Chapter 3 Flashcards by Chantal Hatch

What are six items required to be shown on policy declaration pages?

i) Names of parties to insurance policy
ii) Policy period
iii) Loss payable or payee
iv) Type of insurance coverage and amount of coverage
v) Rate and premium
vi) Subject matter of insurance

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What are three causes of fires in Canada and provide an example of each.

i) Malfunction of electrical or mechanical equipment Example: Damage electrical cords
ii) Arson Example: Fire set by vandals
iii) Misuse of ignition source Example: Playing with lighters

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When do policies come into effect and expire?

12:01 am standard time at the address of named insured.

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What changes can be made to application forms to address concerns relating to coverage commencement?

The broker can indicate the time of day the application was completed and coverage bound.

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What may happen when losses are paid in full to insured when loss payables are shown on policies.

Insurer will also have to pay to loss payable their amount of interest

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What may happen when losses are paid in full to insured when no loss payable is shown on policies, but in fact should have been shown?

Insurer will not be obligated to pay interest of loss payable

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What type of information is required to be shown on declaration pages regarding cost of insurance?

Both the rate and total premium

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What are three required coverages found on policies insuring against the peril of fire?

i) Fire
ii) Lightning
iii) Explosion of natural coal and manufactured gas

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Indicate covered or not covered: Power surge damage to blender on kitchen counter caused by lightning.

Not covered

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Indicate covered or not covered: Fire damage to blender resulting from lightning strike.

Covered

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Indicate covered or not covered: Damage to computer from “brown out”.

Not covered

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Indicate covered or not covered: Fire damage to clothes in commercial clothes dryer at launder mat.

Not covered

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Indicate covered or not covered: Fire damage resulting from war.

Not covered

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Indicate covered or not covered: Damage to property from radioactive contamination.

Not covered

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Indicate covered or not covered: Damage to building from forest fire

Covered

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Indicate covered or not covered: Money and securities.

Not covered

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Indicate covered or not covered: Watercraft being held for sale in insured’s building.

Covered

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Indicate covered or not covered: Automobiles used to deliver products to customers.

Not covered

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Indicate covered or not covered: Aircraft owned by insured used to transport customers.

Not Covered

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Indicate covered or not covered: Property vacant for 21 days.

Covered

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Indicate covered or not covered: Building which is unoccupied for more than 30 consecutive days.

Not Covered

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What does “vacant” mean

Person who is usually occupying premises is absent and contents have been removed

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What does “unoccupied” mean?

Building is complete with contents and person who normally occupies premises is temporarily

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Will increased costs of construction due to compliance with local building bylaws be covered by commercial policies?

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What are three examples of local building byways which may effect building re-construction?

i) Required improved building materials (2x4 to 2x6) ii) Required installation of sprinkler systems iii) Required handicapped accessibility

Identify the three components of the Removal Clause

i) Policy will insure property which was removed to unnamed location to protect it from loss or further loss ii) Amount of coverage at the new unnamed location is the remainder of coverage which was not used during loss at the named location iii) Duration of coverage at the new unnamed location is the least of seven days or the unexpired term or policy

Define “Loading”.

Loadings are charges made by insurers when clients wish to purchase coverage above base fire coverage.

Identify seven perils by Fire & Extended Coverage Policies.

i) Fire or lightning ii) Explosion iii) Impact by aircraft, spacecraft, or land vehicle iv) Riot, vandalism, or malicious acts v) Smoke vi) Leakage from fire protective equipment vii) Windstorm or hail

What are four types of explosions excluded by Fire & Extended Coverage forms?

i) All boilers ii) Piping connected to boilers under pressure iii) Steam generating boilers iv) Smelt dissolving tanks

What is one type of pressure vessel not affected by explosion exclusions?

Manually portable gas cylinders

Will tenants of buildings have to be concerned about exclusions relating to explosions of pressure vessels?

Yes, because tenants may operate or control boilers.

Indicate covered or not covered: Damage caused to aircraft which flew into insured’s building.

Not Covered

Indicate covered or not covered: Damage to glass caused by stones thrown by tires of passing automobiles.

Covered

Indicate covered or not covered: Damage to roof from landing gear which fell from passing aircraft.

Covered

Indicate covered or not covered: Damage to building caused by automobile driven by insured.

Not Covered

What is an example of impact by land vehicle that would be insured by Fire and Extended Coverage policies?

An example is when a local youth drives his vehicle into the client’s building.

What are three exclusions found in the Riot, Vandalism, or Malicious Acts peril and provide one example of each.

i) Exclusion: Cessation of Work Example: Factory employees walk off the job and product in process (cake batter) at factory spoils ii) Exclusion: Water damage due to escape of water impounded by dam. Example: Vandals damage face of dam which allows water to be released iii) Exclusion: Theft Example: Thieves steal stock of client.

What source of smoke is insured by Fire and Extended Coverage Policies?

Smoke due to the sudden, unusual, and faulty operation of any stationary furnace.

What is insured by Leakage from Fire Protective Equipment Peril?

Damage caused when product within fire protective equipment leaks (water or foam)

What perils are insured by Commercial Broad Form policies?

All risks of direct physical loss or damage subject to policy conditions and exclusions.

Indicate covered or not covered: Water line under basement floor ruptures causing water damage to building

Covered

Indicate covered or not covered: CB radio tower collapses due to snow load.

Not Covered

Indicate covered or not covered: Tornado damages CB radio tower.

Covered

Indicate covered or not covered: Satellite dish stolen from the roof of the insured’s building.

Not Covered

Indicate covered or not covered: CB radio tower collapses due to faulty installation.

Not Covered

Indicate covered or not covered: Hail damage to exterior walls of insured’s building.

