Chapter 3 Flashcards
(114 cards)
1
Q
What are six items required to be shown on policy declaration pages?
A
- Names of parties to insurance policy
- Policy period
- Loss payable or payee
- Type of insurance coverage and amount of coverage
- Rate and premium
- Subject matter of insurance
2
Q
What are three causes of fires in Canada and provide an example of each.
A
- Malfunction of electrical or mechanical equipment - i.e., damaged electrical cords
- Arson - i.e., fire set by vandals
- Miuses of ignition source - i.e., playing with lighters
3
Q
When do policies come into effect and expire?
A
12:01AM standard time at the address of the named insured
4
Q
What changes can be made to application forms to address concerns relating to coverage commencement?
A
The application form used by the insurer could be amended to have the broker indicate the time of day in which the application for insurance was made and coverage bound
5
Q
What may happen when losses are paid in full to insured when loss payables are shown on policies.
A
Insurer will also have to pay to loss payable their amount of interest
6
Q
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?
A
Insurer will not be obligated to pay interest of loss payable
7
Q
What type of information is required to be shown on declaration pages regarding cost of insurance?
A
Both the rate and total premium
8
Q
What are three required coverages found on policies insuring against the peril of fire?
A
- Fire
- Lightning
- Explosion of natural, coal, or manufactured gas
9
Q
Indicate covered or not covered: Power surge damage to blender on kitchen counter caused by lightning.
A
Not covered
10
Q
Indicate covered or not covered: Fire damage to blender resulting from lightning strike.
A
Covered
11
Q
Indicate covered or not covered: Damage to computer from “brown out”.
A
Not covered
12
Q
Indicate covered or not covered: Fire damage to clothes in commercial clothes dryer at launder mat.
A
Not covered
13
Q
Indicate covered or not covered: Fire damage resulting from war.
A
Not covered
14
Q
Indicate covered or not covered: Damage to property from radioactive contamination.
A
Not covered
15
Q
Indicate covered or not covered: Damage to building from forest fire.
A
Covered
16
Q
Indicate covered or not covered: Money and securities.
A
Not covered
17
Q
Indicate covered or not covered: Watercraft being held for sale in insured’s building.
A
Covered
18
Q
Indicate covered or not covered: Automobiles used to deliver products to customers.
A
Not covered
19
Q
Indicate covered or not covered: Aircraft owned by insured used to transport customers.
A
Not covered
20
Q
Indicate covered or not covered: Property vacant for 21 days.
A
Covered
21
Q
Indicate covered or not covered: Building which is unoccupied for more than 30 consecutive days.
A
Not covered
22
Q
What does “vacant” mean?
A
Vacant = Person who is usually occupying premises is absent and contents have been removed
23
Q
What does “unoccupied” mean?
A
Unoccupied = Building is complete with contents and person who normally occupied premises is temporarily away
24
Q
Will increased costs of construction due to compliance with local building bylaws be covered by commercial policies?
A
No
25
What are three examples of local building bylaws which may affect building re-construction?
1. Required improved building materials (i.e., 2x4 to 2x6)
2. Required installation of sprinkler systems
3. Required handicapped accessibility
26
Identify the three components of the Removal Clause:
1. Policy will insure property which was removed to unnamed location to protect it from loss or further loss
2. Amount of coverage at the new unnamed location is the remainder of coverage which was not used during loss at named location
3. Duration of coverage at the new unnamed location is the least of seven days or the unexpired term or policy
27
Define “Loading”.
Loadings are charges made by insurers when clients wish to purchase coverage above base fire coverage
28
Identify seven perils by Fire & Extended Coverage Policies. (F. SWILLER)
1. Fire or lightning
2. Explosion
3. Impact by aircraft, spacecraft, or land vehicle
4. Riot, vandalism, or malicious acts
5. Smoke
6. Leakage from fire protective equipment
7. Windstorm or hail
29
What are four types of explosions excluded by Fire & Extended Coverage forms?
1. All boilers
2. Piping connected to coilers under pressure
3. Steam generating boilers
4. Smelt dissolving tanks
30
What is one type of pressure vessel not affected by explosion exclusions?
Manually portable gas cylinders
31
Will tenants of buildings have to be concerned about exclusions relating to explosions of pressure vessels?
Yes, because tenants may operate or control boilers
32
Indicate covered or not covered: Damage caused to aircraft which flew into insured’s building.
Not covered
33
Indicate covered or not covered: Damage to glass caused by stones thrown by tires of passing automobiles.
