Building Combine and Office Contents Module 3. Copyright Santam Ltd Course code: ASSESS123 / Module 3

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1 Building Combine and Office Contents Module 3 Copyright Santam Ltd Course code: ASSESS123 / Module 3 1

2 Building Combine and Office Contents Module introduction The policy of one of your current clients, Studioplus, has to be renewed. It will be expected of you to renew the policy with reference to the insured s claims ratio of the past year. The insured didn t have a pleasant experience with SA Insurance company and therefore you will be confronted with various questions before he will concede to proceed with the renewal. After renewal, you are told that the insured is going to buy a part of an editing studio from a friend. The equipment will be accommodated in the offices of the insured, where the editing will also be done. Thus, it is expected of you to advise the insured on this and to underwrite the risk accordingly. The following sections are relevant to this case study: Section: General Section: Fire/Buildings Combined Section: Office Contents Section: Money Section: Public Liability Section: Electronic Equipment If you use the following guidelines in relation to this risk, you will be able to complete this module effortlessly: Case study 1 1. Firstly, read the module thoroughly. 2. Then, complete the questions of Task Study the content of Task Complete the inspection reports. 5. Complete the quotation and recommendation/requirement form, which will also serve as renewal document. Case study 2 Complete the questions of Task 1. Complete the quotation and recommendations of Task 2. Complete the questions of Task 3. Copyright Santam Ltd Course code: ASSESS123 /Module3

3 Module objective The goal of this module is to evaluate your knowledge of the following aspects of an office (buildings and content) as risk: General questions asked with renewal; Risk evaluation with regard to changes and the claims ratio; Policy renewal and the application of new underwriting measures; and Posing questions on changes that could occur. (There will be focused on the various types of cover and the underwriting as a result of it and not on premium/tariffing.) Case study Task 1 The policy of Studioplus has to be renewed and you were requested to handle it. It is clearly put to you that the claims ratio of the past year was not as one would wish. You are also aware that the insured is quite difficult and that he has come into conflict with your colleagues on various aspects. The claims ratio of the past year is as follows: Portfolio: Property (Buildings Combined, Money and Office Contents) 157,57% Theft of office equipment R Burglary R Money stolen in transit R 850 Portfolio: Engineers (Electronic Equipment) 381,47% Damage by lightning R Burglary R The insured s policy for the current year is put together as follows: Copyright Santam Ltd Course code: ASSESS123 /Module3

4 SCHEDULE Insurer: Product: Insured: Business: Agency: SA Insurance Company MMIII Studioplus Offices L & L Brokers Agency number: Manner of payment: Institution: Date of payment: Monthly debit order in advance National Bank 1 st day of the month Insured period: 1January 2004 to 31 January 2004 Any consecutive period of one calendar month to which the company agrees to renew the policy or any section of it. Office: Cape Town Signed at Cape Town on 15 December On behalf of the insurer Copyright Santam Ltd Course code: ASSESS123 /Module3

5 SA Versekeringsmaatskappy Insurance Company SCHEDULE SUMMARY Effective sections Additional/Refund premium Renewal premium Monthly Annually Office R251,04 R3 012,50 Money R 58,33 R 700,00 Electronic Equipment R700,00 R382,29 R 4 587,50 Public Liability R 70,83 R 850,00 Policy fee R 10,00 R 120,00 Total premium (14% VAT included) R772,49 R 9 270,00 After inception of cover, this schedule will become a tax invoice for the payment due (VAT number: 1234). Prescription date: 1 January 2005 Copyright Santam Ltd Course code: ASSESS123 /Module3

6 SA Versekeringsmaatskappy Insurance Company SCHEDULE Policy number: 123/ Insured: Studioplus Effective date: 01/01/2004 Endorsements applicable to monthly policy (Endorsements attached to policy and which form part of it) Section General Reference 001 Adjustment of premium clause Office 116 Capital additions clause Money N.A. Electronic Equipment N.A. Public Liability (Claims made basis) Legal defence costs Wrongful arrest and defamation General provision If, in the schedule of this policy, the sum insured, limit of indemnity or compensation is: left blank or has no monetary amount stipulated against it; reflected as nil or not applicable or not covered or no indemnity extended; it means the defined event or circumstance shown in the schedule is not covered by the policy. Copyright Santam Ltd Course code: ASSESS123 /Module3

7 SA Versekeringsmaatskappy Insurance Company SCHEDULE SECTION OFFICE CONTENTS Policy number: 123/ Insured: Studioplus Transaction number: Effective date: 01/01/2004 Stand no. Details of premises/item description Sum insured/ Indemnity limit 1 1 Tyger Street, Bellville, 7530 Content R Construction: Standard Optional extensions applicable Theft by forcible entry into or exit R First amount payable 10% of claim min R500 Theft R First amount payable 10% of claim min R500 Memorandums N.A. Optional extensions not applicable Extension: Riot and strike Premium calculation Content R x 0,225% = R 562,50 Theft by forcible entry into or exit R x 3,5% = R1 750,00 Theft R x 7% = R 700,00 = R3 012,50 Copyright Santam Ltd Course code: ASSESS123 /Module3

