FACULTY OF COMMERCE

DEPARTMENT OF INSURANCE AND RISK MANAGEMENT

Property InsuranceIRM 205 - Course Outline

Module Objectives

To develop in the student an understanding of:-

  • The general principles and practice of property and pecuniary insurance
  • Examples of policies on the market and their coverages
  • The ability to apply the knowledge and skills to practical situations
  • The ability to synthesize different aspects of the syllabus and apply them to given situations

Assessment

Continuous assessment comprising in-class tests and assignments will account for 30% of the final grade. There will be a three-hour final examination paper at the end of the semester, which will constitute 70% to the final grade.

1.0Introduction to property and pecuniary

1.1 General principles and factors limiting insurability of risks

  • Pecuniary value
  • Legality and public policy
  • Insurable interest
  • Lack of knowledge
  • Market agreement
  • Uninsurable risks
  • Pecuniary loss insurance
  • Risks covered and examples of pecuniary insurances, e.g. loss of rent, loss of profits, book debts, accounts receivable, fidelity guarantee. Government bonds, court bonds, contract guarantee bond, etc.

2.0Property insurance 1

2.1 The sum insured as the limit of indemnity

2.2Determination of sums insured values

  • Buildings
  • Machinery
  • Computer records, patterns, models, designs, etc.
  • Retailers stock in trade
  • Special classes – cotton and tobacco
  • Farm produce
  • Farm implements
  • Livestock
  • Engineering policies
  • Reinstatement
  • The reinstatement value conditions
  • Reinstatement and inflation provision, e.g. valuation linked schemes, adjustable premium policy, notional reinstatement value scheme, ay one of reinstatement cover, additional inflation margin.
  • Ancillary clauses in reinstatement
  • Reinstatement in engineering insurance
  • Average
  • Pro rata average
  • Agreed value policies
  • First loss insurance
  • Loss settlements, adjustments and arbitration condition

3.0Property insurance 11

3.1Fire insurance: – standard fire and special perils policy

3.2Collective policies

3.3The escalator clause

3.4Seasonal stock insurance

3.5Declaration policies

3.6Other perils

  • Explosion
  • Spontaneous combustion
  • Riot, strike and malicious damage
  • Storm and special perils
  • Aircraft and other aerial devices or articles dropped therefrom
  • Impact by animals or vehicles
  • Storm tempest flood
  • Bursting or overflowing of water tanks and apparatus
  • Earthquakes and earth tremors
  • Land subsidence
  • Sprinkler leakage insurance
  • Farm insurance
  • Contractors’ all risk insurance
  • Blanket insurances
  • Long term agreements

4.0Property Insurance 111

4.1Theft insurance, definition, risks covered and policy form.

4.2All risks insurance

4.3Money insurance

4.4Goods in transit insurance

4.5Household policies

  • Buildings
  • Contents
  • Contractors all risks insurance
  • Glass insurance

5.0Pecuniary Insurance 1

5.1 General principles

5.2Turnover

5.3Gross profit

5.4The measure of indemnity

5.5Rating

5.6The sum insured

5.7Losses not covered

5.8The standard policy form

5.9Special perils and sprinkler leakage

5.10The policy conditions

5.11Calculation of sum payable

5.12Limited consequential loss cover

5.13Underwriting considerations

5.14Policy extensions

5.15Payroll cover

5.16Indemnity periods

5.17Accountants charges

5.18Engineering consequential loss insurance

5.19Advance profits

5.20Insurance book debts

5.21Provisional premium clause

6.0Pecuniary Insurance 1

6.1Credit insurance

  • General principles
  • Scope of cover
  • Objects of cover
  • Forms of cover
  • Functions of credit insurance
  • Fidelity guarantee
  • Commercial guarantees – general transhipment, warehouse and removal bonds
  • Court bonds – bankruptcy and liquidation bonds
  • Central and local government bonds
  • Underwriting and claims
  • Legal expenses insurance

7.0Combined and package policies

  • Combined policies
  • Package policies

8.0Property and pecuniary insurance claims

  • Claim procedures and use of claim forms
  • Use of loss adjusters
  • Measurement of indemnity for various classes of insured property
  • Dispute resolution in claims settlement

Reading list

Property and Pecuniary Insurance , Insurance Institute of South Africa

Principles of property and pecuniary insurances Study Course 745, CII, London.

Construction insurance: practice, law, reinsurance and risk management. John D Wright. London: Witherby, 1997.

Construction insurance and UK construction contracts. Marshall Levine and Roger ter Haar, eds. 2nd ed. London: Informa Law, 2008.

Engineering insurance. In: Kluwer’s handbook of insurance. Kingston upon Thames, Surrey: Croner.CCH. Looseleaf, updated

Reviewed: January 2011

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