Auto Electrical Specialist Module 4 - Santam4 Vespa 125cc Scooter 2002 2 R 5 000 C _____ Subsection...

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Auto Electrical Specialist Module 4

Copyright © Santam Ltd. 2007 Course code: ASSESS123 / Module 4

Copyright © Santam Ltd. 2007 2 Course code: ASSESS123 /Module4

Auto Electrical Specialist

Module Introduction One of your current clients, Motolek, has been on SA Insurers’ books for the past six months. Motolek contacts you with regard to their insurance portfolio. They tell you that they are now, since the acquisition of the business, financially fit to extend their insurance cover. After the acquisition, they only addressed the basic insurance needs, mainly the items which at that stage were prescribed by the financial institutions. The insured will approach you about various aspects of the sections/extensions he needs cover for. You will have to do a review of the premises before informing him on the underwriting measures involved and giving him a quotation.

Take note that you should rather focus on the various types of cover and underwriting measures than tariffing or premium. The following sections are relevant to this case study: Section: General Section: Fire Section: Office Contents Section: Theft Section: Business All Risks Section: Public Liability Section: Electronic Equipment Section: Motor Section: Motor Traders - Internal Risks Section: Motor Traders - External Risks


If you use the following guidelines in relation to this risk, you will be able to complete this module effortlessly. 1. Firstly, read the module thoroughly. 2. Then, complete the questions of Task 1. 3. Study the content of Task 2.

• Complete the inspection reports. • Complete the quotation and recommendation/requirement form. • Complete the application form, as well as the underwriting/clause

form. 4. Now, complete the questions of Task 3. Module objective The goal of this module is to evaluate your knowledge of the following aspects of a workshop risk: • General questions asked when the insured wants to extend his current insurance

portfolio; • Risk evaluation with the necessary recommendations; • Completion of an application form and the application of underwriting principles; and • The answering of questions on possible changes in the risk.


Motivate your answers with the relevant facts throughout to qualify for the maximum allocation of marks as indicated per question. Case study Task 1 As soon as the current owners of Motolek acquired the business, they arranged for cover by SA Insurers. The cover was only for the goods under hire-purchase from various financial institutions. Their cash flow was limited and they were forced to insure only the most necessary. In the mean time, they have grown their business considerably and are now able to extend their insurance to provide in all their insurance needs. During your visit to the client at his premises the following questions were posed to you: Question 1 For the past six months and due to the high investment costs, Mr M took out only the most necessary insurance cover. He wants to know if he will have to pay the full premium for the rest of the year for the additional cover he is going to take out. ______________________________________________________________________________

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Question 2 Motolek has a lot of machinery and equipment which comprises partly of electronic components. They want to know if they have to insure it in terms of Section Fire or Section Electronic Equipment. What is your suggestion? Since Section Machinery Breakdown was not covered in the SMK 3 course, you may leave this section out. _______________________________________________________________________________________________

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Question 3 The insured wants to know if our policy provides cover for vehicles which have been repaired and are parked outside the building. These vehicles are parked in the parking area, directly in front of the building which forms part of the insured’s premises. When the parking area is full, they are parked in the street. Explain comprehensively to the insured when these vehicles will be covered and under which section(s). ______________________________________________________________________________

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Question 4 Due to the nature of their business they often use hand tools. They take it along with them when they work off the premises. Will our policy cover the tools when it is used elsewhere? If it does, under which section should it be insured? Provide comprehensive advice to the insured. ______________________________________________________________________________

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Question 5 The client wants to know more about liability. Suppose they have worked on one of their client’s vehicles and damage to the vehicle occurred after it has been returned to the client. Is it insurable? ______________________________________________________________________________

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Question 6 Mr M tells you that they deliver vehicles to clients after it has been repaired. He wants to know whether the vehicles will enjoy cover when it is driven or towed at the back of a trailer. (Refer to the visual material where the insured was busy loading a motorcycle onto a trailer.) _______________________________________________________________________________

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Question 7 Mr M would like to know how the sum insured for Section Motor Traders – Internal Risks and Motor Traders – External Risks is determined. _______________________________________________________________________________

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Question 8

Mr M would like to know how the premium for Section Motor Traders – Internal Risks and Motor Traders – External Risks is determined and if it is similar to standard motor tariffs.

