Commercial 103
description
Transcript of Commercial 103
TW
FG C
omm
ercial Business School – C
omm
ercial 103
1
Commercial 103
TW
FG C
omm
ercial Business School – C
omm
ercial 103
2
TWFG Commercial Business SchoolCommercial 103
Commercial 101 – 104Commercial 101
OverviewCommercial Insurance Basic TermsCommercial Insurance Polices: OverviewImportant Auxiliary CoveragesACORD Forms OverviewCommercial Lines Workflow ProcessSubmission ChecklistPost-Binding Checklist
TW
FG C
omm
ercial Business School – C
omm
ercial 103
3
TWFG Commercial Business SchoolCommercial 103
Commercial 101 – 104Commercial 102
How Does the Underwriting Process Operate?Commercial Insurance Policy Coverages: First Level DetailSilverplume Overview (Live Demo)
TW
FG C
omm
ercial Business School – C
omm
ercial 103
4
TWFG Commercial Business SchoolCommercial 103
Commercial 101 – 104Commercial 103
Commercial Lines Basics Property: COPECommercial Lines Basics Property: BuildingCommercial Lines Basics Property: Business Personal Property (BPP)Module 3 Case Study
TW
FG C
omm
ercial Business School – C
omm
ercial 103
5
TWFG Commercial Business SchoolCommercial 103
Commercial 101 – 104Commercial 104
Commercial AutoMulti-Line Policy TypesWorkers Compensation OverviewEndorsements Common to Most Policies
TW
FG C
omm
ercial Business School – C
omm
ercial 103
6
TWFG Commercial Business SchoolCommercial 103
Learning Objectives
Understand the four basic elements used in evaluating Commercial Property
Understand what’s covered under Building coverage on CPP
Understand what’s covered under BPP coverage of the CPP
TW
FG C
omm
ercial Business School – C
omm
ercial 103
7
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: COPEWhy all those pesky questions
Commercial property generally refers to a building and/or a business’ personal property
4 elements needed for carrier quote. COPEConstructionOccupancyProtectionExternal Exposures
TW
FG C
omm
ercial Business School – C
omm
ercial 103
8
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: COPE
Fields on the ACORD applications are designed to capture the
four elements, COPE
The following slides will covered what is being evaluated
TW
FG C
omm
ercial Business School – C
omm
ercial 103
9
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: COPE
Construction:Type of construction affects buildings performance in the event of fire or wind/hailCarriers want building and roof construction typesCarriers need year built as well as any updates. Especially important on building over 20yrs old
TW
FG C
omm
ercial Business School – C
omm
ercial 103
10
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: COPE
Construction:Frame – Typical wood construction, including wood frame with stone, brick or stucco veneerJoisted masonry – A mixture of wood and masonry construction, usually only seen in older structures from the 40’s and 50’s. The walls are masonry or solid brick with wood joists supporting floors and roofsNon-Combustible – Any type of non-combustible (not wood) non-masonry construction. The examples include metal shop buildings with steel framing, mini-self-storage units, and auto-body shops
TW
FG C
omm
ercial Business School – C
omm
ercial 103
11
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: COPE
Construction:Masonry Non-Combustible – Exterior walls are masonry (solid masonry, concrete, solid brick) but the floors and roof are made of metal or some other non-combustible materialFire-Resistive – may be solid masonry for all components or a mixture of solid masonry and heavy, protected steel, such as a high-rise. Depending on the fire-resistive rating of the materials, these structures are classified as modified non-resistive (1 hour rating) or fire-resistive (2 hour rating)
TW
FG C
omm
ercial Business School – C
omm
ercial 103
12
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: COPE
Occupancy:How building is occupied is used in determining susceptibility to loss. Example:Office Occupants – high volume of combustible(burns easy) materials such as papers/files/furniture Restaurant – this type of occupancy can represent an increased hazard. Example would be cooking with a deep fryerTherefore, the ACORD questions, such as whether or not the building is sprinklered, become very important
TW
FG C
omm
ercial Business School – C
omm
ercial 103
13
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: COPE
Protections:Protection refers to fire protection. Specifically, how far are the closest fire hydrant and fire departments, what is the Property Protection Class (PPC) rating, is the property sprinklered. The better protected the building, the lower the rate that the insurance carrier can provide
TW
FG C
omm
ercial Business School – C
omm
ercial 103
14
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: COPE
External Exposures:External Exposures refer to the building’s surroundings, and how that might affect the risk of loss. For example, a metal shop building located in a field full of high grass would represent a greater risk to fire loss than one located in a gravel paved lot
TW
FG C
omm
ercial Business School – C
omm
ercial 103
15
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: COPE
When you understand the exposures that the carrier must consider before offering a rate, then you get a better feel for why the underwriter may be “asking so many questions.” Your understanding should lead you to gathering information up front, in order to shorten the time it takes between submission and quote
TW
FG C
omm
ercial Business School – C
omm
ercial 103
16
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: Building
What is covered under “Building”?
