Chapter 8 | Miscellaneous Risks
Upon completion of this section, you should be able to:
- Identify the proper business group rule to apply when classifying a miscellaneous risk.
- Determine the inclusions and exclusions of a classification for a miscellaneous risk.
The Commercial Lines Manual provides Rule 32 "Miscellaneous Risks," which is intended to assist and determine the proper classification of a miscellaneous risk. Miscellaneous classifications are those which do not directly fit into the major business groups described in the previous rules. This rule was created to deal specifically with these classifications.
The classification code number grouping for miscellaneous risks is from Code 40000 to 49999. There are various rating bases for each of the classifications within this grouping.
The rules regarding the premium computation procedure will be dependent upon the rating base that is assigned to the classification that you have selected. After you have analyzed the insured's operations, the first step is to choose a classification that best describes those operations. Once you have selected the best description, refer to the premium base column in the table:
- For classifications rated on a gross sales basis, refer to the procedures for classifying Mercantile risks.
- For classifications rated on a payroll basis, refer to the procedure for classifying Contracting or Servicing risks.
- For classifications rated on an area basis, refer to the procedure for classifying Buildings or Premises risks.
- For classification rated on other bases, use the specific rating basis assigned to the classification.
Using this technique, let's look at several examples to determine the rules that would apply to particular risks.
An insured operates a 6-story hotel in Miami Beach. They also have a health club on the premises (additional fees are charged) and a restaurant (no dance floor, no alcoholic beverages sold).
The hotel would be classified and rated as follows:
Hotel and Motels - with pools or beaches - four stories or more, Code 45191
The basis of premium would be Gross Sales+, and therefore all rules regarding the procedure for classifying a mercantile risk would apply. Note that separate charges must be made for the following:
Health or Exercise Clubs, Code 44311
Restaurants - with no sale of alcoholic beverages - without dance floor, Code 16814
An insured operates a real estate agency in Omaha, Nebraska.
This agency would be classified and rated as follows:
Real Estate Agents, Code 47050
The basis of premium would be Payroll+. Therefore, you need to refer the procedure for classifying contracting or servicing risks. Also, the footnote to the classification indicates that "For premium computation purposes include the payroll of clerical employees and salesmen."
An insured operates the McDonald House, a 2-story drug rehabilitation facility. Several employees are furnished staff quarters on the premises.
This facility would be classified and rated as follows:
Health Care Facilities - alcohol and drug - Other than - Not -For Profit, Code 44427
The basis of premium is Area+. For classifications rated on an area basis, refer to the procedure for classifying buildings or premises risk. Additionally, a separate charge must be made for the staff quarters:
Apartment Buildings, Code 60010
An insured operates a drive-in theater in Des Moines. This theater has a refreshment stand and a game room containing 5 pinball machines.
This theater would be classified and rated as follows:
Theaters - drive-in, Code 49181
The basis of premium for this risk is Admissions+. Reference must be made to the definition of admissions contained in Rule 24.A. The footnote also includes specific instructions if the admission is charged per car. Additional charges must be made for the following:
Amusement Devices, Code 40040
Restaurants - refreshment stands or drive-ins with tray service - Other than Not - For Profit, Code 16821