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Question 9 Motolek offers a standby service and often has to work on other premises. Mr M would like to know if he enjoys cover when any damage to clients’ vehicles are caused on other premises (e.g. at the client’s house or work premises). ______________________________________________________________________________

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Question 10 Mr M tells you about a bad experience he had years ago when he was an employee at a garage. One of their client’s vehicles fell off the motor hoist. He wants to know if events like this will be covered by our policy and what he should do to obtain this type of cover.

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TOTAL

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SA VERSEKERINGSMAATSKAPPY INSURANCE COMPANY Reference Mister M 49 Factory Street Stikland 7530 Policy number 123746389 Dear Sir It is our pleasure to include with this a copy of your policy. Yours sincerely Head of Underwriting


SCHEDULE

Insurer: SA Insurance Company Product: Multimark III Insured: Motolek 49 Factory Street Stikland 7530 Business: Auto Electrical Specialists Agency: ABC Brokers Agency number: 00002 Manner of payment: Monthly debit order in advance Institution: National Bank Date of payment: 1st day of the month Insured period: 1 March 2004 to 31 March 2004

Any consecutive period of one calendar month to which the company agrees to renew the policy or any section of it.

Office: Stikland Signed at Stikland on 10 March 2004. On behalf of the insurer

SA Versekeringsmaatskappy

Insurance Company


SCHEDULE SUMMARY

Effective sections Additional/Refund premium

Renewal premium Monthly Annually

Fire 0,00 R 116,00 R 1392,00 Theft 0,00 R 33,33 R 400,00 Electronic Equipment 0,00 R 20,83 R 250,00 Motor 0,00 R 2 041,66 R 24 500,00 Public Liability 0,00 R 62,50 R 750,00 Policy fee R 10,00 R 120,00 Total premium (14% VAT included) R 2 284,33 R 27 412,00 After inception of cover, this schedule will become a tax invoice for the payment of the amount due (VAT number: 1234). Prescription date: 1 March 2005 Policy number: 123746389 Insured: Motolek Effective date: 01/03/2004 ___________________________________________________________________ Endorsements applicable to monthly policy (Endorsements attached to policy and which form part of it) Section Reference General 001 Premium adjustment clause Fire N.A. Theft Electronic Equipment N.A. Motor 115 Premium adjustment clause Public Liability (Claims made basis) N.A. ___________________________________________________________________


Insurance Company


General provision If, in the schedule of this policy, the sum insured, limit of indemnity or compensation is: • left blank or has no monetary amount stipulated against it; • reflected as nil or not applicable or not covered or no indemnity extended; it means the defined event or circumstance shown in the schedule is not covered by the policy.


SCHEDULE SECTION FIRE

Policy number: 123746389 Insured: Motolek Transaction number: Effective date: 01/03/04 ___________________________________________________________________ Stand no. Details of premises/Item description Sum insured/ Indemnity limit

1 49 Factory Street, Stikland Machinery R348 000 Construction: Standard Occupation: Motor electrician Additional perils Extension: Earthquake Extension: Special perils Extension: Malicious damage ___________________________________________________________________ Optional extensions applicable N.A. ___________________________________________________________________


Insurance Company


Memorandums Machinery on hire-purchase at National Bank and insured in terms of this section: Motor hoist (model HW 2500) R220 000 2 x ABC mechanical lathes (model S100) R 80 000 (R40 000 each) Bosch drill-press (model Kw100) R 20 000 4 x Bosch portable drills (model K999) R 4 000 (R1 000 each) 4 x Makita angle grinders (model AG100) R 4 000 (R1 000 each) 4 x sets of Gedore socket spanners R 10 000 (R2 500 each) 4 x sets of Gedore hand tools R 10 000 (R2 500 each) ___________________________________________________________________ Optional extensions not applicable Extension: Riot and strike Extension: Leakage Extension: Subsidence and landslip Clause: Stock declaration conditions Extension: Escalator clause Clause: Disposal of salvage


