Course Code: ASSESS123 / Module 1

Cafe

Module 1

Course code: ASSESS123 / Module 1

Case study 1

Café

Module introduction

Mr X, a prospective client, is extremely dissatisfied with the current service of SA Insurance Company. As his policy should soon come up for renewal, he approaches us to take over his current policy.

We will provide you with the current policy schedule. It will be expected of you to answer general questions, to give an overview with the help of a site layout and CD/video, to determine the premium, to give a quotation, to follow the underwriting principles, as well as to advise the client on possible changes.

The following sections are relevant to this case study:

General
Fire
Theft
Money
Glass
Public Liability

If you use the following guidelines in relation to this risk, you will be able to complete this module effortlessly.

Firstly, read the module thoroughly.
Then, complete the questions of Task 1.
Study the content of Task 2.

Complete the inspection reports.
Complete the quotation and recommendation/requirement form.
Complete the application form, as well as the underwriting/clause form.

Now, complete the questions of Task 3.

The experience gained when working through this case study will provide you with the necessary knowledge and confidence to handle similar queries in future.

Module goal

The goal of this module is to evaluate your knowledge of the following aspects of a café as risk:

General questions continually asked;
Risk evaluation with the necessary recommendations;
Determining tariffs, giving a quotation and the application of underwriting principles; and
The answering of questions on possible changes in the risk.

Case study

Motivate your answers with the relevant facts throughout to qualify for the maximum allocation of marks as indicated per question.

Task 1

When visiting Mr X at his café, he inquires about the following aspects:

Although he is extremely dissatisfied with the service of his current insurer, he receives notable discount on his premium. He wants to know if we will blindly accept this premium.

______

Should he insure the total content of his café against fire? Doesn’t our company make provision to do it on a first-loss basis?

______

He realises that cigarettes pose a greater risk and therefore, wants to know if it will be covered in its entirety against theft, burglary and robbery.

______

He also sells Lotto tickets. Will he enjoy cover if he is robbed of the money from its sales? They are responsible by contract. The average sales amount for Lotto tickets is R20 000.

______

The café is located next to a busy street. Therefore, his current insurer doesn’t want to provide him with cover for example when somebody scratches the café’s large windows with a sharp object. Will our policy provide cover for this incident?

______

Mr X wants to know whether he will qualify for discount when paying his premiums annually in advance.

______

His doesn’t have a safe in his café. He wants to know what the limit of his cover will be if the money is kept after hours in a container under the counter.

______

The insured wants to know if our policy will cover him against food poisoning. He doesn’t know whether his current policy provides cover for it.

______

The owner of the building equipped all the shops in the complex with air conditioning units. But he keeps every tenant in terms of their lease agreement responsible for damage to the air conditioners. Will he enjoy cover in terms of our policy for damage done by vandals to the external parts of the unit which is in the communal yard? His current insurer couldn’t answer this question.

______

TOTAL

SAVERSEKERINGSMAATSKAPPY

INSURANCE COMPANYReference 5555

Mr X

110 Durban Road

Durbanville

7550

Policy number 123456789

Segers Superette & Take Aways

Dear Mr

It is our pleasure to include with this a copy of your policy.

Yours sincerely

Head of Underwriting

SCHEDULE

Insurer:SA Insurance Company

Product:Multimark III

Insured:Segers Superette & Take Aways

110 Durban Road

Durbanville

7550

Business:Café and Take Aways

Agency:XYZ Brokers

Agency number:00001

Manner of payment:Monthly debit order in advance

Institution:Absa

Date of payment:1st day of the month

Insured period:1 January 2004 to 31 January 2004

Any consecutive period of one calendar month to which the company agrees to renew the policy or any section of it.

Office:Durbanville

Signed at Durbanville on 3 January 2004.

