Ayla Benavides

Project Assignment

1. Explain why in the Common Policy Conditions Item D. Inspections and Surveys the insured is not obligated to make any inspections. Do some research on the Web and explain this using actual evidence you find.

The insurer has the right, but not the obligation, to inspect the insured's premises and operations at any reasonable time during the policy period. These inspections can be performed by the insurer's own personal or a third party organizations acting on the insurer's behalf. Inspections play an important part in determining the insurability of the insured's property and operations, setting proper insurance rates, and making risk control recommendations. The insurer may inform the insured of the result of the inspections and may recommend changes. However, it does not have the duty to do either. Under the Common Policy conditions section D, indicates that the insurer is not responsible for conducting health or safety inspections.

For example in Asbury Park in New Jersey October 23, 2013, a small business called Biscayne Candies had passed state inspection in May to have its power restored but under the same roof was Kohr's Frozen Custard which failed its inspection for its meter and electrical equipment in March of the same year. Nothing was on file that the ice cream shop could open up shop; this caused a massive fire that consumed more than 60 businesses located on the same boardwalk. This is something that is not an obligation of the insurer to inspect, this was the fault of the tenant and their negligence to abide by state inspection law.

http://www.usatoday.com/story/news/nation/2013/10/23/seaside-boardwalk-shop-failed-electrical-inspection-before-fire/3174781/

2. Building Industries is made up of five distinct subsidiaries. The largest is Able Manufacturing which is headquartered in Singapore and does business in Asia. The second largest is the distribution arm is Baker Distributing in the US. The third is a worldwide transportation service called Quick-Right which is headquartered in Canada. The fourth subsidiary is the Middle-east sales arm in Istanbul Turkey. The fourth is the African sales arm in Capetown South Africa. Given this information, which one of these subsidiaries should be the first named insured on the Building and Business Personal Property policy and what responsibilities and rights the first named insured has:

The first name insured would be Able Manufacturing, any first name insured's on the policy have the authority to cancel the policy at any time given a written notice, are authorized to make endorsements on the policy such as name changes etc., are responsible for payment of all premiums and will be the payee for any return premiums.Finally the first insured can transfer rights and duties under the policy through written consent and elect not to renew a policy

3. ABC companies have three insurance policies to cover their main building on 231 main streets. Assume that the insured is insured to value and ignore any deductible. All policies provide identical coverage.

a. Insurer A covers the building for $100,0001/6 of the total coverage

b. Insurer B covers the building for $200,000 1/3of the total coverage

c. Insurer C covers the building for $300,000½ of the total coverage

d. There is a fire loss to the building and damage is estimated at $800,000. How much does each of these insurance companies pay?

Insurer A: $100,000 Insurer B: $200,000 Insurer C: $300,000
Since there are three total policies, each policy will contribute by limits. Each insurer is based on the ration of its applicable limit of insurance to the total applicable limits of insurance of all insurers. All three insurers together provide $600,000 in total coverage, due to the fact that the covered amount is not equivalent to the loss of $800,000 all insurers would pay out their policy limits.

4. I can waive the insurer's rights to go after another party (subrogate) in writing in four situations. Identify these four situations and any additional requirements.

1.) Prior to a loss- no claim

2.) After a loss to your Covered Property or Covered Income only if, at the time of loss, that party is one of the following.

3.) If the person is covered under the insurance policy

4.) A business firm

1. Owned or controlled by you; or

2. That owns or controls you; or your tenant

5. Provide an example of how the liberalization clause could work

A liberalization clause is a statement of broadening of coverage requiring no additional cost that becomes immediately available to the insured. The clause applies when the insurance company decides to add or enhance coverageand in some cases could be mandated by legislation or rating authorities. In order for this clause to apply, no extra premium must be required, giving the insured immediate access to the new or enhanced coverage.