Insurance Coverage and Terrorism Laws

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Questions and Answers

What is the maximum reimbursement limit for direct physical loss or damage to mobile communication property in any one occurrence?

$10,000 (correct)

$25,000

$50,000

$5,000

Which of the following expenses is not covered under Preparation of Loss Fees?

Attorney fees (correct)

Cost of hiring an insurance adjuster (correct)

Expenses for determining property damage

Consultant fees (correct)

What is the reimbursement cap for rewards paid to an eligible person under the Reward Payment provision?

$25,000 (correct)

$10,000

$75,000

$50,000

In what circumstance will the Preparation of Loss Fees coverage be applied?

After direct physical loss or damage to covered property Signup and view all the answers

Which statement best describes the coverage for mobile communication property?

Reimbursement applies for physical damage occurring more than 100 feet from the described premises. Signup and view all the answers

What percentage of terrorism losses does the federal program cover starting in 2015?

85% Signup and view all the answers

Which entity is responsible for establishing procedures for the pro rata allocation of insured losses exceeding $100 billion?

Secretary of the Treasury Signup and view all the answers

If aggregate insured losses from terrorism exceed $100 billion, what is the Treasury's responsibility?

Pay nothing for losses exceeding $100 billion Signup and view all the answers

What happens to the federal share of terrorism losses after 2015?

It decreases by 1 percentage point each year Signup and view all the answers

What is the maximum amount of insured losses the Treasury can cover in any calendar year for terrorism acts?

$100 billion Signup and view all the answers

What other exclusions still apply to acts of terrorism covered under the federal program?

Nuclear, war or military action Signup and view all the answers

Where is the underwriting company located that is mentioned in the policy?

Chicago, IL Signup and view all the answers

What is a 'certified act of terrorism' according to the endorsement?

An act of terrorism recognized by the Secretary of the Treasury. Signup and view all the answers

Which insurance coverage is NOT modified by the exclusion of certified acts of terrorism?

Personal Property Coverage Part Signup and view all the answers

Which of the following best describes the nature of inspections according to the content?

Any authorized individual may conduct inspections at any given time. Signup and view all the answers

What will NOT be covered under the certified act of terrorism exclusion?

Losses related to acts deemed as terrorism by local authorities. Signup and view all the answers

In which coverage parts does the Exception Covering Certain Fire Losses apply?

To both the Commercial Property and Equipment Breakdown Coverage Parts. Signup and view all the answers

What is the criterion for a loss to be excluded as a result of a certified act of terrorism?

It must be certified by the Secretary of the Treasury. Signup and view all the answers

What does the term 'proper temporary custody' refer to in the context of property rights?

An individual's ability to manage property without full ownership rights. Signup and view all the answers

What types of losses are specifically excluded from coverage under the certified act of terrorism exclusion?

Loss or damage caused directly or indirectly by a certified act of terrorism. Signup and view all the answers

What is the limit for pollutant clean up and removal related to personal property?

$100,000 annual aggregate Signup and view all the answers

For newly acquired or constructed property, what is the limit for buildings?

$2,000,000 Signup and view all the answers

Which of the following has the lowest coverage limit for personal effects and property of others?

$5,000 Signup and view all the answers

What is the coverage limit for electronic data processing equipment while in transit?

$50,000 Signup and view all the answers

What is the coverage limit for valuable papers and records at any other location, other than exhibitions?

$50,000 Signup and view all the answers

What is the aggregate coverage limit for mobile communication property?

$10,000 Signup and view all the answers

What is the period of coverage for newly acquired or constructed property?

90 Days Signup and view all the answers

Which of the following provides coverage for dependent business premises for business income/extra expense?

$100,000 Signup and view all the answers

What is the coverage limit for preparation of loss fees related to business income/extra expense?

$25,000 Signup and view all the answers

What is the limit for outdoor property covered under the basket aggregate?

$1,000,000 Signup and view all the answers

What is explicitly excluded from the Additional Coverage concerning construction costs?

Costs associated with environmental assessments due to pollutants Signup and view all the answers

Which of the following is considered a 'pollutant' under the Additional Coverage clauses?

Fungus and microorganisms resulting in damage Signup and view all the answers

What activities does the Additional Coverage specifically not include in terms of costs?

Remediation of property contaminated by pollutants Signup and view all the answers

How does the policy define the treatment of Electronic Data in the Additional Coverage?

Limited to specific covered causes of loss described elsewhere Signup and view all the answers

Which of the following is NOT a factor for the exclusion of enforcement costs in the Additional Coverage?

Replacement of structurally unsound elements Signup and view all the answers

What kind of laws or ordinances are explicitly mentioned as non- reimbursable in the policy?

Those mandating environmental clean-up from pollutants Signup and view all the answers

Which situation falls under the exclusions outlined for compliance with ordinances or laws?

Testing for presence of mold before renovation Signup and view all the answers

What is the earliest effective date for the policy changes mentioned?

3/1/2023 Signup and view all the answers

Which of the following statements is correct regarding the replacement of the Increased Cost of Construction?

It is replaced by an exclusion of specific compliance costs. Signup and view all the answers

What are 'microbes' as referenced in the exclusions of this policy?

Living organisms potentially causing structural damage Signup and view all the answers

Study Notes

Property Policyholder Notice

This notice does not form part of the policy, grant coverage or change policy terms.
"We" refers to the insurer on declarations/certificate. "You" refers to the first named policyholder.
The Terrorism Risk Insurance Act (Act) gives the policyholder the right to purchase terrorism coverage, subject to policy provisions.
The federal government shares terrorism loss risk with insurers.
The definition of 'certified act of terrorism' has changed, removing the foreign-interest requirement.
The federal government (Department of the Treasury) shares losses in accordance with the Act.
The federal share of insured terrorism losses is 85% of amounts over the insurer retention amount, decreasing by 1% per year until 80%.
Terrorism losses cannot exceed $100 billion in a calendar year.
Coverage is subject to insurer deductible.
Losses up to $100 billion in a calendar year are subject to pro rata allocation based on Treasury procedures.
The insurance provider offers coverage for certified terroristic acts.
Nuclear, war, military action exclusions still apply.