 

On behalf of the insurer

SCHEDULE

SUMMARY

Effective sections / Additional/Refund premium / Renewal premium
Monthly Annually
Fire / 0,00 / R170,00 / R2040,00
Theft / 0,00 / R333,33 / R4000,00
Money / 0,00 / R 33,33 / R 400,00
Glass / 0,00 / R 20,00 / R 240,00
Public Liability / 0,00 / R166,67 / R2000,00
Broker’s fee / R 15,00 / R 180,00
Total premium (14% VAT included) / 0,00 / R738,33 / R8860,00

After inception of cover, this schedule will become a tax invoice for the payment of the amount due (VAT number: 1234).

Prescription date: 01/01/2005

Policy number:123456789

Insured:Segers Superette & Take Aways

Effective date:01/01/2004

______

Endorsements applicable to monthly policy

(Endorsements attached to policy and which form part of it)

SectionReference

General001 Adjustment of premium clause

FireN.A.

Theft

MoneyN.A.

GlassN.A.

Public

Liability

(Claims made basis)112 Extension: Products liability

113 Extension: Wrongful arrest and defamation

______

General provision

If, in the schedule of this policy, the sum insured, limit of indemnity or compensation is:

left blank or has no monetary amount stipulated against it;

reflected as nil or not applicable or not covered or no indemnity extended;

it means the defined event or circumstance shown in the schedule is not covered by the policy.

SCHEDULE

SECTION FIRE

Policy number:123456789

Insured:Segers Superette & Take Aways

Transaction number:Effective date: 01/01/04

______

Stand no.Details of premises/Item descriptionSum insured/

Indemnity limit

1110 Durban Road, Durbanville

Stock in tradeR200 000

EquipmentR300 000

SignageR 10 000

Construction:Standard

Occupation:Café and Take Aways

Additional perils:

Extension:Earthquake

Extension:Special perils

Extension:Malicious damage

______

Optional extensions applicable

N.A.

______

Memorandums

N.A.

______

Optional extensions not applicable

Extension: Riot and strike

Extension: Leakage

Extension: Subsidence and landslip

Clause: Stock declaration conditions

Extension: Escalator clause

Clause: Disposal of salvage

SCHEDULE

SECTION THEFT

Policy number:123456789

Insured:Segers Superette & Take Aways

Transaction number:Effective Date: 01/01/04

______

Stand no.Details of premises/Item descriptionSum insured/

Indemnity limit

1 110 Durban Road, Durbanville

First-loss cover R 50 000

Excess 10% of claim min R500

Construction:Standard

______

Optional extensions that apply

Keys and locks:R2500

______

Memorandums

Memo 1:Limit on tobacco and cigarettes: R 10 000

Memo 2:Condition 2: Burglar alarm (siren type)

______

Optional extensions that do not apply

Buildings - Increased limit

SCHEDULE

SECTION GLASS

Policy number: 123456789

Insured: Segers Superette & Take Aways

Transaction number:Effective Date: 01/01/04

______

Stand no.Details of premises/Item descriptionSum insured/

Indemnity limit

1 110 Durban Road, Durbanville

Limit R 3 000

Excess 10 % of claim min R250

______

Optional extensions that apply

N.A.

______

Memorandums

N.A.

______

Optional extensions that do not apply

Riot and strike extension

Special replacement

______

SCHEDULE

SECTION MONEY

Policy number: 123456789

Insured: Segers Superette & Take Aways

Transaction numberEffective Date: 01/01/04

______

Stand no.Details of premises/Item description Sum insured/

Indemnity limit

1 110 Durban Road, Durbanville

Specific limits/detailsIndemnity limit

Money which is not kept in a locked safe or strongroom

(i)While it is on the insured premises, after the insured’sR3 000
trading hours;

(ii)While it is in the dwelling of the insured, a partner, R3 000
director or employee of the insured;

(iii)While it is on the insured premises, in the safe-
keeping of one or more of the petrol attendants; andR_____

(iv)While

(a)It is in the safekeeping of one or more
collectors or delivery people; R_____

(b)It is in the safekeeping of a partner, director or
employee of the insured who is on a business trip R3 000
any place in the world and away from the insured
premises.

