For underwriting purpose, we sometimes have to determine the scope of a single risk. In this article we will delve deep into the nature and definition of single risks in Property Insurance.
A single risk, for this purpose, means any building or range of buildings not separated either:
1. From other buildings by an open space (with no tall grass, timber or any other combustible element) of 15 meters where there are no opposing openings and where the other buildings have external walls of bricks, stone or concrete (reinforced or otherwise) and are roofed with slates, tiles, concrete (reinforced or otherwise) or metal sheeting.
2. From other buildings by an open space (with no combustible element) of 25 meters where there are opposing openings or where the other buildings are of a construction inferior to that defined in 1 above3.
From adjacent property by a perfect party wall of brick, stone or concrete (reinforced or otherwise) of at least 21 centimeters thickness, entirely without opening and extending atleast 37 centimeters above the roof of both sides. Where one roof is of concrete, the partywall need not extend above it.In buildings separated in accordance with 1 or 2, an open-sided covered way, not used forany trade process or for storage, would not be considered as forming communication.
In the case of plants in the open (refineries, chemical factories and the like) or of tank storage, the minimum open space between units or groups of tanks for the purpose shall be 25meters. In addition, storage tanks must be adequately bonded by container walls sufficient to hold at least 110% of the maximum capacity of the tanks.
Wherever there is sloping ground coupled with a risk which, in the event of fire, could produce burning liquid, regard should be taken of the fact when assessing a single risk, notwithstanding the existence of separations as defined above.
These separations are considered to be adequate to prevent the spread of fire. However, where an inherent explosion hazard exists, a perfect party wall (see 3 above) cannot necessarily be considered adequate separation. Moreover, where highly explosive materials are used, even greater distances are required to provide adequate separation.
Where stocks are insured on a floating or declaration basis, the amount to be taken into account is the loss limit on stocks in the single risk under consideration or, where there is no loss limit, the total sum insured on stocks. Variation of this rule is allowed only in cases Where the maximum value of stocks in the single risk is clearly limited by the capacity of the building or buildings, in which case the amount to be taken into account shall not be less than that related to the maximum capacity.
Prevailing climatic conditions, e.g. strong winds or extreme cold, which could have a material effect on fire spread must also be taken into account in defining single risk.
The above discussion is as per the jurisdiction of LIRMA Definition of a Single Risk. For details : www.insureegypt.com
Mr. Abdul has been in insurance sector of Bangladesh for a decade. He is an Associate Member (ACII) of Chartered Insurance Institute of London.