BCN 4708 Fall 2008
Chapter 8
Insurance
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?
Risk Management
Risk Management Process





Identify and analyze loss exposure
Evaluate alternatives
Select the best techniques
Implement
Monitor and adjust
Risk Management
Return
Risk / Return Tradeoff
Risk
Risk Management
Dealing with risk





Identify
Plan
Monitor
Anticipate
Improve company
Insurance
Transfer risk exposure

Insurance
Required
Covers specific risk
Selection is important
Disclosure
Best’s Rating Guide
Insurance
Types of losses




Property
Financial
Liabilities
Losses involving personnel
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
Insurance
Builders Risk



Property deductions
Unoccupied
All losses not excluded
Insurance
Property insurance






Covers losses due to destruction of personal
or company property
Replacement cost
Value
Coinsurance
Specific perils
Exclusions
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
Insurance
Business General Liability Exposures






Legal liability losses
Bodily injury
Property damage
Other injury
Caused by employees or subcontractors
Occurrences
Insurance
Contract Liability Exposure
Owner , Contractor, Surety

Exculpatory Clauses
Hold-harmless
Indemnification

Contract Liability exclusion
Insurance
Other types of coverage






Business Automobile Policy
Workers Compensation Insurance
Employee Benefits Liability Coverage
Employment Practices Liability
Umbrella Liability Policy
Personnel Loss Exposures
Insurance
Public Liability Insurance



Need proof for initial license or to renew
Signed affidavit
Min requirements
Different for different areas of construction
No exemption
Insurance
Workers’ Compensation insurance


Certificate of registration
Can obtain exemption
Employee Deductions










FIT
SIT
Social Security Tax (OASDI)
Medicare Tax (HI)
SUTA
SDI / Workers’ Comp
Local
Union
Medical
Dental