“COPE” - Property Underwriting and Effective Loss Control
I. Property Underwriting and “COPE”
A. Construction (C)
B. Occupancy (O)
C. Protection (P)
D. Exposure (E)
II. Construction (C)
A. Broken into three parts
1. Construction Materials
2. Square Footage
3. Age of the Structure
B. Construction Materials
1. Insurance Services Office (ISO) defines six construction classifications based
on combustibility and damageability of the “major structural features.”
2. The “Major Structural Features” considered are:
a. Exterior, load-bearing walls - Primary element
1) Masonry
2) Fire Resistive / Modified Fire Resistive
3) Non-masonry / non-fire resistive (non-combustible or “slow burning”)
4) Combustible
b. Roof and floors – Secondary elements
1) Concrete
2) Fire Resistive / Modified Fire Resistive
3) Non-masonry / non-fire resistive (non-combustible or “slow burning”)
4) Wood or other combustible materials
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
3. “Primary” and “secondary” elements combine to create the construction
class. The lower the number, the MORE susceptible to fire damage the
structure is considered:
a. Construction Class 1 – Frame
b. Construction Class 2 – Joisted-Masonry
c. Construction Class 3 – Non-Combustible
d. Construction Class 4 – Masonry/Non-Combustible
e. Construction Class 5 – Modified Fire Resistive
f. Construction Class 6 – Fire Resistive
4. Four “Rules” of Classification
a. If the exterior, load-bearing wall is “combustible” (wood or a combustible
assemblage), the entire building is rated as construction class “1” regardless of
the roof material.
b. If rule “1” does not apply and 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 materials.
c. If the load-bearing walls are masonry, fire resistive, or modified fire resistive,
the construction becomes a function of the floor/roof materials.
d. “Major structural features” are often an assembly of several parts. When
structural feature is an assembly, the entire assemblage is classed using the
most combustible or susceptible member of the assemblage.
Example: An all metal exterior building on metal studs with the interior
studs and insulation covered with plywood. The plywood makes this a
combustible assembly.
5. Construction Class Cheat Sheet – See Exhibit 1
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
Exhibit 1 – Construction Class Cheat Sheet
Wall Material
Floor/Roof Material
1
Wood / Combustible
Non-Combustible / Metal
Masonry2
Modified Fire Resistive
Fire Resistive
Construction Class
Code
Wood / Combustible
Wood / Combustible1
Wood / Combustible1
Wood / Combustible1
Wood / Combustible1
Frame
Frame
Joisted Masonry
Joisted Masonry
Joisted Masonry
1
1
2
2
2
1
Wall Material
Floor/Roof Material
Construction Class
Code
Wood / Combustible1
Non-Combustible / Metal
Masonry
Modified Fire Resistive
Fire Resistive
Non-Combustible / Slow Burning3
Non-Combustible / Slow Burning3
Non-Combustible / Slow Burning3
Non-Combustible / Slow Burning3
Non-Combustible / Slow Burning3
Frame
Non-Combustible
Masonry Non-Combustible
Masonry Non-Combustible
Masonry Non-Combustible
1
3
4
4
4
Wall Material
Floor/Roof Material
Construction Class
Code
Frame
1
Non-Combustible
3
Modified Fire Resistive
5
Fire Resistive
6
Modified Fire Resistive
5
Modified Fire Resistive
Fire Resistive
5
6
Concrete, Modified Fire Resistive or
Wood / Combustible1
Fire Resistive
Concrete, Modified Fire Resistive or
Non-Combustible / Metal
Fire Resistive
Concrete,
Modified
Fire Resistive or
Masonry4
Fire Resistive
Masonry4,5
Concrete or Fire Resistive
Concrete, Modified Fire Resistive or
Modified Fire Resistive
Fire Resistive
Fire Resistive6
Modified Fire Resistive
Fire Resistive6
Concrete or Fire Resistive
1 Includes a “Combustible Assembly”
2
One layer of non-load-bearing bricks covering metal studs is not considered a masonry wall; it is a noncombustible wall with a brick facade.