Not covered
34
Indicate covered or not covered: Damage to roof from landing gear which fell from passing aircraft.
Covered
35
Indicate covered or not covered: Damage to building caused by automobile driven by insured.
Not covered
36
What is an example of impact by land vehicle that would be insured by Fire and Extended Coverage policies?
If a local youth drives his vehicle into the client's building
37
What are three exclusions found in the Riot, Vandalism, or Malicious Acts peril and provide one example of each.
1. Cessation of work - i.e., factory employees walk off the job and product in process (cake batter) at factory spoils
2. Water damage due to escape of water impounded by dam - i.e., vandals damage face of dam which allows water to be released
3. Theft - i.e., thieves steal stock of client
38
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
39
What is insured by Leakage from Fire Protective Equipment Peril?
Damage caused when product within fire protective equipment leaks (water or foam)
40
What perils are insured by Commercial Bond Form policies?
All risks of direct physical loss or damage subject to policy conditions and exclusions
41
Indicate covered or not covered: Water line under basement floor ruptures causing water damage to building.
Covered
42
Indicate covered or not covered: CB radio tower collapses due to snow load.
Not covered
43
Indicate covered or not covered: Tornado damages CB radio tower.
Covered
44
Indicate covered or not covered: Satellite dish stolen from the roof of the insured’s building.
Not covered
45
Indicate covered or not covered: CB radio tower collapses due to faulty installation.
Not covered
46
Indicate covered or not covered: Hail damage to exterior walls of insured’s building.
Covered
47
Indicate covered or not covered: Front window in insured’s building cracks as a result of building settling on foundation.
Not covered
48
Indicate covered or not covered: Vandalism damage to exterior glass.
Covered
49
Indicate covered or not covered: Hurricane damage to exterior sign.
Covered
50
Indicate covered or not covered: Fire damage to building which has been shut down for 75 days for annual maintenance.
Not covered
51
Indicate covered or not covered: Power surge burns out motor in insured’s cooling system.
Not covered
52
Indicate covered or not covered: Lightening strike damages elevator control panel in insured’s building.
Covered
53
Indicate covered or not covered: Brown out caused by recent electricity shortage causes damage to computer equipment.
Not covered
54
Indicate covered or not covered: Pet boa constrictor (snake) was stolen from insured’s pet store.
Covered
55
Indicate covered or not covered: Pit bull watchdog was killed in fire at insured’s building.
Covered
56
Indicate covered or not covered: Insured’s fish in aquarium die as a result of fire.
Covered
57
Indicate covered or not covered: Thieves steal bearer bonds from insured’s safe.
Not covered
58
Indicate covered or not covered: Cash stolen from cash register by robber.
Not covered
59
Indicate covered or not covered: Preprinted scratch and win tickets stolen from insured’s store.
Not covered
60
Indicate covered or not covered: Stamps stolen from locked cash drawer in insured’s office.
Not covered
61
Indicate covered or not covered: Watercraft stolen from insured’s building.
Covered
62
Indicate covered or not covered: Vandalism damage to insured’s delivery van.
Not covered
63
Indicate covered or not covered: Collison damage to vehicle only on insured’s premises and not required by law to be licensed.
Covered
64
Indicate covered or not covered: Forklift (used exclusively on insured’s premises) stolen from insured’s warehouse.
Covered
65
Indicate covered or not covered: Fire damage to four diamond rings valued at $15,000
Covered
66
Indicate covered or not covered: Pre-recorded video tapes (value $400) stolen from insured’s convenience store.
Covered
67
Indicate covered or not covered: Fire damage to four fur coats valued at $20,000
Covered
68
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
69
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
70
Indicate covered or not covered: Vandalism damage to scaffolding rented to a customer. Insured operates an equipment rental business.
Not covered
71
Indicate covered or not covered: Explosion of hot water heater which operates at 45 psi.
Not covered
72
Indicate covered or not covered: Damage to boiler which cracked due to lack of water supply.
Not covered
73
Indicate covered or not covered: Fire caused by lit cigarette damages boiler.
Covered
74
Indicate covered or not covered: Earth movement.
Not covered
75
Indicate covered or not covered: Fire resulting from earthquake.
Covered
76
Indicate covered or not covered: Flooding from high tides.
Not covered
77
Indicate covered or not covered: Flooding from water overflowing river banks.
Not covered
78
Indicate covered or not covered: Water damage from puddles which seep into insured’s building.
Not covered
79
Indicate covered or not covered: Sewer back up.
Not covered
80
Indicate covered or not covered: Rain damage which came in open window.
