C12 Property Insurance - Ch 7 - The Commercial Property Broad Form

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charisse
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312267
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C12 Property Insurance - Ch 7 - The Commercial Property Broad Form
Updated:
2015-11-30 19:45:29
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CIP Property insurance
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C12 Property Insurance chapter 7
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  1. How many clauses does the Commercial Property Broad Form have?
    18 clauses (1 more than the Named Perils Form)
  2. What new clause was inserted just before the Definitions clause in the Broad Form?
    the Locked Vehicle Warranty
  3. What clause, present in the Named Perils Form, is divided into Sub-clauses A and B in the Broad Form? Why is it divided into these 2 sub-clauses?
    the Insured Property clause in the Broad Form differs that that in the Named Perils Form, mainly in being divided into 2 sub-clauses A and B. 

    This expands the scope of the contract beyond only the locations identified on the Declarations Page.  It also enhances coverage to include some losses that might otherwise be excluded.
  4. What clause in the Named Perils Form is the Broad Form's Sub-clause A identical to?
    Sub-clause A is identical to the Insured Property clause in the Named Perils Form.
  5. Under what circumstances does the Broad Form's Sub-clause B provide coverage where the Named Perils Form does not?
    • 1) Temporary locations
    • 2) Building at Newly Acquired Location
    • 3) Contents at Newly Acquired Location
    • 4) Property in Transit
    • 5) Sales Representative
  6. Explain the distinction between a temporary location and a newly acquired location.
    Coverage at a temporary location excludes a location owned, rented, or controlled by the insured.
  7. How should an insurer consider insuring property that would otherwise be covered under Sub-clause B if that property is valuable, unusual, or attractive to thieves?
    It might be better to omit coverage for such high exposures under the Commercial Property Broad Form and issue a separate policy on terms that reflect the exposure and loss control measures needed.
  8. How is the Broad Form's Insured Perils clause different from the Named Perils Form's Insured Perils clause?
    Differs in extending coverage not merely against perils named in this clause but against all risks of direct physical loss of or damage to the property insured.
  9. Why do exclusions in all risks wordings exempt losses that would be covered by the Basic Fire Policy?
    The all risks forms represent the trend to include more perils in a single policy rather than issue separate policies for perils such as burglary, theft, or transportation.

    As a result of that trend, exclusions in all risks wordings exempt losses that would be covered by a Basic Fire Policy.
  10. How many exclusions does the Broad Form have? Which ones are identical to their counterparts in the Named Perils Form?
    • 16 exclusions in the Broad Form. 
    • 7 are identical to their counterparts in the Named Perils Form.
  11. Explain the Broad Form's Sewers, Drains and Watermains exclusion.
    The Broad Form excludes sewers, drains, watermains, and other types of property that may be part of an insured building or fall within the definition of equipment.

    Same coverage as in Named Perils Form.
  12. Define the term stock as it relates to the Commercial Broad Form.
    Stock includes the insured's own property and property of others; for veterinarians, animal hospitals, and pet shops, that includes live animals.
  13. The Animals, Fish, or Birds exclusion in the Broad Form limits coverage to what perils?
    Limits coverage to the perils of the Named Perils Form and one more: theft or attempted theft.
  14. How do its 2 exceptions limit the Furs, Jewellery, Prescious Stones exclusion?
    This exclusion is limited by 2 exceptions:

    1) for a loss less than the specified dollar amt ($1000 IBC), the excepton restores coverage removed by the exclusion

    2) restores coverage for the full amount of a loss caused by one of the named perils
  15. Which exclusion is meant to limit the scope of coverage to insured property in transit? What exceptions are there to this exclusion?
    The Broad Form excludes coverage for insured property that is also insured under a marine policy except while on a regular ferry or railway car transfer incidental to transportation on land.
  16. What is the exception to the Property in the Custody of Others exclusion?
    The Broad Form excludes property that is subject to some contractual arrangement with a customer.

    The exception to the exclusion is for property in the custody of a carrier delivering it, where the insured is responsible for the property until it is delivered.
  17. Define the term free on board.
    • F.O.B. - that is, at the risk of the insured's customer.
    • ie. property in the custody of a carrier delivering it, where the insured is responsible for the property until it is delivered.
  18. Which exclusions under Excluded Perils are the same in both the Broad Form and the Named Perils Form?
    • 1) War Risks Exclusion
    • 2) Nuclear Incident Exclusion
    • 3) By-Laws Exclusion
  19. Along with fire following an earthquake, the exemption in the Broad Form's Earthquake exclusion applies to what 3 other perils? What type of property is not covered by the Earthquake exclusion?
    • 1) explosion
    • 2) smoke
    • 3) leakage from fire protective equipment

