; insurer wouldn't want to use this endorsement on small insured since premium isn't large enough to warrant added expense of processing those reports

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