Property Insurance

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Property Insurance

• Dublin
• 22nd September2009
• Martin Barry

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We are going to discuss the following

• Underwriting
• Design and Protection of Buildings
• Special Perils Explosion - Subsidence
• Commercial All Risks
• Reinstate v Reinstatement
• Warranties
• Property Insurance in 2009 and the future

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Property Underwriting

• The purpose of underwriting is to assess the
  extent to which the risk presented departs in any
  respect from normal and if so, to what extent
  additional hazard can be mitigated or can be
  covered and at what rating considerations.

It should be a principle of underwriting that
each underwriting account be financially
self-supporting, and investment income should be
irrelevant. The premium on a fire policy is got
by multiplying the rate per cent by the sum
insured.
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Property Underwriting

• Rating (fire) is based on -
• Classification Grouped according to
  trades/businesses
• Discrimination the differentiation of risks in a
  classification with regard to particular features
  
• Experience the loss ratio
• Information should be obtained from as wide a
  field as possible

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Property Underwriting

• Underwriting Factors
• Inception hazards
• Contributory hazards
• Accumulation of risk/Multiple Tenure
• Factors improving the risk
• Subject to the Insurers Retention and Reinsurance
  arrangements

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The Design and Protection of Buildings

•  
• Building Regulations Life Safety
• Insurance Requirements Property protection
• Fire Offices Committee Standards/Grades
• Loss Prevention Council Design Guide

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The Design and Protection of Buildings

• Insurers Guide The LPC Design Guide for the
  Fire Protection of Buildings 2000
• New Publication - Building Regulations 2000 (UK)
• Approved Document B. Fire Safety (Vol. 2)
  Buildings other than dwelling houses
• Incorporating Insurers Requirements for
  Property Protection

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The Design and Protection of Buildings

• Basic objectives for Insurers in relation to
  property protection
• To minimise the effect of fire on a business
• To limit the effects of business interruption
• To allow a business to be trading within 24 hours
  of a fire
• To protect the buildings within a business

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The Design and Protection of Buildings

• Essential principles
• The building shall be constructed in such a
  manner that if a fire starts, the extent of fire
  and smoke damage will be minimised and confined
  as close to the source of the fire outbreak as is
  practical/feasible
• With the exception of joinery products, the
  building shall be constructed from building
  materials/products that will not make a
  significant contribution to the early stages of
  the fire or contribute to the spread of the fire
• Suitable measures will be taken for the
  prevention of premature structural collapse and
  excessive

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The Design and Protection of Buildings

• Essential principles contd
• Consideration should be given at the design
  stage regarding potential damage from fire
  fighting water and ensure, as far as practical,
  that the effect on the environment of the fire
  effluent will be minimised
• As a minimum, all fire protection products shall
  be third party certified
• The fire protection products/system shall be
  installed by adequately trained specialist
  installers
• The building shall be fitted with an appropriate
  automatic fire alarm system

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The Design and Protection of Buildings

• Essential principles contd
• The fire protection systems shall be regularly
  maintained so that they are able to, perform
  their intended function throughout the building
• There shall be adequate provision to prevent
  arson attack
• The building shall be so constructed that fire
  cannot spread into the premises from an adjoining
  building or other external fire source
• The building owner shall ensure an adequate
  standard of fire safety management throughout the
  life of the building
• Any fuel-burning appliance and services or
  electrical appliance and services shall be
  designed, constructed and installed in a manner
  that reduces their potential as an accidental
  source of ignition

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Commercial All Risks

• Defined Perils
• Perils of a Chemical Type
• Explosion, Spontaneous fermentation or heating
• Social Perils
• Riot, civil commotion, strikers, locked out
  workers and malicious persons
• Perils of Nature
• Storm, flood earthquake, subsidence
• Miscellaneous Perils
• Escape of water, aircraft, impact

