Chapter 13 - Commercial Property Insurance
In this quiz, we’ll be learning all about how the process of ensuring commercial property works. Commercial property is defined as any buildings or land which is intended to be used to generate a profit, be it from rental income or capital gain. What do you know about commercial property insurance?
- 1.
Which of the following perils are covered in the Causes of LossBasic form?
- A.
Collapse
- B.
Explosion
- C.
Volcanic eruption
- D.
Nuclear hazard
Correct Answer
B. ExplosionExplanation
B is correct. Coverage for collapse is provided as an additional coverage in the Broad and Special Causes of Loss forms only. Volcanic eruption is covered under the Earthquake and Volcanic Eruption endorsement. (The other Causes of Loss forms cover volcanic action, which is not the same thing as volcanic eruption.) Loss arising out of a nuclear hazard is excluded under all Causes of Loss forms.Rate this question:
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- 2.
Under the Earthquake and Volcanic Eruption endorsement, all earthquake shocks or volcanic eruptions that occur within a certain number of hours constitute a single earthquake or volcanic eruption. What is that time period?
- A.
40 hours
- B.
72 hours
- C.
168 hours
- D.
24 hours
Correct Answer
C. 168 hoursExplanation
C is correct. Under this endorsement, all earthquake shocks or volcanic eruptions that occur within any 168-hour period constitute a single earthquake or volcanic eruption.Rate this question:
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- 3.
Which Causes of Loss form provides open peril coverage?
- A.
Basic
- B.
Broad
- C.
Special
- D.
Both Basic and Broad
Correct Answer
C. SpecialExplanation
C is correct. The Basic and Broad Causes of Loss forms are named peril forms.Rate this question:
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- 4.
Loss caused by sprinkler leakage is covered under which Commercial Property Causes of Loss forms?
- A.
Basic
- B.
Broad
- C.
Special
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
D is correct. All of the Causes of Loss forms cover sprinkler leakage.Rate this question:
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- 5.
Which Commercial Property Causes of Loss forms cover collapse?
- A.
Basic
- B.
Broad
- C.
Special
- D.
All of the above
Correct Answer(s)
B. Broad
C. SpecialExplanation
B and C are correct. Collapse is not covered under the Basic Causes of Loss form.Rate this question:
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- 6.
Which of the following would be covered under the building coverage of the Building and Personal Property coverage form?
- A.
Inventory stored at the insured's warehouse
- B.
An addition to the insured's store on which construction has just begun
- C.
Fire extinguishers located in the insured's factory
- D.
Office furniture and supplies kept in the insured's building.
Correct Answer(s)
B. An addition to the insured's store on which construction has just begun
C. Fire extinguishers located in the insured's factoryExplanation
B and C are correct. Inventory, furniture, and supplies would be covered under business personal property coverage.Rate this question:
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- 7.
The insured's business sustains $25,000 damage in a fire. The fire department that was called to the scene billed the insured $1,000. The business is insured under the Building and Personal Property coverage form for $500,000 with a $5,000 deductible. How much will the insurance company pay for this loss?
- A.
$21,000
- B.
$20,000
- C.
$24,000
- D.
$26,000
Correct Answer
A. $21,000Explanation
A is correct. Fire department service charges are paid in addition to the limit of insurance, with no deductible.Rate this question:
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- 8.
Which of the following properties would not be excluded under the Building and Personal Property coverage form?
- A.
Lawn
- B.
Driveway
- C.
Private company jet
- D.
Animals held for sale
Correct Answer
D. Animals held for saleExplanation
D is correct. The first three choices are excluded, but animals are not excluded if they are boarded or held for sale.Rate this question:
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- 9.
When are losses under the Building and Personal Property coverage form paid at replacement or repair cost?
- A.
Always
- B.
Never
- C.
If the insured meets the coinsurance requirements and costs are $2,500 or less
- D.
Whenever the total amount of loss does not exceed 25% of the policy limit
Correct Answer
C. If the insured meets the coinsurance requirements and costs are $2,500 or lessExplanation
C is correct. Most losses are paid at actual cash value. However, if the Coinsurance conditions are met and costs are $2,500 or less, the policy will pay the cost of building repair or replacement without taking depreciation into account.Rate this question:
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- 10.
Which of the following have special loss valuation requirements under the Building and Personal Property coverage form?
- A.
Buildings
- B.
Furniture and fixtures
- C.
Glass
- D.
Valuable papers and records
Correct Answer(s)
C. Glass
D. Valuable papers and recordsExplanation
C and D are correct. Stock, glass, valuable papers and records, and tenants improvements and betterments all have special valuation requirements.Rate this question:
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- 11.
Which of the following losses would be excluded under the Building and Personal Property coverage form if the insured building had been vacant for more than 60 days before the loss occurred?
- A.
Attempted theft
- B.
Sprinkler leakage when the insured had protected the system against freezing
- C.
Vandalism
- D.
Glass breakage
Correct Answer(s)
A. Attempted theft
C. Vandalism
D. Glass breakageExplanation
A, C, and D are correct. Damage because of attempted theft, vandalism, or glass breakage is excluded after 60 days of vacancy. Damage in a vacant building because of sprinkler leakage is covered if the system was protected against freezing.Rate this question:
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- 12.
Which of the following is covered under the Builders Risk coverage form?
- A.
Building under construction
- B.
Foundation of the building under construction
- C.
Fixtures, machinery, and equipment used to service the building if they will become a permanent part of the building and are located within 100 feet of the building
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
D is correct. The Builders Risk coverage form covers the building under construction and its foundation. Fixtures, machinery, equipment used to service the building, and the insured's building materials and supplies can be covered if they will become a permanent part of the building and are located within 100 feet of the building.Rate this question:
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- 13.
Up to what percent of the amount paid for direct loss will the insurance company pay for debris removal expense under the Business and Personal Property coverage form?
- A.
5
- B.
10
- C.
20
- D.
25
Correct Answer
D. 25Explanation
D is correct. Under the Business and Personal Property coverage form, the insurance company will pay up to 25% of the amount paid for a direct loss for debris removal expense. An additional $10,000 of coverage is available if the debris removal expense exceeds the 25% limit or the total loss exceeds the policy limits.Rate this question:
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- 14.
What is the limit on Pollutant Cleanup and Removal coverage under the Business and Personal Property coverage form?
- A.
$10,000
- B.
$20,000
- C.
$25,000
- D.
$50,000
Correct Answer
A. $10,000Explanation
A is correct. The policy will pay up to $10,000 for pollutant cleanup and removal if the pollution was caused by a covered peril.Rate this question:
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- 15.
What is the per-year policy limit for coverage of electronic data under the Business and Personal Property coverage form?
- A.
$1,000
- B.
$2,500
- C.
$5,000
- D.
$7,500
Correct Answer
B. $2,500Explanation
B is correct. The Business and Personal Property coverage form will only pay up to $2,500 in any one policy year for losses to electronic data.Rate this question:
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Mar 22, 2023Quiz Edited by
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Feb 25, 2009Quiz Created by
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