Not covered
81
Indicate covered or not covered: Rain damage caused when roof was removed by windstorm.
Covered
82
Indicate covered or not covered: Water damage caused by rupture overhead water lines.
Covered
83
Indicate covered or not covered: Damage caused by leakage of sprinkler system.
Covered
84
Indicate covered or not covered: Breakdown of insured’s oven.
Not covered
85
Indicate covered or not covered: Damage caused by fan in insured’s cooling system which broke free inside air conditioning system.
Not covered
86
Indicate covered or not covered: Fire caused by short circuit in electrical system in insured’s building.
Covered
87
Indicate covered or not covered: Freezing of produce in insured’s grocery store resulting from breakdown of furnace.
Not covered
88
Indicate covered or not covered: Water damage to stock from freezing of overhead waterlines.
Covered
89
Indicate covered or not covered: Low humidity in insured’s building causes damage to wooden furniture being held for sale.
Not covered
90
Indicate covered or not covered: Damage to produce in insured’s grocery store which has shrunk and shriveled up due to being on shelf for two weeks.
Not covered
91
Indicate covered or not covered: Fading of clothes on display in store window from sunlight.
Not covered
92
Indicate covered or not covered: Contamination caused when refrigeration system ruptures and cooling brine is sprayed on insured’s stock.
Not covered
93
Indicate covered or not covered: Smoke damage to insured’s building caused by nearby industrial smoke stack.
Not covered
94
Indicate covered or not covered: Smoke damage to insured’s stock from smoke from a fireplace in insured’s building.
Not covered
95
Indicate covered or not covered: Damage caused by raccoons to electrical wiring in insured’s building.
Not covered
96
Indicate covered or not covered: Theft of office equipment by insured’s employees during business hours.
Not covered
97
Indicate covered or not covered: Vandalism damage caused by insured’s employees after business hours.
Covered
98
Indicate covered or not covered: Damage to building caused by rupture of domestic hot water heater operating at 15 psi and having an internal diameter of 18 inches.
Covered
99
Indicate covered or not covered: Damage to building walls resulting from settling of building on its foundation.
Not covered
100
Indicate covered or not covered: Accumulative damage to carpeting in reception area of insured’s building resulting from normal wear and tear.
Not covered
101
Indicate covered or not covered: Damage caused to shelving unit when it collapses. It was found that a defect in the metal caused the collapse. This defect could not have been detected using usual and customary inspections.
Not covered
102
Indicate covered or not covered: Damage to produce which rotted while awaiting sale.
Not covered
103
Indicate covered or not covered: During annual inventory it was discovered that six stock times have gone missing.
Not covered
104
Indicate covered or not covered: Loss of stock item which could not be located in insured’s store. Insured’s inventory control system indicated this item has not been sold.
Not covered
105
Identify six advantages of the Broad Form policy.
1. Theft losses to stock and equipment are insured
2. Water damage from rupture of overhead water lines are insured
3. Impact of vehicles operated by insured or employees
are covered
4. Many types of collapse are covered
5. All types of smoke damages, except smoke from industrial operations or agricultural smudges are covered
6. All other losses not specifically excluded are covered
106
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?
Part of the amount of insurance.
107
List three provisions of coverage found in the extension for personal property of officers and employees.
1. Only applicable when the employee (the owner) does not have the property insured or when client is obligated or liable for loss
2. Coverage is limited to $250 per employee or director
3. Applies at described location or any newly acquired location
108
Identify two crime coverages provided by Building Damage by Theft extension.
1. Theft or attempt thereat
2. Vandalism or malicious acts happening during same occurrence
109
What parts of buildings are not insured by Building Damage by Theft extension?
Glass
110
What are two types of insureds that may be eligible for coverage under Building Damage by Theft extension.
1. Building owners when building is insured under named perils policy and contents are insured under broad form policy
2. Tenants in buildings when they have purchased broad form coverage on their contents and they have assumed responsibility for losses to building or robbery in leases
111
What is the limit of coverage found in Building Damage by Theft extension?
$2,500
112
What are two perils not insured by the “growing trees, shrubs, or flowers in the open" extension? Also, what is the limit of coverage?
1. Hail and Wind
5. $500 per tree, shrub, or flower, including costs of debris removal
113
What are four coverages automatically included in commercial package policies?
1. Property Insurance
2. Business Interruption
3. Liability Insurance
4. Crime Insurance
114
What are five considerations that could result in lower premiums?
1. If building was constructed after 1945
2. Sprinklered
3. Alarmed
4. Sole occupant
5. Increased deductible
