Texas General Lines — Property and CasualtyCommercial LinesHard
A commercial property owner has a Building and Personal Property Coverage Form with a 'Special' Causes of Loss form. During a severe hailstorm, the roof of the building is damaged, and several windows are broken. Additionally, a power outage caused by the storm leads to a surge that fries a critical piece of electrical equipment. Which losses would be covered under the 'Special' Causes of Loss form?
- ANeither the roof damage/broken windows nor the electrical equipment damage.
- BOnly the electrical equipment damage from the power surge.
- COnly the roof damage and broken windows.
- DBoth the roof damage/broken windows and the electrical equipment damage.
Show answer & explanationAnswer & explanation
Correct answer: C. Only the roof damage and broken windows.
A 'Special' Causes of Loss form covers all direct physical losses unless specifically excluded. Hail damage and broken windows from a storm are typically covered. However, damage from artificially generated electrical current (like a power surge) is a common exclusion in 'Special' Causes of Loss forms, requiring separate Equipment Breakdown coverage.
Why the other options are wrong
- A. Hail damage and broken windows are standard covered perils for 'Special' Causes of Loss.
- B. Electrical surge damage is usually excluded from 'Special' Causes of Loss forms.
- D. The electrical equipment damage from a power surge is typically excluded under 'Special' Causes of Loss.
Special Causes of Loss Form
A Commercial Property Causes of Loss form that provides 'all-risks' coverage, meaning it covers all direct physical losses to covered property unless specifically excluded. It's broader than 'Basic' or 'Broad' forms.
- Covers all perils except those specifically excluded.
- Common exclusions include earthquake, flood, government action, power failure (off-premises), and mechanical breakdown/electrical surge.
- Requires careful review of exclusions for comprehensive understanding.
Memory trick: Special's Scope: Storm's Strengths, Surge's Sins.