Claim Management

Prof: V.K.Agarwal Visiting Faculty

Insurance
AUTO Inland Marine Property & Liability

Coverages
Work Comp Bonds Other Liability

Claims History Review



Ins Program
  

Autos (fleet of 9, incl. trailer)(experience - discounted) Package (liability is sales based - auditable) - CPP W/Comp (payroll-based - auditable) 3/02 - $127 other vehicle turned in front of auto driven by owner/officer 5/01 - $7290 unsafe lane change auto loss owner/officer driving 8/99 - $9706 lost control of auto, flipped 9/03 - $1399 theft from auto parked at business 2/03 - $6038 theft of computer, copier, laptop, from business premises 7/98 - $688 wind/hail damage to canopy at parade of homes 12/97 - $4013 cut finger while using utensil to trim tile, during installation 9/96 - $1919 employee drove vehicle into building, damaged desk, bookcase, side of bldg, computer 3

Loss history
       

Multi-line Commercial policies

property loss exposures possibility that a person or an organization
will sustain a financial loss as a result of damage to, destruction of, theft of, or loss of use of property

liability loss exposures possibility that a person or an organization

will sustain a financial loss as the result of a claim from someone seeking monetary damages
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Commercial insurance
    

Commercial property CGL insurance Business income Workers compensation Crime insurance & employers liability Equipment Breakdown Professional Inland & ocean marine
Fiduciary liability (EBL)

Directors & Officers/EPLI

   

Businessowners ~ BOP Commercial Package policy ~ CPP Farm insurance Commercial auto

Umbrella

Commercial insurance/bonds
    

Aircraft Environmental Impairment Liquor Liability Surety Bonds License & Permit Bonds

Section I
How Where

How Much

What

Analysis of property insurance

Section 2
Exclusions BI, PD, PI, AI

Conditions
defense judgment

Insured

Analysis of liability insurance

Eligibility
Commercial Package (CPP)  Business Owners (BOP)  Other: builders risk


Policy structure
Common policy declarations Common policy conditions Coverage parts If only one part, its considered monoline rather than packaged

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Commercial Property Declarations

    

property description kinds & amounts of property covered covered causes of loss mortgagee(s) (if any) deductible amount

  

list of forms & endorsements coinsurance % any optional coverages

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Commercial Insurance Conditions

      

concealment, fraud,  no benefit to bailee misrepresentation  other insurance control of property  policy period, insurance under 2 or more coverage territory coverage parts  transfer of rights of legal action against insurer recovery (subrogation) liberalization severability cross-suits
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Loss Conditions (Valuation/settlement basis)

      

abandonment appraisal duties in event of loss or damage loss payment recovered property vacancy valuation

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Commercial Property
         

Buildings, auxiliary structures Insureds business personal property Others personal property in insureds custody Property Not Covered Property Subject to Limitations Additional Coverages Extensions of coverage Deductibles Loss Settlement Provisions Optional Coverages, endorsements

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Definition of Building
 

 

structures listed on Dec page completed additions to covered buildings fixtures (including outdoor) permanently installed machinery & equipment

insureds personal property used to maintain business & premises additions, alterations, & repairs (including materials within 100)

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Property NOT Covered by BPP

      

accounts, bills, records. most animals autos for sale contraband excavations land air/water-borne property

    

bridges, roadways, bulkheads, piers, retaining walls, foundations property covered elsewhere underground pipes valuable papers vehicles/aircraft/watercraft outside grain, hay, straw, fences, antennas, trees

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Additional Coverages
        

Property off premises Property in Transit Property of Others Personal Effects Debris removal Preservation of property Fire department service charge Pollutant cleanup & removal Increased cost of construction

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Coverage Extensions Available BPP

     

Newly acquired buildings or personal property Valuable papers & records Accounts receivable Exterior Signs Trees, Shrubs, Plants and Lawns Tenant Glass

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Insurers Loss Payment Options

 