Policy Conditions

Policyholder may cancel by mailing advance written notice.
Insurer may cancel for non-payment of premium or other reasons with advance notice.
Cancellation notice must state the effective cancellation date.
If the insurer cancels, the refund will be pro-rata.
Policyholder may cancel with a refund, possibly less than pro rata.
Policy modification requires insurer consent via endorsement.
Policyholder's records may be examined by the insurer.
Inspections, surveys, and recommendations are for insurability, not safety.
Premiums are the responsibility of the first named insured on declarations.
Transfer of rights and duties is allowed in case of death, with transfer to legal representative.
Payment of all premiums is the responsibility of the first Named Insured.

Terrorism Exclusion

Exclusion for certified acts of terrorism.
This exclusion applies regardless of concurrent causes.
Property damage from a fire resulting from a certified act of terrorism will be covered.
Coverage does not apply to business income or extra expenses for a certified act of terrorism.

Service of Suit Endorsement

Insurer designates an official (Superintendent, Commissioner, or Director) as its attorney for service of process in policy-related legal actions.
Insurer will abide by final court decisions.
General Counsel is authorized to accept service of process.

Auto Dealers Amendment Endorsement

This endorsement details specific coverage limits for damages resulting from various perils at described premises.

Loss Prevention Expense

This covers the cost to protect property from loss or damage due to a covered peril.
Limit of $5000 per occurrence.

Mobile Communication Property

Covers property more than 100 feet away from the premises.
Limit of $10,000 per occurrence.

Preparation of Loss Fees

Covers reasonable and necessary expenses to determine the extent of a loss.
Limit of $25,000 per occurrence.

Reward Payment

Covers rewards paid for the recovery of lost or damaged property.
Limit of $25,000 per occurrence.

Coverage Extensions

Newly acquired or constructed property will be covered for loss or damage incurred during the policy period, or within 90 days after acquisition or beginning construction.
Coverage for the personal effects of others is extended to cover direct physical loss or damage to the personal effects when in the named insured's care, custody, or control.
Coverage for valuable papers and records is extended.
Coverage for property off-premises will cover loss or damage to covered property away from the described premises, subject to conditions.
Coverage for outdoor property will cover loss or damage to outdoor property located 100 feet from the covered premises, excluding property owned by others if not in the named insured's care, custody, or control.

Accounts Receivable

Extends coverage to cover accounts owed to the insured from customers that cannot be collected.
Covers interest or collection expenses.

Appurtenant Buildings

Covers buildings that are appurtenant to and at the same premises as a building described in the declarations, under certain conditions.
Maximum coverage limit is $100,000 per occurrence.

Electronic Data Processing Equipment and Media

This coverage extends to "computers", "electronic data", and "media" in the named insured's care, custody, or control, excluding property of officers, partners, managers, members, or employees—for the same specified causes of loss as described premises

Employee Tools

Covers "employee tools" used in your business, with a maximum coverage limit.

Fine Arts

Covers loss or damage with replacement cost.

Tents

Covers loss or damage to tents on the described premises, with a maximum coverage limit.

Limits of Insurance

The most that will be paid in any one occurrence is the stated Limit of Insurance.
The amounts of insurance in various coverages are separate from the Limits of Insurance shown in the declarations for other coverages, except in the case of preservation of property.

Economic and Trade Sanctions

Policy is void if any provision violates U.S. economic or trade sanctions.
Applicable to certain persons or entities or property in sanctioned countries.
Certain claims or suits are prohibited under the policy.

H. Definitions

Defines terms like "Fungus", "Cyber Attack", "Computer", "Communicable Disease", etc. for the policy.

Additional Authority

This section clarifies various loss provisions in the context of any applicable authorities or laws.

Cancellation Changes

Policy may be cancelled with advance notice, specifying a cancellation reason.
5 days’ written notice if cancellation is due to nonpayment of premium.
30 days advance notice for any other reason.
Cancellation may be permitted if the building is vacant for 60 continuous days, or if repairs are not initiated within 30 days of settlement.
Other building conditions may also lead to cancellation.
60-day cancellation notice before renewal for commercial property and Capital Assets Program policies.

Windstorm or Hail Percentage Deductible

Deductible applies to losses caused by windstorm or hail.
Deductible amount determined based on percentage per building or property, calculated separately for various scenarios.

Loss Payable Provisions

Detailed guidance on paying claims to designated loss payees.
Discusses various clauses related to loss payments.
Covers circumstances where multiple parties have an interest in the covered property.

Utility Services—Time Element

Coverage extends to Business Income and Expenses related to covered property outages for specified causes.

"Breakdown" Covered Cause of Loss Revision

Covers losses due to defined causes (aircraft, freezing, lightning, smoke, etc.), for "Covered Equipment."
Defines "Breakdown" as sudden and accidental direct physical loss to covered equipment, requiring repair or replacement. Exclusions are enumerated.

Kansas Changes

Modification of the cancellation clauses in the policy, allowing cancellation in specific circumstances.

Concealment, Misrepresentation or Fraud

Policy is void if fraud or material misrepresentation exists in connection with the insurance application process, claim, or coverage.

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Description

Test your knowledge on insurance reimbursement limits, coverage for mobile communication property, and the specifics of terrorism loss coverage. This quiz covers important aspects of insurance policies and federal regulations regarding terrorism. Prepare to challenge your understanding of these critical topics.