Chapter 4: Property Insurance

Question 1

What is the purpose of fire and special perils insurance?

Answer 1

To provide compensation to the insured in the event of damage to the insured property.

Question 2

When events are covered by standard fire cover?

Answer 2

• Fire (excluding fire caused by explosion or from an underground heat source)
• Lightening
• Explosion - restricted to cover explosion of boilers or gas for domestic purposes only

Question 3

What are the four types of optional perils of a standard fire policy?

Answer 3

• Chemical perils
• Social perils (riot, civil commotion, etc)
• Perils of nature (storm, earthquake, etc)
• Miscellaneous perils (aircraft, water escape)

Question 4

What kinds of explosion are excluded under a standard fire policy?

Answer 4

• Own steam pressure vessels that are subject to inspection by statute - covered by engineering explosion policies.
• Pressure waves from sonic bangs

Question 5

How does standard fire and special perils policy treat spontaneous fermentation or heating?

Answer 5

The property which ignites spontaneously is not covered, but any property which sets fire as a consequence is.

Question 6

How does a standard fire and special perils policy cover storms?

Answer 6

• Flooding of any kind is not covered - this would be covered by a flood policy
• Excludes damage to any moveable structures in the open (i.e. gates)

Question 7

What excess is usually applied to storm cover in a standard fire and special perils policy?

Answer 7

£100

Question 8

How does a standard fire and special perils policy treat water escapement?

Answer 8

• Water from a leaking sprinkler system is not covered
• Water from an empty building is not covered

Question 9

What does impact cover?

Answer 9

Cover for the vehicles of the insured when under the control of another (e.g. many forklifts in a factory)

May also cover own impact, there the insured is in control of the vehicle at the time

Question 10

What does subsidence, ground heave and landslip usually cover?

Answer 10

Covers damage to the property when the ground moves underneath it.

Question 11

What does subsidence, ground heave and landslip usually exclude?

Answer 11

• Damage to yards and car parks, roads, pavements, fences, walls, etc
• Normal settlement of new buildings, erosion by coast or river, dodgy design or workmanship
• Originating prior to inception date of the policy
• Demolition, construction or structural alteration to the property

Question 12

What are the standard market exclusions of all property policies?

Answer 12

• Riot or civil commotion
• War risks
• Radioactive contamination
• Northern Ireland excluded perils
• Pollution
• Marine policies
• More specifically insured perils

Question 13

What does all risks insurance cover?

Answer 13

Accidental loss or destruction of or damage to the property insured.

Question 14

What does theft insurance cover?

Answer 14

Cover for loss of property or damage to a building during theft or attempted theft.

Question 15

What might a restrictive theft policy exclude?

Answer 15

Entry using a key, a trick or hiding in the premises.

However, damage would be covered if it was done while exiting.

Question 16

What are some of the optional extensions to a theft policy?

Answer 16

• Breakage of glass
• Replacement of locks
• Temporary removal or stock for cleaning or repair
• Index linking (i.e. ensuring that the sum insured is maintained in line with inflation)

Question 17

What might a theft policy include but only through careful underwriting?

Answer 17

• Collusion (plotting between a thief and employee)
• Full theft (i.e. not requiring violent or forceable entry)
• Robbery and aggravated burglary (i.e. when premises are open for business)