FINA 4358 MODULE 4 ASSIGNMENT
Commercial Property insurance
Homework Questions
Module 4
1. We have quite a markup on our pressure vessels (a $400,000 vessel sells for $750,000). What
would we collect if we lose one and why can’t we collect the sales price?
Collect $400,000; PDI does not have Manufacturing’s Selling Price.
2. Our main warehouse has a replacement cost of $10 million if we rebuild it out of wood as it now
stands. However, I know we’d go back with a steel building at half that price. Why are we
carrying the warehouse on our Property Policy at the $10 million value?
Coinsurance penalty could apply penalty because the true value of the building is $10 million.
Functional Building Valuation could be requested from the underwriter.
3. Our current policy seems to be “specific” as to location. Is that right? What’s the downside of it
being that way and what alternative do we have?
Yes; Multiple locations allows you to move property between locations without having to tell
insurance. Downside is coinsurance is required; Alternative is Blanket Insurance
4. I see the value of our warehouse for “contents” is $140 million. I’m assuming that about $130
million of that is inventory value but I don’t know what that means. Is it average inventory value,
maximum inventory value…what? How can we better handle our inventory coverage?
Fluctuating Values i.e. Peak season endorsement
5. Some of the control components for the pressure vessels manufacture by PDI are, in fact,
produced in machine shops in Germany. The manufacturer has told him they are not providing
insurance on these items while awaiting shipment to PDI’s US warehouse. How can these items
be insured?
Foreign Property Coverage: Property temporarily overseas, property in process of manufacture
overseas, property permanently overseas
6. Do we have any coverage on our trade show samples and displays while at events in Europe and
the Middle East? I’m told the average value of our trade show display id $3 million.
Property Temporarily overseas coverage
7. What is the best way we can get coverage on our dock, foundations and underground piping?
Additional Covered Property
8. What is the Manufacturer’s Consequential Loss Assumption endorsement, and do we need it?
Commercial Property insurance
Homework Questions
Module 4
1. We have quite a markup on our pressure vessels (a $400,000 vessel sells for $750,000). What
would we collect if we lose one and why can’t we collect the sales price?
Collect $400,000; PDI does not have Manufacturing’s Selling Price.
2. Our main warehouse has a replacement cost of $10 million if we rebuild it out of wood as it now
stands. However, I know we’d go back with a steel building at half that price. Why are we
carrying the warehouse on our Property Policy at the $10 million value?
Coinsurance penalty could apply penalty because the true value of the building is $10 million.
Functional Building Valuation could be requested from the underwriter.
3. Our current policy seems to be “specific” as to location. Is that right? What’s the downside of it
being that way and what alternative do we have?
Yes; Multiple locations allows you to move property between locations without having to tell
insurance. Downside is coinsurance is required; Alternative is Blanket Insurance
4. I see the value of our warehouse for “contents” is $140 million. I’m assuming that about $130
million of that is inventory value but I don’t know what that means. Is it average inventory value,
maximum inventory value…what? How can we better handle our inventory coverage?
Fluctuating Values i.e. Peak season endorsement
5. Some of the control components for the pressure vessels manufacture by PDI are, in fact,
produced in machine shops in Germany. The manufacturer has told him they are not providing
insurance on these items while awaiting shipment to PDI’s US warehouse. How can these items
be insured?
Foreign Property Coverage: Property temporarily overseas, property in process of manufacture
overseas, property permanently overseas
6. Do we have any coverage on our trade show samples and displays while at events in Europe and
the Middle East? I’m told the average value of our trade show display id $3 million.
Property Temporarily overseas coverage
7. What is the best way we can get coverage on our dock, foundations and underground piping?
Additional Covered Property
8. What is the Manufacturer’s Consequential Loss Assumption endorsement, and do we need it?
