Chapter 4 - Property Insurance Flashcards
Fire and Special Perils Insurance Standard Policy cover
In commercial it is more common to find special perils added to a fire policy as cover is built up.
ABI issued recommended wordings for fire and special perils policies. In the wording ‘DAMAGE’ means loss or destruction of or damage to the property insured. Standard cover is made up of 3 parts:
• Fire - damage to property cause by fire excluding; explosion resulting from fire, earthquake or subterranean fire, the specific item that spontaneous fermentation, any process involving the application of heat
• Lightning - all damage or destruction caused by lightning is covered
• Explosion - is restricted to explosion of boilers or gas used for domestic purposes only
Fire and Special Perils Insurance Optional Extensions
- Perils of a chemical type - explosion, spontaneous fermentation, heating
- Social perils - riot, civil commotion, strikers, locked-out workers, malicious persons
- Perils of nature - storm, flood, earthquake, subterranean fire, subsidence, landslip
- Miscellaneous perils - escape of water, aircraft, impact
Standard Market Exclusions
- Riot or civil commotion
- War risks
- Nuclear assemblies
- Northern Ireland excluded perils
- Terrorism
- Pollution or contamination
- Marine policies
- More specifically insured clauses
- Consequential loss
Applies to Fire and Special Perils and Property Insurance.
All Risk Insurance Standard Policy Cover
This does not provide cover against every risk but is an improvement on the scope of cover available under a Fire and Perils policy.
ABI issued recommended wordings. It covers accidental loss or destruction of or damage to the property insured.
There are no optional extensions.
All Risk Insurance Exclusions
- Absolute exclusions - Standard market exclusions plus certain trade risks
- Exclusions that an aspect of cover can sometimes included in the policy - Corrosion, rust, change in temperature, wind or rain damage to moveable property in the open and malicious damage cover to empty buildings
- Exclusions that an aspect of cover can be written in the policy - Money, jewellery. glass, computers, theft, landslip
- Exclusions that are more appropriate to another class of insurance - Motor vehicles, watercraft, aircraft, livestock
All Risk Insurance Limits of Liability
Insurers often cover the insurances of all property of one type at all locations, providing their total sum insured at any one location does not exceed a pre-agreed limit.
Some perils may be on a first loss basis. Where the insured requests cover up to an amount significantly less than the total value of the property insured. they do this on the basis that total destruction is very unlikely. Perils popular include theft, storm, flood and impact. Insurers will allow a premium discount.
Theft Insurance Standard Policy Cover
There is no standard market wording.
Theft must involve entry or exit from the premises by forcible and violent means.
It’s not covered if entry by a key, a trick or hiding in the premises while it is open for business. However, cover would apply if force or violence was used in exiting.
For particularly hazardous risks insurers may impose more limited cover; Theft following forcible and violent entry.
Cover can be extended to include hold-up, defined as theft accompanied by assault or violence or the threat of it. Cover is often automatically included.
Theft Insurance Optional Extensions
- Breakage of glass
- Replacement of locks
- Temporary removal
- Index linking
Subject to careful underwriting
• Collusion
• Extended or full theft
• Robbery and aggravated burglary
Theft Insurance Underinsurance
The condition of average applies to theft policies, unless the insurance is on a first loss basis. The insured must choose the first loss insured and also declare the full value. Claim settlements are adjusted on the basis of the full value compared with the declared full value.
Theft insurance Exclusions
- Standard market exclusions
- Collusion
- Fire and explosion
- Cash and bank notes
- Livestock
Theft insurance Limits of Liability
Cover is often on a first loss basis because the insured recognises that a potential thief will be selective in what they steal.
It is increasingly common for theft insurance to be subject to an excess.
Glass Insurance
This covers destruction or damage to all fixed glass.
Cover is on an all risk basis, but scratches and chips are usually excluded.
Includes cover for boarding up damaged glass and damage to window frames.
Almost always dealt with by replacement
Optional extensions:
• Damage to shopfront contents
• Damage to washbasins and sanitary fittings in hairdressing salons
Limitations:
Standard practice to exclude damage by fire, lightning and explosion.
An excess of say £50 is applied to avoid small claims.
Money Insurance
It always includes cash, cheques, postage stamps, national insurance cards and luncheon vouchers.
Cover is on an all risk basis. Different situations will have different limits.
Money policies are not subject to an average as sums chosen are limits.
Optional extensions:
• Personal accident assault
• Credit cards
Exclusions:
• Standard market exclusions
• Loss due to an accounting error
• Loss due to dishonesty of an employee not discovered in 7 days
• Loss outside the UK
• Loss resulting from safe being opened by a key
