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 5Covered Causes of Loss 11Inland Marine Insurance 12Businessowners 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 Exposures Property 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 insured Furniture and fixtures Machinery and equipment “Stock” All other personal property owned by you and used in your business Property owned by others Labor, materials or services furnished on property of others Improvements and betterments Leased Personal Property Personal property of others $2500 for property in the care, custody or control of insured

Property Not Covered under BPP Buildings and other real property LandRoadways WaterRetaining walls BridgesPiers Plants and outdoor property Growing crops and lawns Outdoor crops Outdoor trees, shrubs and plants Outdoor fences Outdoor signs, unless attached to buildings

Property Not Covered - continued Other personal property Deeds Evidence of debt Money Currency Accounts Bills Securities and notes Also, food stamps Vehicles, Watercraft, Aircraft Animals Valuable papers and records Property 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 premises Outdoor property Covered only for fire, lightning, explosion, riot or civil commotion or aircraft