Property Loss Exposures
A Property Loss Exposure is any condition or situation that presents the possibility that a property loss will happen.
The three important aspects of Property Loss Exposures are: -
· Types of property that might be exposed to loss, damage or destruction.
· Causes of loss that might result in property being lost, damaged or destroyed.
· Financial consequences that might result from a property loss.
Types of Property
Property is any item with value. One common approach of classifying property is to distinguish between Real Property and Personal Property.
Real Property consists of land as well as buildings and other structures attached to the land or embedded in it. The term “real estate” is commonly used to refer to real property.
Personal Property consists of all tangible or intangible property that is not real property.
Insurance practitioners use categories that relate to the insurance treatment of property, such as: -
· Buildings
· Personal property (contents) contained in buildings
· Money and securities
· Motor vehicles and trailers
· Property in transit
· Ships and their cargo
· Boilers and machinery
These categories are listed separately here because they represent types of property for which specific forms of insurance have been developed.
Buildings
Buildings include more than bricks and mortar and other building materials such as plumbing, wiring, heating and air conditioning equipment, some basic portable equipment – fire extinguishers, snow shovels, lawn mowers, elevators, specially designed portable platforms, hoists, tracks for use by window washers, wall to wall carpeting, built in appliances, or paneling, etc.,
Personal Property (Contents) Contained in Buildings
The contents of a typical home include personal property such as furniture, clothing, televisions, jewelry, paintings and other personal possessions.
The contents of
· Furniture and Fixtures
· Machinery and Equipment
· Stock
Money and Securities
Money means currency, coins and bank notes. Traveler’s checks, credit card slips, and money orders held for sale to the public are also considered money in certain cases.
Securities are written instruments representing either money or other property. Stocks and bonds, for example, are securities.
For insurance purposes, money and securities are classified separately from other types of contents because their characteristics present special features / problems.
Motor Vehicles and Trailers
To identify property loss exposures, Motor Vehicles and Trailers are broadly categorized as under: -
· Autos and other high way vehicles
· Mobile equipment
· Recreational Vehicles
In insurance, Auto is a broad term that includes cars, trucks, buses and other motorized vehicles designed for use on public roads.
Mobile Equipment, which is specifically defined in most commercial insurance policies, includes many types of land vehicles – usually designed for use principally off public roads – including equipment attached to them. Examples include bulldozers, farm machinery and forklifts.
Recreational Vehicles are vehicles used for ports and recreational activities. Examples include dune buggies and all-terrain vehicles.
Property in Transit
A great deal of property is transported by truck, but property is also moved in cars, buses, trains, airplanes and ships. These property in transit are exposed to several losses such as breakage, damage, leakage, fire, explosion, etc.,
Ships and Their Cargo
Ships and their cargo are exposed to special perils not encountered in other means of transit. For example, ships that operate along coastal waters can run aground, leaving the cargo stranded. Moreover ocean cargoes fluctuate in their values according to their location.
Boilers and Machinery
Many businesses have objects that can be classified as Boilers and Machinery. Steam Boilers, Domestic Boilers, unfired pressure vessels such as air tanks; refrigerating and air
Conditioning equipments; mechanical equipments such as compressors and turbines; production equipment; and electrical equipment, transformers and other electrical apparatus are all examples of boilers and machinery.
Boilers and machinery share two characteristics:
· They are susceptible to explosion or breakdown that can result in serious financial loss.
· They are less likely to have explosions or breakdowns if they are periodically inspected and properly maintained.
Property Loss Exposures
