Occupancy Hazards, Fire Protection Classes, Fire Prevention, and Fire Detection: Practice Questions and Solutions

This section of the study guide is intended to provide practice problems and solutions to accompany the pages of Insurance Operations, Regulation, and Statutory Accounting, cited below. Students are encouraged to read these pages before attempting the problems. This study guide is entirely an independent effort by Mr. Stolyarov and is not affiliated with any organization(s) to whose textbooks it refers, nor does it represent such organization(s).

Some of the questions here ask for short written answers based on the reading. This is meant to give the student practice in answering questions of the format that will appear on Exam 5. Students are encouraged to type their own answers first and then to compare these answers with the solutions given here. Please note that the solutions provided here are not necessarily the only possible ones.

Source:

Myhr, A.E.; and Markham, J.J. Insurance Operations, Regulation, and Statutory Accounting (Second Edition). American Institute for Chartered Property Casualty Underwriters. 2004. Chapter 5, pp. 5.15-5.20.

Original Problems and Solutions from The Actuary's Free Study Guide

Problem S5-54-1. Myhr and Markham, pp. 5.15-5.16, discuss four general sources of occupancy hazards. What are these sources? For each source, give one specific example of how the source could contribute to fire-related damage.

Solution S5-54-1. The four sources of occupancy hazards, discussed by Myhr and Markham, pp. 5.15-5.16, are as follows:
"1. Housekeeping practices;
"2. Heating equipment;
"3. Electrical equipment;
"4. Smoking."

The following housekeeping practices could be hazardous:
i. Uncollected litter: paper, oily items, packing materials, discarded smoking materials, accumulation of greasy soot in vents and flues;
ii. Improper storage: non-separation of materials that react with one another, combustible containers, oily materials in confined spaces;
iii. Improper disposal: dangerous incineration of waste on the insured's premises.

The following heating equipment could be hazardous:

i. Burners and heating elements;
ii. The equipment itself and pipes, ducts, and flues leading from it;
iii. Wood-burning stoves and salamanders (portable heaters).

The following electical equipment could be hazardous:

i. Electrical equipment that is used carelessly;
ii. Electrical equipment that is improperly installed;
iii. Electrical equipment that is poorly maintained.

The following are examples of how smoking could be hazardous:

i. Cigarettes and cigars themselves could cause a fire;
ii. Matches used to light the cigars/cigarettes could cause a fire.

Problem S5-54-2. Myhr and Markham, p. 5.16, discuss the difference between special hazards of the class and special hazards of the risk. For each of the following situations, state whether the situation describes a special hazard of the class or a special hazard of the risk.

(a) The buildings owned by Ajax the tobacco manufacturer suffer roof damage because Ajax likes to skateboard on top of their roofs.
(b) A cheesecake factory owner receives a premium increase based on the insurance company's data, which show that the frequency of rodent infestations in cheesecake factories has increased in recent years.
(c) An explosives manufacturer has an added risk of explosion in his factory, in excess of the risk experienced by plastic toy manufacturers.
(d) A cheesecake factory owner receives a premium increase because he has purchased a custom-built cheesecake-making machine that cooks all cheesecakes over a tall open flame.
(e) The only manufacturer of Fuel Y in Country X receives a premium increase because of the flammability of Fuel Y.

Solution S5-54-2. According to Myhr and Markham, p. 5.16, special hazards of the class are "hazards that are typical for the class of loss exposures." Special hazards of the risk are "hazards that are created by the activities of a particular business and that are not typical of other businesses with which it would be classed."

Accordingly, (a) and (d) describe special hazards of the risk, because these situations pertain to unique characteristics of the business in question, not to characteristics that other similar businesses might also exhibit. Situations (b), (c), and (e) describe special hazards of the class, because other businesses engaged in similar kinds of work are also likely to have the same hazardous characteristics.

Problem S5-54-3. The American Association of Insurance Services (AAIS) has three public protection classifications: Protected, Partially Protected, and Unprotected. These classifications are described by Myhr and Markham, p. 5.17. For each of the following buildings, what would be the public protection classification?
(a) A building that is within 500 feet of a fire hydrant and is within 10 road miles of a responding fire department.
(b) A building that is within 500 feet of a fire hydrant and is within 4 road miles of a responding fire department.
(c) A building that is within 1100 feet of a fire hydrant and is within 10 road miles of a responding fire department.
(d) A building that is within 1100 feet of a fire hydrant and is within 4 road miles of a responding fire department.
(e) A building that is within 2200 feet of a fire hydrant and is within 4 road miles of a responding fire department.
(f) A building that is within 20 feet of a fire hydrant and is within 6 road miles of a responding fire department.

Solution S5-54-3. The following definitions of the three AAIS public protection classifications are given by Myhr and Markham, p. 5.17:

"Protected: Building is located within 1000 feet of a fire hydrant and is within five road miles of a responding fire department.

"Partially Protected: Building is located more than 1000 feet of a fire hydrant and is within five road miles of a responding fire department.

"Unprotected: Building is located in an area that is classified as neither protected nor partially protected."

Note that any building located more than 5 road miles from a responding fire department is considered Unprotected. Any building located within 5 road miles from a responding fire department is considered either Protected or Partially Protected.

Accordingly, the following are the answers:

(a) is Unprotected.
(b) is Protected.
(c) is Unprotected.
(d) is Partially Protected.
(e) is Partially Protected.
(f) is Unprotected.

Problem S5-54-4. Give two examples of ways in which building owners can take measures to prevent fires.

Solution S5-54-4. This question is based on the discussion in Myhr and Markham, p. 5.18, where the following possibilities are mentioned:

1. Controlling heat sources via reduction or elimination thereof;
2. Using substitutes for certain dangerous heating techniques - e.g., using hot water instead of open flames;
3. Separating fuel and heat;
4. Controlling arson;
5. Controlling the use of mobile heat sources.

Any two of the above answers would suffice. Other valid answers may be possible.

Problem S5-54-5. Myhr and Markham, pp. 5.18-5.20, discuss five major fire detection systems. Give a brief description of each system.

Solution S5-54-5. The five types of major detection systems mentioned by Myhr and Markham, pp. 5.18-5.20, are as follows:

1. A guard service with a clock system: "A clock system verifies that the guard makes regular rounds. Guards carry devices that time-mark their routes through the premises" (Myhr and Markham, p. 5.19).

2. A private patrol system: "In many areas, business and industry associations provide private patrol services as a member benefit. A guard visits each business several times during the night to ensure that all doors and windows are secure and that fire has not broken out" (Myhr and Markham, p. 5.19).

3. Smoke and heat detectors: "Most smoke detectors perform independently, sounding an alarm only at the location of the detected smoke. More advanced systems connect the smoke detectors so that all the alarms sound simultaneously... Heat detectors can be operated independently of suppression devices but are most frequently combined with devices like automatic sprinkler systems. Heat detectors are slow to activate, which makes them less desirable than smoke detectors" (Myhr and Markham, p. 5.19).

4. An automatic local alarm: A local fire alarm system is "a detection system, triggered by smoke or heat, that sounds a gong, siren, or another audible alert inside or outside the building" (Myhr and Markham, p. 5.19).

5. A central station alarm or remote station system: A central station system is "a private detection service that monitors the systems of multiple businesses and/or residences and that calls appropriate authorities or dispatches its own personnel when an alarm is activated" (Myhr and Markham, p. 5.19).

See other sections of The Actuary's Free Study Guide for Exam 5.