CPCU 3
Terms
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- SELF INSURANCE
-
A retention program that possess one or more of the following characteristics:
1. sufficient number of independent losses as to make losses from the exposure highly predictable
2. established fund to which the organization makes regular contributions and from which losses are paid
3. A formalized captive insurance program
4. All state legal requirements met for "self-insurer"
- MASONRY NONCOMBUSTIBLE CONSTRUCTION
- EXTERIOR WALLS ARE MADE OF SELF-SUPPORTING MASONRY MATERIALS. FLOORS AND ROOF ARE MADE OF METAL OR SOME OTHER NONCOMBUSTIBLE MATERIAL
- EXTRA EXPENSE
- Extra expenses incurred to continue operations following an occurrence that would otherwise cause a suspension of operations.
- BUSINESS INTERRUPTION (BUSINESS INCOME LOSS)
- Loss due to a buisness being "out of businees" due to a covered loss.
- RETROSPECTIVE RATED INSURANCE
- The insured pays a premium based on either losses incurred or losses paid during the policy period subject to a minimum and maximum premium
- NONCOMBUSTIBLE CONSTRUCTION
- SPECIALIZED TERM - EXTERIOR WALLS, FLOORS AND ROOF ARE CONSTRUCTED OF AND SUPPORTED BY METAL, GYPSUM OR OTHER NONCOMBUSTIBLE MATERIALS THAT WILL CONTRIBUT LITTLE IF ANY FUEL TO A FIRE
- DIRECT LOSS
- Decrease in value and increased cost to repair or replace a covered piece of property
- RISK MANAGEMENT
- Broad-based systematic approach to prevention, loss cost reduction, finding the most efficient way to pay any remaining losses.
- INSURANCE
- A written agreement by two parties where the insured agrees to pay a premium and the insurance company agrees to pay a loss stipulated in the contract
- FRAME CONSTRUCTION
- THE EXTERIOR WALLS OF THE BUILDING ARE CONSTRUCTED OF WOOD OR OTHER COMBUSTIBLE MATERIALS EVEN IF COMBINED WITH OTHER MATERIALS SUCH AS BRUCK OR STUCCO
- INDIRECT LOSS
- Used to describe business income loss and extra expense
- RIDK MANAGEMENT
- Broad-based systematic approach to prevention, loss cost reduction, finding the most efficient way to pay any remaining losses.
-
RISK CONTROL
(Also widely known as)
LOSS CONGTOL - Any conscious action (or decision not to act) intended to reduce the frequency or severity of accidental losses
- IGNITION TEMPERATURE
- THE MINIMUM TEMPERATURE TO WHICH A SOLID SUBSTANCE MUST BE HEATED FOR IT TO IGNITE
- RISK MANAGEMENT SURVEY QUESTIONNAIRES
- Ask questions that are helpful in discovering both insurable and uninsurable loss exposures
- REVENUE
- Money that an organization makes by selling goods, renting space, providing services, collecting taxes, soliciting donations, etc.
- DUPLICATION OF EXPOSURE UNITS
- Involves complete reproduction of an organization's own asset or facility to be kept on standby or reserve
- FIRE LOAD
- THE EXPECTED AMOUNT OF COMBUSTIBLES AVAILABLE AS FUEL FOR A HOSTILE FIRE IN A GIVEN AREA
- INSURANCE SURVEY QUESTIONNAIRES
- Designed to reveal the insuranble loss exposures of the prospect or client; to provide information need to underwrite and rate the policies that would cover the loss exposures
- LOSS EXPOSURE
- The possibility of a loss.
- RETENTION
- The organization bears all cost of losses and related administrative expenses on its own
- JOISTED MASONRY CONSTRUCTION
- THE EXTERIOR WALLS ARE MADE OF MASONRY MATERIALS (BRICK, STONE, CONCRETE) AND THESE WALLS DO NOT DEPEND ON WOOD OR OTHER COMBUSTIBLE MATERIALS FOR SUPPORT - OTHER SUPPORTING ELEMENTS OF THE BUILDING ARE MADE OF WOOD
- CONSEQUENTIAL LOSS
- Synonym for indirect loss. Also a more limited use as 1)loss resulting from spoilage of perishable items or 2) loss of value of undamaged property because property with which it is used has been damaged or destroyed
- PERSONAL PROPERTY
- All property that is not real property.
- SEGREGATION OF EXPOSURE UNITS
- encompasses to distinct but closely related risk management techniques - separation of exposrue units and duplication of exposure unites. Aimed at making losses smaller and more predictable
- HUMAN BEHAVIOR APPROACH
- ATTACKS THE PROBLEM BY MODIFYING THE BEHAVIOR OF PEOPLE TO REDUCE THE FREQUENCY OF UNSAFE ACTS
- INTERVIEWS
- Often conducted during the course of an inspection. Used to get more information than just an inspection
- RISK MANAGEMENT PROCESS
- 1.Identify/analyze loss exposure. 2. Examine feasibility of alternative risk management techniques. 3. Select the technique. 4. Implement the technique. 5. Monitor the results.