TW
FG C
omm
ercial Business School – C
omm
ercial 103
17
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: Building
BuildingThe building itself, as described on the dec page
FixturesIncluded are any fixtures, such as light fixtures,
including outdoorsPermanently Installed Equipment
Usually bolted to floor or wall. Can be included on building or BPP. Typically placed on building due to broader coverage
TW
FG C
omm
ercial Business School – C
omm
ercial 103
18
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: Building
Some Forms of Personal PropertyIncluded is any personal property used to maintain or service the building.Examples: Fire extinguishers, outdoor furniture, floor coverings, HVAC equipment, dishwashing equipment, lawnmowersThis broad definition allows a landlord to purchase building coverage only, and have all building related personal property included without also having to purchase BPP coverage
TW
FG C
omm
ercial Business School – C
omm
ercial 103
19
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: Building
Additions, Alterations & RepairsIncluded are additions under construction,
alterations, and repairs to the buildingRemoves need to purchase separate Builder’s
Risk coverageMay need to increase limit to coverage additions
and alterationsIncluded are all materials/supplies/equipment
used for alterations or repairs as long as the are within 100 of premises
Typically contractors will insure materials/equipment on an Inland Marine Installation Floater. Building coverage would be excess
TW
FG C
omm
ercial Business School – C
omm
ercial 103
20
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: Building
As you can see, there’s much more to building coverage than just the building itself
TW
FG C
omm
ercial Business School – C
omm
ercial 103
21
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: BPP
There are 7 categories of specific Business Personal Property (BPP) that are described in the Property Coverage Form
TW
FG C
omm
ercial Business School – C
omm
ercial 103
22
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: BPP
Fixtures & FurnitureFixtures refers to those not permanently installed. Can be removedNot the same as improvements and betterments
Example:A jeweler leases a building and installs special showcases to display his products. If the tenant were to move at the end of the lease, the showcases would be disassembled and taken with him. However, if the same tenant remodeled the interior, constructing a back office and a special concrete encasement for a safe, those improvements would not be taken when the lease expired.
TW
FG C
omm
ercial Business School – C
omm
ercial 103
23
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: BPP
Machinery & EquipmentMachinery and equipment not permanently
attached to the building nor used to service the building
TW
FG C
omm
ercial Business School – C
omm
ercial 103
24
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: BPP
StockMerchandise held for storage or saleRaw materials, in-process or finished goodsAll supplies used to pack or ship stock
Assigning a value to stock when determining the BPP limit can be tricky if the operations of the insured are such that the value of “stock” fluctuates. The value assigned should reflect the largest amount that would occur at any one time during the policy term. Note also that this stock is tied to the location. This becomes important if the insured has multiple locations and the stock (raw materials, in-process work) moves from location to location and therefore the values fluctuate. This situation calls for “Blanket BPP” coverage—which will be discussed at a later date.
TW
FG C
omm
ercial Business School – C
omm
ercial 103
25
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: BPP
All Other BPP Owned and used in the businessCatch-all for any remaining BPP
Labor/Materials/Services furnished by owner on BPP of others
Includes arranged by businessEnsures that the insured’s added value work to other’s
BPP is also covered
TW
FG C
omm
ercial Business School – C
omm
ercial 103
26
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: BPP
Your Use Interest as a Tenant in Improvements & Betterments
Example:Suppose a tenant does $100,000 of improvements to a rented property and expects to use them for 10 years. Their use interest is $100,000 over 10 years, or $10,000 per year. After 3 years, there is a fire loss and the building is totaled. The tenant’s insurable loss would be the remaining 7 years of use or 7 X $10,000 = $70,000. Note that the owner of the building should have increased the limit of building coverage on their policy to reflect the improvements done by the tenant. It does not violate the principle of indemnity that the owner and the tenant should collect from the same loss, as their insurable interests differ, and each is the subject of a separate insurance policy.