SCHEDULE

SECTION THEFT Policy number: 123746389 Insured: Motolek Transaction number: Effective date: 03/03/04 ___________________________________________________________________ Stand no. Details of premises/Item description Sum insured/ Indemnity limit 1 49 Factory Street, Stikland

First loss cover R5 000 Excess 10% of claim min R500

Construction: Standard _____________________________________________________________________________________________ Optional extensions applicable Keys and locks: R2 500 __________________________________________________________________________________ Memorandums Memo 1 – Excess applicable to theft claims amounts to 10% of claim with a minimum of R500. __________________________________________________________________________________ Optional extensions not applicable Buildings – Increased limit


Insurance Company


SCHEDULE SECTION ELECTRONIC EQUIPMENT

Policy number: 123746389 Insured: Motolek Transaction number: Effective date: 01/03/04 ________________________________________________________________

Details of premises/Item description Sum insured/ Indemnity limit

PENTIUM IV COMPUTER AND MAG 796 MONITOR (17DM) R7 200 (Serial number 22uw 123) First amount payable 10% of claim min R250 1 x HP LASERJET PRINTER R2 150 (Serial number 2233Bl 123) First amount payable 10% of claim min R250 _______________________________________________________________________________ Optional extension applicable N.A. _________________________________________________________________ Memorandums N.A. ___________________________________________________________________ Optional extension not applicable Telkom access lines Incompatibility cover


Insurance Company


SCHEDULE SECTION MOTOR

(SPECIFIED BASIS) Policy number: 123746389 Insured: Motolek Transaction number: Effective date: 03/03/04 ___________________________________________________________________ Item no. Make/Model Description Year CFG Sum insured Cover

1 Ford Ranger LDV 2002 2 R115 000 C 2 Fiat Uno P/V 1995 2 R 35 000 C 3 Venter Trailer 1998 2 R 25 000 C 4 Vespa 125cc Scooter 2002 2 R 5 000 C _____________________________________________________________________________________________ Subsection B Indemnity limit With respect to any event that occurs directly or indirectly because of a fire or explosion. R2 500 000 Liability to passengers R2 500 000 Any other event and the total of (a), (b), and (c) R2 500 000

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Cover A = Fire and Theft B = Balance of third party, Fire and Theft C = Comprehensive D = Third party only E = Balance of third party and Fire


Insurance Company


Optional extensions applicable Extension: loss of keys R 5 000 First amount payable - R100 Extension: windscreen R 2 000 First amount payable - 25% MIN R250 Liability limits (theft of radios) R 2 500 Extension: Contingent liability R2 500 000 Extension: Parking facilities and movement of third party vehicles R2 500 000 __________________________________________________________________________________ Memorandums Memo 1 Loss of use is included as attached. Memo 3 Up to R100 000 5% of claim min R1 000 R100 000 – R150 000 5% of claim min R1 500 R150 000 – R250 000 5% of claim min R2 000 R 250 000 and more 5% of claim min R3 500 Optional extensions not applicable Riot and strike Wreckage removal Unauthorised passengers Credit shortfall


SCHEDULE

SECTION PUBLIC LIABILITY

Policy number: 123746389 Insured: Motolek Transaction number: Effective date: 01/03/04 ___________________________________________________________________ Item no. Description Indemnity limit

1 Liability Claims made basis R1 000 000 Excess 5% of claim min R1 000/ maximum R25 000 Retrospective date: 01/03/2004

Optional extensions applicable Extension: Legal defence costs R 10 000 Optional extensions not applicable Extension: Products liability Extension: Defective workmanship liability Extension: EC Liability Extension: Wrongful arrest and defamation __________________________________________________________________________________


Insurance Company


You inform him that you have to do a review before you will be able to quote on the other three sections and/or the increased amounts. Use the following site layouts and visual material to evaluate the risk. GROUND LEVEL

SLIDING GATE

IRON

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*

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*


UPPER LEVEL

VIEW TO PARTS (STORE)

TIMBER PLATFORM

OFFICE OFFICE

OFFICE BOARDROOM

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Inspection reports Complete the following inspection reports to determine the risk. The sections on which no information was made available in the visual material, site layout or other information pieces have already been filled-in or marked as “N.A.”. Take note: Where “N.A.” is marked on the inspection report, it does not necessarily imply that it is “not applicable” to all similar risks. It is only “not applicable” to this specific risk/case study.

