Fin 3610 Assignment 12: Chapters 25 And 2 ✓ Solved
Fin 3610 Assignment 12name Chapters 25 And 2
Answer the following questions:
- What is a package policy?
- Explain the advantages of a commercial package policy to a business firm as compared to the purchase of separate policies.
- Identify the causes of loss that are covered under the following forms:
- Causes-of-loss basic form
- Causes-of-loss broad form
- Causes-of-loss special form
- Briefly describe the following commercial property insurance coverages:
- Builders risk insurance
- Condominium insurance
- Equipment breakdown insurance
- Difference in conditions (DIC) insurance
- Explain the following ocean marine insurance coverages:
- Hull insurance
- Cargo insurance
- Protection and indemnity (P&I) insurance
- Freight insurance
- Provide an example of a claim in each of the following:
- Products liability
- Completed operations liability
- Distinguish between the meaning of “contractual liability” and “contingent liability.”
- Explain the difference between an occurrence policy and a claims-made policy.
- A workers compensation policy contains several coverages. Briefly explain each of the following:
- Part One: Workers Compensation Insurance
- Part Two: Employers Liability Insurance
- Part Three: Other-States Insurance
Sample Paper For Above instruction
Understanding Commercial Insurance Policies and Marine Insurance Coverages
Commercial and marine insurance policies play a crucial role in risk management for businesses engaged in various industries. They provide financial protection against unforeseen losses, damages, and liabilities arising from everyday operations, accidents, or catastrophic events. This paper explores the key concepts associated with package policies, causes of loss, specific commercial property coverages, and ocean marine insurance, offering a comprehensive understanding of these insurance types essential for risk mitigation.
Package Policies: Definition and Advantages
A package policy, also known as a bundled policy, is an insurance contract that combines multiple coverages into a single package tailored to meet a business’s needs. Typically, it includes property, liability, and other relevant coverages, allowing firms to insure various exposures under one policy. The primary advantage of a commercial package policy is cost efficiency; it often results in discounts compared to purchasing individual policies separately. Additionally, package policies simplify management and administration by providing a centralized coverage document, making it easier for businesses to handle claims and renewals. They also promote broader coverage, as insurers often customize these packages to include various coverages specific to the industry or operations, reducing gaps in coverage that might occur with separate policies.
Causes of Loss in Different Insurance Forms
Insurance forms specify the perils or causes of loss that are covered, which vary in scope across different forms:
- Causes-of-loss basic form: Generally covers perils such as fire, lightning, windstorm, hail, explosion, vandalism, and theft. It provides a limited set of causes, making it suitable for minimal coverage needs.
- Causes-of-loss broad form: Extends the basic form by including additional perils such as falling objects, weight of snow or ice, water damage from accidental discharge, and breakage of glass.
- Causes-of-loss special form: Offers the most comprehensive coverage, covering all direct physical losses except those specifically excluded in the policy. It is the most flexible and widely used form due to its broad coverage scope.
Commercial Property Insurance Coverages
Various types of commercial property insurance address specific risks associated with business properties:
- Builders risk insurance: Protects buildings under construction against damage from hazards such as fire, wind, vandalism, and theft during the construction period.
- Condominium insurance: Designed for condominium associations or unit owners, covering the physical structure and common areas against insured perils, along with personal property and liability coverage.
- Equipment breakdown insurance: Covers the repair or replacement of equipment and machinery due to breakdowns, including electrical systems, HVAC, and production machinery, which are often excluded under standard property policies.
- Difference in conditions (DIC) insurance: Offers additional coverage for perils not included or insufficiently covered in standard policies, such as earthquakes or floods, ensuring comprehensive protection.
Ocean Marine Insurance Coverages
Marine insurance is vital for businesses involved in international shipping and transportation. Key coverages include:
- Hull insurance: Provides coverage for physical damage to ships, boats, and vessels involved in transportation.
- Cargo insurance: Protects the goods or merchandise being transported against damage or loss during transit.
- Protection and indemnity (P&I) insurance: Offers liability coverage for risks such as injuries to crew, pollution, or damage caused to third parties during marine operations.
- Freight insurance: Covers loss of income resulting from damage or loss of cargo, which prevents the collection of freight charges.
Liability Claims: Examples and Differences
Understanding different liability claims is crucial for managerial decision-making:
- Products liability: Example: A consumer suffers an injury due to a defective product. The manufacturer may be held liable for damages.
- Completed operations liability: Example: A contractor’s work causes damage to the client’s property after project completion, leading to a liability claim against the contractor.
Contractual and Contingent Liabilities
Contractual liability arises when a business assumes liability through a contract, such as a lease or service agreement. Contingent liability, on the other hand, depends on the occurrence of an uncertain future event, like a lawsuit or warranty claim, which may or may not materialize.
Occurrence vs. Claims-Made Policies
An occurrence policy covers claims from incidents that happen during the policy period, regardless of when the claim is filed. Contrarily, a claims-made policy only covers claims filed during the policy period, which may necessitate continuous coverage or tail endorsements to protect against claims arising from past incidents.
Workers Compensation Policy Coverages
Workers compensation policies are multi-faceted, providing various coverages such as:
- Part One: Workers Compensation Insurance: Covers employees' medical expenses and lost wages due to work-related injuries or illnesses.
- Part Two: Employers Liability Insurance: Protects employers against legal claims from employees for injuries not covered by workers compensation, including legal defense costs.
- Part Three: Other-States Insurance: Offers coverage for work-related injuries to employees working outside the primary state where the policy is issued, ensuring compliance across jurisdictions.
In summary, understanding the detailed facets of commercial insurance policies and marine coverages enables businesses to select appropriate protections, mitigate risks effectively, and ensure continuity of operations amid unforeseen events.
References
- Barlow, A. (2019). Principles of Risk Management and Insurance. Pearson.
- Kulczycki, R. (2020). Marine Insurance: Principles and Practice. Routledge.
- Vaughan, E. J., & Vaughan, T. (2018). Fundamentals of Risk and Insurance. John Wiley & Sons.
- Rejda, G. (2021). Principles of Risk Management and Insurance. Pearson.
- Swiss Re. (2022). Marine Insurance Market Review. Swiss Re Publications.
- Canadian Underwriter. (2020). Marine Insurance: An Overview. Canadian Underwriter Magazine.
- American Institute for Marine Underwriters (AIMU). (2021). Marine Insurance Coverage Guide.
- Swiss Re Institute. (2023). The Economics of Marine Insurance. Swiss Re Publications.
- Insurance Information Institute. (2022). Understanding Commercial Insurance Policies. III.
- National Association of Insurance Commissioners (NAIC). (2023). Guide to Workers’ Compensation Insurance. NAIC.