Chapter 6 Personal Property (Habitational Insurance)

Question 1

Identify four persons included in the definition of “you” or “your” and who would be “insureds” under the policy.

Answer 1

1. The person named on the policy.
2. Spouse/partner of the named insured.
3. The relatives of either spouse or partner.
4. Any persopn under 21 in the care of the named insured.
5. Students attending school, college or university.

Question 2

When only one person is named on the policy and a claim is made by their spouse or common law partner, the insurer will agree to pay the claim when certain evidence is provided to it. Identify three ways in which such persons might qualify for coverage.

Answer 2

1. Any person who is not a named insured, must have been living in the same household at the time of loss or damage to their property.
2. Students attending school, college or university must be in full-time education and dependent on the insured(s).
3. A person living with named insured in a conjugal relationship outside marriage continuously for three years; or
   The natural or adoptive parent of a child, living with the named insured for a period of one year.

Question 3

Each Homeowners Form contains two coverage sections. Identify these coverage sections and the coverage provided by each.

Answer 3

Property Coverage - Dwelling Building, Detached Private Structures, Personal Property, Additional Living Expense
Liability Coverage - Personal Liability, Voluntary Medical Payments, Voluntary Payment for Damage to Property, Voluntary Compensation for Residence Employees

Question 4

a) Identify the items insured under Coverage A – Dwelling Building.
b) Explain the coverage provided for “Outdoor Trees, Shrubs and Plants.”

Answer 4

a) Dwelling building and attached structures, and permanently installed outdoor equipment on the premises (items that are affixed to land like children’s swings, lawn sprinklers), Outdoor swimming pool and attached equipment, theft of construction material only if dwelling is complete and ready to be occupied (construction for fencing)
b) The insured can opt to apply as much as 5% of the amount on the “dwelling building” to outdoor trees, shrubs and plants on the premises.

Question 5

State the three Insuring Agreements included within Coverage C – Personal Property.

Answer 5

1. On premises coverage (contents in dwelling and contents used/worn by insured),
2. Off premises coverage (property temporarily removed),
3. Property of students

Question 6

Identify three types of personal property items excluded under this coverage.

Answer 6

property excluded include motorized vehicles (except lawnmowers or motorized wheelchairs), camper units/trailers, aircraft, tape decks, television sets, recording and transmitting equipment.

Question 7

State the territorial limits provided for personal property which is away from the insured’s premises.

Answer 7

As long as property is normally kept on premises, it is covered anywhere in the world.

Question 8

Identify two types of losses for which “Special Limits of insurance” are provided and provide examples for each.

Answer 8

1. Those which apply to specific property items, regardless of the cause of loss. Ex. Business property, securities, computer software.
2. Those which apply to specified property items which have been stolen. Ex. Jewelry, numismatic property, collectible cards, bicycles.

Question 9

Identify the two coverages provided under Coverage D - Additional Living Expense.

Answer 9

1. Additional Living Expense (2 weeks max)
2. Fair Rental Value

Question 10

Indicate the circumstances under which coverage would be provided for Additional Living Expense.

Answer 10

Dwelling damaged by an insured peril with damage sufficient to make it unfit for occupancy, or requires insureds to move out while repairs are being made.

Question 11

State the basis of claim payment.

Answer 11

Claim payment is made on a replacement cost basis, unless otherwise stated.

Question 12

Summarize the Insuring Agreement for this Extension of Coverage -
Debris Removal

Answer 12

If the amount payable for loss, including expense for debris removal, is greater than the amount of insurance an additional 5% of that amount will be available to cover debris removal expense.

Question 13

Summarize the Insuring Agreement for this Extension of Coverage -
Property Removed

Answer 13

Property that has been removed from the premises to protect it from loss or damage, it is insured for 30 days or until the policy term ends - whichever occurs first.

Question 14

Summarize the Insuring Agreement for this Extension of Coverage -
Moving to another home

Answer 14

Property is covered in transit to and at the soon-to-be occupied location of the insureds new principal residence. Coverage is restricted to 30 days or expiry of the policy, whichever comes first.

Question 15

Summarize the Insuring Agreement for this Extension of Coverage -
Change of Temperature

Answer 15

Personal property that is damaged by change of temperature resulting from physical damage, to insured’s dwelling or equipment by an insured peril will be insured. This only applies to personal property kept in the dwelling.