Money kept in a locked safe or strongroom in a building on the insured’s premises after the insured’s trading hours.

With regard to the safe or strongroom as described below:

………………………………………………………………… R______

With regard to any safe or strongroom which is not specified
in 2(i) above, the limit in relation to the grading of such
a safe or strongroom will be determined as follows:

No SABS gradingR 5 000

SABS category 1 gradingR 10 000

SABS category 2 grading R 20 000

SABS category 2 grading HD grading D3R 40 000

SABS category 2 grading ADM grading R 100 000

SABS category 2 grading ADM grading D3R 125 000

SABS category 3 gradingR175 000

SABS category 4 gradingR 350 000

SABS category 5 gradingR 500 000

It is provided that the liability of the company for premises affected is always at most limited to the amounts stated below (3).

With regard to any other loss of or damage to money during the period described below, the indemnity limit for money related to the specified insured premises will read as follows:

Main limit- during December or any mentioned periodR 5 000

- any other periodR 5 000

With regard to the loss of crossed cheques, crossed bills or crossed postal orders.

(The indemnity limit below is payable above the indemnity limit shown in 1, 2 and 3.)

R100 000

DetailsIndemnity limit/

Compensation

Clothing R3 000

ContainersR2 000

Keys and locksR3 000

______

Optional extensions applicable

Personal accident (assault) extension

Capital sumR10 000

Weekly sumR 100

Medical costsR 1 000

Number of persons3

______

Memorandums

Excess:5% of claim min R500

______

Optional extensions not applicable

Riot and strike extension

SCHEDULE

SECTION PUBLIC LIABILITY

Policy number: 123456789

Insured: Segers Superette & Take Aways

Transaction number:Effective Date: 01/01/04

______

Stand no.DescriptionIndemnity limit

1 110 Durban Road, Durbanville

Claims made basis R2 000 000

Excess 5% of claim min R1 000/

maximum R25 000

Retrospective date: 01/01/2004

______

Optional extensions applicable

Products liabilityR500 000

Products: Take aways and baked products

Legal defence costsR 10 000

Wrongful arrest and defamation

per eventR 50 000
per annual insurance periodR100 000

______

Memorandums

Excess with regard to products liability: 10% of claim min R2000 and with a maximum of R25 000

______

SITE LAYOUT
Task 2

Inspection reports

Complete the following inspection reports to determine the risk. The sections on which no information was made available in the visual material, site layout or other information pieces have already been filled-in or marked as “N.A.”.

Take note: Where “N.A.” is marked on the inspection report, it does not necessarily imply that it is “not applicable” to all similar risks. It is only “not applicable” to this specific risk/case study.

FIRE SURVEY REPORT

TO: ………………………………………….……FROM: ……………………………………………

BRANCH: ………………………………….……SURVEYOR: ….…………………………...……

DEPARTMENT: ………..………………………SURVEY NUMBER: ………..………………….

REFERENCE: ………….………………………DATE: ……..………………….………………….

DATE: ……..…………………………………….

