ANNEX K, CHAPTER 11 A-FN-105-001/AG-001 11K-1 ...

ANNEX K, CHAPTER 11A-FN-105-001/AG-001UNINSURED LOSSESLOSSES FROM BREAKDOWN OF EQUIPMENT1. Except for the consequential loss of any food items due to refrigeration failure,losses from breakdown of equipment, including those resulting from short circuit orother electrical injury or disturbance, eg, power surges, are not covered under the NPFCIP. The only exceptions are breakdown caused by lightning strike, or electricaldisturbance resulting in a fire, in which case the coverage is for loss or damage causeby 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 anyelectrical disturbance is noted at a unit, that equipment such as food freezers andcoolers 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 totake action as outlined in paragraph 2 to ensure that the chances of such lossesoccurring are kept to the very minimum.FIDELITY BOND4. Coverage is not provided under the NPF CIP or through CFCF self-insurance forlosses normally covered under a Fidelity Bond.5. This means a unit has absolutely no insurance coverage whatsoever foremployee infidelity. In other words each unit, in effect, self-insures for losses sustainedthrough employee infidelity and therefore must bear the entire loss of any employeeinfidelity. (See Annex C paragraph 5.c.)6. The problem of sustaining a claim under this type of insurance is difficult and theinsurance cost is expensive. It is considered that the best policy to adopt is that of goodinternal control and accounting practices to ensure employee infidelity is reduced to aminimum. Units, therefore, are not to take out insurance on their own accord to providecoverage for this risk.IMPROPERLY SECURED CASH7. Cash on hand which is stolen and has not been adequately secured in a moneysafe or other secure repository may not be considered insured if a review of thecircumstances of the loss indicates failure by the unit concerned to take reasonableprecautions for securing the stolen cash. In such cases the losing unit must absorb theloss.11K-1

ANNEX K, CHAPTER 11A-FN-105-001/AG-001UNIT DEDUCTIBLE8. A unit's deductible is to be considered as an uninsured loss. The deductible wasdesigned primarily to eliminate the administrative workload and costs of processingsmall claims that usually exceed the return on a small claim. In addition the deductibleprovides an incentive measure to encourage units to develop and adopt practices andprocedures that will prevent losses from occurring. Accordingly, to take out insurance tocover the unit deductible, in addition to being expensive, defeats the purpose of thedeductible. Therefore units are not to take out additional insurance to cover the unit'sdeductible under the NPF CIP.Annex C - Property Coverage11K-2