- Construction, occupancy, protection, and exposure are all acronyms for construction, occupancy, protection, and exposure. When writing an insurance policy for a property, an insurance underwriter must consider these factors.
- Each of the COPE elements suggests a different form of risk and, as a result, will affect a value model in different ways.
- Construction refers to how a structure was built, occupancy to what the structure is used for, protection to how the structure is protected, and exposure to external variables that may represent a threat to the structure.
What are characteristics of Cope?
Understanding your organization’s exposure to property risk begins with having precise, up-to-date insurable values for all buildings and structures on your property schedule. While this can help ensure your property is insured to its full value, detailed building data (such as COPE and Secondary COPE) can help you get the best rates.
Construction, occupancy, protection, and exposure are all acronyms for construction, occupancy, protection, and exposure. It contains information such as the type of construction material used, the number of stories, and fire protection, among other things. The building’s sensitivity to harm from windstorms or seismic activity is a secondary COPE trait. Both COPE and Secondary COPE data can be used to demonstrate the possibility of an organization suffering losses as a result of a catastrophic event, as well as quantify the possible property losses. Some insurers and catastrophe modeling tools automatically assume the worst case scenario in the absence of this information.
Below are some secondary COPE features you can start gathering to prevent the “worst case scenario” and get better prices.
How do you understand commercial property and underwriting and cope?
Working for over four years with the Insurance Services Office’s Commercial Risk Services section (now known as RDS) provided me with the opportunity to get somewhat familiar with the recognition, gathering, and reporting of the necessary property underwriting data known as “COPE” data.
For nearly 300 years, real estate underwriters have used the same four core types of underwriting data: construction, occupancy, protection, and exposure (COPE). The majority of this fundamental underwriting data is captured by commercial property apps. In this and the next posts, each element is addressed in greater depth.
The construction element is further divided into three sub-components. The following sub-parts are discussed in detail in the following paragraphs:
The combustibility and damageability of the materials used to construct the “main structural features” of a structure are classified by ISO into six categories (numbered “1” to “6”). The lower the number, the more vulnerable the building is to fire damage (the main construction rating factor in this system). The outside load-bearing walls, roof, and floor are the “primary structural features” utilized to define the building class codes (s).
A building class code is assigned based on the load-bearing wall material used first, and then the floor and roof materials used second. There are four types of load-bearing exterior walls to consider: 1) masonry, 2) fire-resistant/modified fire-resistant, 3) non-masonry or fire-resistant, and 4) flammable materials (wood). Similarly, there are four different types of floors and roofs to consider: 1) concrete; 2) modified fire resistant/fire resistant; 3) non-combustible/slow burning; and 4) wood or other non-combustible/slow burning materials.
The building class of a structure is determined by combining one of the three wall types with one of the four floor/roof types. A graphic is attached that shows how these factors interact to produce a given construction class. Construction categories are governed by only two universal “rules”: 1) If the exterior load-bearing wall is masonry, modified fire resistive, or fire resistive, the entire building is rated as masonry (construction class “1”); and 2) if the exterior load-bearing wall is anything OTHER THAN masonry, modified fire resistive, or fire resistive, the structure’s construction class is based on the roof and floor construction material.
Remember that each “major structural characteristic” is often made up of numerous pieces when using this chart. When evaluating one of these qualities, the complete assemblage that created that portion must be taken into account, and no “assembled” feature can be classified higher than its most flammable or susceptible component.
- An outside metal-on-metal-stud wall with plywood or other combustible material on the inside (common in industrial settings). Because of the combination of these two dissimilar materials, the entire length of wall coated in combustible material must be classified as a type “3” combustible wall. If this arrangement covers a large enough portion of the wall, the entire wall may be deemed frame for rating reasons.
- Metal-covered wood joist roof supports are classified as a frame assemblage and given a frame rating.
(However, load-bearing masonry, modified fire resistive, and fire resistive walls are exempt from the assembly rule.)
There are really three more construction classifications linked to Group II causes of loss, in addition to the six construction classes listed above and in the accompanying chart (windstorm, hail, aircraft, riot, civil commotion, etc.). The construction class codes “7,” “8,” and “9,” respectively, modify the construction classes “2,” “3,” and “4”. These three additional codes will never be used by agents; instead, they will be aware that they exist and that they are primarily concerned with the structure’s ability to handle high wind loads.
Problems with Mixed Construction. What effect does a mix of building materials and assembly have on the construction classification of a commercial structure? In reality, such mingling can jeopardize the building’s construction class. According to the accompanying table, every building with a frame wall or wall assembly has the entire structure evaluated as construction class “1” – frame, which has some highly expensive property rating consequences.