Name
Address / Postal code
Occupation
Area class: ( ) N/A / Retention class: N/A. / Construction class:
GENERAL DESCRIPTION
Locality Industrial / Commercial / Closed Shopping Centre
Residential / Other
Details (if other)
Construction Roof Reinforced Concrete / Corrugated Iron /  / Tiles
Thatch / Saw tooth / Details other
Box guttering / Condition of gutters / Good / Poor / 
Skylights / Plastic / Fibre glass
Walls / Reinforced concrete / Brick / I.B.R.
Details other / Is building older than 10 years? / YES /  / NO
No. of floors / No. of basements / 0
Construction of floors / Concrete / Timber
Condition of premises / Good / Average / Poor
Adjacent exposure / Low / Average / Poor
Rivers/Canals N.V.T. / Debris Block-up
Detail (Type of exposure)
Adjacent Risk Communcates / YES / NO / 
Seperation by
Security / Chain link fence / 2m Wall / Access Control
Street lights / Floor Lights / 24hr Security
Electric Perimeter fence
S.A.I.D.S.A. Corporate Alarm / Other Alarm - Name
Electrical / Municipal supply / X / Eskom Supply
Contact Breakers / Condition appears to be- Good / Otherwise
Flexible extenstion leads noted / YES / X / NO
Are plug points overloaded? / YES / NO / X
Process (if major process involved, attach on separate sheet)
None / Storage/Retail/Distribution only / X
Heat Process/Welding/Grinding / Flammable liquids / Quantity
Flammable liquid store – brick under concrete slab / YES / NO
LP Gas installation ons site N/A / Number of cylinders / Size …………………KG
Is wall block manifold in good condition N.V.T. / YES / N/A / NO / X
All goods stored on racking or pallets / Ja / Nee /  / If ‘Yes’, height of floor ……………..mm
Construction of racking / Timber / Steel
Storage Neat, tidy and well organised / Ja / Nee
Risk congested / Disorganised / Untidy
Spray painting (detail) / Deep fat cooking / None
Grease extraction filters clean N/A / YES / NO
Fire Protection
Local Fire Brigade ( ) would attend any ourbreak of fire / Fire Station is = …5 Km…………………kms from risk
Appliances on Site – hand held / YES / NO
Size / Number of extinguishes
Service dates marked YES / NO / Last date
30m Hose Reels YES / Number of / None
Have staff been trained in the use of Fire Extinguishers YES / NO / X
Easy Access to appliances YES / NO / X / Hydrant ring main / YES / NO
Automatic Sprinklers YES / NO
A.S.I.B. Certificate Valid YES / N/A NO
Sprinkler Detail – contact number
Edition ……………….…………………………Supply …….…………………………………………Units ………….……………………..
Hazard…………………………………………Stack Height ……N/A……………………………………
Requirements (A.S.I.B.) YES / NO / Smoke Detectors YES / NO
Water Supply / Municipal / Bore Hole / Dam
LOSS HISTORY
Date 12 June 2004 / Amount – R30 000
Cause Armed robbery
Remedial action Siren alarm with panic buttons
MANAGEMENT & HOUSEKEEPING
General Standard / Good / Average / X / Poor / X
Waste Disposal / Good / Average / Poor
Smoking Permitted / YES / NO
If no, were used smoking materials noted / YES / NO
Are no smoking signs on display? / YES / NO
Specified rules for smoking (i.e. smoke areas, etc.)
Are flammable materials located against or between buildings / YES / NO / 
MAXIMUM PROBABLE LOSS (M.P.L.)
All under one roof with free internal communication MPL 100% / YES / X / NO / X
Risk separated by fire break wall or detached buildings / YES /  / NO
If in your opinion less han 100% supply site plan N/A
Are buildings less than 5 metres apart? N/A / YES / NO
Seperation of buildings
OPINION OF RISK
Good / Average / X / Poor
Risk acceptable / YES / X / NO
Moral Hazard / Good /  / Poor
Inception Hazard / High / Medium / Low / X
Spread Hazard / High / Medium / Low / X
Fire Load / High / Medium / Low / X
FURTHER COMMENT Yes
If yes, see attached
Risk improvement requirements attached? / YES / X / NO
……………………………………………………………………………….
Surveyor / ………………………………………………………
Date

