UNINSURED LOSSES

LOSSES FROM BREAKDOWN OF EQUIPMENT

1. Except for the consequential loss of any food items due to refrigeration failure, losses from breakdown of equipment, including those resulting from short circuit or other electrical injury or disturbance, eg, power surges, are not covered under the NPF CIP. The only exceptions are breakdown caused by lightning strike, or electrical disturbance resulting in a fire, in which case the coverage is for loss or damage cause by the fire only. (See subparagraphs 5.d. and 5.e. to Annex C.)

2. Units should arrange to have all electrical equipment, devices, wiring, etc, checked regularly to ensure they are in good condition. It is particularly important, if any electrical disturbance is noted at a unit, that equipment such as food freezers and coolers are checked immediately to ensure they have not been affected.

3. Risks outlined in paragraph 1 are not covered in any standard insurance policy, and obtaining special coverage is expensive. It is therefore incumbent upon units to take action as outlined in paragraph 2 to ensure that the chances of such losses occurring are kept to the very minimum.

FIDELITY BOND

4. Coverage is not provided under the NPF CIP or through CFCF self-insurance for losses normally covered under a Fidelity Bond.

5. This means a unit has absolutely no insurance coverage whatsoever for employee infidelity. In other words each unit, in effect, self-insures for losses sustained through employee infidelity and therefore must bear the entire loss of any employee infidelity. (See Annex C paragraph 5.c.)

6. The problem of sustaining a claim under this type of insurance is difficult and the insurance cost is expensive. It is considered that the best policy to adopt is that of good internal control and accounting practices to ensure employee infidelity is reduced to a minimum. Units, therefore, are not to take out insurance on their own accord to provide coverage for this risk.

IMPROPERLY SECURED CASH

7. Cash on hand which is stolen and has not been adequately secured in a money safe or other secure repository may not be considered insured if a review of the circumstances of the loss indicates failure by the unit concerned to take reasonable precautions for securing the stolen cash. In such cases the losing unit must absorb the loss.

UNIT DEDUCTIBLE

8. A unit's deductible is to be considered as an uninsured loss. The deductible was designed primarily to eliminate the administrative workload and costs of processing small claims that usually exceed the return on a small claim. In addition the deductible provides an incentive measure to encourage units to develop and adopt practices and procedures that will prevent losses from occurring. Accordingly, to take out insurance to cover the unit deductible, in addition to being expensive, defeats the purpose of the deductible. Therefore units are not to take out additional insurance to cover the unit's deductible under the NPF CIP.