Paying the Price The Status and Role of Insurance Against Natural Disasters in the United States (1998) / Chapter Skim
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Appendix A: Commercial Insurance
Appendix A: Commercial Insurance
Pages 229-238
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From page 229... ...
Direct damage to insured structures and business personal property includes payment for the repair or replacement of the damaged property. Business interruption coverage generally provides indemnity for the loss of net income and continuing expenses and helps to assure that the business will survive the repair period.
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From page 230... ...
Most commercial property insurance policies exclude: · foundations and other underground property (i.e., pipes and drains) grading, excavations, and filling plants, lawns, trees, shrubs, growing crops, and land paved surfaces, roads, bridges, piers, wharves detached signs, antennas, fences, and other outdoor items building glass retaining walls not a part of a building · vehicles licensed for road use, watercraft, and BASIC CONCEPTS Commercial property insurance policies also exclude any property specifically insured under another policy, as well as property sold by the insured under conditional sales installment plans, or other deferred billing plans after delivery to the customer.
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From page 231... ...
Property valued at $1.507 trillion, or 14 percent of the total value of all commercial property in the United States, is situated in the Atlantic and Gulf Coast counties. These properties sit directly in the path of potential hurricanes, severe windstorms, and the ravages associated with
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From page 232... ...
Costly building contents, such as computers, electric equipment, and manufacturing machinery, are especially vulnerable to loss caused by exposure to natural hazards. While structural values are significant, they represent only a portion of the values to be insured, and the value of contents will rapidly raise the overall values to be insured.
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From page 233... ...
In the insuring of commercial property, special attention must be paid to the conditions of insurability because of high values, the potential for more frequent and severe events, and the shrinking of the supply of affordable reinsurance. Classification of Structures Commercial buildings include the following categories of structures: high-rise, reinforced concrete, heavy steel, reinforced masonry, light steel timber, and unreinforced masonry.
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From page 234... ...
These classifications reflect the emphasis placed on insuring loss caused by fire. They do not address the quality of construction or consider the applicable building codes.
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From page 235... ...
Because most commercial buildings are not owner-occupied, and since the lessees change from time to time, the underwriter must obtain current occupancy information to evaluate loss potential, and properly rate both building and contents. The type of occupancy will determine whether a building and its contents are eligible for class rates or must be specifically rated.
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From page 236... ...
Over the years, property insurance underwriters have tencleci not to give significant attention to the location of a risk, since they viewed fire as the predominant cause of loss. With the movement of more anci more people into the coastal plains, to the shorelines of the Great Lakes, to the edges of major tributaries, to recreational areas, anci to the West Coast, where wildfires anci earthquakes pose a threat, a new awareness of natural hazards is emerg .
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From page 237... ...
Another factor inhibiting data collection involves the industry's statistical plans, whose data fields are becoming increasingly complex. The industry has staunchly resisted efforts to expand the statistical plans to accommodate new and desirable information for instance, a more detailed breakdown of the "cause of loss" codes to distinguish losses caused by hailstorms, tornadoes, hurricane, and other instances of severe winds, rather than designating all of these situations as "wind." The creation of new wind and construction classifications is considered not necessary and extremely costly from an operational standpoint.
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From page 238... ...
2) The importance of small businesses in the economic scheme of the United States is difficult to overstate and should not be overlooked.
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