Insurance
101:
Property and Boiler/Machinery Coverages
This,
the second article in our Insurance 101 series, should give you a better
understanding of the District's commercial business insurance.
Commercial
property insurance, sometimes called fire and allied lines insurance,
is the form of insurance that covers direct and indirect losses related
to commercial properties. Property is either real or personal. Real property
includes real estate (land) and buildings fixed on that land. Personal
property can be classified as (1) tangible movable items such as furniture
and computers and (2) intangible items such as patents, copyrights, and
stocks. Our property insurance policy covers the following property:
Real property,
including new buildings and additions under construction at an insured
location, in which we have an insurable interest.
Personal
Property: 1) owned by us, including our interests as a tenant in improvements
and betterments. 2) of others in our custody to the extent we are under
obligation to keep it insured (i.e., per a contractual requirement).
Our policy
also insures the interest of contractors and subcontractors during construction
at one of our locations to the extent of our legal liability for insured
physical loss or damage to the property. This policy does not cover:
- Currency,
money, precious metal in bullion form, notes or securities.
- Land,
water, or any other substance on land.
- Animals,
standing timber, growing crops.
- Watercraft
or aircraft.
- Vehicles
of officers and employees or vehicles other wise insured for physical
loss or damage.
- Underground
mines or mine shafts or any property within such mine or shaft.
- Dams and
dikes.
A detailed
inventory of real and personal property is the first step toward identifying
our property risks. Real property is relatively easy to identify because
addresses and values are recorded in our Property Accounting system. Personal
property is more difficult to identify and value because of different
valuation methods.
Other values,
such as property of others, and contractual obligations, can only be determined
from the risk manager's in-depth knowledge of District operations
As of November
1, 2001, our property is valued at $714,286,012. The following deductibles
apply to each loss:
- $25,000
- Policy deductible including musical instruments and leased contractors
equipment
- $100,000
- Earth movement deductible
- $500,000
- Flood deductible (Note: Flood and water coverage for certain of our
properties is excluded.)
New procedures
for our self-insured property losses (losses valued at $25,000 or less)
were recently implemented. Information regarding filing a self-insured
claim can be found at this web site:
http://www.dist.maricopa.edu/legal/rmi/selllfinsreim.htm
All major
property claims (such as a fire at one of our properties) and those claims
that could ultimately exceed $25,000 should be reported to the Risk Manager
immediately.
Boiler
and Machinery Insurance
Boiler and
machinery insurance coverage is a special type of property insurance designed
to reduce-through periodic inspections-the chance of malfunction among
boilers and other equipment, including pressurized, electrical, and electronic
machinery. The field of boiler and machinery insurance embraces risks
of direct loss and indirect loss arising from accidents to objects. Objects
include boilers, generators, engines, pumps, compressors, and turbines.
The first
step in the risk identification process for boilers and machinery is to
determine what objects present could cause loss-not an easy task. The
most apparent is any object containing steam. In addition to steam boilers,
any object under pressure or vacuum should be considered. Refrigeration
and air conditioning compressors are also insured under a boiler/machinery
policy. Electrical objects such as transformers, reactors, circuit breakers,
and other items that could be critical should also be identified.
Our boiler
and machinery values are a part of our property values mentioned above.
A $25,000 deductible applies to all boiler and machinery losses.
The
next installment of Insurance 101 will discuss our Commercial General
Liability insurance.
Published
in the Summer 2002 Edition of In Brief
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