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Lecture Ten-Eleven ： Property Insurance

Lecture Ten-Eleven ： Property Insurance. Learning Objectives. Identify the classification of property insurance Identify the common elements of property insurance policy

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Lecture Ten-Eleven ： Property Insurance

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  1. Lecture Ten-Eleven：Property Insurance Northwest University Huixia Liu

  2. Learning Objectives • Identify the classification of property insurance • Identify the common elements of property insurance policy • Explain the major coverage and characteristics of fire insurance, transportation insurance , engineering insurance , and characteristics of agricultural insurance Northwest University Huixia Liu

  3. Main Contents • Introduction to Property Insurance • Transportation Insurance • Fire Insurance • Engineering Insurance • Agricultural Insurance Northwest University Huixia Liu

  4. Property Insurance • Conception • Classification • The operational procedure • The basic principles of indemnity Northwest University Huixia Liu

  5. conception of property insurance • In a broad view, property insurance includes three types as: • physical property insurance • the property-related interests insurance • liability insurance • In a narrow vies, property insurance only includes physical property insurance, so called property loss insurance . • In this lecture. We analyze a narrow-viewed property insurance, Property loss insurance. and discuss liability insurance in Lecture Twelve. Northwest University Huixia Liu

  6. Characteristics of property insurance • the insured subjects are physical property, tangible, and can be valued in money, including movable property and non-movable property. • Insurable interests are necessarily required • The insured subject is diversified • Risk control is very important Northwest University Huixia Liu

  7. Classification • Based on the different insured subjects, property insurance is usually classified into the following types: • Marine Insurance • Transportation Insurance • Fire Insurance • Engineering Insurance • Agriculture Insurance Northwest University Huixia Liu

  8. The operational procedure • Property insurance operates as the following procedure: （see Textbook P128) Underwriting Risk control Reinsurance Indemnity Northwest University Huixia Liu

  9. Transportation Insurance • Definition • Characteristics • Transported goods insurance • Transportation vehicle insurance Northwest University Huixia Liu

  10. Definition of Transportation Insurance Transportation insurance provided insurance against the risks of such moving properties as ships, trucks, airplanes, etc, including both transportation vehicles/vessels and goods. The transportation insurance is classified into transporting goods insurance, auto insurance , shipping vessel insurance, flight insurance, etc. Northwest University Huixia Liu

  11. Characteristics of transportation insurance • The insured subject is moving. • The risks are diversified and complicated • Accidents occurs out of the local areas • Concerning liabilities. • The insurance period covers the whole journey Northwest University Huixia Liu

  12. Transporting goods insurance • The insured subject: the transporting goods • The insurance amount is calculated based on the different terms of payments as follows: General terms of payments in the international trade: • FOB (离岸价） • CIF （到岸价） • CFR/C&F （成本加运费） Northwest University Huixia Liu

  13. Transporting goods insurance • Notes: • FOB pricing costs =actual costs +domestic costs + bank charges +profit • CFR/C&F pricing costs==actual costs + domestic costs +bank charges +profit + sea freight • CIF pricing costs =actual costs + domestic costs +bank charges +profit + sea freight + premium Northwest University Huixia Liu

  14. Transporting goods insurance • the general rule in international trade by see is: the insurance amount =CIF pricing costs ×(1+10%) ×offering premium rate Notes:The offering premium rate is based on the following factors: • transportation vessels • the route • the features of the goods Northwest University Huixia Liu

  15. Transporting goods insurance • The major coverage of transporting goods insurance： • transporting goods in ocean • transporting goods on land • transporting goods by air • The major ocean coverage usually includes: • FPA(平安险）: • WPA/WA（水渍险） • AR（一切险） Northwest University Huixia Liu

  16. Transporting goods insurance • FPA (free from particular average,平安险） • WPA/WA（with particular average/with average, 水渍险） • AR（all risks 一切险） Northwest University Huixia Liu

  17. Transporting Vehicles insurance • Classification • Auto insurance • Aviation insurance • Shipping vessel insurance • Railway transportation insurance Northwest University Huixia Liu

  18. Transporting Vehicles insurance • Coverage Auto insurance Loss of the auto medical expenses Liability Aviation The loss of airplanes The injured passengers Liability Northwest University Huixia Liu

  19. Transporting Vehicles insurance • Shipping vessel insurance The loss of shipping vessels Related expenses • Railway transportation insurance the loss of train the liability Northwest University Huixia Liu

  20. Fire Insurance • Concept of Fire insurance Fire insurance only covers fire risk of the non-moving property in the early time. Nowadays, “Fire” has much broader coverage, including fire, all the natural risks, and even the accidental loss of all the moving and non-moving property. Northwest University Huixia Liu

  21. Fire Insurance • coverage • homeowner dwelling and property • business firms and public institution’s property • all the machines and equipments • covered perils fire or lightning windstorm explosion ice, snowstorm, tornado, flood, etc. Northwest University Huixia Liu

  22. Fire Insurance • Rescue expenses/salvage charges • Exclusions: • War, civil riots • Pollution • The deliberate damage • Indirect loss, etc. Northwest University Huixia Liu

  23. Fire Insurance • Premium is based on both the insured amount and the characteristics of the insured subject as follows: • Physical condition of the property • use of the property • covered perils • location • the facility of risk control Northwest University Huixia Liu