3
This includes Built-Up Tar and Gravel Roof
4If
the masonry does not meet the requirements of footnote “5” but is at least 4 inches thick, then the structure
is classed as modified fire resistive.
5To
qualify, the wall must be either: 1) solid masonry at least 4” thick; 2) hollow masonry at least 12” thick; or 3)
hollow masonry between 8” and 12” think with a listed fire resistance rating of at least 2 hours.
6”Fire Resistive”
is defined as a non-combustible material or assemblies with a fire resistance rating of at least 2
hours. Can be accomplished based on the material or by the application of a sprayed on cementitious mixture
covering all exposed metal. If between 1 and 2 hours fire resistance rating, the member is considered “modified
fire resistive.”
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
6. Problems with Mixed Construction
a. Major structural features may not be consistent throughout the entire ratable
structure.
b. Primary and secondary major structural feature are assigned the superior class
only when 66 2/3% or more of the subject major structural feature is of the
superior class. If this is not the case, the entire structural feature is assigned the
lower class.
c. See Exhibit 2
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
Exhibit 2: Mixed Construction
Example 1: Different Wall Materials
This building is located in an industrial park. This is a one story building measuring 120 feet by 60 feet
with a wall height of 10 feet. The front of the building has been converted into office space and the rear
is for storage and minor production. When originally built, the walls and roof were all metal siding on
metal studs with approved “slow-burning” insulation on the interior of the walls qualifying the building
as a construction class “3” structure. Upon moving in, the tenant and landlord installed a dividing wall
between the intended office area and the warehouse/production area. Wood paneling was attached to
the metal studs in the office area to a height of 8 feet and a drop-panel ceiling installed. The office area
is 20 x 110. Does the creation of a frame assembly change the construction class of this building?
Total Exterior Wall Area
(360’ perimeter x 10 feet tall)
Combustible Assembly Wall Area
(160’ exterior perimeter x 8 feet high)
Non-Combustible Wall Area
(160 ‘ exterior perimeter x 2 feet high) + (200 exterior perimeter x 10 feet
high)
3,600 square feet
1,280 square feet
(35.6%)
2,320 square feet
(64.4%)
Non-Combustible
Storage / Production Area
Non-Combustible
40’
Non-Combustible
120’
(Roof is Non-Combustible. Floor is Concrete.)
60’
Office Area
20’
Combustible Assembly (to 8’)
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
Example 2: Differing Floor and Roof Materials
This structure was originally constructed as a one story, 3000 square foot (50’ x 60’) structure with 12
inch masonry walls and a non-combustible, built-up tar and gravel roof and a wall height of 20 feet. The
building/business owner, due to the need for more storage area, added a 50’ x 30’ mezzanine storage
area over the front office area and extending into part of the work area. The storage area is ¾ inch
plywood on top of metal joists – a combustible assembly. Prior to this addition, the building was rated as
masonry non-combustible (construction class “4”). How does this addition affect the building’s
construction class? The answer is based on the combination of the floor and roof area since the exterior
walls are all of the same masonry material.
Total Floor and Roof Area
(50’ x 60’)+(50’ x 30’)
Combustible Floor Area
(50’ x 30’)
Non-Combustible Roof Area
(50’ x 60’)
4,500 square feet
1,500 square feet
(33.33%)
3,000 square feet
(66.67%)
50’
30’
1 Story
(50’x30’)
60’
10’
30’
2 Story
(50’x30’ Storage Above)
20’
Office Area
(1st floor)
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
7. Other Construction Material Considerations
a. A large amount of combustible interior walls (including assemblies)

b. Combustible flooring
These minor features do not affect the construction class of the building, but they do
alter the underwriting view (and overall rate) of the building.
