Cpcu 520 - Assignment 5

Front 1

Underwriters nearly always assesst he estimated extend of possible damages based on what three main causes of loss in property insurance

Back 1

(Memory Aid: ELF)
1.Explosion
2.Lightning
3.Fire

Front 2

Highlight

Back 2

Terrorism became a major cause of loss after the terrorist attacks on 9/11/01. Insurance companies must try to set rates for coverage although little historical loss data exists.

Front 3

Highlight

Back 3

Fire is considered the most important cause of loss to underwrite in property insurance

Front 4

The ISO categorizes construction into six classifications

Back 4

1.Frame
2.Joisted masonry
3.Noncombustible
4.Masonry noncombustible
5.Modified fire resistive
6.Fire resistive

Front 5

Seven underwriting concerns with respect to age of the construction

Back 5

(Memory Aid: DOC FIVE)
1.Different building code
2.Obsolescence of heating and electrical systems
3.Changes in occupancy and use of the building
4.Fire stops violated over the years
5.Increases in losses imposed by current building codes
6.Valuation problems
7.Erosion or deterioration

Front 6

Highlight

Back 6

Time element (indirect) losses are losses sustained due to the policyholder's inability to use the covered property immediately following a loss

Front 7

Five factors must be considered when determining the probably period of interruption

Back 7

1.Seasonability and rebuilding time
2.Bottlenecks
3.Length of the production process
4.Disaster contingency plans
5.Computer systems

Front 8

Four categories of ocean marine insurance

Back 8

1.Yachts
2.Commercial hulls
3.Protection and indemnity
4.Cargo insurance

Front 9

Five factors must be considered when underwriting theft, burglary, and robbery

Back 9

(Memory Aid: CLOMP)
1.Coverage and price modifications
2.Location of the property
3.Occupancy
4.Marketability and susceptibility
5.Public protection

Front 10

Four underwriting considerations regarding employee theft exposures

Back 10

(Memory Aid: MEAL)
1.Management controls should be in place and followed
2.Evidence of moral hazards should be considered
3.Amount of insurance should be in accord with underwriting guidelines
4.Loss control systems should be in place

Front 11

Four objectives of insurer loss control activities

Back 11

1.Profit objectives
2.Meeting customer demand
3.Meeting legal requirements
4.Humanitarian and ocietal concerns

Front 12

Amount subject

Back 12

The largest loss possible from any single event at any given time

Front 13

Automatic sprinkler system

Back 13

System used to control fire that disburses water, dry powder, carbon dioxide, or halon

Front 14

Building Code Effectiveness Grading Schedule (BCEGS)

Back 14

Classifications assigned to different communities according to each community's effectiveness in enforcing building codes

Front 15

Building codes

Back 15

State and local regulations that dictate minimum standards for building construction

Front 16

Central station system

Back 16

Private service with personnel monitoring a number of commercial concerns; effective but costly

Front 17

Common hazards

Back 17

Hazards present in nearly every occupancy

Front 18

Deluge sprinkler system

Back 18

Resembles pre-action sprinkler systems except the valves are always open; automatic heat or smoke detector controls whether water flows

Front 19

Dry pipe system

Back 19

Type of automatic sprinkler system in which pressurized air fills the pipe until activation brings water into the system

Front 20

External exposures

Back 20

Exposures outside the area owned or under the control of the insured

Front 21

Fender walls

Back 21

Horizontal extensions of fire walls beyond the outer walls of the building

Front 22

Filed classes

Back 22

Classes of inland marine insurance in which the major rating bureaus are required to file rates, rules, and forms for the member companies

Front 23

Fire division

Back 23

A section of a struction so protected that fire will not spread to another section

Front 24

Fire resistive construction

Back 24

Superior to other types of construction; load bearing components of a fire-resistive structure are determined not to collapse or buckle

Front 25

Fire wall

Back 25

A fire-resistive barrier restricting the spread of fire; must be masonry material at least eight inches thick

Front 26

Frame construction

Back 26

Exterior walls are constructed of wood or other combustible materials; susceptible to structural damage since load-bearing supports are combustible

Front 27

Fuel load (fire load)

Back 27

Maximum expected amount of combustible material in a particular area

Front 28

Joisted masonry construction

Back 28

Also called "ordinary construction", "brick", "wood joisted", or "brick joisted"; buildings with exterior walls of fire-resistive construction or of masonry construction; walls are self-supporting masonry and interior framing and floors are of wood or other combustible material

Front 29

Local fire alarm system

Back 29

System that sets off an alarm inside or outside of the building when triggered by a smoke or heat detector

Front 30

Loss control

Back 30

Refers collectively to loss prevention and loss reduction

Front 31

Loss prevention

Back 31

Measures intended to lower the frequency of losses

Front 32

Loss reduction

Back 32

Measures intended to lower the severity of losses that occur

Front 33

Masonry noncombustible construction

Back 33

Masonry noncombustible buildings are either buildings with exterior walls of fire-resistive construction with a rating of at least one hour or buildings of masonry construction

Front 34

Modified fire resistive construction

Back 34

Columns and walls supporting the upper floors and roof must be masonry or reinforced concrete construction; fire-resistance rating of the materials is one to two hours

Front 35

Nationwide Marine Definition

Back 35

Defines the types of risks and coverages state insurance laws can classify as marine and inland marine insurance

Front 36

Navigation warranty

Back 36

Restricts coverage to the area for which the yacht, equipment, and experience of the operator are appropriate

Front 37

Nonfiled classes

Back 37

Classes of inland marine insurance developed and rated according to the underwriting practices of an individual insurer

Front 38

Parpets

Back 38

Extensions of fire walls rising vertically above the roofline

Front 39

Pre-action sprinkler systems

Back 39

Fire suppression device in which a valve opening the sprinkler system is opened by a smoke detector or heat detector in response to fire conditions

Front 40

Probable maximum loss (PML)

Back 40

The largest loss that the underwriter considers possible based on experience and judgement

Front 41

Public fire protection

Back 41

Fire protection equipment and services provided by the town, city, or county

Front 42

Special hazards of the class

Back 42

Specific hazards common to a particular class which increase the likelihood or severity of loss

Front 43

Special hazards of the risk

Back 43

A special hazard caused by a business engaging in an activity which is not common to the class of the business

Front 44

Underinsured

Back 44

The property is not insured to value and the policyholder will not receive the full value of the property if the property is damaged or destroyed

Front 45

Wet pipe system

Back 45

Type of automatic sprinkler system with water at the sprinkler head