Question 16

Summarize the Insuring Agreement for this Extension of Coverage -
Freezer Food

Answer 16

Up to $2,000 will be paid for food in the freezer of the insureds premises when loss is due to power failure or mechanical breakdown. Does not include loss of power from operation of circuit breakers/fuses or disconnection of power supply.

Question 17

Summarize the Insuring Agreement for this Extension of Coverage -
Tear Out

Answer 17

There is coverage for repairs of parts of the building, such as walls or ceilings, if they must be torn out to repair water damage from pipes or water containers.
Exclusion: Tear our extension does not apply to repair damage caused by swimming pools or public watermains.

Question 18

State the basis of settlement applicable to -
Personal Property

Answer 18

Payment for loss to personal property is provided on a replacement cost basis, unless:
- Article cannot be replaced because of its inherent nature
- Age contributes to articles value
- Article not maintained in good/worakable condition
- Article no longer used for its original purpose

Question 19

State the basis of settlement applicable to -
Dwelling Building

Answer 19

Cost of repairs or replacement (whichever is less) without deduction for depreciation. Must be in the same location, same occupancy, and of a similar quality of materials.

Question 20

State the basis of settlement applicable to -
Detached Private Structures

Answer 20

Cost of repairs or replacement (whichever is less) without deduction for depreciation. Must be in the same location, same occupancy, and of a similar quality of materials.

Question 21

Match Homeowners Basic Form (IBC 1151)
Fire or Lightning

Answer 21

Coverage for lightning includes damage to electrical devices or appliances.

Question 22

Match Homeowners Basic Form (IBC 1151)
Covers damage caused from hot water heaters and domestic boilers and not that due to water hammer.

Answer 22

This coverage is extremely broad, insuring explosions of hot water heaters and domestic boilers used for heating purposes.
This peril does not include water hammer

Question 23

Match Homeowners Basic Form (IBC 1151)
Smoke

Answer 23

This peril means smoke due to a sudden, unusual and faulty operation of any heating or cooking unit in or on the premises, but not smoke from fireplaces.

Question 24

Match Homeowners Basic Form (IBC 1151)
Falling Object

Answer 24

This peril means a falling object which strikes the exterior of the building.

Question 25

Match Homeowners Basic Form (IBC 1151)
Impact by Aircraft or Land Vehicle

Answer 25

This peril does not include any impact by a vehicle owned or operated by you or your employee. Animals are not insured under this peril.
When damage is caused by an insured or any employee of the insured, there is no coverage. Impact to animals is also excluded.

Question 26

Match Homeowners Basic Form (IBC 1151)
Riot

Answer 26

You are insured against the direct loss or damage caused by Riot.

Question 27

Match Homeowners Basic Form (IBC 1151)
Vandalism or Malicious Acts

Answer 27

This peril does not include loss or damage:
- Occurring while the building is under construction or vacant even if permission for construction or vacancy has been given by insurer
- Caused by you
- Caused by theft or attempted theft.

Question 28

Match Homeowners Basic Form (IBC 1151)
Water Damage

Answer 28

This peril means loss or damage caused by:
- the sudden and accidental escape of water from a watermain
- the sudden & accidental escape of water or steam from within a plumbing, heating, sprinkler or air conditioning system or domestic water container, which is located inside insured’s dwelling
- the sudden and accidental escape of water from a domestic water container located outside the insured’s dwelling. However, such damage is not covered when the escaped water is caused by freezing
- water which enters insured’s dwelling through an opening which has been created suddenly and accidentally by an insured peril other than water damage

Question 29

Match Homeowners Basic Form (IBC 1151)
Windstorm or Hail

Answer 29

This peril does not include loss or damage to insured’s personal property within a building or to the interior of a building caused by windstorm, hail or coincidental rain damage, unless the storm first creates an opening in the building.
This peril does not include loss or damage to:
- outdoor radio & TV antennae (including satellite receivers)
- due to weight, pressure or melting of ice or snow, whether driven by wind or not
- due to waves or floods, whether driven by wind or not.

Question 30

Match Homeowners Basic Form (IBC 1151)
Glass Breakage

Answer 30

Glass that forms part of your dwelling or private structures , including glass in storm windows and doors, is insured against accidental breakage.
**This peril does not include loss or damage occurring while a building is under construction or vacant if permission for construction or vacancy has been given by insured.

