Chapter 2 Flashcards
Fire Resistive
Building which has met minimum standards in terms of hours it will withstand a specific, carefully controlled test fire.
Non-combustible
All structural members including floors, roofs and their supports are constructed of steel, iron, concrete or other non-combustible materials. Exterior also required to be of non-combustible construction.
Common Hazards
Conditions common to all buildings which influence their potential for loss.
Detachment
Refers to the proximity of the building insured or containing the property insured to other commercially rated buildings.
Adverse Selection
Occurs when the applicants for insurance are largely those most likely to suffer a loss.
Risk Classification
Refers to the grouping or classifying of risks according to established criteria which, in large part, is based on their probability for loss as a class.
Soft Market
Characterized by intense competition between insurers. As a result, rates tend to be low.
Hard Market
Occurs when low profit margins force out some of the competition. As a result, insurers use a more disciplined underwriting approach. The insured normally receives little or nothing in the way of rate discounts.
Hazard
Is a condition which may cause a peril to occur
Physical Hazard
A condition relating to the use of tangible property which could cause a peril to occur.
Moral Hazard
Subjective characteristics of the applicant that could cause a peril to occur.
Morale Hazard
Deal with the attitude of the client
Accommodation business
Business which is marginal or substandard but which the insurer agrees to accept as a favour or accommodation to the broker.
Supporting business
The existence of other insurance policies the applicant has with the same insurer.
