When determining the level of risk in a stock throughput policy – which often involves different types of transportation, facilities and goods – a marine insurance underwriter uses an evaluation called COPE when it comes to the facilities. An analytical assessment used for more than 300 years, COPE stands for Construction, Occupancy, Protection, and Exposure.
Understanding these factors can help underwriters analyze potential losses associated with the property whether it is a warehouse or storage facility. We’ll describe the importance of each element of COPE and how it helps tell a bigger story about the property investment under evaluation.
Construction is often considered the most important element of COPE. It evaluates the physical structure of the building and has several key parts. The first part rates the construction materials. What was used to build the roof, floors, and walls? And what is their level of combustibility?
Next, this category determines the square footage of the property and how its size might contribute to the extent of damage in a single event.
The final determining factor is the age of the structure. When was the structure built? How are the wiring and the plumbing? What about the condition of the roof? Is the building up to code? And when was the last date it was updated?
Occupancy refers to the purpose or operations of the property. What services does the property offer, and what kind of products are housed on it? Knowing these details helps determine any risks associated with the establishment. For example, an office building may pose fewer hazards than a laboratory facility with combustible and flammable materials.
The protection category evaluates what systems are in place to help prevent damage. Are there fire alarms? Does the property have a sprinkler system? What about fire extinguishers? And more importantly, are they properly working, tested, and up to date? For climate controlled or controlled room temperature goods insured, are their redundant power supplies or emergency backup generators present?
Exposure is the final component. It assesses any external factors that could harm the building, such as wildfires, earthquakes, and tornadoes. If the property is in a flood zone, then take water damage into account, but if a neighboring building houses flammable materials, then fire is a possibility. Factors like potential flooding or wind damage will be taken into account.
This assessment provides a more holistic view of the property and its associated risks. For more information on underwriting assistance, contact us today.