CAIB 2

coverage is provided only on property which is specifically identified or scheduled

policy used to insure building, stock and equipment under a single limit of insurance

• 1. Formula/cost: ACV minus straight line depreciation (the number of years the bld could've been used minus how long it was used.
• 2. Market value/direct sales: real estate appraiser will come to a value based on market value
• 3. Income: rental income
• 4. True value to owner: other methods fail to consider special circumstances
• 5. Broad Evidence rule: combo of 4 methods

• an insurer ceding part of the risk it has assumed to one or more other insurers,
• (the contract is between the insurers)

a policy under which a group of insurers has agreed to participate in providing coverage

something imposed by the insurer which requires the insured to do or not do something

the right of the insurer to "step into the shoes" of the party whom is has compensated and sue any party who the compensated party could have sued.

a promise that certain facts are as they are represented to be and remain so

a fact which if communicated to the insurer would induce it either to decline the insurance altogether, or not accept it unless a higher premium is paid

to act wilfully, and with the specific intent to deceive or cheat

in which a contract has no "legal or binding force" and as such is "incapable of being enforced by law"

building which has met minimum standards in terms of hours it will withstand a specific, carefully controlled test fire

all structural members including floors, roofs and their supports are constructed of steel, iron, concrete or other non combustible materials. Exterior is also required to be non combustible construction.

conditions common to all buildings which influence their potential for loss

the proximity of the building insured or containing the property insured to other commercially rated buildings

occurs when the applicants for insurance are largely those most likely to suffer a loss

refers to the grouping or classifying of risks according to established criteria which, in large part, is based on their probability for loss as a class

Characterized by intense competition between insurers. As a result, rates tend to be low

occurs when low profit margins force out some of the competition. As a result, insurers use a more disciplined underwriting approach. The insured normally receives little or nothing in the way of rate discounts

in a condition which may cause a peril to occur

a condition relating to the use of tangible property which could cause a peril to occur

subjective characteristics of the applicant that could cause a peril to occur (dishonesty)

business which is marginal or substandard but which the insurer agrees to accept as a favour to the broker

the existence of other insurance policies the applicant has with the same insurer

"empty" or when the normal occupant is absent and then contents have been removed

lack of habitual presence of human beings or when the premises are complete with it's contents, except that such person who normally occupies the premises is temporarily away

an additional rate charged over and above the fire rate

the inertia of a body that tends to move it away from the centre wround which it revolves

"failure in the working mechanism of the machinery…a functional defect in the moving parts of the equimpent which causes the latter to cease functioning or to function improperly"

a failure in the electrical mechanism of the machinery, appliance or device.

the type of losses which might be expected as part of the every day operation of a business

"deterioration or depreciation (i.e. value by ordinary and resonable use of the subject matter)"

the deterioration of an object which arises naturally over time

a hidden or concealed defect. One which could not be discovered by reasonable and customary inspection: one not apparent in the face of goods, product, document, etc.

disappearance under circumstances which cannot be explained

changes the terms or conditions of the policy

adds additional coverages to those already in place

materials, including diskettes, tapes and punch cards upon which data is recorded

the information stored on media

a location not specified on the policy which is not owned, rented or controlled in whole or in part by the insured

a location acquired (owned, rented or controlled) by the insured. Such location is a newly acquired location for a period of 30 days from acquisition

the cost of repairing or replacing the property on the same site with new property of like kind and quality and for like occupancy without deduction for depreciation

is one who has temporary custody of the personal property of another for the purpose other than sale and who is compensated as a condition of such custody

the legal duty imposed upon bailees which requires them to take the same care of the goods of others as would be taken by a prudent and diligent owner of such goods

includes airlines, railroads, trucking companies and others that furnish transportation to any member of the public seeking their services

• The gov't regulates the movement of goods by a tariff that lists the shipping rates for the carrier and the rules by which the shipment is made.
• Standard: reflects the amount for which the common carrier will be held legally liable under the tariff.
• Valued: the value is higher than what is expected, therefore the owner can negotiate to pay a higher rate to cover the additional cost
• Released: where the carrier doesn't hold any liability for goods transported

one that carries, for pay, the goods of certain customers only as contrasted to a common carrier that carries the goods of the public in general.

ones who haul their own goods or goods entrusted to them as bailees or lessees and includes shippers who own or lease their vehicles and carry their own goods.

the maximum amount an insurer will pay in only one disaster or occurrence

is concerned with setting up physical barriers to restrict unauthorized access to property

is concerned with setting up electronic barriers to restrict unauthorized access to property

refers to the methods used by owners to secure access to the premises when the business is closed (alarm).

refers to the protection provided to areas within the building where valuable property is being stored

provides direct security for individual items such as safes, vaults, chests, filing cabinets, display cases

refers to the ability of a telephone to withstand tampering

all negotiable and non negotiable instruments or contracts representing money or other property and includes revenue and other stamps in current use, tokens and tickets, but doesn't include money

the unlawful taking of property by a person unlawfully entering or leaving the premises as evidenced by marks of forcible entry or exit

means the taking of insured property from a custodian by a person or persons who have: - caused or threatened to cause bodily harm or commited an overt unlawful act witnessed by the custodian or taken such property from a custodian who has been killed or rendered unconscious.

includes the insured(s), their partner(s) or any employee authorized by them to have the care and custody of insured property

includes all means of taking property without the owner's consent

loss resulting directly from one or more fraudulent or dishonest acts commited by and employee, acting alone or in collusion with others.

