Time Outline: 150 TOTAL MINUTES OF INSTRUCTION = 3 HOURS OF CE CREDIT (50 minute of instruction + 10 minute break per hour)

Transcription

1 The Dirty Dozen Course Description: Analyze twelve significant commercial subjects and discover the facts. Discover the details on how coverage can vary significantly, depending on which edition of the policy or endorsement an insurer uses and the affect on you and your client. Commercial Property, Business Income and Extra Expense, Commercial General Liability (CGL), Additional Insured Endorsements, Commercial Auto, and the Businessowners policy issues will be reviewed. Course Objectives: To make the participant aware of the details behind commercial coverage issues during the class. Examine significant commercial insurance loss exposures and property and casualty coverage issues that exist for today s commercial client. Participants will learn why identification and satisfaction of an individual s exposures to loss should be a systematic process that addresses the needs of all parties involved - insured, insurer, and agent. Time Outline: 150 TOTAL MINUTES OF INSTRUCTION = 3 HOURS OF CE CREDIT (50 minute of instruction + 10 minute break per hour) 50 MINUTES 1st. What do the terms premises, building, fixtures, structures, personal property, property and permanently installed include when used in commercial property coverage forms? 2nd. What coverage is provided for damage to property of others? 3rd. Vacant Buildings 4th. Methods Of Valuation In Property Insurance Policies 50 MINUTES 5th. 6th. 7th. 8th. 50 MINUTES One of the biggest mysteries in commercial insurance Business Income Coverage Coinsurance Direct Vs. Indirect Coverage Who is An Insured? CGL Additional insured endorsements challenges and opportunities. 9th. What is the extent of contractual liability protection provided by the CGL and BAP? 10th. Misunderstood Commercial General Liability (CGL) exclusions. 11th. Auto Definition It Doesn t Always Mean the Same Thing 12th. Mysteries and problems with certificates of insurance, loss payee, lender loss payee, and evidence of property insurance. 1

2 The Dirty Dozen 1st. What do the terms premises, building, fixtures, structures, personal property, property and permanently installed include when used in commercial property coverage forms? 1. Commercial Building and Personal Property a. Building 1) Importance of described premises. 2) What is included within the terms building or structure? 3) Additional Building Property endorsement 4) Fixtures, machinery, and equipment b. Your Business Personal Property 1) Description of premises c. Personal Property of Others d. Property Not Covered 1) Additional Covered Property endorsement 2) Additional Property Not Covered endorsement 2. Businessowners a. Building b. Business Personal Property c. Property Not Covered 3. Business Income and Extra Expense Coverage a. Damage to property vs. covered property. b. Extra expense to repair or replace any property 4. Dependent Property Coverage Forms 2nd. What coverage is provided for damage to property of others? 1. Property in the insured s care, custody or control? 2

3 2. Leased, rented, or borrowed property 3. Commercial General Liability (CGL) a. Property damage b. Leased, rented, or borrowed property c. Personal property in the insured s care, custody or control? 4. Commercial Building and Personal Property Form a. Tenant s Improvements or betterments b. Bailment exposures c. Leased personal property 5. Businessowners 6. Legal liability insurance 3rd. Vacant Buildings 1. What does the term vacancy mean when used in various commercial property coverage forms. 2. When does coverage restriction as a result of vacancy apply? 3. Is it the same for a tenant and landlord? 4. Building and Personal Property Coverage Form 5. Other Commercial Property examples 6. Notice requirements, material facts, agency/carrier contract 4th. Methods Of Valuation In Property Insurance Policies 1. Replacement Cost 2. Valuation methods in property insurance 3. Agreed Value 4. Actual Cash Value (ACV) 5. Selecting an amount of insurance 6. Selling Price options 3

4 7. Debris Removal - What coverage qualifications must be met for this provision to apply? a. Pollutants? What about the increased cost to remove asbestos that is uncovered because of a windstorm? b. Why should an insured consider increasing this limit? 5th. One of the biggest mysteries in commercial insurance Business Income Coverage 1. Questions to consider in estimating the Period of Restoration a. Four financial questions that need to be answered to properly write business income and extra expense coverage. b. Purposes of and considerations to take into account when working with the Business Income Report/Work Sheet. c. Understanding the business you are writing - points to consider and questions to answer during the evaluation process. d. Differences between writing manufacturing and mercantile risks. e. Definitions 1) Finished Stock 2) Period of restoration - When does it begin and end? (1) Ordinance and Law Increased Period of Restoration End. (2) Waiting period deductibles 3) Suspension 2. Extended Period of Indemnity coverage. a. Loss Determination - What actually happens during a loss? 1) The process and how to substantiate the loss 2) Windfall profits - what are they and will they be paid? 3) Gray areas of policy interpretation such as who determines what should be a continuing and non- 4

