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The three amounts to be considered when calculating the amount of payment as outlined in the Indemnity Agreement are: ------------Correct Answer--------------------
- the value of the lost or damaged property (ACV)
- the interest of the insured in the property (ex. financial interest, home, mortgage)
- the amount of insurance specified on the "Declarations Page" for the loss or damaged property (least amount|) Identify the four categories that buildings may fall into: ------------Correct Answer-- ------------------Residential (ex. home) Non-mercantile (ex. hospitals, nursing homes) Mercantile (ex. drycleaners, bakeries) Manufacturing/Industrial (ex. autobody shops)
Three classes of property commercially insured are: ------------Correct Answer------- -------------building, stock, equipment Identify the two bases that coverage can be provided on: ------------Correct Answer--------------------Scheduled All property Property of every description Identify and give an example of each of the five types of property contained in the definition of Building found in the IBC Commercial Property Broad Form ------------ Correct Answer--------------------1) Growing plants, trees, shrubs INSIDE the building used for decorative purposes only when insured is the owner of the building (ex. cactus)
- Materials and equipment supplies ON the premises for maintenance (ex. lumbar, glass)
- Additions and extensions IN CONTACT with the building (enclosed walk-way between buildings) 4 ) Permanent fittings and fixtures ATTACHED and FORMING part of the building. (ex. light fixtures, carpeting)
- Fixed structures PERTAINING to building and located on the premises (ex. fence)
Identify the three conditions that need to be present before 'similar property belonging to others' will be insured under the definition of Stock: ------------Correct Answer--------------------1) must be similar to that insured by the policy
- the insured must have had an obligation to keep the property insured
- the insured must be legally liable for it. Identify and give an example of each of the three types of property contained in the definition of Equipment found in the IBC Commercial Property Broad Form: --- ---------Correct Answer--------------------1) generally all contents USUAL to insureds business, other than building or stock (ex. furniture)
- similar property belonging to others which the insured is under obligation to keep insured or for which he is legally liable for (ex. shaw cable box)
- tenants improvements (ex. space rented out or leased, malls) [GST] Identify the three ways in which property may be valued: ------------Correct Answer--------------------Actual Cash Value (ACV) Replacement Value Book Value Which way is NOT an appropriate means of valuing property for insurance purposes? ------------Correct Answer--------------------Book Value
Identify the one word that can summarize the difference between Actual Cash Value and Replacement Cost: ------------Correct Answer--------------------depreciation Who does the onus rest upon to establish the amount of insurance required? ------ ------Correct Answer--------------------the Insured Identify the five methods that may be used to determine Actual Cash Value: ------- -----Correct Answer--------------------1) Actual Cash Value
- True Value to customer 3 ) Market Value/Direct Sales Approach
- Income Approach
- Formula/Cost Approach Method Identify the two types of depreciation used in the Formula/Cost Approach, and give an example of a type of property that would be appropriate using each: ------- -----Correct Answer--------------------Straight Line Depreciation (ex. buildings) & Plateau Accelerated Depreciation (ex. cars, furniture) A licensed real estate appraiser will generally be consulted to provide an expert opinion when establishing Market Value/Direct Sales Approach. Identify the three
Identify four instances when subscription policies may be issued: ------------Correct Answer--------------------- the broker wants to spread a good large line of business among markets
- the line of business is so SPECIALIZED, its not covered by the insurers treaty with its reinsurers
- the type of risk is one which the insurer does not want to expose to its reinsurance treaties
- the limits do not exceed insurers net retention limits but are beyond what it is prepared to pay in a single claim. Identify two characteristics shared by all subscription polices: ------------Correct Answer--------------------- both share premiums and losses
- each agreement is usually required to be negotiated separately Briefly describe the role of the LEAD company in a subscription policy: ------------ Correct Answer--------------------the lead company normally issues the policy and provides all policyholder services, including the handling of claims
Identify from the brokers point of view which method is preferred where the insurers can reduce their amount of exposures on large risks: ------------Correct Answer--------------------Reinsurance What is the purpose of a Minimum Retained Premium? ------------Correct Answer-- ------------------to ensure the costs of underwriting the policy can be recouped, at least in part. Identify the three amounts to be considered when calculating the amount of payment as outlined in the Indemnity Agreement: ------------Correct Answer--------- ------------ the value of the lost or damaged property (ACV)
- the interest of the insured in the property (ex. financial interest, home, mortgage)
- the amount of insurance specified on the "Declaration's Page" for the lost or damaged property (least amount) What is the purpose of the deductible? ------------Correct Answer--------------------to eliminate minor maintenance types of claims Insurers agree to 'waive' any co-insurance requirement when a loss meets either of the following conditions: ------------Correct Answer--------------------2% or
- exclude losses which are not common to a large number of insureds, but represent an increased potential for loss so an additional premium may be charged (building in course of construction, satellite receivers) Identify three 'permissions' allowed in a commercial property policy: ------------ Correct Answer--------------------- for other insurance concurrent with this form ( insurances)
- to make additions, alterations or repairs
- ???to do such work and keep and use such articles, materials and supplies in such quantities as are usual or necessary to the insureds business??? What may an Insurer do when there has been a Breach of Conditions in the policy? ------------Correct Answer--------------------the Insurer may have grounds to deny coverage Identify two instances when an Insurer may NOT deny coverage when there has been a breach: ------------Correct Answer--------------------- the loss was not caused or contributed by the breach