Pay the amount of damage or loss Pay to repair or replace damaged property Take property & pay agreed or appraised value

Repair, rebuild or replace with property of like kind and quality Remember: must have financial loss and insurable interest

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BPP Additional Conditions

Mortgage Holder Vacancy Coinsurance or agreed value

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Optional Coverages BPP


  

agreed value option inflation guard replacement cost extension of replacement cost to property of others

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Functional Valuation Endorsements: BPP Functional building valuation Functional personal property valuation (other than stock)
Functional replacement cost = cost to replace damaged property with similar property that will perform the same function

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Two Major Approaches to Insuring Property

SPECIFIC INSURANCE States separate amount for each building and for personal property at each location  BLANKET INSURANCE Covers with one limit:


 2 or more types of property  1 or more types of property at more than 1 location

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Commercial Liability


How can liability be imposed?

Contract  Common law negligence  Statute


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Who can expose the business to loss?

      

Owner/spouse in conduct of business Employees, including operation of mobile equipment Real Estate/property managers Legal Representatives Newly acquired/formed organizations Independent contractors Those to whom property is entrusted

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Structure of Coverage


Liability coverage
  

Premises/operations Products/completed operations Acts of Independent Contractors

  

Supplementary Payments Medical Payments Damage to Rented Premises

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Structural coverage issues

       

Who is an insured What is covered Where its coverage How much: Limits of insurance Exclusions Definitions Conditions Endorsements
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Who is an insured
Named insured (by definition)  Automatic insureds  Additional insureds


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What is covered
  

Legal liability (damages) Defense expense (sometimes in damages, sometimes outside) BI, PD, PI, AI as defined (may exclude last two based on class of risk, underwriting) Direct and indirect liability exposures which are not excluded or better covered elsewhere Not professional (few exceptions)
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Where & when its covered

Territory  Policy period  Occurrence, suit  Retroactive, extended reporting periods: claims made forms


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Exclusions
Intentional acts (reasonable force, perpetrator excluded)  Contractual Liability (exceptions)  Liquor  War  Employment/workers compensation


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Exclusions continued
    

Pollution Recall (sistership) expense Auto/watercraft/aircraft (exceptions) Damage to your own property or property in your care (business risk) Damage to what youre adding value to or working on (be careful, workshop excluded)

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Exclusions continued
Known loss (montrose decision, aka loss in progress)  Mold, contamination, fungus (incl. testing, remediation)  Professional (some exceptions)  PI/AI exclusions (intentional, criminal)  Lead-based paint

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Exclusions added by class

Products/completed operations  Advertising injury/Personal Injury  Testing / consulting  Other locations/operations (depending on nature)  Special med pay exclusions


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Limits of insurance
Occurrence  General Aggregate  Products / completed operations aggregate  Med Pay sublimit per person  Supplementary payments (enumerated)


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Definitions
  

    

BI, PD, PI, AI Suit, claim Hazards (to bring meaning to coverage description and boundaries to exclusions) Transfer of rights of recovery Other insurance Insured Contract (to clarify exclusion for contractual or assumed liability) Territory Pollution
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Risk Management
Identifying loss exposures Analyzing loss exposures Evaluating techniques Selecting best technique(s) Implementing technique(s) Monitoring program & making needed corrections & adjustments

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Risk Management
Identify Analyze

Monitor

Options

Select
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Property/Liability
Owner? Landlord? Tenant?  Construction?  Lease income?  Rental Expense?  Other parties?


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Auto
Risks?  Driver selection?  Accident analysis?  Excess/primary?  Permissive user?  Delivery/installation?


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Workers Compensation
Statutory  Employer/employee  Subcontractors  Employers Liability  Safety Programs  Volunteers


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Inland Marine
Computers/data  Values to be delivered & installed


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Other Liability
Employment Practices  Directors & Officers  Owners & Contractors Protective  Umbrella/Excess


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Bonds

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Whats in each bucket?

     

Property & Liability Auto Workers Comp Inland Marine Bonds Other Liability

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