8 SA Versekeringsmaatskappy Insurance Company Policy number: 123/ SCHEDULE SECTION ELECTRONIC EQUIPMENT Insured: Studioplus Transaction number: Effective date: 01/01/04 Item description Sum insured/ Indemnity limit 1 x HP Colour Laserjet 4500 printer R (serial number 1234) First amount payable 10% of claim min R500 5 x HP Laserjet 6P R6 000 each R (serial number 1101) (serial number 1102) (serial number 1103) (serial number 1104) (serial number 1105) First amount payable 10% of claim min R500 per item 1 x Minolta fax machine (model MF 2800) R (serial number 98761) First amount payable 10% of claim min R500 1 x Minolta photocopier (model Dl 3010) R (serial number 98888) First amount payable 10% of claim min R x Acer Veriton 3200 computers & 35C R5 000 each R (serial number ) (serial number ) (serial number ) (serial number ) (serial number ) (serial number ) Copyright Santam Ltd Course code: ASSESS123 /Module3

9 First amount payable 10% of claim min R500 per item 6 x Acer Veriton 5500 computers & 77C R7 000 each R (serial number ) (serial number ) (serial number ) (serial number ) (serial number ) (serial number ) First amount payable 10% of claim min R500 per item 1 x HP scanner (model 2670) R (serial number 99999) First amount payable 10% of claim min R250 Acer Network server 3120 hard drives R (serial number ) (serial number ) First amount payable 10% of claim min R100 Optional extensions applicable N.A. Memo 1 Excess applicable to theft claims: 10 % of claim minimum R1 500 Optional extensions not applicable Telkom access lines Incompatibility cover Copyright Santam Ltd Course code: ASSESS123 /Module3

10 SA Versekeringsmaatskappy Insurance Company Policy number: 123/ SCHEDULE SECTION PUBLIC LIABILITY Insured: Studioplus Transaction number: Effective date: 01/01/2004 Item no. Description Indemnity limit 1 Liability Claims made basis R Retrospective date: 01/01/2004 Optional extensions applicable Extension: Legal defence costs R Extension: Wrongful arrest and defamation per event R per annual insurance period R Optional extensions not applicable Extension: Products liability Extension: Defective workmanship liability Extension: E.C. Liability Copyright Santam Ltd Course code: ASSESS123 /Module3

11 SA Versekeringsmaatskappy Insurance Company SCHEDULE SECTION MONEY Policy number: 123/ Insured: Studioplus Transaction number: Effective date: 01/01/2004 Stand no. Details of premises Indemnity limit 1 1 Tyger Street, Bellville, 7530 Specific limits/details Indemnity limit 1. Money which is not kept in a locked safe or strongroom (i) While it is on the insured premises, after the insured s R1 500 trading hours; (ii) While it is in the dwelling of the insured, a partner, R1 500 director or employee of the insured; (iii) While it is on the insured premises, in the safekeeping of one or more of the petrol attendants; and R N.A. (iv) While (a) It is in the safekeeping of one or more collectors or delivery people; R N.A. (b) It is in the safekeeping of a partner, director or employee of the insured who is on a business trip any R1 500 place in the world and away from the insured premises. 2. Money kept in a locked safe or strongroom in a building on the insured s premises after the insured s trading hours. i. With regard to the safe or strongroom as described below: Chubb walk-in safe (no SABS GRADING) R ii. With regard to any safe or strongroom which is not specified in 2(i) above, the limit in relation to the grading of such a safe or strongroom will be determined as follows: No SABS grading R SABS category 1 grading R SABS category 2 grading R SABS category 2 grading HD grading D3 R SABS category 2 grading ADM grading R SABS category 2 grading ADM grading D3 R SABS category 3 grading R SABS category 4 grading R SABS category 5 grading R Copyright Santam Ltd Course code: ASSESS123 /Module3

12 It is provided that the liability of the company for premises affected is always at most limited to the amounts below (3). 3. With regard to any other loss of or damage to money during the period described below, the indemnity limit for money related to the specified insured premises will read as follows: Main limit - during December or any mentioned period R any other period R With regard to the loss of crossed cheques, crossed bills or crossed postal orders. (The indemnity limit below is payable above the indemnity limit shown in 1, 2 and 3.) R Details Indemnity limit/compensation Clothing R2 000 Containers R2 000 Keys and locks R2 000 Optional extensions applicable N.A. Memorandums Optional extensions not applicable Extension: Riot and strike Extension: Personal accident (assault) Premium calculation Limit R x 7% = R700 Copyright Santam Ltd Course code: ASSESS123 /Module3