TW
FG C
omm
ercial Business School – C
omm
ercial 103
27
TWFG Commercial Business SchoolCommercial 103
Commercial Lines Basics: Commercial Property: BPP
Leased Personal PropertyLeased personal property for which you have a contractual responsibility to ensure, unless otherwise insured as Personal Property of Others. The typical example here is computers, copiers and other office machines that the insured leases. The leases typically require the insured to provide insurance coverage for the leased items.
TW
FG C
omm
ercial Business School – C
omm
ercial 103
28
TWFG Commercial Business SchoolCommercial 103
TW
FG C
omm
ercial Business School – C
omm
ercial 103
29
TWFG Commercial Business SchoolCommercial 103
TW
FG C
omm
ercial Business School – C
omm
ercial 103
30
TWFG Commercial Business SchoolCommercial 103
QUIZ
TW
FG C
omm
ercial Business School – C
omm
ercial 103
31
TWFG Commercial Business SchoolCommercial 103
What does the acronym COPE stand for?
TW
FG C
omm
ercial Business School – C
omm
ercial 103
32
TWFG Commercial Business SchoolCommercial 103
What does the acronym COPE stand for?
Construction, Occupancy, Protection, Exposures
TW
FG C
omm
ercial Business School – C
omm
ercial 103
33
TWFG Commercial Business SchoolCommercial 103
Is permanently installed equipment covered under the Building or BPP?
TW
FG C
omm
ercial Business School – C
omm
ercial 103
34
TWFG Commercial Business SchoolCommercial 103
Is permanently installed equipment covered under the Building or BPP?
It can be covered under either, but most insureds choose to cover it under the building limit
TW
FG C
omm
ercial Business School – C
omm
ercial 103
35
TWFG Commercial Business SchoolCommercial 103
An insured sets out to add 3500 sq ft to their building. Is the work in progress covered under the CPP? If so, what should the insured do at the commencement of work?
TW
FG C
omm
ercial Business School – C
omm
ercial 103
36
TWFG Commercial Business SchoolCommercial 103
An insured sets out to add 3500 sq ft to their building. Is the work in progress covered under the CPP? If so, what should the insured do at the commencement of work?
Part 1: Yes, additions and alterations are coveredPart 2: Determine the RCV of the building once the work is completed, and increase the building limit to match this value
TW
FG C
omm
ercial Business School – C
omm
ercial 103
37
TWFG Commercial Business SchoolCommercial 103
If an insured has stock at several locations, and the value of that stock fluctuates, what form of BPP should they consider for the stock?
TW
FG C
omm
ercial Business School – C
omm
ercial 103
38
TWFG Commercial Business SchoolCommercial 103
If an insured has stock at several locations, and the value of that stock fluctuates, what form of BPP should they consider for the stock?
Blanket Coverage
TW
FG C
omm
ercial Business School – C
omm
ercial 103
39
TWFG Commercial Business SchoolCommercial 103
An insured lease a $5000 copier. Can this be covered under the CPP? If so, under what coverage? Is there anything else the insured should consider?
TW
FG C
omm
ercial Business School – C
omm
ercial 103
40
TWFG Commercial Business SchoolCommercial 103
An insured lease a $5000 copier. Can this be covered under the CPP? If so, under what coverage? Is there anything else the insured should consider?
Part 1: YesPart 2: BPPPart 3: Do they need to increase their BPP limit to account for the additional $5000
TW
FG C
omm
ercial Business School – C
omm
ercial 103
41
TWFG Commercial Business SchoolCommercial 103
Future Classes
February 21st Commercial 104February 28th Commercial 101March 6th Commercial 102March 13th Commercial 103
TW
FG C
omm
ercial Business School – C
omm
ercial 103
42
TWFG Commercial Business SchoolCommercial 103
Industry Segment Classes (Beginning in March)
Retail & Service Farm/RanchArtisan Contractor Excess & SurplusCommercial Auto Professional LiabilityWorkers Compensation UmbrellaCommercial Real Estate BondsRestaurant Financial InstitutionsManufacturing Hotels/MotelsAgriculture Medical Technology
TW
FG C
omm
ercial Business School – C
omm
ercial 103
43
TWFG Commercial Business SchoolCommercial 103
Questions???