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Last Post 11/13/2009 12:32 AM by  insprojohn
Commercial Coverage
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Ray Hall
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02/23/2007 5:36 PM

    This is a hypo with a few twist and turns.

    The insured is a large granite and marble wholesale location in Houston, Texas in an industrial park. The building has a railroad siding for the park occupants. The insureds building is a stand alone building in the middle of the park. The building is 80 foot long and 48 feet deep. with 20 foot overhead doors.The warehouse space is in the rear.

    The policy is a CP 10 30 Bld $500,000.  Contents $700,000.  a $5,000. Ded.  both have a 90% co-insurance clause

    Facts: A gondola car on the siding was moved in at 17.42  it was spotted by the mgr. @ 17.50. The  fire alam was set off by the sprinker system at 19.20. The fire destroyed the gondala car, the marble stock shipment of $200,000. the building and contents and a 30 Ton Grove Cherry Pick rented from Herts to unload the car.

    You task is to investigate the facts and report to the carrier what the loss reserves should be on this loss. Do not start you damage estimate, just sort out the coverage and covered property, by the way the C & O of the fire was a "hot journal box" on the building side of the gondola car.

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    Ray Hall
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    02/23/2007 6:28 PM

    New information for the adjuster as this is now a full assignment.  The policy also has business income & extra expense of $680,000. with the same co-insuance of 90%.  The building is a tilt wall with metal joist, metal deck, light weight concrete, 3/4 insulation, mod bit. roof.Office space in front is 12 feet deep with a glass store front windows 10 feet high. drop ceilings of 9 feet,  a/c 20 ton roof mounted, return air ducted to unit in 4 areas.

    Destoryed OH/ door, 20x30 roof deck and joist, black soot on walls, ceilings, floors.

    Other about 25% of the stock in boxes destroyed.  All the marble, granite, needs cleaning, all office furniture in offices totaled by water from sprinkler. All the stock in the Gondola car and the cherry picker worth $225,000 ACV.

    Now wade on in no one will be put down. We all promise....This is the type of commercial claim( with wrtinkles) that  has occurred many times. call me or email this week end if you do not want to post. This is  the type losses you will do in a good commercial adjusters class on paper.

     

     ** the car had 600 pcs of stock, or about one months inventory and the insured keeps a 2 month supply in the warehouse and $300,000. of boxed stock on hand.

    The office space is 12x12x9, 8 foot door, desk, credenza, chair, computer, printer x 5 entrance-rec 1  mail room/kitchen 1

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    wstj
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    02/23/2007 7:21 PM
    Where can I download a copy of the typical policy? I would like to see what exclusions might exist.

    Wesley
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    HuskerCat
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    02/24/2007 2:29 AM

    OK Trader, you already have put another twist & turn on this one.  It started out as a fire loss, now it's a typical hurricane loss.  Oh, well, no matter....but give us one more little piece of info if you would.  What is a "hot journal box" on the gondola?  And what specifically do you mean when you say gondola?  That can mean different things to different folks.

    This is a good scenario that I'll return to after I have access to my policy forms.  On a little trip right now away from my usual resource drawer.

     

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    Ray Hall
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    02/24/2007 2:41 PM
    Make it fire loss only. The RR car is a flat bed car with sides about 5 feet high. The fire started in the box the grease is put in for the wheels to turn quite and easy without wear. A major cause of RR fires.
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    Ray Hall
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    02/28/2007 5:35 PM

    You  need the following CP forms to work this problem loss: IL 00 17 11 98, CP 00 10 04 02, CP 10 30 04 02. about  25 pages in all.

    This question has many land mines : 1. RR side track agreement 2. Rental equip. 3 Waiver of subrogation 4 indemnity for RR property.5 co-insurance on contents coverage.

    1. This is a very old agreement, the insured can not sue the RR for damage to the insureds property, EVEN though the fire was caused by the RR property/car/cargo/engine.

    2. The insured must insure the rental equip. The lease agreement.

    3 & 4 covered in No. 1

    5. Big co-insurance penalty depends on the covered property which this policy must address covered in 1 & 2.

    These clues should give you a starting point.

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    Ondaway
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    04/12/2007 7:57 PM
    Hi...I'm a newbie here...can I play with this interesting set of facts?
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    Tom Toll
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    04/13/2007 10:53 AM

    Why would you not be entitled to wade in. You comments are welcome, regardless of how many years you have in this business.

    Success is not final, failure is not fatal: it is the courage to continue that counts.
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    Ray Hall
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    04/16/2007 6:58 PM

    It been a long time since this was posted ?

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    Ray Hall
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    05/04/2007 8:47 PM

    Read this on a "Form" for a catastrophe firm the other day. I know the answer. A box ask for the "Loss Payee" who do you put in this box?

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    HuskerCat
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    05/05/2007 12:43 AM
    Posted By Ray Hall on 04/16/2007 6:58 PM

    It been a long time since this was posted ?

     

    You kind of answered all the questions yourself that could be answered based on the info given.

     

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    HuskerCat
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    05/05/2007 12:48 AM
    Posted By Ray Hall on 05/04/2007 8:47 PM

    Read this on a "Form" for a catastrophe firm the other day. I know the answer. A box ask for the "Loss Payee" who do you put in this box?

    "You" don't put anybody there.  That's up to the carrier, unless they have provided you with the dec pages and the Loss Payee is confirmed that way. 

     

     

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    Ray Hall
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    05/05/2007 2:19 PM

    The answer to the Loss Payee Question , is who ,what is a loss payee.