    The Earthquake exclusion does not apply to property in transit
  20. Define the term agricultural smudging
    In agricultural smudging, containers of slow-burning combustible material are ignited to creat a blanket of smoke.  They are called smudge pots and are used in operations such as fruit orchards or groves when low temperatures are expected.
  21. What are the 2 exceptions to the Pollution exclusion? Give an example of a situation in which each exception would apply.
    • Pollution Exclusions:
    • 1) excludes coverage for loss or damage caused by a spill or leakage of one or more pollutants, as well as the cost of cleanup
    • 2) excludes the cost to test, monitor, or otherwise assess an actual or threatened release of pollutants

    • Pollution Exceptions:
    • 1) applies if the spill or escape of a pollutant is directly caused by an insured peril
    • 2) applies to secondary loss or damage - that happens when an insured peril is caused by a spill or escape that itself was caused by an insured peril

    ie. a tank storing lubricating oil has a faulty design and leaks into the dirt yard.  Workmanship/faulty design is excluded. Thus the leak was caused by an uninsured peril, so the exception does not apply and any cost to the insured to deal with the contamination of the ground is excluded.
  22. Describe the Mysterious Disappearance exclusion.
    The Broad Form excludes loss by mysterious disappearance at any time or by shortage of equipment or stock disclosed on taking inventory.

    Theft losses are covered by an all risks policy, but the insd must prove theft - presumed theft is not covered.
  23. Define the term warranty
    ...a statement or stipulation in a contract the breach of which nullifies the contract
  24. What does the Broad Form's Locked Vehicle Warranty stipulate?
    • Any vehicle in which the insured carries insured property:
    • 1) will have a fully enclosed body or compartment
    • 2) all the doors of the vehicle will be locked; and
    • 3) all the windows of the vehicle will be closed

    If the vehicle is left unattended, theft will only be covered with evidence of forcible entry.
  25. In what way does the Locked Vehicle Warranty limit itself?
    by affirming coverage for a certain type of loss if proof is given that certain requirements were met
  26. Which 3 terms are defined differently in Broad Form than they are in the Named Perils Form?
    Riot, Vandalism, and Malicious Acts
  27. MC: There are 2 exceptions to the Exterior Glass or Vitrolite Exclusion of the Commercial Property Broad Form. One of them is for damage covered under the Broad Form's extension of coverage for building damage by theft.

    What is the other exception?
    ...for loss or damage caused directly by one of the Named Perils
  28. MC: A friendly fire is...
    ...a fire burning where it is intended to burn
  29. MC: An exception is made to the Dishonest Acts Exclusion under the Commercial Property Broad Form where a...
    ...theft was committed by an employee
  30. MC: There are 2 exceptions that apply to the first part of the Pollution Exclusion of the Commercial Property Broad Form. One exception applies if the spill or escape of a pollutant is directly caused by an insured peril. 

    What is the other exception?
    ...the second exception applies to secondary loss or damage
  31. MC: A warranty is...
    ...a statement or stipulation in a contract the breach of which nullifies the contract
  32. SA(25): Sub-clause B of the Insured Property clause in the Commercial Property Broad Form provides coverage in some circumstances where the Named Perils Form does not.  Identify and explain 5 such coverages under Sub-clause B.
    INSURED PROPERTY SUB-CLAUSE B

    • 1) Temporary Locations
    • - Contents at other than a specified location are covered except while in transit
    • -- or outside Canada
    • - To ensure that a temporary location is not confused with a newly acquired location, coverage at a temporary location excludes a location owned,
    • -- rented,
    • -- or controlled by the insured

    • 2) Building at Newly Acquired Location
    • - The policy covers the building at any newly acquired location within Canada
    • - Coverage begins with the acquisition of the building
    • -- and lasts for 30 days or
    • -- until the date of the endorsement adding the building to the policy
    • -- or the policy's expiry date
    • -- whichever comes first
    • - A building under construction is not  covered

    • 3) Contents at Newly Acquired Location
    • - The policy covers contents at any newly acquired location within Canada that is wholly
    • -- or partly owned, 
    • -- rented,
    • -- or controlled by the insured
    • - The coverage begins and ends on the same terms as we noted above for a building at a newly acquired location

    • 4) Property in Transit
    • - Contents in transit within Canada
    • -- or the continental US are covered until delivered
    • - The insured might use parcel post or courier services for its shipping
    • - The insured might ship goods by air freight or by contract carrier or
    • -- on its own trucks or by air/rail
    • - With so many possibilities, an insured must decide on an amount of insurance for Property in Transit with care
    • - Conversely, the insurer should know how much the insured ships by different means to assess its exposure to loss
    • -- especially if a wide range in values shipped by different means requires the highest single exposure to be selected

    • 5) Sales Representative
    • - Whether in transit or not, contents within Canada
    • -- or the continental US are covered while in the custody of a sales rep
    • - Depending on the property, this coverage can present the most serious exposure to an insurer

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