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M93 > Revision > Flashcards

Revision Flashcards

1
Q

What is the fire triangle?

A

Heat, fuel & oxygen. The three elements required start a fire

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2
Q

What are the main causes of accidental fire?

A 
People
Processes
Heating systems
Lighting & power systems
Waste & materials
Trade processes
Other occupiers
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3
Q

How can heat be transferred?

A

Conduction
Convection
Radiation

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4
Q

How can fire spread by conduction?

A

When two bodies are in physical contact, heat can travel from one to the other via conduction which may cause the temperature to rise to its ignition point starting a fire

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5
Q

What affects propagation of a fire in a building?

A

Fire resistivity of floors, ceilings and walls
Openings such as doors & windows
Combustibility of contents

Compartmentation

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6
Q

What materials are prone to spontaneous combustion?

A

Damp hay in stacks
Grain
Piles of oily rags
Flammable liquids with low flash points like acetone & benzene

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7
Q

What issues are caused by poor house keeping?

A

Allowing fires to smoulder undetected, hindering the fire brigade, not clearing waste, dropping cigarettes. This all makes fire inception more likely

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8
Q

Why are flammable liquids & gasses a potential explosion hazard?

A

Vapoury can easily mix with oxygen in the air filling a room. When beat is added the vapours explode as the fire triangle is complete

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9
Q

How will a surveyor use information on flashpoint & auto ignition temperature of materials?

A

To assess the safety of the storage, processes & the adequacy of the fire detection & suppression systems

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10
Q

What do underwrites make assessments of when assessing fire hazard?

A

The fire load - The proportion of combustable vs resistive material within the building & the overall resistivity of the building itself

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11
Q

What makes q floor fire resistive?

A

It must be non combustible, normally made of either concrete or hollow clay blocks

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12
Q

How are automatic fire alarms catagorised?

A

Composite strip: detect rapid change in temperature
Smoke: use radioactivity to detect ionised smoke particles
Heat: detect IR or UV radiation

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13
Q

What are the most common sprinkler systems?

A

Wet
Dry
Alternate
Pre-action/ drencher

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14
Q

How can you mitigate the effects of a lightning strike?

A

An electrical conductor can be added to the buildings high points to guide the electricity through a conductive path to a discharge rod buried in the earth

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15
Q

What is the difference between a fire & explosion?

A

The speed of ignition

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16
Q

Why is dust a more severe hazard than gas?

A

Gas is free to escape & is unlikely to build up unlike dust which may float around in the air & settle in the environment providing a source of fuel

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17
Q

Why is location near a water course not always an indicator of flood risk?

A

Flash flooding is becoming much more frequent & aging drainage systems can’t cope with the high volumes of water

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18
Q

What type of soil is thought to present the greatest risk in terms of damage caused by subsidence?

A

Heavy clay soils

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19
Q

How is theft defined in section 1 of the theft act 1968 (England & Wales)?

A

Dishonestly appropriating property belonging to another with the intention of permanently depriving them of it

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20
Q

How does a typical theft policy wording extend the cover to include theft that does not involve breakdown of the physical defences of the building?

A

Theft involving violence or threat of violence to you, your partners, directors or employees. This extends theft cover to a robbery wording where the physical defences are not overcome

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21
Q

What type of theft cover would a hotelier require?

A

Full theft cover without the requirement of break in

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22
Q

What is the significance of risk address in theft underwriting?

A

Address reveals the likely incidence rate of theft

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23
Q

Name 3 types of perimeter protection, other than doors and windows

A

Lockdown posts/anti ram posts
Perimeter fencing
Strong room /cage

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24
Q

How are safes classified?

A

Free standing
Wall mounted / floor mounted

Safes are given a limit of liability for storage based on their security rating

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25
Q

Why are goods in transit attractive to thieves?

A

They are new, well packaged & easy to sell

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26
Q

What is the definition of damage in the standard fire & specified contingencies policy?

A

Loss or destruction of or damage to the property insured

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27
Q

If riot is insured how many days does the insurer have to pursue recovery from the police?

A

42

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28
Q

What is the difference between the terrorism cover provided is1993 f the revised 2003 version?

A

1993- fire & explosion damage only

2003- All risks bases, including CBNR

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29
Q

What are the three main components insured in a property damage policy?

A

Buildings
Machinery
Stock

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30
Q

What other costs may be incurred during reinstatement?