13 Motivate your answers with the relevant facts throughout to qualify for the maximum allocation of marks as indicated per question. Task 1 During your meeting, the insured posed the following questions/statements to you. Please answer it comprehensively. 1. What do you mean by saying that the policy has to be renewed? 3 2. I am of the opinion the sums insured on my policy are sufficient. Why do we have to go over it again? 2 3. About two months ago, I have lost some of the contracts (documents) I handle on behalf of my clients. As a result, they have held me responsible for their loss of income. Will the policy provide cover for events like these? 2 Copyright Santam Ltd Course code: ASSESS123 /Module3

14 4. One of my friends said I should approached you to extend Section Public Liability of our policy to include food poisoning. This is because we have functions on the premises from time to time. Do you agree? 2 5. When lightning caused damage to one of my computers, you required an additional excess of R It is insured under Section Electronic Equipment, but I can t find where this excess is mentioned on my policy schedule. Please explain this to me? 1 TOTAL 10 Copyright Santam Ltd Course code: ASSESS123 /Module3

15 Task 2 Before you could present new underwriting measures and the premium for renewal, you will have to do a review of the premises. A site layout of the risk, as well as some visual material to help you with the quotation, is attached. Complete only the sections clearly visible on the site layout and visual material. The sections on which no information was made available in the visual material, site layout or other information pieces have already been filled-in or marked as N.A.. Take note: Where N.A. is marked on the inspection report, it does not necessarily imply that it is not applicable to all similar risks. It is only not applicable to this specific risk/case study. Copyright Santam Ltd Course code: ASSESS123 /Module3

16 LAYOUT OF BUILDING AND PARKING AREA TARRED PARKING AREA STREET C O N S T R U C T I O N: WALLS: ROOF: BRICK CORRUGATED IRON STUDIOPLUS OCCUPIES UPPER GROUND LEVEL STUDIOPLUS OCCUPIES LOWER GROUND LEVEL NETTED SHADING UPPER GROUND LEVEL OF BUILDING OCCUPIED BY VARIOUS OTHER TENANTS STAIRCASE Copyright Santam Ltd Course code: ASSESS123 /Module3

17 LAYOUT OF BUILDING OFFICE AND CONFERENCE CENTRE OFFICES AND CORRIDOR UPPER GROUND LEVEL VERSKEIE HUURDERS LOWER GROUND LEVEL GRONDHELLING VARIOUS TENANTS STUDIOPLUS OFFICES & CORRIDOR UPPER GROUND LEVEL VARIOUS TENANTS KANTORE ONDERSTE GRONDVLAK SLOPE STUDIOPLUS OFFICES & CONFERENCE CENTRE LOWER GROUND LEVEL OFFICES LOWER GROUND LEVEL MAIN COMPUTER SERVER WALK-IN SAFE FIRE HOSE FIRE EXTINGUISHER DOOR TO CONFERENCE CENTRE RECEPTION MAIN ENTRANCE Copyright Santam Ltd Course code: ASSESS123 /Module3

18 Task 2 OFFICE PREMISES Name: Occupation: Address: Postal code: Offices: Multi-storey block: Which floor: Converted house: Retail premises: Other (describe): 1. Is the building reception area inside the building? YES NO 2. Are the fire escapes locked at night? If not what prevents intending thieves using these to gain access to any floor in the building? YES NO 3. Is there access from adjacent buildings? YES NO If Yes describe Location: City Centre Residential area Township Isolated area r Industrial area Other (detail) Please tick correct answer/provide answer Security: Are all windows protected by burglar bars 12mm thick or more? YES NO Are all perimeter doors protected by grille gates 12mm thick or more? YES NO Does building have 24 hour security? Name of security company YES NO Access control? YES NO Are office perimeter lights burning at night? YES NO Has a burgular alarm system been installed? YES NO If Yes, name of installer: ADT YES NO Type of system: Radio r Siren Communicator Yes Protection: Full perimeter Full space Yes Partial perimeter Spot space 24 hour warden back-up YES NO Contruction and thickness of exterior walls Property at Risk: DESCRIPTION DETAILS VALUE Computers 1.Main frame 2.PC s 3.Laptop Printers Typewriters Fax machine Photo copiers Dictaphones Calculators TV-, video, Hi-Fi equipment Furniture Other e.g. loose mats Total Value Copyright Santam Ltd Course code: ASSESS123 /Module3

