This is Part VI of our seven-part series on Understanding Rule 85. In this series, we delve into the intricacies of Rule 85 and its implications for property insurance.
Not all buildings can be rated using typical methods under Rule 85. Some structures fall into categories that require specialized considerations due to their unique functions or the risks they pose. This section covers those cases, focusing on buildings where people live and other special categories that demand specific rating methods.
Habitational and special class rates
Buildings designed for human occupancy - apartments, dormitories, hotels - are rated differently than other structures. The increased risk of multiple individuals living in a relatively confined space requires insurers to account for both property risks and liability risks. Habitational class rates ensure that the unique aspects of residential buildings are adequately assessed.
Specifics on rating buildings where people live
When it comes to buildings designed for habitation, insurers focus on factors such as:
Occupancy levels: The more people living in a building, the higher the potential risk. Buildings with high occupancy rates, such as dormitories or apartment complexes, carry increased fire hazards and liability risks due to the sheer number of people.
Fire safety measures: The presence of fire alarms, sprinkler systems, and egress points are crucial in habitational class rating. The effectiveness of these systems can significantly influence the rating, as they directly impact the safety of the building's occupants.
Personal property and liability: Unlike commercial spaces, habitational properties often involve personal belongings that increase the potential for loss in the event of damage. Additionally, the liability risk for injuries or accidents is higher in buildings where people live, further complicating the rating process.
Special categories
Certain buildings or structures fall outside the typical realm of class rating due to their unique use or inherent risks. These include:
Agricultural storage: Buildings used to store crops, equipment, or livestock feed are vital to agricultural operations, but they also pose fire and environmental risks. Specialized class rates account for the high value of stored goods and the unique conditions within these facilities.
Wharves, piers, and bridges: Constant exposure to water, weather, and heavy loads makes marine structures more susceptible to damage. They are rated based on materials, environmental conditions, and the frequency of use.
Big tents: Temporary structures like large event tents require specialized rating methods due to their impermanent nature and potential vulnerabilities, such as fire or weather-related damage.
These categories highlight the diversity of structures that insurance companies need to assess outside the standard class-rating framework. Each presents unique challenges in risk assessment and requires a more nuanced approach to rating.
Conclusion
Specialized class rates offer a more tailored approach to insuring structures that pose distinct risks. Whether the building is habitational or used for agriculture, marine activity, or temporary events, these rates ensure that insurers consider the unique hazards associated with each category. By understanding these distinctions, insurers can better protect their clients and manage risks.
