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Commercial property policies may provide coverage from theft while property is an automobiles. What warranty will be included in commercial property policies when theft coverage is provided for property in automobiles?
- Vehicle containing the property insured be equipped with a fully enclosed body or compartment
- The doors are securely locked and the widow closed
- Access or entry to the vehicle mu have been gained through the use of force Statutory Conditions or Commercial Property conditions Policy conditions. What are 3 additional conditions contained in a number of commercial property for and explain the effect of each?
- Pair and Set - the undamaged property still has value will be deducted from claim payment
- No benefit to Bailee - bailee must take care of the property of the other with ordinary Care
- Sue and Labour - insured must take all reasonable action to recover stolen property Identify three things that a Survey does?
- Assist in identification of losses or exposures
- Helps to determine the coverages needed
- Develops other underwriting information need by the insurer. What benefits would a checklist have in relation to the survey?
- Alerts broker to possible losses or exposures
- Ensures that needed coverages are not forgotten or ignored
- Helps to reduce the potential for errors and omissions claim
CAIB 2 PRACTICE EXAM
Identify the two types of depreciation used in the Formula/Cost approach and give an example for each: Straight line depreciation - is based on the number of years something could have reasonably been expected to function. A building that is 30 year old but can be used for another 30 years is 50% depreciated. Plateau accelerated depreciation - A property which is mostly productive in its early years. The greats depreciation will happen in the first few years. Once that certain age is reached the depreciation plateaus, example office equipment When is the Income Approach method most commonly employed? When a run down building is used for a business which is making a profit. The net annual rental income is determined and a capitalization factor applied to it to produce actual cash value amount. Identify three reasons why a Subscription Policy may be used:
- The line of business is so specialized as to not be covered the insurer's treaty with its reinsurers
- They type of risk is on which the insurer does not want to expose to reinsurance treaties
- The limits do not exceed the insurer's net retention limits but are beyond what it is prepared to pay in a single claim Identify the three amounts to be considered when calculating the amount of payment as outlined in the Indemnity agreement and of the three amounts which one is payable?
- Actual Cash Value
- Insured's financial interest
- Amount of insurance Which ever amount is lowest. Insurers agree to 'waive' any co-insurance requirement when a loss meets either of the following conditions (2): is under 2% of insured amount or is under $ Insurers have many reasons for excluding coverage for certain perils and property items. Indicate the reason the insurer might have for excluding each of the following losses:
-Assists to identify loss exposures -Help eliminate the purchases of coverage the business does NOT need -Assists in the developments of underwriting information needed by the insurer Identify five areas of information that may be required when a building is over 25 years of age: heating wiring Over-current protection Plumbing roof Identify five hazards common to all commercial buildings which may influence their potential for loss: Geography (electrical service ) Occupancy protection construction Heathing Identify three businesses that may contain 'special hazards': churches Bakerier Service stations Identify six types of Physical Hazards: -Type of building construction -Occupancy -house keeping -External exposures -geography -protection Identify three types of Moral Hazard: -associated -financial condition -moral character Identify two types of Morale Hazard? indifference to loss Poor management
Identify four types of the seven 'internal sources of information' available to an underwriter: -claims reports -inspection reports -field representative -underwriting guides and manuals Identify the four parameters within which an underwriter makes a decision about a particular risk: to accept the risk (on the base presented) to decline the risk To accept but with higher deductible to accept the risk with an increased rate Identify what information is required by law to appear on all insurance policies: (6) policy period policy number name of the insured Names of loss payee coverages provided (Summary of insurance coverages and amounts for which the insurer may be liable Premium Identify two extensions of coverage required by law to be in a Fire policy: lighting Explosion of coal or, natural or manufactured gas Why would Building Damage by Theft extension be of value to a tenant? If the insured is a tenant and liable for damage caused to the building The insured is not the owner of the building and the broad policy covers Beside theft of attempted theft, identify other damage covered by the extensions:
-Collection expense in excess of normal collection cost and make necessary by such loss or damage. -Other expenses reasonably incurred by the insured in re-establishing records or accounts receivable following such loss or damage -Accounts which cannot be collected as a direct result of loss or damage to accounts receivable records from an insured peril
- Identify two other locations, other than those listed on the form, where coverage is extended by the Valuable Papers and Records Insurance?