A

Professional fees
Debris removal
EU & local authority costs incurred in complying with regulations

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31
Q

What are the typical loads applied to building & machinery sum insureds for debris removal & complying with regulations?

A

Building: 17%
Machinery: 5-10%

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32
Q

What is the benefit of insuring rent under the BI section of a policy?

A

Coverage under the property damage section only applies while the building is uninhabitable while cover under the BI section also covers the period a building is unoccupied for following completion of works

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33
Q

What are the other principal commercial property policies other than fire & specified contingencies?

A

Money
Glass
Goods in transit
Engineering

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34
Q

What benefits for the insurer are there for a profit share / low claims rebate?

A

It provides incentive to renew. Rebate is only available if the policy renews

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35
Q

What are the main contingencies that can be added to basic fire, lighting & explosion cover?

A

Explosion, Aircraft, Riot, Earthquake, Spontaneous combustion, Storm, Flood, Escape of water, impact by own/3rd party vehicle, sprinkler leakage, subsidence, terrorism

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36
Q

Why is SRCC offered as a special contingency & excluded in the conditions?

A

Certain risks may be target locations ( news papers, animal testing etc) risk must be considered for every location

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37
Q

What schemes are available to protect insureds from underinsurance due to inflation?

A

Index linking

Day one basis

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38
Q

What sections of policy can day one basis be applied to?

A

Buildings & contents

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39
Q

When property is temporarily removed for various purposes insurers often freely provide cover. Name I describe two clauses used for this purpose

A

Temporary removal applies to removal of machinery & fixtures etc for cleaning I renovation/repair within the UK, including transit with a limit up to 10% of the so insured against contingencies in the policy

Temporary removal of document & computer records to premises; the UK e.g. auditors for contingencies in the policy up to 10% of the sum insured

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40
Q

How does inclusion of the debris removal, EU & Public authority, professional fees clauses affect the operation of the average clause?

A

Except for stock insurance, where the clause does not apply, the value of the property insured at the relevant time is increased by appropriate amounts for each clause. The sum insured must correctly allow for each clause value, otherwise the average clause will further reduce the amount payable.

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41
Q

What are the characteristics of an obsolete building?

A

A design/construction now impractical to reproduce or not subject to rebuild. Not suitable for the original purpose it was built

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42
Q

Where insurance is arranged on a stock declaration basis what is the position held when:

  1. No declaration is received within 30 days of the required date?
  2. The declaration exceeds the sum insured?
A
  1. The sum insured is used as the declared figure
  2. The max figure that can be used in calculations is the sum insured. In the event of a claim this is the maximum amount payable
43
Q

What happens if workmen need to carry out repairs?

A

If repairs or minor structural alterations are required this can occur without impacting cover. If alterations are substantial the insurer must be notified

44
Q

What contingencies are typically suitable for first loss cover?

A

Storm, flood, escape of water, impact, sprinkler leakage, theft

First loss is when sum insured < actual value of item.

45
Q

Name 5 types of property typically covered by business all risks policy

A

Computers, office, exhibitions, deeds, documents, cups & trophies, scientific equipment, Museum, musical instruments

46
Q

What is a buy back & what exceptions do they typically apply to?

A

When underwrites provide cover to certain contingencies typically excluded from all risks cover (like subsidence, land slip & heave, fraud, theft, glass)

47
Q

What circumstances might an insured ask for collusion extension?

A

Collusion is an extension for when the insured thinks there is a risk of an insider being involved in the crime (no break in). Underwriters will need to check there is no abnormal risk present.

48
Q

When might insures not want to offer secretion cover?

A

Secretion is when a thief hides to steal I then breaks out. This is typically included as standard, but may not be available at high risk premises such as jewellers & warehouses

49
Q

Why are insurers reluctant to offer full theft cover on standard office package policies?

A

Office equipment can be very high value, so insurers will typically restrict cover to normal forcible & violent

50
Q

What is the risk insured in BI insurance if ay event occurs?

A

The damage done may make it impossible to operate, impacting the businesses gross profit

51
Q

What is the measure of compensation that can be claimed under BI insurance?

A

Loss of grass profit resulting from a reduction in turnover AND the additional costs incurred to reproduce the lost activities to reduce loss of turnover

52
Q

What is the indemnity period?