MONEY SURVEY REPORT

/ SAFES/STRONGROOM
NO. 1 / NO. 2 / NO. 3
Manufacturer
Located in premises
Serial Number
Date of Manufacture
S.A.B.S. Catergory
Number of Locks
Types of Locks
Height (mm) / N/A
Width (mm)
Depth (mm)
How secured
Door plate thickness
Key storage – day
Key storage – night
Max. Cash stored overnight / R / R / R
Overnight “Book” limit / R / R / R
Total number of receptacles
(safes/tills) / Safes / Cash Tills / Est. Values
THE NATIONAL LOTTERY
Surveyors please note the additional cash may be on site as a result of the National Lottery.
The following must be provided
Is the insured a National Lottery Agent? / YES / NO
If yes stateMaximum on hand at any one time for the lottery / R / ………………………………
Is the existing safe suitable to store Lottery cash PLUS other business takings / YES / NO
If NO requirements re new safes MUST be made (See question 7 at Task 1)
S.A.B.S. category drop/chute safe is a standard requirement for this type of risk Refer question 7 in Task 1
HOLD-UP
Maximum amount of cash on site – R 30 000 / Late night trading / YES /  / NO
Drop/Chute safe used / YES / NO /  / Manufacturer
Serial number / Time Delay locks fitted / YES / NO / 
Keys kept by professional carriers / YES /  / NO / Notices on display / YES / NO / 
Multi-Tenure Centre / YES / NO
ALARM COVER / YES / NO / Installer – name ADT
Radio / YES / NO
Siren / YES /  / NO / Armed response / YES / NO
Panic buttons / YES /  / NO / S.A.I.D.S.A. Approved / YES /  / NO
TRANSIT
Professional carriers used for all banking? / YES / NO / 
If Yes, name:
If No, are own staff used? / YES /  / NO
If Yes, how many? / Males / Are they armed? / YES / NO / 
Females / Are they armed? / YES / NO / 
Is cash carrying case used? / YES / NO / 
Maximum amount carried – of cash R30 000 / Of Cheques - R
Cash Cheques - R / Credit Card vouchers– R
Copy of deposit slip/cheque and cash details kept at office? / YES / NO / 
Wages – cash per week/per month - R
Wage packets made up pn premises/contract sites/other (provide details)? / YES / NO
If No, by whom (detail security when delivered/kept on-site/premises)
Wage paid directly to staff bank accounts / YES / NO
All wages paid by cheque / YES / NO
Wages made up in locked “cash-office” – (if yes, details) / YES / NO
Are wages paid from cash on hand / YES / NO
Number of staff paid weekly/monthly by cash / Weekly / Monthly
Access control to premises? / YES / NO / CCTV used / YES / NO
Panic buttons available/fitted? / YES /  / NO / Connected to who? / N/A siren only
Distance from bank ………………………..kms / Time of banking varied? / YES / X / NO
Route to and from bank varied / YES / NO / Vehicle changed? / YES / N/A / NO
Frequency of banking? Daily / Frequency of till clearing?N/A
C.O.D.
How often? / How much cash? R
How many drivers/collectors? / Are they armed / YES / NO
How long in transit before banked/returned to base?
Are townships visited? / YES / NO / How often?
How many carriers per day/week?
See attached risk improvement requirements / YES / NO
………………………………………………………………………
Surveyor / ………………………………………………………………..
Date

Application form

Complete the application form with reference to the last-mentioned information.

It is not necessary to use existing clause numbers. Create your own clause number for the purpose of this exercise and list it at the bottom of the application form (if necessary).

Example

“Clause 1” – Burglar alarm condition with armed response unit

“Clause 2” – Security gates at all outer doors

At this stage, you don’t have to fill in any information on the following:

HSR
MPL
Same risk number

APPLICATION FOR INSURANCE

[Mark applicable choice with a . Areas marked with greyMUSTALWAYS be completed] For office use

CLIENT DETAILS

Current/previous Santam Insurance?No Yes Current/previous policy number: ……………………………………

Short name N/A :…………………………………………………………………………………………………………………………….

[Name that will appear on the alphabetical index on computer]

Full Trading name 111222 :……………………………………………………………………………………………………………………………..

[Namae that will print on policy schedule]

Company Reg. No :111222………………………………………………VAT1001/2004 No.: …………………………………………………………

Language : Afrikaans English

Telephone number : ……915=7000…………………………………Area code: …………………Int. Code: ………………………