Behavior for Invalid Construction / Occupancy Class Codes

Touchstone allows you to import all combinations of construction and occupancy codes, even if a particular combination does not produce loss during an analysis. However, if a location has a construction or occupancy code that is not a valid AIR-supported code, Touchstone does not import the location. If you try to import a location with valid AIR-supported construction and occupancy codes, but one or both of these codes is invalid for the country or region in which the location is located, Touchstone imports this location and notes the incompatibility in the import log.

During a Detailed Loss Analysis, Touchstone determines whether the construction and occupancy combination for each exposure is valid both for the peril/model for which you are analyzing loss and the country or region in which each location is located. In the Analysis Settings, the For Invalid Con/Occ Pairs field provides options for the action that you want Touchstone to take upon encountering an invalid combination:

• Ignore: The loss engine omits from the analysis all locations that have construction and occupancy combinations that are invalid based on region/country, model, and/or peril. In this case, Touchstone does not produce loss for these locations. To identify locations that were not included in a loss analysis, check the analysis log.

• Use System Default: During a Detailed Loss Analysis, Touchstone remaps invalid construction and occupancy code combinations using one or more of the following construction and occupancy class codes, as applicable. In Touchstone 6.0 and later, when you select this option, Touchstone uses this option for each model individually within the analysis. In previous versions, Touchstone used this option when the construction/occupancy combination was invalid for all models within the analysis.

• Unknown construction (100)

• General commercial occupancy (311)

Touchstone does not remap construction and occupancy codes for offshore locations, as all combinations of offshore asset construction and occupancy are valid. However, make sure that you do not accidentally assign an onshore construction or occupancy code to an offshore location.

In some models, the construction and occupancy class code combination 100-300 is not valid, and Touchstone remaps this combination to 100-311. However, for exposures in South America, the construction and occupancy class code combination 100-300 is valid, and Touchstone does not remap this combination.

During an analysis, upon identifying a location with an invalid construction and occupancy code combination, Touchstone remaps the affected construction and/or occupancy codes by performing one of the processes listed in the following table for each model involved in the analysis:

Construction Code Valid?	Occupancy Code Valid?	Remapping Process
Invalid for model	Valid for model	1. Touchstone remaps the construction code to unknown construction (100). The construction and occupancy codes are each now valid for the model involved in the analysis. 2. Touchstone checks whether the construction code (100) and occupancy code are compatible with each other. 3. If the construction and occupancy codes are incompatible, Touchstone remaps the occupancy code to general commercial occupancy (311).
Valid for model	Invalid for model	1. Touchstone remaps the occupancy code to general commercial occupancy (311). The construction and occupancy codes are each now valid for this model. 2. Touchstone checks whether the construction code and occupancy code (311) are compatible with each other. 3. If the construction and occupancy codes are incompatible, Touchstone remaps the construction code to unknown construction (100).
Invalid for model	Invalid for model	1. Touchstone remaps the occupancy code to general commercial occupancy (311). The construction and occupancy codes are each now valid for this model. 2. Touchstone checks whether the construction code and occupancy code (311) are compatible with each other. 3. If the construction and occupancy codes are incompatible, Touchstone remaps the construction code to unknown construction (100).
Valid for model, but incompatible with occupancy code	Valid for model, but incompatible with construction code	1. Touchstone remaps the occupancy code to general commercial occupancy (311). The construction and occupancy codes are each now valid for this model. 2. Touchstone checks whether the construction code and occupancy code (311) are compatible with each other. 3. If the construction and occupancy codes are incompatible, Touchstone remaps the construction code to unknown construction (100).

When there are invalid pairs, you may see the same loss numbers in a portfolio/multi-peril analysis whether you select the “Ignore” option or the “Use System Default” option. This is because, if the loss analysis includes a model for which a location’s construction/occupancy pair is valid, Touchstone does not remap the codes. (If you run a single peril, the "Use System Default" option does remap the construction/occupancy code for the peril if the code is not valid for that peril, and so it will produce loss results.)

Considerations for Selecting the Use System Default Option

Consider carefully whether to choose the "Use System Default" option, thereby specifying that Touchstone should remap invalid construction and occupancy class code combinations to unknown/unknown or unknown/general commercial during a loss analysis. Note especially the following considerations:

• Is it appropriate to use unknown construction and occupancy class codes to generate losses for the selected peril? Certain constructions or occupancies may not be vulnerable to a particular peril. For example, underground pipelines are not vulnerable to wind perils in AIR models, and it may be inappropriate to map an underground pipeline to an unknown construction and occupancy class code combination in order to produce losses.

• Is it appropriate to use unknown construction and occupancy class codes to generate losses for a particular construction or occupancy? It may be inappropriate to treat certain types of construction or occupancies as unknown. For example, industrial facilities react very distinctly to wind or quake perils, and it may be inappropriate to map an industrial facility to an unknown construction and occupancy class code combination in order to produce losses.