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Explosion of -
Domestic Boilers and domestic gas for light and
heat Trade Boilers, Economisers and Steam
pressure vessels and Damage to Surrounding
Property thereby Other vessels the property of
the Insured or in his control Damage to
surrounding Property caused by explosion of these
other vessels Explosion of dust, gases,
chemicals, liquids (explosive) and boilers etc
not owned or controlled by insured Domestic
can mean the domestic heating of a premises
occupied for business purposes

• Covered by Standard Fire Policy
• Can only be covered by an Engineering Insce
• Normally excluded from Eng. Peril - can be
  covered if Inspection contract is in force
• Covered by Explosion Peril
• Covered by Explosion Peril

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Subsidence

• Insurance against subsidence, ground heave and
  landslip is commonly
• included in the package policies offered in
  respect of the buildings and
• contents of private dwellings or
• Added to a policy by means of a buy-back
  endorsement
• However, the cover is not widely available for
  industrial and commercial
• risks as there is a strong element of
  selection against the insurers

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Subsidence

• Subsidence is settlement of the ground on which
  the premises stand due to
• uneven settlement of made up ground
• movements, falls or changes in underground
  workings
• movement of foundations made of dissimilar types
  of ground which have been affected by change in
  the moisture content (sand and clay react
  differently to such changes, for instance) or
• Other changes in moisture content (for instance
  because of drought)

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Commercial All Risks Policy

• Causes which insurers WILL NOT INSURE in a
  property policy pollution, normal settlement of
  new structures, war risks, terrorism,
  consequential loss (except rent), property
  insured by a marine policy,
• Causes which insurers MAY INSURE but only after
  careful attention to underwriting inventory
  shortages, vacant property - freezing, escape of
  water, malicious damage etc.
• Causes which insurers will usually allow to be
  added as buy-backs fraud and dishonesty, theft,
  goods in transit, fixed glass, crops and trees.
• Causes or property more properly insured on a
  specific specially designed policy computers,
  livestock, consequential loss, own steam or
  other pressure plant

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Reinstate v Reinstatement Memorandum

• Reinstate as a policy condition
• The insurer in providing indemnity has the option
  to pay cash, repair, replace or reinstate in the
  event of loss. The option to reinstate is seldom
  taken, because of all the problems that can be
  encountered in reinstating a property
• Reinstatement Memorandum
• This is a clause or an extension of cover that
  is offered by insurers and the basic principle of
  the Memorandum is that
• the sum insured at the time of damage must
  represent the cost of rebuilding or replacement
  at the time of reinstatement
• No deduction is made for wear and tear
• Cover is not available for stock insurances

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Warranties

• In a fire policy, a warranty is either a clause
  requiring an insured to undertake to do or not to
  do certain things
• A warranty must be strictly complied with, and if
  there is a breach the insurance is voidable
• Therefore it is important when imposing
  warranties they are clearly expressed and the
  insured is aware of them
• One warranty that should appear on all policies
  is related to waste. As it is often the
  accumulation of waste which accelerates a fire or
• Today going forward should that one warranty
  should relate to security

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Warranties

• If the warranty is an expressed condition it
  converts the warranty into a condition precedent
  to liability in respect of the property insured
  or any item thereof
• The breach of a warranty is a bar to any claim
  in respect of the property insured or any items
  thereof from the time of the breach until the
  next renewal date
• Question on a Proposal Form does the answer to
  the question constitute a Warranty/Policy
  Condition ?.
• Continuing Warranty Hussain v Brown (1996)
  illustrates that a question about an alarm on a
  Proposal Form is not a continuing warranty
• Irish Insurance Federation Non-Life General Code
  is relevant to Personal Insurances

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Property Insurance in 2009

• Construction
• Construction methods
• Labor force and Planning enforcement
• Contractors All Risks
• Partially constructed buildings
• Protection of these buildings
• Start up defects period

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Property Insurance in 2009

• Vacant Properties
• Security
• Protection
• Sum Insured Replacement/Indemnity
• Who will Insure

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Property Insurance - Construction
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Property Insurance - Construction
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Property Insurance

• Questions