19 Transit: Is any of the property/equipment removed from the premises? YES NO If Yes, is it regularly? - If so please detail Past Losses: (Please note regular transits will require special terms. In particular theft from unattended vehicles will usally be excluded) Have the premises been entered in the last three years? YES NO If Yes, give details What protections were installed to prevent a repetition? Alarm linked to a reaction unit. Precautions: Do you take any special precautions with computer equipment when not in use e.g. locking of Strongroom? YES NO If Yes, give details Computers: (Additional information) Is the equipment (a) Owned (b) Hired (c) Leased If leased, please provide a copy of the lease agreement Maintenance agreement in force? YES NO Is lightning and power surge protection fitted? YES NO Where do you keep your computer discs? In safe Do you have back-up computer discs? YES NO If Yes where are they kept? Copyright Santam Ltd Course code: ASSESS123 /Module3

20 Comment and general recommendations following on the inspection reports Copyright Santam Ltd Course code: ASSESS123 /Module3

21 Quotation Section Office Contents Theft (by forcible entry) Sum insured Tariff Premium Excess 0,500% 6% Theft 10% Electronic Equipment 5% Public Liability _ R850 Money 8% Recommendations/requirements It is not necessary to use existing clause numbers. Create your own clause number for the purpose of this exercise and list it at the bottom of the application form. Example Clause 1 Burglar alarm condition with armed response unit Clause 2 Security gates at all outer doors Copyright Santam Ltd Course code: ASSESS123 /Module3

22 Case study 2 The editing equipment the insured acquired from a friend consists of the following: Description Serial number Date of purchase Sum insured (replacement value) Sony Betacam SP 123/087 15/02/2000 R recorder/data processor Sony Betacam SP 123/187 15/02/2000 R recorder/data processor Sony Betacam SP /07/2002 R recorder/data processor Sony Betacam SP /88 01/09/2002 R controller/data processor Sony Betacam SP /89 01/09/2002 R controller/data processor Pioneer Betacam SP /89 10/12/1995 R controller/data processor Sony 37cm screens 12345/ / / / /0 10/12/ /12/ /12/ /12/ /12/1998 R R R R R Sony 66cm screen /11 15/10/2003 R Motivate your answers with the relevant facts throughout to qualify for the maximum allocation of marks as indicated per question. Task 1 He would like to know the following with regard to the equipment: 1. Will it be covered in terms of my office policy? 2 Copyright Santam Ltd Course code: ASSESS123 /Module3

23 2. Will I always be indemnified on a replacement basis (new for old) if I insure the equipment in terms of Section Electronic Equipment? (explain comprehensively) 7 3. I am not completely up to date with the value of the imported equipment. If it is insured in terms of Section Electronic Equipment and a claim arises, will I be wronged? 1 4. Should only a part of the equipment become defective during the editing process, may I proceed to replace/repair it? Will I be indemnified in terms of Section Electronic Equipment? This is only because it will be impossible for us to wait until you assess the damage. 2 Copyright Santam Ltd Course code: ASSESS123 /Module3

24 5. Occasionally, I have to send the editing equipment for a service. Will it be covered in terms of Section Electronic Equipment when it is at the service provider and on its way there and back? 2 6. Since I am now also able to do editing work, I am worried about notable financial losses when my equipment is damaged by lightning and my contracts could not be fulfilled. Will we be covered in terms of Section Electronic Equipment if we use other equipment temporarily? 2 TOTAL 16 Copyright Santam Ltd Course code: ASSESS123 /Module3

25 Task 2 Please quote on the equipment by using the following quotation program: NB: The sum insured must represent the market value of the equipment. Quotation Electronic Equipment Section Sum insured Tariff Premium Excess 3% Recommendations/requirements It is not necessary to use existing clause numbers. Create your own clause numbers for the purpose of this exercise and list it at the bottom of the application form. Example Clause 1 Burglar alarm condition with armed response unit Clause 2 Security gates at all outer doors Copyright Santam Ltd Course code: ASSESS123 /Module3

26 Motivate your answers with the relevant facts throughout to qualify for the maximum allocation of marks as indicated per question. Task 3 More questions The building in which the client s offices are located, will soon be paid off. He wants to know the following: The building is occupied by the following tenants: Radio Pulpit (Studio and offices) Studioplus (Editing studio and administrative offices) King Fisher (Mobilisation centre only administrative functions) PST Training (Presentation and soft skills training facilities) HS Training (Computer-based training centre) C-Web (Webpage designers) 1. Which section of the policy will provide the most beneficial cover for the building? Motivate your answer What do people have to keep in mind when determining the value of a building for insurance purposes? (Refer to site layout and visual material) 6 Copyright Santam Ltd Course code: ASSESS123 /Module3

27 3. We are planning to extend our business to Durban during the new financial year. Initially, we will only establish an administrative office and need cover for office contents. When do we have to notify you and how will it affect our insurance? 3 4. Let s assume my building is insured with you. Will it have a substantial impact on my insurance if I convert a part of the building into a restaurant/take away business? 3 5. Which underwriting principles should apply when insuring a building with SA Insurance company? 1 TOTAL 15 Copyright Santam Ltd Course code: ASSESS123 /Module3