Question 31

Match Homeowners Basic Form (IBC 1151)
Transportation

Answer 31

This peril means loss or damage caused by collision, upset, overturn, derailment, stranding or sinking of any automobile or attached trailer in which the insured property is being carried. This would also apply to any conveyance of a common carrier. This peril means loss or damage to personal property while it is temporarily removed from insured’s premises; building fixtures and fittings when they are temporarily removed from insured’s premises for repair or seasonal storage.
This peril excludes loss or damage to property in a vacation or home trailer the insureds own; any watercraft, their furnishings, equipment or motors.

Question 32

Match Homeowners Basic Form (IBC 1151)
Theft

Answer 32

This peril does not include loss or damage:
a) which happens at any other dwelling the insured owns, rents or occupies, except while temporarily living there.
b) from the part of the dwelling rented to others caused by theft or attempted theft by any tenant, tenant’s employee or member of the tenant’s household
c) The property in or from a dwelling under construction or of materials and supplies for use in the construction until the dwelling is completed & ready to be occupied
d) to animals, or birds or both
e) resulting from a change in ownership of property that is agreed to, even if that change was brought about by trickery or fraud.

Question 33

Match Homeowners Basic Form (IBC 1151)
Electricity

Answer 33

This peril means sudden and accidental damage from artificially generated electrical current.

Question 34

True or False
___ Only the Homeowners and Comprehensive Forms Automatically include personal liability coverage.

Answer 34

False

Question 35

True or False
___ All Homeowners Forms insure personal property temporarily removed anywhere in the world.

Answer 35

True

Question 36

True or False
___ Freezer Food coverage provided on all Homeowners Forms would insure spoilage of meat in a deep freeze located in a storage shed in the insured’s back yard.

Answer 36

True

Question 37

True or False
___ All Homeowners Forms have Special Limits of Liability on items such as jewellery and furs

Answer 37

False

Question 38

True or False
___ Many of the exclusions contained in the Homeowners Basic Form (IBC 1151) are also found in the other Homeowners Forms.

Answer 38

False (1151 exclusions include Buildings used for business, property in fairgrounds exhibition, illegally acquired property, coverage when dwelling is vacant for more than 30 days)

Question 39

Is the following insured under the Homeowners Comprehensive Form (IBC 1155)? Yes or No?
Crafts done by the insured and on display at the three day craft show?

Answer 39

Yes

Question 40

Is the following insured under the Homeowners Comprehensive Form (IBC 1155)? Yes or No?
Downhill skies broken in an automobile accident.

Answer 40

Yes

Question 41

Is the following insured under the Homeowners Comprehensive Form (IBC 1155)? Yes or No?
Damage to walls and drapes from smoke from a fireplace.

Answer 41

No

Question 42

Is the following insured under the Homeowners Comprehensive Form (IBC 1155)? Yes or No?
Wear and tear to living room rug.

Answer 42

Yes

Question 43

Is the following insured under the Homeowners Comprehensive Form (IBC 1155)? Yes or No?
Breakdown of electric motor in the insured’s dishwasher.

Answer 43

No

Question 44

Is the following insured under the Homeowners Comprehensive Form (IBC 1155)? Yes or No?
Cracking of building foundation and interior walls due to settling of ground.

Answer 44

No

Question 45

Is the following insured under the Homeowners Comprehensive Form (IBC 1155)? Yes or No? Damage to electrical wiring caused by mice.

Answer 45

No

Question 46

Is the following insured under the Homeowners Comprehensive Form (IBC 1155)? Yes or No?
Theft of family pet from kennel in the insured’s backyard.

Answer 46

No

Question 47

Identify two expenses provided by the Mobile Home Insurance policy for “emergency removal expense”

Answer 47

In the event there is a threat of loss to the home from an insured peril, up to 5% of the amount of insurance on the dwelling can be used to pay for reasonable expenses incurred in its removal from the site. These expenses include:
1.Expenses incurred in disconnecting water and power services;
2. Towing or transporting costs.

Question 48

State the responsibility of the Condominium Corporation respecting the purchase of insurance.

Answer 48

It is the responsibility of the Condominium Corporation to insure the value of the building and all common elements which includes:
- Parking area
- Walkways
- Landscaping
- Recreational areas

Question 49

Explain why the condominium unit owner should purchase “Loss Assessment” coverage.

Answer 49

If coverage on the Corporation’s policy is inadequate to cover a loss, they may levy an assessment on each unit owner to recover the shortfall.
Loss Assessment coverage would protect the unit owner against such an event.

Question 50

Common characteristics of Homeowners Forms.

