PROPERTY LOSSES

1
PROPERTY LOSSES

• Lecture Nine
• Week Five

2
FIXED PROPERTY

• Land
• Buildings
• Includes landlords fixtures and fittings

3
PERILS AFFECTING FIXED PROPERTY

• Fire
• excluding it own spontaneous combustion or
  fermentation or undergoing a process involving
  the application of heat.
• Storm or flood
• excluding subsidence, heave or landslip
• Explosion
• excluding boiler explosion

4
PERILS AFFECTING FIXED PROPERTY

• Aircraft
• Riot and malicious Damage
• All risks to property excluding various items.
• Impact

5
MOVEABLE PROPERTY

• Plant, and machinery.
• Stock
• Office contents
• Household contents
• Vehicles
• Private
• Commercial

6
MOVEABLE PROPERTY

• Marine hull
• Marine Cargo
• Aviation hull
• Aviation cargo
• Engineering
• Computer

7
PERILS

• Similar to buildings
• Fire
• All risks

8
INVEWTIGATING THE CAUSE OF FIRE

• Investigation of fire needs
• Source of ignition
• Substance of ignition
• The defect, act or omission which led to source
  of ignition
• For fire to be covered must be accidental to the
  insured.

9
SOURCE OF IGNITION

• Materials need to be at a certain temperature
  before ignition occurs
• Flash Point
• Point at which limited amount of flammable vapour
  is produced and ignited by flame. Fire not
  sustained
• Fire point
• Continuous flow of vapour to sustain fire ignited
  by flame
• Self-ignition
• Bursts into flame spontaneously

10
CAUSES OF IGNITION

• Cigarette
• In contact with standard polyether medium density
  foam
• Flamed after 70 min with no smouldering
• Excessive loading of switches
• Rags used for cleaning paints spontaneously
  combusted.

11
REASONS FOR ARSON

• To gain financially
• To conceal another crime
• To destroy/protest
• Mental disorder
• Boredom

12
BURGLARY

• Covers contents of premises
• Excludes losses not followed by violent or
  forcible entry to or exit from a building.
• Normally includes assault or threats of violence
• Excluding loss of money
• Excluding property in the open
• Excluding connivance by employees

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TOTAL LOSSES

• Sum Insured is usually policy limit.
• Estimate cost of rebuilding
• May need surveyors or other experts
• Consists of
• materials
• labour
• salvage removal
• Estimate market value

14
PARTIAL LOSSES

• Cost of repairs
• Obtain detailed quotations
• Compare cost of repair with
• Total loss
• less recovery from salvage

15
STOCK

• Finished stock
• Goods in process
• Raw materials

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FINISHED STOCK

• Retailer
• Value wholesale price
• Calculation of loss
• Invoice value, less obsolescent stock.
• Check books for incoming stock
• Make allowance for shrinkage.
• Obsolescent stock
• Damaged, out of fashion, gone off

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WHOLESALE

• Invoice value less obsolescence
• Exchange prices for such items as wheat, corn or
  some metals.
• Shipping may be included in the cost

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MANUFACTURER

• Finished stock
• Cost of labour raw materials overheads
• Goods in process
• Cost of labour raw materials overheads
• Up until stage which the product had reached
• Raw materials
• Invoice or exchange price

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RECOVERIES

• Recovery from salvage
• Recovery from tortfeasors
• negligence
• Recovery from other insurers
• Average

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AVERAGE
Sum insured
X
Loss
Value
Sum Insured 20000
Value 100000
Loss 10000
20000/100000 10000 5000
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QUESTIONS ??