Chapter 2 Flashcards
What are three advantages of using a fact-finding survey?
- Assists brokers when identifying potential losses
- Assists brokers not to sell coverages client does not need
- Assists brokers in collecting information needed by insurance companies
What are three benefits of commercial property checklists and which is most important to brokers?
- Assists brokers when identifying potential losses
- Assists brokers to make sure coverages are not overlooked
- Assists brokers in reducing errors and omission losses
Explain characteristics of the following construction classes: Fire Resistive / Non-Combustible
Fire Restrictive - the building has achieved standard set in hours to remain structurally sound when attacked by fires
Non-Combustible - these buildings are slightly below standard of fire resistive structures
What are five areas insurers request additional information when buildings are over 25 years old?
- Wiring
- Heating
- Over-current protection
- Roof
- Plumbing
What are five hazards common to commercial buildings? (HOPED)
- Heating
- Occupancy
- Protection
- Electrical services
- Detachment
What type of wiring provides the best protection?
Copper wiring
What type of over current protection provides the best protection?
Automatic circuit breakers
What is detachment?
Detachment = the distance of insured building (or property) to commercially rated buildings
Describe the two types of protection?
Private Protection - steps insured has taken within buildings to reduce frequency and severity of losses (i.e., sprinklers, fire extinguishers)
Public Protection - refers to protection methods used by municipalities, or outside steps (i.e., fire departments)
When buildings have no protection from local fire departments what term is often used to describe these buildings?
Unprotected
Define “adverse selection”.
What are four functions performed by underwriters?
Define “risk classification”.
What is the main advantage of risk classification?
Identify an internal source underwriters utilize when rate making.
Identify an external source underwriters utilize when rate making.
What are two influences which cause premiums to change from year to year?
What are characteristics of soft markets?
What are characteristics of hard markets?
What is a physical hazard?
List six types of physical hazards common to all commercial risks and provide an example of each. (PET HOG)
What is a moral hazard?
List three moral hazards and provide an example of each. (FAM)
What is accommodation business?
What are four factors underwriters will review when considering accommodation business?
