Property Insurance Dangers and Risks

IMPORTANT DANGERS AND RISKS

We learned that a risk is something that produces a loss, but a hazard is something that influences the incidence of a loss.

Property insurance covers a wide range of threats and dangers that might result in losses. The primary threats and hazards will be the focus of this section.

Major Risks

1) Ablaze

One of the most common dangers is fire. The heat and light produced by the combustion (burning) of things are known as pyrolysis. There are two types of fire: controlled and uncontrolled. When used correctly, fire can be used for cooking or eating. It becomes a source of destruction when it is out of control. Insurance is primarily concerned with the loss or destruction of property due to uncontrolled flames.

2) Detonation

An explosion is a violent burst in an object caused by a build-up of pressure due to heat within it. When liquids and solids in an object are heated, they expand and turn into gas, generating heat. As these gases seek an escape route, the heat raises their pressures. An explosion occurs when pressure builds up. A fire can produce an explosion, or an explosion can create a fire.

Explosions caused by bursting water pipelines and flue gas explosions are typically not insured for insurance purposes.

3) Thunderstorm

Lighting, sometimes known as "fire from the sky," is a direct electric current between two clouds of opposite charges or between clouds and the earth. The impact of a lightning strike on an object could cause structural damage or a fire that could burn the building down. When lightning strikes damage electrical cables, power surges can occur.

4) Windstorms A storm is a change in an environment's atmospheric conditions. Windstorms are storms that have severe winds traveling at velocities more significant than 55 kilometers per hour. The winds have the potential to cause damage. Be in brief spurts or over long lengths of time. The cost of repairing buildings and other property might be substantial.

5) Natural disasters

A sudden movement/shaking of the earth's surface caused by the movement of the earth's rocks is known as an earthquake. They are most commonly found along geological faults. When these rock masses collide, they generate energy, which is released in a seismic wave.

More frequently than not, earthquakes occur at the ocean's depths, with little or no possibility for property damage. However, in an earthquake that strikes near a city, the risk of property damage and fatalities is high.

The Richter magnitude scale is used to determine the size of an earthquake.

6) Flooding

A flood occurs when water overflows onto normally dry land. Heavy rainfall and storms are the most common causes of floods. Floods cause property damage, the devastation of plants and crops, and the loss of human life, among other things.

Bwaise, a Kampala suburb, is one of the places in Uganda that is notorious for flooding following heavy rains.

The list of critical threats is by no means complete. Theft, riots and strikes, spontaneous combustion, aircraft and vehicle impact, and other perils are covered by property insurance.

Dangerous Situations

Hazards are those characteristics/factors that impact the occurrence of a loss. They are divided into two categories: physical and moral risks.

Physical hazards are those components of a risk that can be seen. These can be features of the risk that intimate the occurrence of the loss and those that spread the loss.

• The lack of fire extinguishers, smoke alarms/detectors, and water sprinklers on a premise • The storage of hazardous materials/substances within a premise • The occupation/trade of a firm, such as auto dealership versus matchbox manufacturing
• Using makuti/grass-thatched roofs instead of corrugated iron sheets to construct a building/premises
• The type of stock that the insured trades. Compared to the stock of motorcycle replacement parts, cardboard boxes would enhance the chance of fire spreading quickly due to their volatile nature.
• Business location, such as whether it is in a congested or less congested area.
• The size of the building.
• The nature and type of construction materials utilized • The age of the building

As previously stated, moral hazards are the intangible characteristics of risk. The human factor of the insured, such as attitude, carelessness, and so on, is the critical emphasis for underwriting risks.

The following are some of the moral risks.

• The insured's attitude toward his or her peers
• Management's view
• Carelessness
• The insured's integrity
• Housekeeping
• Poor machinery maintenance