A

The period of time beginning with an interruption until the point at which the business has returned to levels of turnover prior to the event, but no longer than the maximum indemnity period stated in the policy

53
Q

Why is it important to distinguish between indemnity period & maximum indemnity period?

A

The indemnity period is the actual length of the claim, while the maximum indemnity period is set by the insured & will allow for the insured business to return to normal

54
Q

Give four examples of alternative bases of BI cover apart from an insured profit basis

A 
Gross fees (private schools with fees)
Gross revenue (professional services)
Gross rentals (property owners)
Increased cost of working only ( where revenue continues to be earned without the premises)
55
Q

What is the difference between ICOW & additional ICOW?

A

Increased costs of working can be first loss cover or form part of the reduction in turnover settlement calculation & will be subject to an economic limit

Some businesses hill need to spend more than the economic limit to remain in business so an additional ICOW can be purchased up to an agreed limit

56
Q

What is the special feature of the definition of indemnity period for advanced profits insurance?

A

The indemnity period starts on the day from which the business would have commenced trading if it had not experienced an interruption

57
Q

What is the economic limit with respect to ICOW?

A

The limit applied to the ICOW portion of a BI claim when the costs are incurred for the sole purpose of avoiding a reduction in turnover. The limit is the amount of insured gross profit saved

Rate of gross profit X turnover generated by costs incurred

58
Q

What is the property damage proviso?

A

Physical damage cover must be in force & liability must have been accepted under the PD policy

59
Q

What acceptions are there to the property damage proviso?

A
  1. PD loss is not paid purely because it is below the policy excess
  2. When the contingency insured on the BI policy is not one that can have an insured interest in property (murder, suicide, disease, supplier failure, local authority shutdown)

Additional bi contingencies will typically include an extra rate applied to the gross profit

60
Q

What is the difference between cover provided by the Public utilities extension & the accidental failure of utilities extension?

A

Accidental failure indemnities from accidental failure of the supply at terminal ends of the suppliers feed to the insured premises

Public utilities is restricted to interruption caused by 9 insured contingency at the suppliers premises

61
Q

Why should the insured keep a record of the total indebtedness to the policyholder of all customers with whom the deal on a credit basis?

A

So they can establish the value of the debts at the time of destruction of the records by adjusting that figure for extra credit agreements

62
Q

Why should a risk survey be carried out following a large claim?

A

To identify the specific problems which affected the way the loss occurred & was dealt with, to eliminate that cause of loss & minimise the chance of reoccurrence

63
Q

What special features of the premises will be elicited from a BI survey?

A

How able the business is to operate after insured damage. Also focus on business continuity

64
Q

What has EML got to do with acceptance of property damage risks?

A

EML is a sliding scale depending on inception hazard, propagation hazard, detection & response. If risk is high acceptance will be low. Insurers may offer to take less than that proportion (EML) of the risk

65
Q

What is the objective of a survey

A

Provide then he underwriter with a report of all material information relating to the risk

66
Q

You are notified of a 500k fire. The damage was insured and policy terms were complied with. The risk was surveyed three years ago and is due for resurvey in two years time. What is your reaction?

A

Request the surveyor to resurvey now. Provide special instructions to the surveyor & loss adjuster

67
Q

What is the impact of the insurance act 2015 on the remedy for breach of warranty?

A

Upon breach of a warranty automatic termination of cover is no longer the sole remedy, instead cover is suspended

68
Q

What is the difference between an excess, a franchise & a deductible?

A

Excess: The first amount a claim, which the insured will pay

Franchise: The amount of an agreed loss which if not exceeded the insured will pay. If the loss exceeds the franchise the insurer will pay the full loss value

Deductible: similar concept to excess, but usually a lot larger

69
Q

How soon before renewal does an insurer need to start pre-renewal work?

A

3 months for larger risks, 6 weeks for others

70
Q

What effect did the decision in printpak v AGF (1999) have in respect of breach of warranty?

A

Breach of warranty in respect of one section of a policy was held to only affect that section of the policy

71
Q

What is a standard risk profile?

A

When the policyholder’s activities are carried out in single tenure premises of suitable design & incombustible construction with proper control over trade hazards from heating, lighting & segregation of manufacturing from storage

72
Q

Can underwriters accept risks that deviate from the standard risk profile?

A

Acceptance will be assessed on the individual I collective effect on the level of risk. It must be considered if they are acceptable (increased risk but still insurable) or not. Unacceptable deviations must be eradicated before acceptance.