Covered

Indicate covered or not covered: Front window in insured’s building cracks as a result of building settling on foundation.

Not Covered

Indicate covered or not covered: Vandalism damage to exterior glass

Covered

Indicate covered or not covered: Hurricane damage to exterior sign.

Covered

Indicate covered or not covered: Fire damage to building which has been shut down for 75 days for annual maintenance.

Not Covered

Indicate covered or not covered: Power surge burns out motor in insured’s cooling system

Not Covered

Indicate covered or not covered: Lightening strike damages elevator control panel in insured’s building.

Covered

Indicate covered or not covered: Brown out caused by recent electricity shortage causes damage to computer equipment.

Not Covered

Indicate covered or not covered: Pet boa constrictor (snake) was stolen from insured’s pet store.

Covered

Indicate covered or not covered: Pit bull watchdog was killed in fire at insured’s building.

Covered

Indicate covered or not covered: Insured’s fish in aquarium die as a result of fire.

Covered

Indicate covered or not covered: Thieves steal bearer bonds from insured’s safe.

Not Covered

Indicate covered or not covered: Cash stolen from cash register by robber.

Not Covered

Indicate covered or not covered: Preprinted scratch and win tickets stolen from insured’s store.

Not Covered

Indicate covered or not covered: Stamps stolen from locked cash drawer in insured’s office.

Not Covered

Indicate covered or not covered: Watercraft stolen from insured’s building.

Covered

Indicate covered or not covered: Vandalism damage to insured’s delivery van

Not Covered

Indicate covered or not covered: Collison damage to vehicle only on insured’s premises and not required by law to be licensed.

Covered

Indicate covered or not covered: Forklift (used exclusively on insured’s premises) stolen from insured’s warehouse

Covered

Indicate covered or not covered: Fire damage to four diamond rings valued at $15,000.

Covered

Indicate covered or not covered: Pre-recorded video tapes (value $400) stolen from insured’s convenience store

Covered

Indicate covered or not covered: Fire damage to four fur coats valued at $20,000.

Covered

Indicate covered or not covered: Fire damage to stereo located at customer’s home which was purchased from insured on deferred payment plan. There was still $500 outstanding on the deferred payment plan.

Not Covered

Indicate covered or not covered: Damage to TV set being delivered to customer’s home by local courier company. TV set was purchased from insured’s store.

Covered

Indicate covered or not covered: Vandalism damage to scaffolding rented to a customer. Insured operates an equipment rental business.

Not Covered

Indicate covered or not covered: Explosion of hot water heater which operates at 45 psi.

Not Covered

Indicate covered or not covered: Damage to boiler which cracked due to lack of water supply.

Not Covered

Identify six advantages of the Broad Form policy.

i) Theft losses to stock and equipment are insured ii) Water damage from rupture of overhead water lines are insure iii) Impact of vehicles operated by insured or employees are covered iv) Many types of collapse are covered v) All types of smoke damage, except smoke from industrial operations or agriculture smudges are covered vi) All other losses not specifically

Are the amounts of coverage available to insureds in extensions of coverage part of the amount of insurance or in addition to the amount of insurance?

i) Is only applicable when the employee (the owner) does not have the property insured or when client is obligated or liable for loss ii) Coverage is limited to $250 per employee or director iii) Coverage applies at described location or any newly acquired location

Identify two crime coverages provided by Building Damage by Theft extension.

i) Theft or attempt thereat ii) Vandalism or malicious acts happening during same occurrence

What parts of buildings are not insured by Building Damage by Theft extension?

Glass

What are two types of insureds that may be eligible for coverage under Building Damage by Theft extension.

i) Building owners when building is insured under named perils policy and contents are insured under broad form policy ii) Tenants in buildings when they have purchased broad form coverage on their contents and they have assumed responsibility for losses to building by burglary or robbery in leases

What is the limit of coverage found in Building Damage by Theft extension?

$2500

What are two perils not insured by the “growing trees, shrubs, or flowers in the open” extension? Also, what is the limit of coverage?

Exclusion: Wind Exclusion: Hail Limit of Coverage: $500 per tree, shrub or flower including costs of debris removal

What are four coverages automatically included in commercial package policies?

i) Property insurance ii) Business interruption iii) Liability insurance iv) Crime insurance

What are five considerations that could result in lower premiums?

i) If the building was constructed after 1945 ii) Sprinklered iii) Alarmed iv) Sole occupant v) Increased deductible

List some advantages of broad form policy

1. Water damage due to rupture and freezing of waterlines (including freezing damage to waterlines) 2. Impact of land vehicles driven by insureds or employees. 3. All sources of smoke damage, excluding agricultural smudging or industrial operations. 4. Expansion and rupture of hot water heaters less than 24 inches in internal diameter and used for domestic purposes only 5. All other losses not specifically excluded 6. Theft or attempted theft 7. Roof collapse from various causes (snow-load)

Common extension of coverage: Personal Property of Officers and Employees covers if?

1. Loss occurred on insured premises 2. Obligated to insure and liable. 3. Max coverage of $250 per person

common extensions of coverage: building damage by attempted theft & related vandalism: covered if

1. Insured is not the owner of the building (tenant) 2. Insured is liable (lease agreement) 3. Not otherwise insured 4. $2500 per occurrence 5. Fire excluded

Common extensions of coverage

1. Necessary removal 2. Debris removal 3. Personal property of officers and employees 4. Building damage by attempted theft & related vandalism 5. Outside plans if by Named Peril (excluding wind / hail) or theft?

Broad form peril exclusions

1. War 2. Terrorism 3. Nuclear incident 4. Criminal act by insured 5. Bylaws 6. Earthquake 7. Flood 8. Earth movement

Chapter 3 Flashcards

(87 cards)