Final answer:
The key loss control feature in boilers and machinery insurance program is inspection, ensuring safety systems like fire sprinklers are maintained and reducing the insurer's risk. Audits help verify compliance, prevent fraud, and retention affects coverage terms and costs.
Step-by-step explanation:
An important loss control feature of the boiler and machinery insurance program is inspection. Insurance companies are aware of the moral hazard, where insured parties may take greater risks because they have coverage. To mitigate such risks, and as part of their loss control procedures, insurers might require the installation of minimum level of security and fire sprinkler systems within a business. In addition to the installation, regular inspections of these systems are mandated to ensure they remain in top condition, effectively reducing the insurance company's exposure to claims and ensuring safety.
Audits are also a significant operational component wherein insurance companies review and verify information to ensure compliance and prevent insurance fraud. Another element that can influence the terms of insurance is retention, which pertains to the amount of risk the insured retains, potentially affecting premiums and deductibles.