5 continuing expense or when ordinary payroll should continue to be paid? 4) Does the form pay for loss of income as a result of damage to an insured s intangible property such as goodwill or reputation? 3. Business Income With vs. Without Extra Expense coverage. 6th. Coinsurance Direct Vs. Indirect Coverage 1. Building and Personal Property Form 2. Businessowners Policy Insurance-to-value requirement 3. Business Income a. What operating expenses can and cannot the insured deduct to determine the amount of insurance required? Is this fair? b. What options exist for an insured to avoid the coinsurance requirement? c. Basis of co-insurance vs. what is paid. 4. BOP Business Income and Loss of Rental Values coverage time vs. dollar limit options 7th. Who is An Insured? 1. Commercial General Liability (CGL) Coverage Form a. Who Is An Insured 1) You entity designated on declarations page 2) Individual 3) Partnership or joint venture 4) Limited liability company 5) Organization other than partnership or joint venture 6) Trust 7) Employees and volunteers 8) Newly acquired or formed entities 5

6 b. Separation of insureds (severability/cross liability) condition c. Insuring Agreement 1) Insured becomes legally obligated to pay (1) Sources of legal liability (2) Damages - types covered 2) Bodily injury (BI) and Property damage (PD) 3) Defense (1) When does the obligation to defend: Begin? End? 4) Within policy period and coverage territory 5) Discontinued Operations and Product (1) When does the BI or PD occur? (2) Coverage issues and options when a client retires, sells to or buys another business, or goes out of business. 2. Business Auto Coverage (BAC) form a. Symbols 1) What is an auto? What is the difference between using symbol 1 (any auto) and using symbols 2, 8, and 9 for liability coverage? 2) What significant gaps in coverage can result when using symbol 7? b. Who Is An Insured 1) Named insured and permissive operators 2) Five classes of drivers excluded 3) You 4) Anyone else using covered auto with permission c. What if an accident happens as a result of faulty maintenance, after the client sells an auto? 6

7 3. Commercial Property Coverage Forms 8th. CGL Additional insured endorsements challenges and opportunities. 1. Commercial General Liability a. Additional Insured Charitable Institutions b. Additional Insured Church Members and Officers c. Additional Insured Grantor Of Licenses d. Additional Insured Owners, Lessees Or Contractors Scheduled Person Or Organization e. Additional Insured Owners, Lessees or Contractors Automatic Status When Required In Construction Agreement With You f. Additional Insured Owners, Lessees Or Contractors Completed Operations 2. Broad Form or blanket Additional Insured risks and steps to avoid problems 9th. What is the extent of contractual liability protection provided by the CGL and BAP? 1. Hold harmless and indemnity agreements 2. What about the duty to defend and pay damages? 3. Commercial General Liability 10th. Misunderstood Commercial General Liability (CGL) exclusions. 1. Definitions a. Property damage b. Your product c. Your work 2. Exclusion k. Damage to Your Product 3. Exclusion j. (5) That particular part of real property on which you or any contractors or subcontractors are working or performing 7

8 operations 4. Exclusion l. Damage to Your Work 5. Exclusion m. Damage to Impaired Property or Property Not Physically Injured 6. Endorsements available to modify coverage 11th. Auto Definition potential gaps and overlaps in coverage between the CGL and BAC 1. Definitions a. Auto in the CGL and BAC b. Loading and Unloading in the CGL c. Mobile equipment in the CGL and BAC 2. CGL Coverage for autos and other vehicles a. Exclusion g. Aircraft, Auto Or Watercraft b. Exclusion h. Mobile Equipment 3. BAC Coverage for autos, coverage autos and other vehicles a. Coverage auto b. Exclusion 7 Handling Of Property c. Exclusion 8 Movement Of Property By Mechanical Device d. Exclusion 9 Operations 12th. Mysteries and problems with certificates of insurance, loss payee, lender loss payee, and evidence of property insurance. 1. Certificate of Insurance ACORD 25S a. What coverage issues are created as a result of issuing or requesting Certificates of Insurance? 2. Evidence of Property Insurance ACORD Loss Payee vs. Lender Loss Payee rights and responsibilities 4. What steps can be taken to reduce the potential for problems from the standpoint of the agent, carrier, insured, and certificate holder? 8