FIRE SURVEY REPORT

TO: ………………………………………….…….…. FROM: …………………………………………… BRANCH: ………………………………………….… SURVEYOR: ……………………….……...…… DEPARTMENT: ………………………………..…… SURVEY NUMBER: ………………..…………. REFERENCE: …………………………………….… DATE: …………………….………….…………. DATE: ………………………………………………. Name

Addess

Occupation

Area class ( ) Retention class: Construction class:

GENERAL DESCRIPTION

Locality Industrial Commercial Closed shopping centre

Residential Other

Details (if other)

Construction – Roof Reinforced concrete Corrugated iron r Tiles

Thatch Saw tooth Details other

Box guttering Condition of gutters Good Poor

Sky lights Plastic Fibre glass

Walls Reinforced concrete Brick I.B.R.

Details other Is bilding older than 10 yrs? YES NO r Number of floors Number of basements

Construction of floors Concrete Timber

Condition of premises Good Average Poor

Adjacent exposure Low Average High

Rivers/Canals Debris Block-up

Detail (type of exposure)

Adjacent risk communicates Yes No r

Seperation by

Security Chain link fence 2m Wall Access control

Street Lights r Floor lights 24 hr Security

Electric perimeter fence

S.A.I.D.S.A. Corporate Alarm Other alarm – name


Electrical Municipal supply Eskom Supply

Contact Breakers Condition appears to be- Good r Otherwise

Flexible extenstion leads noted YES NO r

Are plug points overloaded? YES NO r

Process (if major process involved, attach on separate sheet)

None Storage/Retail/Distribution only

Heat Process/Welding/Grinding Flammable liquids Quantity 2

Flammable liquid store – brick under concrete slab YES NO r

LP Gas installation ons site r Number of cylinders 2 Size …………………KG

Is wall block manifold in good condition YES r NO

All goods stored on racking or pallets Ja Nee If ‘Yes’, height of floor ……………..mm

Construction of racking Timber Steel

Storage Neat, tidy and well organised Ja Nee

Risk congested Disorganised Untidy

Spray painting (detail) Deep fat cooking

Grease extraction filters clean YES NO

Fire Protection

Local Fire Brigade ( ) would attend any ourbreak of fire Fire Station is = ………8……………kms from risk

Appliances on Site – hand held YES NO

Size Number of extinguishes

Service dates marked YES r NO Last date 7/2002

30m Hose Reels YES Number of None

Have staff been trained in the use of Fire Extinguishers YES NO

Easy Access to appliances YES NO Hydrant ring main YES NO

Automatic Sprinklers YES NO

A.S.I.B. Certificate Valid YES NO

Sprinkler Detail – contact number

Edition ……………….…………………………Supply …….…………………………………………Units ………….…………………….. Hazard…………………………………………Stack Height ………………………………………… Requirements (A.S.I.B.) YES NO Smoke Detectors YES NO

Water Supply Municipal r Bore Hole Dam


LOSS HISTORY

Date 15 October 2003

Amount – R8 550-80

CauseBurglary Remedial action Install alarm with armed reaction unit. MANAGEMENT & HOUSEKEEPING

General Standard Good Average Poor

Waste Disposal Good Average Poor

Smoking Permitted YES NO r

If no, were used smoking materials noted YES NO r

Are no smoking signs on display? YES NO

Specified rules for smoking (i.e. smoke areas, etc.)

Are flammable materials located against or between buildings YES NO r

MAXIMUM PROBABLE LOSS (M.P.L.)

