Title: Commercial Property Insurance
1Commercial Property Insurance
- Chapter 10
- Business Property Insurance
- Appendix C
- Building and Personal Property Coverage Form
2Property Risk Management
- Property loss - any loss that a person or
organization sustains as a result of the
damaging, destruction, taking or loss of use of
property in which that person or organization has
a financial interest - Risk Management Process
- 1 - Identify and analyze loss exposures
- 2 - Examine the feasibility of alternative risk
management techniques - 3 - Select the best risk management technique
- 4 - Implement the technique
- 5 - Monitor the program
3Identify and Analyze Loss Exposures
- Property Loss Exposures
- 1 - The item exposed to loss
- Real property
- Personal property
- Valuable information
- 2 - The cause of loss anything that could
- cause a loss to property
- 3 - The effects of loss
- Reduction in value
- Increased cost to repair or replace
- Loss of revenue
- Extra expense
- Direct loss and indirect loss
-
4Overview of Commercial Property Insurance
- Insurance Advisory Organizations
- Insurance Services Office (ISO)
- American Association of Insurance Services
(AAIS) - Develop and file with state insurance
departments - Policy forms
- Manual rules
- Loss costs
5ISO Commercial Lines Program (1986)
- Commercial property
- Building and contents (on or within 100 of
insured location) - Boiler and machinery
- Commercial crime
- Employee dishonesty, forgery, theft, burglary,
robbery, extortion - Commercial inland marine
- Elements of transportation or communication
- Property in transit, mobile equipment, property
being installed by a contractor, bridges, radio
towers - Farm
- Commercial auto and liability
6Building and Personal Property Coverage Covered
Property
- Building - Table 10-1
- Your business personal property Table 10-2
- Property owned by the insured
- Furniture and fixtures
- Machinery and equipment
- Stock
- All other personal property owned by you and
used in your business - Property owned by others
- Labor, materials or services furnished on
property of others - Improvements and betterments
- Leased personal property
- Personal property of others
- 2500 for property in the care, custody or
control of insured
7Property Not Covered under BPPTable 10-3
- Buildings and other real property
- Land Roadways
- Water Retaining walls
- Bridges Piers
- Plants and outdoor property
- Growing crops and lawns
- Outdoor crops
- Outdoor trees, shrubs and plants
- Outdoor fences
- Outdoor signs, unless attached to buildings
8Property Not Covered - continued
- Other personal property
- Deeds
- Evidence of debt
- Money
- Currency
- Accounts
- Bills
- Securities and notes
- Also, food stamps
- Vehicles, Watercraft, Aircraft
- Animals
- Valuable papers and records
- Property otherwise covered (BPP is excess)
- Contraband
9Building and Personal Property Coverage
- Covered locations
- Described locations and off premises
- Additional coverages Table 10-4
- Debris removal
- Pollutant cleanup and removal
- Preservation of property
- Fire department service charge
-
10Building and Personal Property Coverage
- Coverage Extensions Table 10-4
- Newly acquired or constructed property
- Personal effects and property of others
- Valuable papers and records
- Property off premises
- Outdoor property
- Covered only for fire, lightning,
- explosion, riot or civil commotion or
- aircraft
11Covered Causes of Loss
- Evolution
- Fire
- Fire and lightning (Standard Fire Policy)
- Extended coverage (EC)
- Vandalism and malicious mischief (VMM)
-
12Extended Coverage(W.C.SHAVER)
- Wind
- Civil commotion
- Smoke
- Hail
- Aircraft
- Vehicles
- Explosion
- Riot
13BPP Cause of Loss Options
- Basic Form Table 10-5
- Fire, lightning and extended coverages
- Sprinkler leakage
- Sinkhole collapse
- Volcanic action
- Broad Form Table 10-5
- Basic form perils plus
- Weight of snow, ice or sleet
- Water damage
- Falling objects
- Breakage of glass
- Special Form All Risk
- Includes limited coverage for theft
-
14Concurrent Causation
- California court rulings of the 1980s
- If a loss to property can be attributed to two
or more causes, as long as one of the causes is
not excluded the loss is covered. - Examples
- Flood and negligent construction of flood
control structures (Palm Desert) - Landslide and faulty installation of drain
-
15Other Exclusions - Maintenance
- Wear and tear
- Rust, corrosion, fungus, decay, deterioration,
hidden or latent defect - Smog
- Settling, cracking, shrinking or expansion
- Insects, birds, rodents, or other animals
- Mechanical breakdown (except elevator collision)
- Dampness, dryness, changes or extremes of
temperature, and marring or scratching
16Other Exclusions - Theft Related
- Employee dishonesty
- Voluntary parting
- Unauthorized instructions
- Inventory shortage
- Unexplained disappearance
- Theft of building materials
- Dollar Limitations
- 2500 for furs
- 2500 for patterns, dies, molds and forms
- 2500 for jewelry,.gold, silver,..
- 250 for stamps, tickets (including lottery
tickets held for sale, and letters of credit
17Consequential Property CoverageBusiness Income
Coverage
- Business interruption
- Net income
- Continuing normal operating expenses incurred
- Extra expense
- Monthly limit of indemnity
- Maximum period of indemnity
- Payroll endorsements
18Other Property Coverage
- Commercial Crime Coverage
- Inland Marine
- Boiler and Machinery
- Businessowners Policy
19Inland Marine Insurance
- Development
- Regulatory restrictions on other coverages
- Could offer all-risk coverage
- Less restrictive regulations
20Nationwide Marine Definition
- Imports
- Exports
- Domestic shipments
- Instrumentalities of transportation and
communication (bridges, tunnels, piers, power
lines, television towers) - Various types of individual personal property
(jewelry, furs, instruments) - Various types of business property (mobile
equipment, animals, computers)
21General Characteristics of Inland Marine Policies
- Coverage for property in transit
- Loss exposures covered
- Physical loss
- Business income and extra expense
- Broad coverage of perils
- Valuation provisions
- Actual cash value, replacement cost, selling
price, invoice value or agreed value