Transcript Slide 1

TWFG Commercial Business School – Commercial 103
Commercial 103
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial 101 – 104
Commercial 101
Overview
Commercial Insurance Basic Terms
Commercial Insurance Polices: Overview
Important Auxiliary Coverages
ACORD Forms Overview
Commercial Lines Workflow Process
Submission Checklist
Post-Binding Checklist
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial 101 – 104
Commercial 102
How Does the Underwriting Process Operate?
Commercial Insurance Policy Coverages: First Level Detail
Silverplume Overview (Live Demo)
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial 101 – 104
Commercial 103
Commercial Lines Basics Property: COPE
Commercial Lines Basics Property: Building
Commercial Lines Basics Property: Business Personal Property (BPP)
Module 3 Case Study
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial 101 – 104
Commercial 104
Commercial Auto
Multi-Line Policy Types
Workers Compensation Overview
Endorsements Common to Most Policies
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: COPE
Why all those pesky questions
Commercial property generally refers to a building and/or a business’
personal property
4 elements needed for carrier quote. COPE
Construction
Occupancy
Protection
External Exposures
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: COPE
Construction:
Type of construction affects buildings performance in the event of fire or
wind/hail
Carriers want building and roof construction types
Carriers need year built as well as any updates. Especially important on
building over 20yrs old
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: COPE
Construction:
Frame – Typical wood construction, including wood frame with stone,
brick or stucco veneer
Joisted 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 roofs
Non-Combustible – Any type of non-combustible (not wood) nonmasonry construction. The examples include metal shop buildings with
steel framing, mini-self-storage units, and auto-body shops
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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 material
Fire-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)
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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
fryer
Therefore, the ACORD questions, such as whether or not the building is
sprinklered, become very important
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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
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TWFG Commercial Business School – Commercial 103
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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: Building
What is covered under “Building”?
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: Building
Building
The building itself, as described on the dec page
Fixtures
Included are any fixtures, such as light fixtures, including outdoors
Permanently Installed Equipment
Usually bolted to floor or wall. Can be included on building or BPP.
Typically placed on building due to broader coverage
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: Building
Some Forms of Personal Property
Included is any personal property used to maintain or service the
building.
Examples: Fire extinguishers, outdoor furniture, floor
coverings, HVAC equipment, dishwashing
equipment, lawnmowers
This 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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: Building
Additions, Alterations & Repairs
Included are additions under construction, alterations, and repairs to
the building
Removes need to purchase separate Builder’s Risk coverage
May need to increase limit to coverage additions and alterations
Included 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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: Building
As you can see, there’s much more to building coverage than just
the building itself
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: BPP
Fixtures & Furniture
Fixtures refers to those not permanently installed. Can be removed
Not 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.
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: BPP
Machinery & Equipment
Machinery and equipment not permanently attached to the building
nor used to service the building
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: BPP
Stock
Merchandise held for storage or sale
Raw materials, in-process or finished goods
All 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.
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: BPP
All Other BPP
Owned and used in the business
Catch-all for any remaining BPP
Labor/Materials/Services furnished by owner on BPP of others
Includes arranged by business
Ensures that the insured’s added value work to other’s BPP is also
covered
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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.
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Commercial Lines Basics: Commercial Property: BPP
Leased Personal Property
Leased 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.
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Commercial 103
TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
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Commercial 103
TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
QUIZ
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
What does the acronym COPE stand for?
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
What does the acronym COPE stand for?
Construction, Occupancy, Protection, Exposures
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Is permanently installed equipment covered under the Building
or BPP?
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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?
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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 covered
Part 2: Determine the RCV of the building once the work is completed,
and increase the building limit to match this value
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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?
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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?
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 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: Yes
Part 2: BPP
Part 3: Do they need to increase their BPP limit to account for the
additional $5000
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Future Classes
February 21st
February 28th
March 6th
March 13th
Commercial 104
Commercial 101
Commercial 102
Commercial 103
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Industry Segment Classes (Beginning in March)
Retail & Service
Artisan Contractor
Commercial Auto
Workers Compensation
Commercial Real Estate
Restaurant
Manufacturing
Agriculture
Farm/Ranch
Excess & Surplus
Professional Liability
Umbrella
Bonds
Financial Institutions
Hotels/Motels
Medical Technology
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TWFG Commercial Business School – Commercial 103
TWFG Commercial Business School
Commercial 103
Questions???
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