Commercial Property Insurance and Risk Management by Trieschmann, Weining,

Hedges, Trupin and Flitner(readings in CAS Study Kit)

Chapter

1 Property Risk Management

3 Building and Personal Property Coverage

5 Covered Causes of Loss

11 Inland Marine Insurance

12 Businessowners Insurance

Property Risk Management

Property loss - any loss that a person or organization sustains as a result of the damaging, destruction, taking or loss of use or property in which that person or organization has a financial interest

Risk Management Process

1 - Identify and analyze loss exposures

2 - Examine the feasibility of alternative risk management techniques

3 - Select the best risk management technique

4 - Implement the technique

5 - Monitor the program

Identify and Analyze Loss ExposuresProperty Loss Exposures

1 - The item exposed to loss

Real property

Personal property

Valuable information

2 - The cause of loss (Exhibit 1-2)

3 - The effects of loss

Reduction in value

Increased cost to repair or replace

Loss of revenue

Extra expense

Direct loss and indirect loss

Overview of Commercial Property Insurance

Insurance Advisory Organizations

Insurance Services Office (ISO)

American Association of Insurance Services (AAIS)

Develop and file with state insurance departments:

Policy forms

Manual rules

Loss costs

ISO Commercial Lines Program (1986)

“Commercial property”

Building and contents (on or within 100’ of insured location)

Boiler and machinery

Commercial crime

Employee dishonesty, forgery, theft, burglary, robbery, extortion

Commercial inland marine

Elements of transportation or communication

Property in transit, mobile equipment, property being installed by a contractor, bridges, radio towers

Farm

Commercial auto and liability

Building and Personal Property Coverage Covered Property

Building (Exhibit 3-2)Your business personal property

Property owned by the insuredFurniture and fixturesMachinery and equipment“Stock”All other personal property owned by you and used in your

businessProperty owned by others

Labor, materials or services furnished on property of othersImprovements and bettermentsLeased Personal Property

Personal property of others$2500 for property in the care, custody or control of insured

Property Not Covered under BPPBuildings and other real property

Land Roadways

Water Retaining walls

Bridges Piers

Plants and outdoor propertyGrowing crops and lawns

Outdoor crops

Outdoor trees, shrubs and plants

Outdoor fences

Outdoor signs, unless attached to buildings

Property Not Covered - continuedOther personal property

DeedsEvidence of debtMoneyCurrencyAccounts BillsSecurities and notesAlso, food stamps

Vehicles, Watercraft, AircraftAnimalsValuable papers and recordsProperty otherwise covered (BPP is excess)Contraband

Building and Personal Property Coverage

Covered locations

Described locations and off premises

Additional coverages

Debris removal

Pollutant cleanup and removal

Preservation of property

Fire department service charge

Building and Personal Property Coverage

Coverage Extensions

Newly acquired or constructed property

Personal effects and property of others

Valuable papers and records

Property off premisesOutdoor property

Covered only for fire, lightning,explosion, riot or civil commotion or aircraft