Study 10 - Commercial Property Solutions Flashcards by Jeff Chandler

What techniques are used in loss control?

Avoidance
Loss prevention
Loss reduction
Separation or diversification
Non insurance risk transfer

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What are the two methods used to finance losses?

Retention and transfer

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What types of losses are best served by retention?

Low in severity, high in frequency

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What is passive retention?

Exposures retained but never identified

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What are the two methods of transfer?

Loss to other entities by business contract

- Loss to an insurer through insurance policy

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What are some examples of avoidance?

Permanently close a building

- Stop using high risk products and/or processes

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What are some examples of loss prevention and loss reduction?

Build a fence around a property lot
Install locks on doors
More valuable papers off site or away from ignition sources
Hire an appraiser to evaluate a building’s value
Have an insurer conduct a property preinspection
Screen employees driving history
Create an attrition plan

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For hazard materials, what loss prevention and loss control techniques could you use?

LP:

Remove substances from premises; store at off site location
Hang signs to alert others of dangerous chemicals

LC:

Place in a ULC container
Fire extinguishers on hand

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For poor housekeeping, what loss prevention and loss control techniques could you use?

LP:

Contract maintenance duties to a third party
Have insurer inspect premises
Remove all clutter on and around ignition sources

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For smoking, what loss prevention and loss control techniques could you use?

LP:

Install signs prohibiting smoking
Place fire resisitive waste receptacles in smoking areas

LC:
- Install a centrally monitored fire alarm system

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For exposed wiring, what loss prevention and loss control techniques could you use?

LP:
- Hire a company to conduct an infrared thermography inspection to check for hot spots

LC:
- Install centrally monitored fire alarm

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For property away from the premises, what loss prevention and loss control techniques could you use?

LP:

- Lock property in vehicle overnight or in a hotel room

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For adjacent exposures, what loss prevention and loss control techniques could you use?

LP:
- Install a fire resistive barrier between buildings

LC:

Reduce extent of wall openings facing the exposure
Clean up debris between buildings

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For spray painting, what loss prevention and loss control techniques could you use?

LP:

Install proper equipment such as a downdraft spray booth
Use only approved materials

LC:
- Install a sprinkler system

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For commercial cooking, what loss prevention and loss control techniques could you use?

LP:
- Contract with a cleaning company to service and clean cooking equipment on regular basis

LC:

Install a fire suppression system
Install fire extinguishers

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For welding, what loss prevention and loss control techniques could you use?

LP:

Appoint a security guard to stay on the work site for two hours after work has been completed to ensure no fires
Provide fire safety and training programs to staff

For cutting, what loss prevention and loss control techniques could you use?

LP:

Install effective dust control systems
Clean the main dust control system on a regular basis

LC:

Install a sprinkler system
Install fire extinguishers
Install a centrally monitored fire alarm system

What are the typical property exclusions?

Vacant property
Electrical devices
Money, bullion, platinum, and other precious metals
Automobiles
Watercraft
Fur or fur garments
Property illegally acquired

What are the typical peril exclusions?

Flood
Earthquake
Sewer backup
By laws
Inventory shortage
Pollution
Mould, fungus, biological or environment perils
Terrorism
Equipment breakdown

What is typically covered?

Building, stock, equipment & floaters

What is covered under building?

Fixed structures that pertain to the building and located on premises

Also includes signs, plants, trees & shrubs

Many insurers include equipment used for maintenance and normal repairs part of the building

What is covered under stock?

Merchandise usual to the insureds business

Includes packaging, wrapping, advertising materials

Many companies also consider similar property belonging to others

What is covered under equipment?

All contents usual to the business

Includes furniture, furnishings, fittings, fixtures, machinery, tools, utensils and appliances other than building or stock

What are the two types of endorsements?

Standardized

Manuscript or free-form

What elements should be considered in commercial property forms?

- The valuation basis (typically RC or ACV) - Policy coinsurance clause - Choice between blanket or separate limits - Do values at risk fluctuate over the year

What does the coinsurance clause encourage insureds to do?

Insure their property to value

What is the formula for coinsurance?

Amount of insurance carried / minimum amount required x Amount of loss = Amount covered by the insurance company

How does a stated amount coinsurance clause differ from a standard one?

Stated is a dollar amount as opposed to a percentage

What is POED or COED?

Property of every description Contents of every description Common for blanket policies

What two options are available for businesses with fluctuating values?

Stock reporting policy | Peak season endorsements

Explain a stock reporting policy

Policy limit reflects highest anticipated value of stock Reports of stock value monthly, quarterly or annually Premium is adjusted at year end

What is the difference between named perils and all perils?

* A named-perils policy provides coverage against loss or damage caused by only the listed perils. * Property must be directly damaged by a peril that is explicitly named in the policy. * Named-perils policies are cheaper than all-risks policies. * All-risks policies cover against direct physical loss or damage caused by any peril provided that the peril is not excluded. * Some excluded perils can be purchased on top of an all-perils policy. * Since all-risks forms limit coverage by exclusions, they insure against more perils than named perils forms.