CPCU 551, Chapter 2 Exam: Building and Personal Property Coverage Form, Exams of Commercial Law

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CPCU 551, CHAPTER 2 EXAM

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BPP form - ANSWERBuilding and Personal Property Coverage Form BPP can cover any combination of _________, __________ and __________ - ANSWERBuilding Your Business Personal Property Personal Property of Others Real Property - ANSWERconsists of land, all structures permanently attached to the land and whatever is growing on the land Personal Property - ANSWERall tangible property other than real property Fixture - ANSWERany personal property affixed to real property in such a way as to become part of the real property The BPP form includes 7 specific categories of Business Personal Property - ANSWERFurniture and fixtures Machinery and equipment Stock All other personal property owned by you and used in your business Labor, materials and services arranged by you Your interest as a tenant in improvements/betterments Leased personal property you must ensure by contract trade fixtures - ANSWERfixtures and equipment that may be attached to a building during a tenant's occupancy, with the intention that they be removed when the tenant leaves Improvements and betterments - ANSWERAlterations or additions made to the building at the expense of an insured who does not own the building and who cannot legally remove them Commercial bailment - ANSWERThe temporary possession by one party (the bailee) or personal property of another party (the bailor) for a specific purpose beneficial to both parties Agreed value optional coverage - ANSWEROptional coverage that suspends the coinsurance condition if the insured carries the amount of insurance agreed to by the insurer and the insured Inflation guard optional coverage - ANSWERCoverage for the effects of inflation that automatically increases the limit of insurance by the percentage of annual increase shown in the declarations

Coverage for Debris Removal in the Building and Personal Property Coverage Form is limited to what percentage of the direct loss payment plus deductible amount? - ANSWER25% When an insured is choosing between replacement cost and actual cash value on a policy, the insured should - ANSWERDetermine if the policy limits are adequate for replacement cost An important attribute of the Preservation of Property additional coverage is what? - ANSWERThe coverage is subject to the limits of insurance stated in the declarations. An insured chooses the "Agreed Value" option for its Building and Personal Property Coverage Form (BPP). The agreed value for the property is $100,000 and the limit of insurance is $120,000. The building is totally destroyed by a covered cause of loss. At the time of the loss, the value of the building was $130,000. Ignoring any deductible and rounded to the nearest $1,000, the insurer would pay - ANSWER$120, Mid-policy term, a retail clothing chain opens two newly leased stores with contents valued at $75,000 in each store. The owners of the chain attend a week-long industry fair and bring $5,000 worth of merchandise to display. Assuming the coinsurance requirement is met on its Building and Personal Property Coverage Form, how much coverage will be available for business personal property under the coverage extensions? - ANSWERNewly Acquired or Constructed Property for up to $100,000 at each store for the earlier of 30 days or when they are reported and accepted by the insurer; Property Off-Premises for up to $10,000 at the industry fair for the weeklong event An insured chooses the "Agreed Value" option for its Building and Personal Property Coverage Form (BPP). The agreed value for the property is $100,000 and the limit of insurance is $120,000 with a $5,000 deductible. The building is totally destroyed by a covered cause of loss. At the time of the loss, the value of the building was $130,000. The insurer would pay - ANSWERThe insurer will pay $120,000. $130,000 − $5,000 = $125. Limit applies. An insured chooses the "Agreed Value" option for its Building and Personal Property Coverage Form (BPP). The agreed value for the property is $100,000 and the limit of insurance is $120,000 with a $5,000 deductible. The building is totally destroyed by a covered cause of loss. At the time of the loss, the value of the building was $120,000. The insurer would pay - ANSWERThe insurer will pay $115,000. $20,000 − $5,000 = $115, A small business owner purchased an unendorsed Building and Personal Property Coverage Form (BPP). The limit on the policy is $500,000 which meets the coinsurance requirements. The deductible is $1,000. The total value of the insured property is $525,000. The insured suffered a $510,000 covered loss to the property. What will the insurer pay? - ANSWERThe insurer will pay $500,000. The deductible comes off the loss, not the limit of insurance.

An insured has an unendorsed Building and Personal Property Coverage Form (BPP) providing $500,000 of coverage on its building on a replacement cost basis, with a $5,000 deductible. The insured suffered a $100,000 covered loss to the building. The debris removal costs were $40,000. The jurisdiction where the building is located does not have any regulations regarding replacement or repair; however, the insured is subject to fire department charges of $1,250. How much coverage will be provided under the following additional coverages? - ANSWERDebris Removal $40,000; Fire Department Service Charge $1,000 Fire Department Service charge is limited to $1,000. Except for pollution cleanup and removal and electronic data additional coverages, how do the limits and deductibles apply on the Building and Personal Property Form? - ANSWERLimits apply separately to each occurrence; the deductible applies separately to each scheduled limit when an occurrence involves loss to two or more items over covered property. Under the Building and Personal Property Coverage Form (BPP), which one of the following is property not covered? - ANSWERA retaining wall in front of the insured building Which one of the following would be considered Your Business Personal Property under a Building and Personal Property Coverage Form (BPP)? - ANSWERStock The Outdoor Property Extension covers trees, shrubs, and plants subject to what terms? - ANSWERThe coverage extension applies to debris removal of trees, shrubs, and plants that are the property of others from the described premises. The Debris Removal additional coverage may include the cost to clean up pollution depending on which circumstances? - ANSWERThe cost to clean up debris caused by insured peril that releases toxic chemicals in a building A building and its contents are insured under Building and Personal Property Coverage Form (BPP) with the agreed value option in effect. The Limit of Insurance is $1,000,000, with a $5,000 deductible. The agreed value shown in the policy is $1,500,000. How much will the insurer pay if the insured sustains a $300,000 loss by an insured peril? - ANSWERThe insurer will pay $195,000. ($1,000,000/$1,500,000) X $300,000 - $5, A printing company owns its building and recently purchased and permanently installed an eight color web printing press. The risk manager is in the process of revising the company's insurance limits to make sure that the new printing press is covered under the company's property insurance. When revising the limits, the risk manager should consider the printing press as - ANSWERWhen revising the limits the risk manager should consider this printing press as part of the building.