  24. Engineering Insurance • Concept • Classification and characteristics Northwest University Huixia Liu

  25. Engineering Insurance • Conception Engineering insurance includes : • Architectural Engineering Insurance • Assembling Engineering Insurance • High technical Engineering Insurance It covers the property loss and liability. Northwest University Huixia Liu

  26. Engineering Insurance • Classification and characteristics • Architecture Engineering Insurance • All the contractual persons related with the architecture project at the different stage can be an applicant for engineering insurance. • the owner, the contractor, the engineers, etc, are legal person for the insured. Northwest University Huixia Liu

  27. Engineering Insurance • Coverage: accidental hurts, death, illness, property loss • Exclusions: Flood, earthquake, lightening, fire, explosion, theft are excluded perils Northwest University Huixia Liu

  28. Engineering Insurance • Assembling Engineering Insurance all kinds of machines, equipment, etc, are possible insured subject. Coverage: property loss, accidental hurts, death, illness, Exclusions: Flood, earthquake, lightening, fire, explosion, theft are excluded perils. Northwest University Huixia Liu

  29. Engineering Insurance • High Technical Engineering Insurance Such as Aerospace insurance eg, IUAI ( International Union of Aerospace Insurers） Oil drilling insurance Northwest University Huixia Liu

  30. Agricultural Insurance • Conception Agricultural insurance provides insurance for planting and breeding. It covers the natural disasters for the plants and animal diseases or accidents for domestic animals and poultry. • Examples of Chinese Domestic animal insurance Northwest University Huixia Liu

  31. Agricultural Insurance • Characteristics (1) • large coverage • both natural perils and economical risks effect the insured subjects • high risks and high indemnity rate • government supports are necessary Northwest University Huixia Liu

  32. Agricultural Insurance • Classification broadly, agricultural insurance is classified into two types as follows: • planting insurance • breeding insurance Northwest University Huixia Liu

  33. Agricultural Insurance • planting insurance includes the following major coverage: • Crop insurance : during planting and growing stage, the value of decreased harvest, production expenses; • Forest insurance • Gardening and nursery Northwest University Huixia Liu

  34. Agricultural Insurance • Breeding Insurance Including the following major coverage: • Livestock insurance(牲畜）: covering animal diseases, death, and communicable diseases. • Domestic animals and poultry （家禽） insurance : covering the loss from death • Aquaculture insurance（水产）: covering the loss from theft, natural disaster, etc. • Other specialty insurance Northwest University Huixia Liu

  35. Liability Insurance • General liability refers to the legal liability arising out of business operations other than automobile or aviation accidents and employee injuries. Northwest University Huixia Liu

  36. Basic Characteristics of Liability Insurance • Based on the sound legal system • The insured subject is legal responsibility • Characteristics of the Main Subject • Methods of Acceptance Northwest University Huixia Liu

  37. Classification • Based on the different insured subjects, liability insurance is usually classified into the following types: • Public liability Insurance • Produce Liability Insurance • Employer Liability Insurance • Professional Liability Insurance Northwest University Huixia Liu

  38. The insured • The owner of public sites and managers; • The manufacturers, wholesalers and retailers; • Drivers of mobile equipment owned; • Newly acquired or formed organizations. Northwest University Huixia Liu

  39. Acceptance and Indemnity • Indemnity • Bodily injury and property damage liability The insurer agree to pay on behalf of the insured all sums up to the policy limits that the insured is legally obligated to pay because of bodily injury and property damage to which the insurance applies • The insurer also pays the legal defense costs. Northwest University Huixia Liu

  40. Public liability Insurance • Conception of public liability insurance • The major coverage of public liability insurance Northwest University Huixia Liu

  41. Conception of Public Liability Insurance • The public liability insurance is widely used by business firms to cover their general liability loss exposures. • In a broad view, property insurance includes liability insurance. Northwest University Huixia Liu

  42. Product Liability Insurance • Conception of product liability insurance • General content Northwest University Huixia Liu

  43. Conception of Product Liability Insurance • Products liability refers to the legal liability of manufacturers, wholesalers, and retailers to persons who are injured or incur property damage from defective products. Northwest University Huixia Liu

  44. Professionals Liability Insurance Overages • Physicians liability insurance • Errors and omissions insurance • Lawyer liability insurance • Architects and engineers liability insurance • Accountant liability insurance Northwest University Huixia Liu

  45. Summary • Classification of property insurance • The common elements of property insurance policy, and the basic principles of indemnity of property insurance • The major coverage and characteristics of ocean marine insurance, fire insurance, transportation insurance , engineering insurance , and characteristics of agriculture insurance • The concept and characteristics of liability insurance • The basic coverage provided by liability insurance • The basic coverage and characteristics of public liability insurance，employer liability insurance，and professional liability insurance Northwest University Huixia Liu

  46. Review Questions • Identify the basic types of property insurance in China. • List the basic coverage that are provided in fire insurance. • List the basic coverage that are provided in transportation insurance. • List the basic characteristics and coverage that are provided in agriculture insurance. • Explain the states quo of agriculture insurance in China. • Identify the major general liability loss exposures of business firms. • Briefly describe the meaning of “products and completed operations hazard.” • Why is coverage for employers liability needed? • Explain the factors why liability insurance in China is not popular? Northwest University Huixia Liu

  47. Search for information Search for: a. The agricultural insurance in China b. The typical development patterns of agricultural insurance in the American and European countries Northwest University Huixia Liu

  48. Preview Read and prepare the questions from “The Liability Risk” ( P57-70） Northwest University Huixia Liu

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