The time permitted by an insurer, commencing with the expiry date of the policy, in which a claim must be discovered by the insured if it is to be covered by the policy

The insured or a partner of the insured or any employee who is duly authorized by the insured to have the care and custody of the insured property outside the premises

a person is guilty of forgery if he fraudulently alters any writing, makes, completes, executes authenticates issues or transfers any writing so it purports to be the act of another who did not authorize that act

includes all monies from sales or services rendered by a business

expenses that continue during the period of an interruption

expenses which may or may not continue during the period of interruption

is the gross profit minus all other expenses earned by the business

the measure of recovery under the Gross Earnings Form- refers to the amount the business would actually have earned had the loss not occured

the entire payroll expense for all employees of the insured, except officers, executives, dept mgmt, employees under contract, and other important employees whose services would not be dispensed with should the business be interefered or interrupted

the manufacturer or supplier upon whom the insured depends for materials or goods

The customer(s) who the insured depends upon to purchase its products

building improvements, alterations, and betterments made at the expense of or purchased by the insured as long as they are not the owner

the replacement or repair cost less depreciation

the costs to repair, replace or rebuild lost or damaged property without deduction for depreciation (new for old)

• 1. Mercantile: corner store
• 2. Non-mercantile: Doctor's office, lawyer
• 3. Manufacturing/industrial: restaurant, bakery
• 4. Institutional: gov't buildings, nursing homes, hospitals

• -fixed structures
• -additions and extentions
• -permanent fittings and fixtures attached and forming part of the building
• -materials, equipment, and supplies used for repair, maintainance and minor alterations to or for the building
• -growing plants inside the building for decorative purposes (but only if the insured is also the owner)

• -merchandise pertaining to the business
• -packing, wrapping, and advertising material
• -similar property belonging to others which the insured is under obligation to keep ir is legally liable.

• -contents usual to the insureds business
• -property belonging to others
• -tenant improvements

actual cost/purchase price minus depreciation (not a good way to value as even if the item technically is worth $0, it may still be useful)

is a condition which may cause a loss to occur

• a. type of building constuction: the ability to withstand fire, earthquake...
• b. Occupancy: type of operations (welding shop, library)
• c. Housekeeping: maintainance of the building
• d. External exposures: location of risk (next to a club vs senior home)
• e. Geography: rural areas with limited access to the fire department
• f. Protection: fire station, public services and police protection

• a. Financial Condition
• b. Associates: association with known criminals
• c. Moral character: questionable business ethics, history of police confrontations...
• d. Indifference to loss: lack of concern
• e. Poor managment: indifference in implementing standards aimed at loss prevention and reduction.

• 1. completing the survey
• 2. seek interested insurers
• 3. arrange meeting with prospect and obtain order for insurance
• 4. submit app to insurer (if required)
• 5. deliver the policy

based on a specific amount of time the building can stand under a controlled fire. usually steel frame, reinforced concrete, concrete block, masonry.

structure, walls, floors, roofs and supports are made of steel, iron or concrete

in older homes, timbre is used in columns, beams, girders, floors, roofs...

brick/joist and concrete block/wood roof type buildings. ext bearing walls are of non-combustible construction having a fire resistance of approx 2 hours. Roofs, floors and int framing are constructed whole or partly of wood or other combustible material.

supporting walls are constructed of wood. Ext is made of wood or stucco.

• 1. Fire resistive
• 2. Non-combustible
• 3. Heavy timbre
• 4. Ordinary
• 5. Frame

the insured should have a minimum 80% of value insured. If not, then the payment of settlement will be shared by both the insured and the insurer. If the loss is less than $5000 or 2% of the amount of insurance, then the co-insurance clause will not be applied.

• did x loss = settlement
• should

• 72,000 x 1,200 = settlement
• 96,000

• 3 x 1,200 = 900
• 4

• 1. heating: hot water/steam, hot air, radiant, electric
• 2. electrical services: wiring (copper), fuses, breakers
• 3. detachment: proximaty to other commercially rated buildings.
• 4. protection: private, public
• 5. occupancy: nightclub, library...

• 1. considered to be commercially uninsurable: war, nuclear energy hazard
• 2. potential to be catastrophic: earthquake, landslide, flood
• 3. more specialized poicy forms have been developed: auto, money and securites, business records
• 4. wholly or partially in the control of the insured: the application of heat or other process, normal wear and tear, scratching or marring
• 5. which are not common to a large nuber of insured, but which represent an increased potential for loss which is deserving of an additional premium charge: communication towers and antennae, buildings in the course of construction...