Answer 50

Each Homeowners Form consists of the following:
1. Clear Language Approach - makes it easier for insureds to read and understand their insurance policies.
2. Common Format or Structure - A common structure is maintained throughout. This way brokers are able to quickly locate answers to clients’ questions.
3. Policy Definitions Uniform - Definitions are provided for certain terms .

Question 51

Policy Definitions

Answer 51

1. Who is insured:
   - the person named on the policy;
   - spouse/partner min. 3 years;
   - natural/adoptive parent of child living with insured for min. 1 year;
   - relatives of either spouse/partner;
   - anyone under age 21 in care of named insured;
   - students attending school, college or university.
2. Dwelling - owner occupied building
3. Premises - land contained within the lot lines where dwelling is situated

Question 52

Extensions of Coverage

Answer 52

1. Debris Removal
2. Property Removed
3. Moving to Another Home
4. Fire Department Expenses
5. Change of Temperature
6. Freezer Food
7. Lock Replacement
8. Tear Out
9. Arson Conviction Reward
10. Credit or Debit Cards, Forgery & Counterfeit Money
11. Inflation Protection

Question 53

Section 1 - Property Coverages

Answer 53

Coverage A - Dwelling Building
Coverage B- Detached Private Structure 10% of coverage A
Coverage C - Personal Property, including Special Limits of Insurance
Coverage D - Additional Living Expense

Question 54

Homeowners Form (IBC 1151)
Perils Insured & Exclusions

Answer 54

Perils Insured:
*Fire
*Lightning
*Explosion
*Impact by aircraft or land vehicles
*Riot
*Vandalism or malicious acts
NOTE: There is no coverage for windstorm or hail losses.

Question 55

Advantages of Homeowners Comprehensive Form (IBC 1122)

Answer 55

Insured against all risks of direct physical loss or damage subject to the exclusions and conditions of the form.

Question 56

Key Exclusions of Homeowners Comprehensive Form (IBC 1122)

Answer 56

*ordinance or law;
*earth movement;
*water damage from external sources of water, such as floods, sewers, or underground water;
*power failure;
*losses caused because the insured failed to protect property after a loss;
*war or nuclear hazard;
*intentional loss;
*weather conditions;
*defective planning and design

Question 57

Underwriting Homeowners Forms -
How limits of insurance determined for Section 1 - Property Coverages

Answer 57

The policy provides divided coverage, meaning that each section has its own policy limits independent of the other sections.
1. Those which apply to specified property items regardless of the cause of the loss including:
1. Business property up to $2,000 in all
2. Securities up to $2,000 in all
3. Personal property used by any student insured by the policy & living away from home up to $2,500 in all
4. Money including cash cards or bullion up to $200 in all
5. Garden type tractors, including attachments and accessories up to $5,000 in all
6. Watercraft up to $1,000 in all
7. Computer software up to $2,500 in all
8. Spare auto parts up to $1,000 in all.

Question 58

Basic coverages provided by Mobile Home Insurance

Answer 58

1. Property
2. Personal Liability
3. Additional Living Expenses
   *Emergency Removal Expense is included

Question 59

Basic coverages provided by Condominium Unit Owners Insurance

Answer 59

1. Building Property - the unit itself, including walls & fixtures
2. Personal Property - furniture, electronics & other moveable goods
3. Personal Liability - Legal expenses from claims or lawsuits agains insured
4. Loss of Use - costs of lodging/transport if unit is uninhabitable
5. Loss Assessment - Insured’s portion of any losses shared out by the association

Question 60

Basic coverages provided by Tenant’s Package Forms

Answer 60

Designed for people who occupy residential premises they do not own, including:
- those living in apartments
- those renting a dwellling or any portion of it
Coverage for Additional Living Expense is included as well.

Question 61

Basic coverages provided by Seasonal Dwelling Insurance

Answer 61

Premises that are owned or used by insureds on a seasonal basis can be added as additional locations insured under their policy.

Question 62

Basic coverages provided by Rented Dwellings

Answer 62

Dwellings that are owned by the insured, but occupied by others, normally are subject to restricted coverage.
Policies insuring rented dwellings or other revenue properties normally exclude vandalism or malicious acts & theft.
Also, basis for settlement for the dwelling building & personal property will often be restricted to their actual cash value. Most insurers won’t provide this coverage unless they also provide the insurance for the owner’s principal residence.

Question 63

Match Homeowners Basic Form (IBC 1151)
Explosion

Answer 63

This coverage is extremely broad, insuring explosions of hot water heaters and domestic boilers used for heating purposes.
This peril does not include water hammer