- Identify the limit available for the two locations listed above: -Being conveyed outside the premises -while temporarily at other locations. 10% of the insurance or $5,000 whichever is less Identify the common exclusion to the Valuable Papers and Records Insurance and the Accounts receivable form and why: loss due to electrical or magnetic injury, or disturbance or reinsure of electronic recording, except by lightning, coverage is available under electric sate processing policy Identify the three areas of coverage under an Electronic Data Processing Policy (EDP): -loss to data processing system, including equipment and component part -active data processing media, include programs -extra expense Identify three exclusions in Equipment Breakdown Policies? -fire and smoke -war related losses -delay or interruption of business or operation -flood -earth movement Identify three features unique to Equipment Breakdown Policies: -inspection services -claims investigation -suspension clause Identify the type of property covered under the Consequential Loss Assumption Clause:
Property that is temperature sensitive (Stock items which are temperature sensitive when loss is caused by loss to equipment which is owned by the insured and used for refrigerating or cooling due to an insured peril Identify the three types of property that must be directly attacked for coverage to respond: -the refrigerating or cooling apparatus, -its connections or supply pipes, -any apparatus furnishing power on the premises Identify the three types of expenses covered by the By-Law Endorsement: -increased cost to rebuild -loss of value of undamaged portion -cost of demolition of undamaged portion of the building Identify five common 'off premises' coverages: -at a newly acquired location (building) -at a temporary location -in transit -newly acquired location (contents) -sales representative Identify three instances when stock or equipment will be considered to be at a Temporary Location: -when the location is not owned by the insured (owned, rented or controlled) -when the property was removed in order to protect it against further loss not in transit -not at any location specified on the policy, Identify two advantages or purchasing Parcel Post insurance from a broker than Canada Post: -faster claims service -broader coverages insured against costs of coverage are reduced overall Identify the class of property to which the Peak Season Endorsement applies: 25% more Stock is required Identify the three conditions that the Insured must meet before any loss will be paid on a Replacement Cost Basis: Property must be replaced (payment will be made on a replacement cost basis only after replacement has been effected) (Replacement must be made) on same or adjacent site
Bill of lading Identify the three types of Bills of Lading normally used by common carriers: -Standard -Increased (Valued) -Released Identify two reasons to use a Released Bill of Lading: -The value of the property is less than the tariff value and the owner does not want to insure property (value of the STOCK...reduce transportation rate by not insuring through bills of lading) -The owner decides to insure the property elsewhere (value of stock higher than tariff and instead of increasing will insure the entire shipment under private insurer and benefit from reduced rate) Identify the liability of the following: Contract carriers -As established by a contract (with owner of property) Private carriers -Amount of the loss of goods carried by them Identify when coverage is effective and ends under the Truckman's Liability Cargo Riders: From the time the goods have been loaded for shipment until they reach their destination Identify four reasons why an owner of goods should not depend upon a carriers insurance: -The carriers insurance may have lapsed or been cancelled -The carriers insurance may not have broad enough coverage (broad enough in perils insured against) -The carrier may not have high enough limits of insurance (adequate amounts of insurance) -The carrier may have been invalidated as a result of breach of policy conditions
- voided) Identify five advantages for owners for owners of goods to carry their own insurance:
-Broader perils insured against -Adequate amount of insurance (amount of insurance payable is generally greater than that provided by carrier's policy - carriers pol may be ACV) -Prompt recovery of losses directly from the insurer -Reduced costs of insurance -Reporting provision feature provides for automatic coverage for all of the insured's shipments Identify another name by which a Builders Risk Policy is known: Course of Construction policy Identify the three types of property which can be covered by the Builder's Risk Policy: -Materials/supplies that will form part of the completed structure (completed project - materials owned by the insured or others) -Landscaping, growing trees, plants, shrubs, or flowers all to enter into and form part of the project provided that the value of such property is included in the amount of insurance -Temporary buildings, scaffolding, falsework, forms, hoardings, excavation, site preparation, and similar work, provided that the value thereof is included in the amount of insurance, and then only to the extent that replacement or restoration is necessary to complete the project Identify three exclusions to the Builders Risk Policy : -Contractors tools and equipment -Payment of losses resulting from faulty or improper material, workmanship or design -Flood or earthquake Identify the two instances when coverage 'normally' ceases under the Builders Risk Policy: -when building comes into use -becomes occupied Identify the two occupancies for when coverage does not normally cease under the form: -when part of building used as office space while construction continues (the use of the building for other construction work which must be done to satisfy the contract)
-safes -vaults -display cases (chests) Identify three ways in which access can be obtained into protected enclosures': -bars on windows (Steel doors and bars) -deadbolt locks on doors (High security Locks) -electric fences (window locks, bars and screens) -( tempered glass, safes and vaults, showcases) Identify any three types of electronic barriers that may restrict unauthorized access to property: -magnetic window locks (magnetic door and window contacts) -infrared sensors (detectors) -motion detectors -(pressure sensors under mats or stair treads, hold up alarms, vibration detectors, shock sensors, glass breakage alarms, closed circuit television cameras) Identify the three components of the most effective security system to protect valuable property: -Perimeter protection -Area protection -Point protection Identify the two types of Perimeter Protection. -Complete protection -Partial protection Identify two weaknesses or Partial Protection: -Stay-behind thieves will not be detected until they try to leave -Forced entry through walls and ceilings will not be detected Identify three areas that will address complete protection: -Protects all openings into building, Including enclosing walls, -Ceilings -floors
Identify two types of electronic defenses in Perimeter Protection: -magnetic contact switches -glass breakage alarms Identify two types of 'electronic protection devises' that are used to guard the interior of building when the building is closed: -interior trapping devices -motion and heat detectors Identify one key disadvantage of Motion Detectors: Too many false alarms - could be caused by something like moving drapes Identify any three individual items that are best protected by Point Protection: -safes -vaults -filing cabinets Identify the two categories that control of alarm systems fall into: -local (locally supervised) -monitored (central station supervised) Identify the major weakness of 'locally supervised' alarm controls: People often forget to arm the system. People forget to turn them on when leaving for the day) Identify two weaknesses of local alarm? -only sounds locally - relying on neighbors or passers-by to report -easily tampered with Identify the four key areas addressed by crime riders: -Property covered -Perils insured -Location of property insured -Persons causing the loss The definitions in crime policies are not always the same as those used in criminal law. Explain this statement in the context of Burglary: The insurance definition requires visible evidence of forcible entry whereas the criminal law definition does not. Identify the two areas contained in the definition of Safe Burglary :
-Loss inside the premises coverage -Loss outside the premises coverage -Money orders and counterfeit paper -Depositors forgery coverage Identify the three General Policy Features of the 3D Policy: -Insured can select any, or all, of the coverage provided under this policy -Crime exposures which are not insured by the policy can often be added by endorsement -Policy issued on a continuous until cancelled basis.
