Chapter 13 - Commercial Property Insurance

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Insurance Quizzes & Trivia

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?


Questions and Answers
  • 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. Explosion
    Explanation
    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.

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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 hours
    Explanation
    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.

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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. Special
    Explanation
    C is correct. The Basic and Broad Causes of Loss forms are named peril forms.

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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 above
    Explanation
    D is correct. All of the Causes of Loss forms cover sprinkler leakage.

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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. Special
    Explanation
    B and C are correct. Collapse is not covered under the Basic Causes of Loss form.

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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 factory
    Explanation
    B and C are correct. Inventory, furniture, and supplies would be covered under business personal property coverage.

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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. $21,000
    Explanation
    A is correct. Fire department service charges are paid in addition to the limit of insurance, with no deductible.

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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 sale
    Explanation
    D is correct. The first three choices are excluded, but animals are not excluded if they are boarded or held for sale.

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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 less
    Explanation
    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.

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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 records
    Explanation
    C and D are correct. Stock, glass, valuable papers and records, and tenants improvements and betterments all have special valuation requirements.

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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 breakage
    Explanation
    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.

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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 above
    Explanation
    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.

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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. 25
    Explanation
    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.

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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. $10,000
    Explanation
    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.

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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. $2,500
    Explanation
    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.

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  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 25, 2009
    Quiz Created by
    Fsspc
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