BCN 4708 Fall 2008

1. BCN 4708 Fall 2008 Chapter 8 Insurance

2. Insurance • What is Risk? • Specific types of Risk • Inflation • Market • Principal • Liquidity • Credit • Two categories of risk • Speculative Risk • Pure Risk • What is Risk Management?

3. Risk Management • Risk Management Process • Identify and analyze loss exposure • Evaluate alternatives • Select the best techniques • Implement • Monitor and adjust

4. Risk Management Risk / Return Tradeoff Return Risk

5. Risk Management • Dealing with risk • Identify • Plan • Monitor • Anticipate • Improve company

6. Insurance • Transfer risk exposure • Insurance • Required • Covers specific risk • Selection is important • Disclosure • Best’s Rating Guide

7. Insurance • Types of losses • Property • Financial • Liabilities • Losses involving personnel

8. Insurance • Premium Rates • Property • Full value • Fire rate • Flood rate • Wind rate • Etc • Maximum values at risk • Credits for certain amenities • Payroll or gross sales • Location • Reputation

9. Insurance • Builders Risk • Property deductions • Unoccupied • All losses not excluded

10. Insurance • Property insurance • Covers losses due to destruction of personal or company property • Replacement cost • Value • Coinsurance • Specific perils • Exclusions

11. Insurance • Financial Loss Exposure • Loss of net income • Decrease in revenues and increase in expenses • Business interruption insurance • Covers rental equipment costs • Work stoppage costs • Temporary relocation costs

12. Insurance • Business General Liability Exposures • Legal liability losses • Bodily injury • Property damage • Other injury • Caused by employees or subcontractors • Occurrences

13. Insurance • Contract Liability Exposure • Owner , Contractor, Surety • Exculpatory Clauses • Hold-harmless • Indemnification • Contract Liability exclusion

14. Insurance • Other types of coverage • Business Automobile Policy • Workers Compensation Insurance • Employee Benefits Liability Coverage • Employment Practices Liability • Umbrella Liability Policy • Personnel Loss Exposures

15. Insurance • Public Liability Insurance • Need proof for initial license or to renew • Signed affidavit • Min requirements • Different for different areas of construction • No exemption

16. Insurance • Workers’ Compensation insurance • Certificate of registration • Can obtain exemption

17. Employee Deductions • FIT • SIT • Social Security Tax (OASDI) • Medicare Tax (HI) • SUTA • SDI / Workers’ Comp • Local • Union • Medical • Dental