Simply said, better construction must equal or surpass 66 2/3 percent of the ratable structural feature to qualify for a higher construction class rating. This 2/3 rule applies to the walls first, then to the combined area of the floors and roofs separately. (When estimating the total floor and roof area, the lowest floor is ignored.)
Two instances of mixed construction are attached. The first is a one-story structure with non-combustible and frame assembly walls, all of which are covered by a non-combustible roof. The second structure is a partly two-story structure with masonry walls, a non-combustible roof, and a combustible second storey composed of 3/4 inch plywood on metal joists.
Other Materials to Consider in Construction. In addition to the “main structural elements” mentioned previously, underwriters examine interior construction features that affect the structure’s damageability. Bowling alleys are a good illustration of this evaluation; due to the raised flammable floors that make up the bowling lanes, a rating fee is usually assessed.
Many facets of the underwriting process connected to COPE’s “construction” factor are influenced by the size of a structure. In COPE’s “protection” section, the size of the structure also matters (i.e. the need for a sprinkler system, etc.). The assessment of the building’s “greatest possible loss” with its “likely maximum loss” is the most important component of structure size from the insurance perspective.
In the article “How NOT to Explain Coinsurance to Clients,” the terms “maximum possible loss” (MPL) and “probable maximum loss” (PML) were discussed. In essence, the entire structure is “possible” to be destroyed in a single loss; consequently, the MPL is the entire structure. The likelihood of a total loss, on the other hand, is inversely related to the size of the structure. In general, the larger the structure, the less probable it is to be completely destroyed in a single incident. In larger buildings, the PML represents a lesser percentage of the MPL.
In the mind of the underwriter, aging structures cause concern and inquiries. When underwriting an older facility, underwriters will pay special attention to the primary systems (roofing, plumbing, HVAC, and wiring). The older the structure, the more probable a major system would fail, resulting in a potential claim that is mostly caused by an internal issue rather than an external force.
Have the systems been kept up to date and maintained as needed? When was the last time you updated your site? What exactly did the improvements entail? Who was in charge of the updates? These are some of the inquiries that underwriters may have about older structures.
Agents should also be concerned about the issue of age. Since the building’s original construction, many construction-related ordinances and laws may have been revised or enacted. The commercial property coverage clearly excludes any higher costs associated with bringing a structure into compliance with local building rules following a covered cause of loss. For further information, see the five-part ordinance or statute series that was previously provided.
Taken alone, “construction” could end up being the most essential factor in property underwriting. Although the second element, “occupation” (what the insured performs), is frequently viewed as the most significant of the four, occupancy is actually secondary to construction when the risk involves a class of business that the underwriter regularly writes.
Although construction and occupancy can be considered as functions of one another in terms of underwriting considerations, the decision frequently comes down to construction. For example, an underwriter may be ready to issue coverage to a restaurant in a masonry/non-combustible building (construction class “4”), but not to the same operation in a joisted/masonry building (construction class “2”).
The following piece concludes our COPE topic by explaining Occupancy, Protection, and Exposure.
What is commercial occupancy insurance?
Owner-occupant or renter-occupied for homeowners and the number of families for which the building is designed); Occupancy how the building is used for commercial property and whether it is owner-occupant or renter-occupied for homeowners; Occupancy how the building is used for commercial property and whether it is owner-occupant or renter-occupied for homeowners and the number of families for which the building is
What is insurance occupancy?
Use and occupancy insurance is an old phrase for business insurance that protects against financial losses such as missed profits and other expenses caused by a calamity that shuts down activities, such as a fire. It may provide coverage for a variety of things, including business revenue, property loss, property replacement, and other connected costs.
It’s currently referred to as business income insurance or business interruption insurance.
What is cope used for?
At non-eucharistic functions, Roman Catholic and some Anglican clergy wear copes. A cloak made of a semicircular piece of material that is open in the front and tied at the breast with hooks or a brooch. It’s constructed of silk or other luxurious fabrics in a variety of colors. A hood was originally worn around the neck, but it was replaced by a shield-shaped piece of material. The hood was restored in the twentieth century. The cappa choralis (“choir cloak”), a black, hooded vestment worn by clergy in processions and choir services, was transformed into the cope. The cope was in use as a liturgical vestment by the end of the eighth century, and by the end of the eleventh century, it had become widely accepted.
What completed operations coverage?
A type of insurance coverage known as products-completed operations protects you from consumer lawsuits alleging property damage or injury as a result of your product or finished service.
What does construction type insurance mean?
Building Construction Categories (ISO) Building construction categories defined by Insurance Services Office, Inc. (ISO) in its Commercial Lines Manual (CLM) for the purpose of setting premiums for commercial property insurance based on fire susceptibility.