COMMON POLICY CONDITIONS

The common policy conditions apply to all of the coverage parts contained in the CPP.

Under the common policy conditions, certain responsibilities and obligations are assigned to the first named insured—the person whose name is listed first in the declarations. It is necessary to specify the first named insured because the CPP may be issued to more than one named insured, such as business partners.

1. Cancellation

The cancellation condition sets forth the circumstances under which the policy may be canceled. The first named insured must cancel the policy in writing, and any premium refund due will be sent to the first named insured.

This refund may be less than a pro rata refund to make up for the expense of issuing the contract.

If the insurance company cancels, it must mail a written notice to the last known address of the first named insured.

 Ten days’ notice is required for cancellation for nonpayment of premium; 30 days’ notice is required for cancellation for any other reason permitted by the policy.

The premium is refunded to the first named insured on a pro rata basis.

Remember that although this is the cancellation condition that appears in the standard contract, some states may legislate unique cancellation rules for policies issued in those states.

2. Changes, Premiums

Along with the right to cancel the policy, the first named insured has some other rights and responsibilities.

The changes condition states that only the first named insured is authorized to make changes in the terms of the policy with the consent of the insurance company.

 Terms can be amended or waived only by an endorsement issued by the insurer that is made a part of the policy.

The premiums condition states that the first named insured is responsible for the payment of all premiums and will receive any return premiums due.

3. Examination of Books and Records,

Inspections and Surveys

The common policy conditions also give the insurance company the right to obtain information it needs to accurately rate the policy and provide the appropriate coverage.

The examination of your books and records condition states that the company may examine and audit the insured’s books and records at any time during the policy period and for up to three years after the end of the policy period.

The inspections and surveys condition gives the company the right to make inspections or surveys of the insured business at any time.

 The company may choose to report on the conditions it finds and recommend changes.

These inspections are related to insurability and premiums only and are not considered safety inspections.

The insurer will not warrant that conditions are safe or healthful or comply with laws or regulations.

This condition does not apply to inspections performed to certify boilers, elevators, or pressure vessels under state or local laws.

4. Transfer of Rights and Duties

Finally, the transfer of your rights and duties under this policy condition states that insureds’ rights and duties under the policy cannot be transferred without the written consent of the insurance company, except in the case of the death of a named insured.

This is sometimes called the assignment clause, and it is a common feature of both personal and commercial lines policies.

If the named insured dies, his rights are transferred to the deceased’s legal representative, but only while the representative is acting within the scope of the duties of the legal representative.

Until a legal representative is appointed, anyone having proper temporary custody of the property will have the insured’s rights and duties as they relate to the property