C. Square Footage
1. Structure size maters because of the relationship between “maximum
possible loss” (MPL) and “probable maximum loss” (PML).
2. To adequately judge PML requires a review of the “Protection” features
found in and part of the structure.
D. Age of the Structure
1. Have the major “systems” been maintained and updated as necessary?
2. When were the last updates?
3. Extent of updates?
4. Who did the updates?
5. Depending on the construction materials, older buildings may easily burn or
contain materials that have potential to create health problems
KEY QUESTION: Does the building meet all current building code requirements?
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
III. Occupancy (O)
A. Two main parts of “occupancy”
1. What the insured does
2. How the insured manages the “hazards” associated with what they do
(“Hazards of Occupancy”)
o What is a “hazard”?
B. What the insured does
1. Two primary occupancy classifications used by ISO for rating commercial
property:
a. Non-Manufacturing
b. Manufacturing
2. Each individual class of insured (within the primary classifications) presents
its own relative risk of property loss
3. The greater the basic risk, based on primary and individual classification, the
more closely the underwriter analyzes the operations (occupancy)
C. How the insured manages its operations and the hazards of those
operations
1. Similarly classed insureds do not necessarily manage their operations in a
similar fashion
2. Body Shop example of differently managed Hazards of Occupancy (Storage of
“Flammable” and “Combustible” liquids)
a. Flammable
b. Combustible
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
3. Hazard of Occupancy’s other considerations
a. Housekeeping
b. Combustible materials in the building
c. Condition of major systems
d. Presence and maintenance of necessary safety systems (dust collection, hood &
duct, etc.)
e. Other considerations based on occupancy type
IV. Protection
A. Primary property protection
1. Sprinkler systems
a. What type of system?
b. Condition of the system
c. Amount of non-sprinklered area
d. High-rack storage problems
e. Is the system adequate for the occupancy?
2. Fire extinguishers
a. Are there enough for the building
b. Are they properly located at eye level
c. Are they in the path of natural exit
d. Are they the correct size
e. Are they the correct type
1) Class “A”
2) Class “B”
3) Class “C”
4) Class “D”
5) Class “K”
f. Are they inspected at least annually and charged as needed
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
3. Fire suppression system
a. Installed in accordance with NFPA 96
b. Cleaned regularly and inspected annually
B. Secondary property protection
1. Alarm systems
a. Type of system: Fire; burglar; combination
b. Local alarm or monitored alarm
c. Where does alarm sound? Is the facility listed by Underwriters Laboratory?
d. Is the system installed properly?
2. Fire walls and fire doors
a. Directly affect the “Probable Maximum Loss” (PML)
b. Properly compartmentalized spaces limit the spread of fire
c. Fire walls must meet minimum standards
d. Any openings within a firewall must be protected with proper fire doors
e. If the wall/door combination does not meet guidelines, may only be considered
a “fire stop”
3. Public fire protection
a. Fire departments are graded based on response time, personnel, training,
equipment and water supply (including water resources)
b. Graded on a scale from 1 to 10
c. Split classifications
C. Miscellaneous protection
1. Standpipe and hose
a. Augment a sprinkler system by allowing occupants to fight fires
b. Some states have removed the hoses for safety reasons
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© 2011 Insurance Journal Academy of Insurance
“COPE” - Property Underwriting and Effective Loss Control
2. Watchman services
a. Hours patrolled
b. How patrol is monitored
V. Exposures
A. Proximity to a “high-hazard” operation
B. High wind danger
C. Wildfire risk
D. Flood zone (Special Flood Hazard Area)
E. Earthquake exposure
F. Jurisdictional building code requirements
VI. Why Knowing “COPE” Helps
A. Allows better planning
B. Knowing what to provide and why makes the property underwriting
smoother and quicker
C. You can better assist clients with they are planning upgrades to current
structures or constructing new buildings
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© 2011 Insurance Journal Academy of Insurance