chp 4 - Chapter 4 Commercial Property Coverage Options(BPP...

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Chapter 4 – Commercial Property Coverage Options (BPP Endorsements) What are some endorsements commonly used in conjunction with the BPP? What alternative valuation methods for determining insurance payments are available? What is blanket insurance? What are the advantages of blanket insurance over specific insurance? How do seasonal businesses pick a limit of insurance with fluctuating inventory values? What endorsements protect against international loss exposures? What endorsements modify Causes of Loss Forms? Endorsements for Alternative Valuation Methods BPP valuation condition determines loss payments o Usually ACV o Optional replacement cost coverage in BPP o Others for specific items (pro rata portion of cost for I&B, selling price) Some endorsements change valuation and ultimately the amount paid by the insurer Manufacturer’s selling price endorsement (“Finished Stock” only) extends BPP valuation of finished stock, whether sold or not - May also be available for retailers (does this duplicate BI coverage?) Functional Building and Personal Property Valuation Endorsements Older buildings that often have very high replacement cost (or even ACV) For losses, insurer pays cost to repair/replace with functionally equivalent materials/design o Functional building valuation example: replace plaster walls with drywall o Functional personal property valuation example: unique machinery If repaired, insurer will pay: (1) limit of insurance, (2) cost to replace/repair, or (3) cost to replace with equivalent property If not repaired, insurer pays: (1) or (3) above or market value of property Functional valuation endorsements delete the coinsurance requirement o Need to carefully determine the cost of replacing property Functional building valuation also includes “Ordinance or law coverage” since many older buildings are out of code o Careful underwriting is required if way out of code International Coverage Endorsements BPP covers property on premises, plus limited extension ($10,000) if away from premises, but never outside US/Canada Business Personal Property – Limited International Coverage o Covers direct physical loss to business personal property temporarily in, or en route, a specific foreign country (or all foreign territories) o Must be at owned/operated location or with authorized representative Not exported property or goods held for sale in foreign country o Extension includes coverage for business property used for personal travel if used to communicate with business Property in Process of Manufacture by Others – Limited International Coverage
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o For companies outsourcing parts of the manufacturing process (non-owned) o Covers raw materials and goods in process in the foreign country (excludes sanctioned countries ) o
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  • Fall '08
  • Flanigan,G
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