- SEPARATION OF EXPOSURE UNITS
- Involves dividing an organization's existing single asset or operation into two or more separate units
-
AUTOMATIC FIRE DETECTION/SUPPRESSION SYSTEM
(SPRINKLYER SYSTEM) - MAY BE WATER, DRY OR WET CHEMICALS, OR OTHER EXTINGUISHANTS -RELY ON FIRE DETECTION DEVICES TO SENS THE PRESENCE OF A HOSTILE FIRE AND ON SIGNALING DEVICES TO ALERT PERSONNEL TO DANGER
- FINANCIAL STATMENTS
- One category of documents used to discover loss exposures; most useful are the balance sheet, income statement, statement of cash flows
- CONTINGENT BUSINESS INTERRUPTION LOSS
- Indirect loss of revenue to a business due to another business' property being damaged.
- LOSS REDUCTION
- Reduce the severity of those losses that do occur
- FIRE PARTITION
- LESS STONG THAN A FIRE WALL, DIVIDES SPACE IN A BUILDING TO REDUCE SPREAD OF FIRE - DOES NOT CREATE A FIRE DIVISION
- BALANCE SHEET
- Used to report an organization's assets, liabilities and owner's equity as of a specific date
- LIABILITY LOSS
- Any loss a person or organization sustains as a result of a claim made against them by someone seeking monetary damages or some other legal remedy.
- POST-FUNDING
- Method of Paying Retained Losses - organization pays for its losses at a later time, using borrowing in the meantime
- FIRE DIVISION
- WHEN ONE SPACE IS SUFFICIENTLY SEPARATED FROM ANOTHER
- INSPECTION
- Of organization's premises and activities - means of discovering and understanding the organization's loss exposures
- HAZARDS
- Conditions that create or increase the probability or likely size of loss.
- LOSS PREVENTION
- Any measure that reduces the probability or frequency of a particular loss but does not eliminat e completely all possibility of that loss
- FIRE WALL
- A SELF-SUPPORTING SOLID WALL THE FULL WIDTH AND HEIGHT OF A BUILDING PLUS ADEQUAT EXTENSIONS BEHONE ANY COMBUSTIBLE ROOFS OR WALLS THAT SEPARATE A BUILDING INTO FIRE DIVISIONS
- AMOUNT SUBJECT
- maximum possible loss - the total value exposed to loss at any one location or from any one event
- PROPERTY LOSS
- Any loss taht a person or organization sustains as a result of the damaging, destruction, taking or loss of use of property in which that person or organization has a financial interest
- CAPTIVE INSURER
- A subsidiary that an organization owns and uses to "insure" some of its own loss exposures - both a form of retention and pre-funding
- FIRE STOPS
- SOLID PIECES RUNNING FROM SUPPORT TO SUPPORT OF A WALL OR FLOOR OF A BUILDING. HELPS REDUCE OPEN SPACES THAT CONTRIBUTE TO THE SPREAD OF FIRE
- MAXIMUM POSSIBLE LOSS
- The size of the largest loss that could occur
- REAL PROPERTY
- Land and all structures premanently attached to the land.
- PRE-FUNDING
- Method of Paying Retained Losses - the money needed to pay for losses is set aside in advance of the losses
- FIRE-RESISTIVE CONSTRUCTION
- PROVIDES MORE FIRE PROTECTION THAN ALL OTHER TYPES OF CONSTRUCTION. BUILDILNG MATERIALS USED RESIST HEAT LONGER THAN MATERIALS REQUIRED FOR PROTECTED ORDINARY OR NONCOMBUSTIBLE CONSTRUCTION
- INCOME STATEMENT
- The difference between items recognized as "income" and those recognized as "expenses"
- PERILS
- A cause of loss
- EXPOSURE AVOIDANCE
- Makes loss from a specified exposure impossible.
- MODIFIED FIRE RESISTIVE
-
INCLUDES MASONRY MATERIALS SLIGHTLY LESS RESISTIVE THAN
FIRE RESISTIVE - PROBABLE MAXIMUM LOSS
- The largest loss likely to occur
- ENGINEERING APPROACH
- ATTACY BY DESIGN AND LOCATION OF PROPERTIES AND EQUIPMENT TO REDUCE THE NUMBER OF PHYSICAL HAZARDS
- NONINSURANCE TRANSFER
- An entity other than an insurance company agrees to pay certain losses incurred by another
- FLASH POINT
- THE MINIMUM TEMPERATURE AT WHICH A LIQUID GIVES OFF VAPORS THAT CAN BE IGNITED BY A SPARK OR FLAME
- POTENTIAL LOSS FREQUENCY
- The number of events - fires, thefts, etc. - that are expected to occur within some time interval (such as a century, decade or year)
- CURRENT FUNDING
- Method of Paying Retained Losses - money is provided at the time of the loss or immediately after
- CREDIBILITY
- The level of confidence that one can properly have that available data is capable of being used as an accurate indicator of future losses.
- RISK FINANCING
- Raising funds to pay for losses that actually occur
- POTENTIAL LOSS SEVERITY
- Refers to how serious a loss occurrence may be
- STATEMENT OF CASH FLOWS
- Show the organization's experience as to cash coming in and cash going out, with the difference - the net cash flow - moving the cash on hand up or down.
- FLOWCHART
- A diagram of an organization's operations