Commercial Insurance

1
Commercial Insurance

• Lecture 13

2
Components of Commercial Package Policy
3
Package Policy

• Combines two or more ISO coverages into a single
  policy (see previous)
• Format
• Common policy declarations
• Common policy conditions
• Coverage parts

4
Coverage parts

• Commercial property
• Commercial general liability
• Commercial crime
• Boiler and machinery
• Inland marine
• Commercial auto
• farm

5
Building and personal property

• Building
• Business personal property of the insured
• Personal property of others
• Additions and extensions

6
Valuation of Property - Building Personal
Property Coverage Form
7
Comparison of Basic Form and Broad Form
8
Business Income Insurance

• Previously business interruption insurance
• Loss of income, continuing expenses and extra
  expenses due to shutdown
• Business income coverage form
• Extra expense insurance

9
Business Income Coverage

• Net profit or loss (before taxes) that would have
  been earned plus continuing normal operating
  expenses, including payroll
• Extra expenses incurred also covered
• Coinsurance of 50 to 125 required
• See other optional coverages

10
Business income example

• Assume co shutdown for 2 months
• Normal annual income 120,000
• Fixed costs per month 30,000
• Variable (direct) costs of production of 20,000
  per month
• Loss 20,000 income 60,000 continuing costs
  80,000

11
Extra expense coverage

• Designed for firms that will continue to operate
  (bank, newspaper)
• Will have to incur additional expenses as a
  result
• Loss profits not covered because business is
  still operating

12
Business income from dependent properties

• Contributing location (supplier)
• Recipient location (buyer)
• Manufacturing location
• Leader location (main store in mall)

13
Other commercial coverages

• Builders risk insurance for buildings under
  construction
• Condominium association
• Glass insurance
• Boiler and machinery
• Credit insurance (retailers ineligible abnormal
  losses only)
• Difference in conditions

14
Transportation

• Ocean marine goods transported over water
• Inland marine goods shipped on land
• Conflicts between marine insurers and fire
  insurers

15
Ocean marine

• Extremely complex oldest customs
• Hull
• Cargo (shipper)
• Protection and indemnity (liability)
• Freight insurance (ship owners lost earnings)

16
Inland marine

• Major classes
• Domestic goods in transit
• Property held by bailees
• Mobile equipment and property
• Property of certain dealers
• Filed forms see list in text
• Non-filed forms see text

17
Businessowners policy (BOP)

• Package policy
• Designed for small to medium retail stores,
  office buildings, apartment buildings and similar
  firms
• Coverages
• Buildings
• Personal property
• Named perils
• Optional or additional