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C70 Gateway to Commercial Insurance > Study 10 - Commercial Property Solutions > Flashcards

Study 10 - Commercial Property Solutions Flashcards

1
Q

What techniques are used in loss control?

A 
Avoidance
Loss prevention
Loss reduction
Separation or diversification
Non insurance risk transfer
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2
Q

What are the two methods used to finance losses?

A

Retention and transfer

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3
Q

What types of losses are best served by retention?

A

Low in severity, high in frequency

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4
Q

What is passive retention?

A

Exposures retained but never identified

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5
Q

What are the two methods of transfer?

A
  • Loss to other entities by business contract

- Loss to an insurer through insurance policy

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6
Q

What are some examples of avoidance?

A
  • Permanently close a building

- Stop using high risk products and/or processes

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7
Q

What are some examples of loss prevention and loss reduction?

A
  • 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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8
Q

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

A

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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9
Q

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

A

LP:

  • Contract maintenance duties to a third party
  • Have insurer inspect premises
  • Remove all clutter on and around ignition sources
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10
Q

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

A

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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11
Q

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

A

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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12
Q

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

A

LP:

- Lock property in vehicle overnight or in a hotel room

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13
Q

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

A

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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14
Q

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

A

LP:

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

LC:
- Install a sprinkler system

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15
Q

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

A

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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16
Q

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

A

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
17
Q

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

A

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
18
Q

What are the typical property exclusions?

A
  • Vacant property
  • Electrical devices
  • Money, bullion, platinum, and other precious metals
  • Automobiles
  • Watercraft
  • Fur or fur garments
  • Property illegally acquired
19
Q

What are the typical peril exclusions?

A
  • Flood
  • Earthquake
  • Sewer backup
  • By laws
  • Inventory shortage
  • Pollution
  • Mould, fungus, biological or environment perils
  • Terrorism
  • Equipment breakdown
20
Q

What is typically covered?

A

Building, stock, equipment & floaters

21
Q

What is covered under building?

A

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

22
Q

What is covered under stock?

A

Merchandise usual to the insureds business

Includes packaging, wrapping, advertising materials

Many companies also consider similar property belonging to others

23
Q

What is covered under equipment?

A

All contents usual to the business

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

24
Q

What are the two types of endorsements?

A

Standardized

Manuscript or free-form

25
Q

What elements should be considered in commercial property forms?

A
  • The valuation basis (typically RC or ACV)
  • Policy coinsurance clause
  • Choice between blanket or separate limits
  • Do values at risk fluctuate over the year
26
Q

What does the coinsurance clause encourage insureds to do?

A

Insure their property to value

27
Q

What is the formula for coinsurance?

A

Amount of insurance carried / minimum amount required
x Amount of loss

= Amount covered by the insurance company

28
Q

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

A

Stated is a dollar amount as opposed to a percentage

29
Q

What is POED or COED?

A

Property of every description
Contents of every description

Common for blanket policies

30
Q

What two options are available for businesses with fluctuating values?

A

Stock reporting policy

Peak season endorsements

31
Q

Explain a stock reporting policy

A

Policy limit reflects highest anticipated value of stock

Reports of stock value monthly, quarterly or annually

Premium is adjusted at year end

32
Q

What is the difference between named perils and all perils?

A
  • 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.

C70 Gateway to Commercial Insurance (10 decks)

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