- the breach condition occurred in a portion of the premises over which the insured has no control
Explain the effect of the Reinstatement clause: ------------Correct Answer------------- -------The Reinstatement clause provides the insureds shall have as much insurance after a loss as they did before. Do all Insurers treat the issue of 'unearned premium' the same in the event of a total loss? ------------Correct Answer--------------------Some insurers are not willing to accept that the insureds should be entitled to a refund premium when they have collected for a loss under the policy. Explain the operation of Subrogation: ------------Correct Answer--------------------it is the right of the insurer to sue the party at fault, after paying the claim to the injured party Identify two parties against whom the Insurer will NOT exercise Subrogation: ------ ------Correct Answer--------------------- individuals
- banks, trust companies Identify three types of Property Protection Systems: ------------Correct Answer------ --------------- sprinkler, or other fire extinguishing system
- fire detection system
- intrusion detection system
Identify three things the Verification of Values clause allows the |Insurer to do: --- ---------Correct Answer--------------------1) allows the insurer THE RIGHT TO CONFIRM THE VALUES INSURED UNDER THE POLICY ARE REASONAABLE AND ACTUALLY EXIST
- permits the insurer THE OPPORTUNITY TO DETERMINE VALUES ON HAND AT THE TIME OF A PREVIOUS LOSS
- enables the insurer to DETERMINE THE EXISTENCE OF ANY OTHER POLICIES OF INSURANCE WHICH MIGHT BE CALLED UPON TO SHARE IN THE PAYMENT OF A LOSS. Identify under Basis of Valuations how losses will be paid on items of stock: UNSOLD & SOLD: ------------Correct Answer--------------------UNSOLD: restricted to its "actual cash value at the time of a loss" SOLD: the selling price charged to the purchaser, less any discounts allowed. Identify three types of discounts that will be considered when adjusting loss on sold stock: ------------Correct Answer--------------------1) picked up by purchaser
- trade-ins
- any reduction in selling price because of negotiation between seller and buyer
Identify two types of property which are subject to a 'special basis of settlement': ------------Correct Answer--------------------- tenants improvements
- records Identify the liability of the Insurer when there is loss to tenants improvements: --- ---------Correct Answer--------------------- if repaired or replaced with due diligence and dispatch
- if not repaired with due diligence and dispatch, the insurer will pay according to the un-expiry of the LEASE. Identify the liability of the Insurer when there is loss to: a) Books of account kept on a manual system: b) Books of account stored electronically: ------------Correct Answer-------------------- a) Books of account kept on a manual system: the cost of blank materials for reproducing records and cost of labour to transcribe or copy records where there is no duplicate b) Books of account stored electronically: the cost of media plus cost of reproduction of data
Give two samples of what courts have ruled to be material: ------------Correct Answer--------------------- previous claims
- vacancy
- existence of other insurance
- previous cancellations or refusals of insurance Identify five facts NOT deemed to be material: ------------Correct Answer-------------- ------Facts which are known or which may reasonably be presumed to be known by the Insurer; Facts which the Insurer can discover upon inquiry; Facts which the Insurer has waived the requirement for information; Facts which tend to lessen the risk; Facts which need not be disclosed by reason of a policy condition Explain the effect of Misrepresentation on an application for insurance: ------------ Correct Answer--------------------if misrepresentation is proved, the insurer is entitled to void the contract
Explain the effect of a 'reported' material change during the term of the policy: --- ---------Correct Answer--------------------- cancel the policy and return the unearned premium
- continue to insure the risk and advise insured of additional premium required and allowed 15 days to make payment Explain the effect of an 'unreported' material change during the term of the policy: ------------Correct Answer--------------------When a loss arises out of an unreported material change, there is no coverage provided by the policy Identify five Additional Conditions contained in a number of commercial property forms: ------------Correct Answer--------------------1) notice to authorities
- sue and labour
- no benefit to bailee
- pair and set
- parts Briefly explain the effect of any three of the additional conditions contained in the commercial property forms: ------------Correct Answer--------------------PAIR & SET: if loss or damage to only one item does not constitute loss or damage to entire pair or set.
Identify three things that a Survey does * ------------Correct Answer--------------------- assist in identification of loss exposures
- helps to determine the coverages needed
- develops other underwriting information needed by the insurer Identify three reasons for a broker to use a Commercial Property Check list --------- ---Correct Answer---------------------alerts brokers to possible loss exposures
- ensures that needed coverages are not forgotten or ignored
- helps to reduce the potential for an errors and omissions claims Identify five classes of Building Construction as identified by the IAO and briefly explain any three. ------------Correct Answer--------------------1) fire resistive - building is one which has met minimum standards in terms of hours it will withstand a specific, carefully controlled test fire. (blocked doors)
- non-combustive - is when all structural members, including floors, roofs, and their supports are CONSTRUCTED of STEEL, IRON, concrete or other non- combustible materials. Falls just short of fire resistive. (bricks)
- heavy timber - is quite rare and only found in existing old buildings. Floor and roof construction is wood such as a log house. (log house)
- ordinary (concrete, wood, steel)
- frame (wood) [hoffon Identify five areas of information that may be required when a building is over 25 years of age: ------------Correct Answer--------------------- roof
- wiring
- over-current protection (circuit breakers, fuses)
- plumbing
- heating Identify five hazards common to all commercial buildings which may influence their potential for loss: ------------Correct Answer--------------------- heating
- electrical services
- detachment
- protection
- occupancy [dope h]