All under one roof with free internal communication MPL 100% YES NO

Risk separated by fire break wall or detached buildings YES NO

If in your opinion less han 100% supply site plan

Are buildings less than 5 metres apart? YES NO

Seperation of buildings

OPINION OF RISK

Good r Average Poor

Risk acceptable YES NO

Moral Hazard Good r Poor

Inception Hazard High Medium Low

Spread Hazard High Medium Low

Fire Load High Medium Low

FURTHER COMMENT

If yes, see attached

Risk improvement requirements attached? YES r NO

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Surveyor

……………………15/12/2004…………………………

Date


Comment and give recommendations following on the inspection reports ______________________________________________________________________________

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Insurable items As previously mentioned, the insured took cover only for goods under hire-purchase, as compelled by the financial institutions involved. Mr M provides you with the following list of items to insure now that he is financially able to: (He doesn’t want any cover for riot and strike.) Rest of machinery and equipment R 450 000 Stock in trade (parts) R 500 000 Electronic Equipment 1 x 22” CTX Computer screen S/N OU7-75300583 R 2 450 1 x 133 Pentium 148 MB Computer S/N 011171126 R 4 300 1 x GEM Electronic lathe R 100 000 (electronic component is 35% of lathe) 2 x Electrical battery testing system R 40 000 (electronic component is 75% of system) Cover for theft R 30 000 Hand tools and equipment taken along when technicians are on standby or are repairing vehicles at the premises of the client. R 10 000

(replacement value) (limit per item R2 000)

Increase general public liability limit to R2 000 000 Defective workmanship R 100 000 Internal Risks (comprehensive cover) R 30 000 (Article I) Additional cover: only one motor hoist @ R50 per hoist External Risks (Third party, Fire and Theft) R 100 000 (Article I) No extensions – only basic cover, including passenger liability and demonstration risks (Salaries and wages R120 000 p/m) Cover for vehicles falling off the hoist R 100 000 The policy should be extended to include the above-mentioned from 1 October 2004.


Quotation on total insured package (including existing insured items)

Section Sum insured Tariff Premium

Fire 0,400%

Electronic Equipment

3%

Theft 8%

Business All Risks

12%

Public Liability

R 1 400

Motor Traders – Internal Risks

0,819%

Motor Traders – External Risks

3%

Motor (Specified basis)

See list - R24 500

Total (VAT included)


Recommendations/requirements ______________________________________________________________________________

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Application form Complete the application form for Sections Business All Risks, Motor Traders – Internal Risks and Motor Traders – External Risks with reference to the last-mentioned information. It is not necessary to use existing clause numbers. Create your own clause numbers for the purpose of this exercise and list it at the bottom of the application form (if necessary). Example “Clause 1” – Burglar alarm condition with armed response unit


BUSINESS ALL RISKS

Policy number and name (for amendment purpose) [Mark applicable choice with a . Areas marked with grey MUST ALWAYS be completed]

GENERAL SECTION DETAILS

Additional CPC limit: ( exceeding R10 000 included) R ……………………………… Premium: R…………………………………… Increased cost of working limit R ……………………………… Premium: R…………………………………… Riot and strike Premium: R……………………………………

ITEM DETAILS

Item Item Item Item

New

Am

ende

d

Can

cel

New

Am

ende

d

Can

cel

New

Am

ende

d

Can

cel

New

Am

ende

d

Can

cel

For an existing policy/item, please indicate:

From: / / / / / / / /

Location * 1 2 3 1 2 3 1 2 3 1 2 3 Premises (only location 1):

Postal code (lcoation 2 & 3)

Specified article Yes No Yes No Yes No Yes No

Limit any one item R R R R

Property description:

Make

Model

Serial/Identification

Sum insured:

R R R R

Com

plet

e fo

r ce

ssio

n no

ted

on it

em

Cession/HP

Cession holder: Cession-/HP no.:

