CISR Commercial Property flashcards

34 cards. Read the term and the definition here. The deck at the top of this page is optional.

Insurable Interest

A financial stake in the property such that the insured suffers loss when the property is damaged. It must exist at the time of loss for the insured to collect.

Replacement Cost

The cost to repair or replace damaged property with new property of like kind and quality, without deduction for depreciation, subject to policy conditions and limits.

Actual Cash Value

Replacement cost minus depreciation for age, wear, and obsolescence. It reflects the property's value immediately before the loss rather than the cost of a new equivalent.

Coinsurance Clause

A condition requiring the insured to carry a minimum percentage of property value. If the limit is lower, the loss payment is reduced in proportion to the shortfall.

Mortgagee Clause

An endorsement giving a lender rights to loss payment and notice independently of the insured, so the lender's interest survives acts by the insured that would impair coverage.

Named Insured

The person or organization listed first on the declarations who owns the policy, controls changes, and receives notices and return premiums from the insurer.

Deductible Calculation

The amount subtracted from a covered loss before payment. Percentage deductibles, common for wind, apply to the limit or value rather than to the loss amount.

Coverage A Building

Covers the building described on the declarations, including permanently installed fixtures, machinery, and equipment that form part of the structure, plus additions under construction.

Business Personal Property

Coverage B protects furniture, fixtures, stock, machinery, and equipment used in the business, including leased property the insured has agreed to insure.

Personal Property of Others

Coverage C protects property in the insured's care, custody, or control, such as customer goods held for repair or storage, usually subject to a sublimit.

80% Coinsurance Default

The Building and Personal Property form requires insurance to at least 80% of property value. Higher or lower percentages and no coinsurance require endorsement.

Coinsurance Formula

Limit carried divided by limit required, multiplied by the loss, equals the payable amount, subject to the deductible and the policy limit.

Newly Acquired Property

Buildings or business personal property acquired after the policy date are covered for a limited period and sublimit, after which they must be reported or added.

Debris Removal Extension

Pays to clear debris after a covered loss, typically with a sublimit and an additional amount available when the loss plus debris removal exceeds the limit.

Preservation of Property

Covers reasonable costs to protect covered property from further damage after a loss, for a limited period, and these costs do not increase the policy limit.

Basic Form Perils

A named-peril list: fire, lightning, explosion, windstorm or hail, smoke, aircraft or vehicles, riot, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.

Broad Form Perils

Adds to the Basic list, including falling objects, weight of snow, ice, or sleet, and accidental discharge of water from a plumbing, heating, or sprinkler system.

Special Form Coverage

Open peril coverage for risk of direct physical loss, meaning the insurer must prove an exclusion applies rather than the insured proving a named peril occurred.

Theft Under Special Form

Theft is not a named peril on Basic or Broad forms. Under the Special form it is covered unless excluded, but employee dishonesty remains excluded.

Earth Movement Exclusion

Excludes earthquake, landslide, and similar earth movement on all causes of loss forms. Coverage requires a separate policy or a specific endorsement.

Ordinance or Law

An endorsement paying the extra cost to rebuild to current building codes, including demolition and undamaged portion replacement, which the base forms exclude.

Protective Safeguards

A condition applying when the insured warrants a sprinkler or alarm system. Failure to maintain it can reduce or bar recovery for a loss the system should have controlled.

Water Backup Exclusion

Excludes loss from water backing up through sewers or drains and sump overflow. Coverage is added back only by a specific water backup endorsement.

Business Income Coverage

Pays net income plus continuing normal operating expenses, including payroll, that the insured would have earned during the period of restoration but for the loss.

Period of Restoration

Begins at the time of loss and ends when the damaged property is repaired or replaced with reasonable speed, or when business resumes at a new location.

Extra Expense Coverage

Pays reasonable costs to avoid or minimize a shutdown, such as temporary premises, rented equipment, and expediting, even when no income is lost.

Business Income Coinsurance

Requires a limit based on projected annual business income. Payment is reduced by the ratio of the limit carried to the limit required.

72-Hour Waiting Period

Applies to civil authority and certain utility service interruption coverage, measuring the interruption from the time the loss begins rather than immediately.

Extended Business Income

Pays business income lost after the property is restored, while operations ramp back to pre-loss levels, for a stated number of days shown in the endorsement.

Contingent Business Income

Endorsement responding to physical loss at a supplier's or customer's premises that interrupts the insured's business, usually requiring named locations or a waiting period.

Inland Marine Definition

Covers property in transit, property of others in the insured's care, and mobile property, following the property rather than a fixed location.

Motor Truck Cargo

Covers goods in transit on owned or hired trucks while the insured is responsible for them. It is distinct from auto liability and the carrier's legal liability.

Bailee Coverage

Protects customer property in the insured's custody for repair, storage, or processing, often written with per-item limits and a deductible.

Equipment Floater

Covers contractor tools and machinery at job sites, in transit, and in storage, typically with per-item limits and a choice of valuation basis.