    A Loss Payee is someone who is not an insured or a mortgagee who has secured a document from the insured to pay  proceeds direct to loss payee from an insured loss for work or services already performed.

    ie: glass contractor, board up, electrician, A/C contractor, fire department. This information would not be on the dec. sheet, but should be known to the adjuster who probably authorized the charges.

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    HuskerCat
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    05/05/2007 5:52 PM

    In other words this was a type of direct pay authorization from a cat repair/restoration firm?  Thought you meant it was a form from a cat claim office, like the loss accord form.  The accord form typically has a space titled "Loss Payee", which would include lenders and/or additional insureds as regard to ownership or lease agreements in the case of business equipment.  Some of these policy documents can get pretty voluminous if a company leases equipment from several different suppliers.  The cat IA doesn't have to concern themself with that.  The person at the carrier making the payment needs to pay attention though.  

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    Medulus
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    05/29/2007 4:33 PM

    Though I consider myself on swampy turf when I disagree with you, Ray, I think Mike is actually right here -- or you both are.  I have always worked under the understanding that the insured and the lender are the loss payees, that the contractors with which the insured may have an agreement to provide a service are not loss payees under the policy.  My understanding could be somewhat limited, but most policies spell out who may be considered for payment under the policy.  Take, for instance, the Loss Adjustment/Payable clause from the 83 page manuscript policy which I am poring over right now:

    "All losses will be adjusted solely with and payable to , or as may be directed by .  Additional insured interests may also be included in loss payment as their interests may appear when named as additional named insured, lender, mortgagee and/or loss payee in the Certificates of Insurance on file with the Company or as identified below.  Also included is any person or organization to which the Insured is obligated by virtue of a written contract or agreement to provide such insurance as afforded in this policy, but only to the extent of such obligation."

    Under this clause a "loss payee" appears to consist of only those entities the insured has identified in "Certificates of Insurance" or for which the insured is obligated by contract to provide insurance.  This would not include a contractor.  Explain to be if and how I am reading this wrong.

    Steve Ebner CPCU AIC AMIM

    "With great power comes great responsibility." (Stanley Martin Lieber, Amazing Fantasy # 15 August 1962)
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    Ray Hall
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    05/30/2007 2:11 PM

    Steve you are 100% correct as you have the loss payee clause to refer to. Mike is more correct than I was on my definition. I do recall when I have seen this clause most  was in resturant fires on leased equipment like ice machines, soft drink dispensers etc..

    Now  this clause in fire insurance policies will really date you. Its the pro rata distrubition clause from the NY standard fire policy.

    Pro Rata Distrubution Clause.

    Not applicable to those items to which the 90% of the 100% Coinsurance Clause is applied nor to the "dwelling extension "or  the "household goods extension".  If any one item of  insurance covers on a building or structure or contents or on more than one building, structure or place, or the contents thereof, the amount of insurance under each such item shall attach on each building, structure, or place, or the contents thereof shall bear to the value of all of the property covered by such item.

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    Ray Hall
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    05/30/2007 2:32 PM

    This is what this clause means. On commercial insurance with an 80% Coinsurance Clause written blanket on several buildings or more important the contents in the buildings in a blanket amount. The risk is pro rated by the number devided into the total. Example the blanket amount is $1,000,000.00 on the complex of 5 buildings, this means you can not collect any more than $200,000.00 on any one building. Thats why each building should have its own value listed in the dec sheet. On contents in the buildings the blanket coverage could be a real short fall if buildings 1,2,3 had $50,000.00 contents in each building by inventory, building 4 had $400,000.00 and building 5 had $450,000. Thats why blanket insurance should always be written for 100% or 90% coinsurance clause. IF* the contents can be insured under an inland marine form this solves the problem as they are always 90% or 100% and the pro rata distrubution clause under the fire form does not come into play.

    *Most all buildings and contents are under the fire forms.

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    Tom Toll
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    05/30/2007 5:12 PM

    A property insurance policy provision that authorizes the insurer to make a loss payment to a person (loss payee) other than the insured to the extent that the loss payee has an insurable interest in the property. Such as a contractor in process of repairs or completion and possibly a Public Adjuster, provided both have loss payee contracts signed and witnessed/notarized.  This is to provide protection for anyone who has a signed contract of adhesion, thus having an insurable interest in the property. This, of course, is up to the carrier to determine insurable interest and whether to place a loss payee on an instrument of payment.

    Success is not final, failure is not fatal: it is the courage to continue that counts.
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    Ray Hall
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    02/16/2008 6:21 PM

    Got a call from a Bud today and I started thinking about the Deductible "thumb rule". It seems to me on losses on the Fire Convention Policys (which is all fire insurance if its not on the marine forms)  It was: the deductible always comes off the amount of the loss(insured or uninsured) on the fire forms. On the inland marine it always came off the loss also; except on a total loss to insurance and then comes off the amount of Insurance. Example if you had a motor crane insured for $200,000.00 and it was a total loss you would only be able to collect $199,000.00. Also on the inland marine forms the premium was always earned on a total loss. On the fire forms HO, CP's BOP's DP3 etc the premium is returned on a total loss on a pro-rata basis.

    Now what is the answer on the above two examples on the return of premium on a NFIP flood policy?

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    Ray Hall
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    02/17/2008 4:41 PM

    The answer on theNFIP dwelling policy is on page 11, section E.

    This does not come up that much, but the correct answer is call your agent about that, same as the Homeowners Policy. One of the problems with the Homeowners is you will not have any UPP coverage when you are in between one move and the next location, no theft coverage in transit, no liability on personal acts etc.

    I do wonder about the front row houses on highway 90 in Mississippi who never ask for the policy to canceled pro/rata return premium.

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