73
Q

Appropriate information depends on what according to the FCA?

A

The knowledge, experience, ability of a typical customer in that sector, policy terms & policy overall complexity

74
Q

How is the value of the subject matter of an inventory & valuation clause calculated?

A

Value at the date the inventory or valuation was made, subject to depreciation or appreciation since that date

75
Q

What property would typically be covered by a valued policy?

A

Works of art & other objects whose true value is otherwise often a matter of dispute at the time of a claim

76
Q

What is the basis for the application of an average in respect of the reinstatement clause?

A

Average will apply unless the sum insured represents at least 85% of the cost of reinstatement of the whole building at the time of repair

77
Q

What is the definition of standard turnover?

A

The turnover during that period in the 12 months immediately before the date of the damage which corresponds with the indemnity period.

78
Q

What is the purpose of the trends & variations (or other circumstances) clause?

A

The formula for BI only works if business remains static, trends 4 variations takes into account any expansion or retraction

79
Q

What is the automatic reinstatement clause & how does it operate?

A

Typically the sum insured is reduced by the amount of a claim until the next renewal. The policy holder may not remember to reinstate the sum insured if the stock is replaced, this clause does this automatically

80
Q

Under the riot compensation act 2016 what is the maximum time period to submit claims against the police?

A

42 days to submit a initial claim & a further 90 days to submit a full claim

81
Q

What does a standard subrogation policy condition allow?

A

It gives insurers the right to recover payments from a third party at the insurers expense

82
Q

A café is located next to a factory, which is due to be demolished. Under what circumstances will the café’s insurer accept a claim for structural damage done to its building as a result of the factory demolition?

A

If the cafe warned its insurer of the planned demolition of the factory, giving it the opportunity to reassess the risk

83
Q

Which building product melts when the temperature of a fire reaches 550°c?

A

Aluminium

84
Q

Composite panels that satisfy the requirements of loss prevention standard (LPS) 1181 will confirm that they what?

A

Will not make a significant contribution to fire growth

85
Q

Under the fire protection association (FPA) design guide for the fire protection of buildings for what time must fire protecting doors provide resistance?

A

At least 2 hours

86
Q

The primary concern of the regulatory reform (fire saftey) order 2005 is the what?

A

Safety of personnel

87
Q

For new-build premises in an isolated area it is appropriate to use a building product that can last 30 minutes without protection in a high temperature fire. What building product is appropriate?

A

Steel

88
Q

What is the most suitable method for extinguishing a metal fire in a manufacturing premises?

A

Dry sand

89
Q

Under British standard BS5839 the specific requirements of a type p alarm relate to protection of what?

A

Property

90
Q

What costs & expensive are covered by a fire & rescue services damage clause?

A

Those injured to reinstate landscape gardens or grounds following damage caused by combating a fire

91
Q

An existing policyholder has inadvertently omitted to advise the insurer of newly acquired plant and machinery. In these circumstances, cover may be provided retrospectively under which clause?

A

Capital addition

92
Q

What is typically the maximum an insurer will pay under a capital additions clause?

A

£500k

93
Q

When an organisation insures its gross profit under a BI policy on a  declaration linked basis, what is the maximum payable by the insurer?

A

133.3% of the estimated insured profit

94
Q

Which two factors influence the rate of sprinkler discount allowed?

A

Availability & pressure of water supply

95
Q

Which factor influences the basis rate used in a BI premium calculation?

A

MD inception hazard

96
Q

The economic limit applicable to increased cost of working under a business interruption claim for a manufacturing risk is calculated by

A

Applying the rate of gross profit to the reduction in turnover avoided

97
Q

A cellophane manufacturer stores carbon disulphide away from the plant and at a low temperature. This indicates that the chemical has a low

A

Auto ignition temperature

98
Q

The auto ignition temperate is the temperature where:

A

A substance will ignight in contact with air

99
Q

For sandwich panels to satisfy the requirements of LPS1208 they must have:

A

No gaps to allow fire or smoke through & the material on the inside should be non-combustable

100
Q

Modern business interruption policies are based on what?

A

Turnover

101
Q

When assessing EML underwriters will do so:

A

Separately for buildings, contents, stock, fees, debris removal and rent on each target risk

102
Q

What is LPS 1181 about?

A

Contribution to fire growth

103
Q

What is LPS1208 about?

A

Fire resistance

M93 (2 decks)

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