Study 4 - Underwriting the Risk: Property

Question 1

What is COPE?

Answer 1

Construction
Occupancy
Protection
Exposure

Question 2

What are the six categories of construction?

Answer 2

Frame
Jointed masonry
Non-combustible
Masonry non-combustible
Modified fire resistive
Fire resistive

Question 3

What else may construction include?

Answer 3

Size of the building
Its age
Number of storeys
Information on the heating system

Question 4

Briefly describe each element of COPE

Answer 4

C - Description of the types of material used for the building and the size of it

O - Use of the property by its occupants

P - Public & private protection, fire stations, sprinklers, extinguishing systems

E - Chance a loss will be suffered as proximity to one or more risks

Question 5

What are the main considerations of occupancy?

Answer 5

Home - occupied or rented

Business - type of business

Question 6

What are the two types of protection?

Answer 6

Public and private

Question 7

What is the difference between public and private protection?

Answer 7

Public is availability of fire departments

Private is the risk itself, sprinklers, fire extinguishers, etc

Question 8

How does the Fire Underwriters Survey grade communities?

Answer 8

Risk levels, fire suppression, water supplies, emergency communication and fire prevention

Question 9

What is exposure?

Answer 9

The possibility of loss by an insured peril in a neighbouring building or the general area

Question 10

What is an important consideration for seasonals?

Answer 10

The proximity of forests

Question 11

Define subrogation

Answer 11

Legal process by which an insruance company, after the payment of a loss, is assigned the rights of the insured to receive the amount of the loss from those who are legally liable for it

Question 12

Define hazard

Answer 12

1) a risk or probability that the event insured against might occur
2) a condition that engenders or increases the chances of a loss

Question 13

Define common hazard

Answer 13

a hazard that is generally found in most occupancies. Heating, lighting and housekeeping are examples of hazards common to most occupancies

Question 14

Define special hazards

Answer 14

Foreseen hazards/risks common to certain types of businesses that are not covered in an ordinary policy. For example, woodworking plants and paint shops

Question 15

Why are problems often heightened for commercial risks?

Answer 15

• Commercials businesses are often larger than dwellings
• They often have more than one occupant
• The occupants activities are usually varied and more dangerous
• The exposure commercial businesses face from surrounding buildings tend to be less predictable and more severe

Question 16

What is the flash point of a liquid?

Answer 16

The minimum temperature at which it will ignite

Question 17

Define automatic sprinkler

Answer 17

A device to protect property from damage by fire in which water is piped to devices called “sprinkler heads” that melt with heat and release water to extinguish fire

Question 18

Explain why different sprinkler liquids may be used

Answer 18

Water is appropriate in many situations

For situations where water might further worsen it; ie. a deep-fat fryer, suppression systems for grease fires must be installed

Question 19

What are the four stages of fire?

Answer 19

(FISH)

1) Incipient - invisible products of combustion produced, no visible smoke or flame
2) Smouldering - uantity of combustion particles increased to point where they are visible as smoke
3) Flame - actual fire now exists, signficant heat is till not present but follows nearly simutaneously
4) Heat - large amounts of heat, flame, smoke and toxic gases are produced, develops very quickly

Question 20

What is there to consider of the human element for a fire loss?

Answer 20

• Do employees know where the fire alarm pull stations are?
• Do they know how to leave the building quickly and safely?
• Do they know how to call fire department?
• Have they been trained in the use of extinguishers?

Question 21

Why is there a bigger threat of exposure with a commercial building?

Answer 21

Commercial buildings are often built much closer together than homes

Question 22

In a single-family dwelling, why is it important to know whether or not the structure is under renovation
or construction?

Answer 22

• The risk of a fire or other insured loss is greater for a dwelling under construction or undergoing renovations than for one that is not
• Construction or renovation work on a dwelling often entails makeshift arrangements for electrical systems or heating
• Workers carry out hazardous processes, such as welding or cutting with torches
• Combustible materials may be used in building or changing property
• All these activities or aspects of construction and renovation work increase the possibility, even the likelihood, of loss

Question 23

Why is it important for the owner of a rental property to make regular visits to the property? Use the
presence of a grow op as an example.

Answer 23

The more often an owner visits, the more likely the owner is to notice any behaviour of the tenants
- or problems with the building itself
- that could give rise to loss
• It has been a matter of some legal dispute whether the dwelling owner’s insurance should respond to losses by fire or mould if they arise out of an illegal operation, such as a growop
• Some courts have ruled that, in the absence of a specific exclusion of loss arising from grow-ops, such loss may be considered vandalism or malicious mischief and therefore covered under the policy
• As a result, it has become quite common for a restriction to be placed on the policy to
exclude losses pertaining to grow ops

Question 24

How might you assess a home?

Answer 24

o What is the size of the dwelling?
o What type of construction was used to build the home?
o How is the home heated?
o How old is the home?
o Is there any construction or renovations currently happening at the home?
o Does the home have any concealed spaces?

Question 25

How would you use COPE for a commercial building?

Answer 25

o Building age or location
o Municipal bylaws
o Construction
o Construction materials
o Heat source
o Power loss contingency