Expiry date: / / / / / / / /

First Amount Payable: 10 % Of claim % Of claim % Of claim % Of claim

Minimum R500 Minimum R Minimum R Minimum R

Basic and extensions Item Item Item Item

Basic cover Premium

R R R R

Replacement condition Yes No Yes No Yes No Yes No

Alarm condition Yes No Yes No Yes No Yes No

* Location

1 = Only while in a specific building

2 = In any building

3 = In and outside any building

Yes No


OFFICE USE ONLY Item Item Item Item

Type of article code:

Slip number:

Bordereau number

Total Fac %

Reinsurer

Reinsurer’s policy number

Reinsurance %

Contact Person

Survey number

Survey data

Surveyor

Clauses applicable (Complete according to inspection report)

Number % Amount Number % Amount

Notes:


MOTOR TRADERS INTERNAL RISKS


GENERAL SECTION DETAILS For an existing policy please indicate: New Amend Cancel from: .…/….…/…….. Type of cover: Comprehensive (C) Situation postal code: Limit: Article I Article II Increase to: Basic Premium: Rebate: No claim bonus: Salaries/Wages: Extensions Premium Work away from premises Yes No R Riot and strike Yes No R Car Hoists Yes No R Premises First amount payable:

Description Excess Basic R % of value % % of claim 10 %

OFFICE USE ONLY Item Item Item Item Slip number: Excess of loss

Bordereau number Priority R R R R

Participating company Reinsurers policy number

Participation R R R R Contact person

Clauses applicable Number % Amount Number % Amount

Notes:

R

R2 500 000 R

R

10 %

R


MOTOR TRADERS EXTERNAL RISKS


GENERAL SECTION DETAILS

For an existing policy please indicate: New Amend Cancel from: .…/….…/…….. Type of cover: Comprehensive (C) Situation postal code: Limit: Article I Article II Increase to: Basic premium: Rebate: Salaries/Wages: Extensions

Limit Premie

Windscreen Yes No R

Social events Yes No R

Names:

Unauthorised use by employees Yes No R

Legal liability of passengers Yes No R

Riot and strike Yes No R

Loss of use Yes No R R

Legal liability of passengers (motor cycles only) Yes No R R

Driving of motorcycles Yes No R

Modifications

Exclude own vehicles Yes No

Exclude passengers liability Yes No

Exclude demonstation risk Yes No

Cover limited to Motorcycles only Yes No

Cover special type vehicles only Yes No

First amount payable:

Description Excess

Basic R

% of value 10 %

% of claim %

R

R2 500 000 R

R

10 %

R


OFFICE USE ONLY Item Item Item Item

Slip number: Excess of loss

Bordereau number

Priority R R R R

Participating company

Reinsurers policy number

Participation R R R R

Contact person

Clauses applicable Number % Amount Number % Amount

Notes:


Task 3 More questions

The insured wants to know what will happen if:

1. For example, a Motolek staff member borrows the company’s LDV over a weekend to

remove garden refuse or to transport something of this sort in his personal capacity. If this vehicle is involved in a collision, will it be covered in terms of the policy?

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2. An employee takes a client’s vehicle, which is on the premises to be repaired, to his home without the client’s permission and is involved in a collision.

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3. Some of the employees move their clients’ vehicles on the premises (for example from the motor hoist to the parking area) and a vehicle is damaged or collides with another vehicle or equipment.

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4. Electronic equipment is being repaired after a claim by a repairer and he charges

additional costs for speedy delivery and overtime work. _____________________________________________________________________________

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5. The engine of a client’s vehicle seizes, after the vehicle has been repaired and returned. After closer investigation, the insured discovered that a part which had been replaced has a defective design. The manufacturer confirms this. The insured wants to know if such an event will be covered in terms of the policy. What will you tell the insured?

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TOTAL

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Auto Electrical Specialist Module 4 - Santam4 Vespa 125cc Scooter 2002 2 R 5 000 C _____ Subsection...

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Transcript of Auto Electrical Specialist Module 4 - Santam4 Vespa 125cc Scooter 2002 2 R 5 000 C _____ Subsection...