Flashcards in Key Point Review Questions Study 8 Deck (50):
1) What is the difference between a primary and a secondary home?
The primary home is the one they live in the most of the time; the second home is the one they live in often.
2) What insurance coverage is provided for a secondary home?
Insurers will use the same policy forms, for example, the homeowners' forms, to cover a secondary home as they use to cover a primary home.
3) What is distinct about a high-valued home?
High-value homes are distinctive in that they tend to be designed by architects and built with custom features not typically found in a standard home.
4) What coverage is available for high-valued homes?
High valued home insurance includes more innovative added coverage, such as home-appraisal expenses, cash-payout options, increased special limits, kidnap expensive coverage and equipment breakdown coverage.
5) What is coverage under kidnap expense coverage?
It provides coverage up to to a limit for costs resulting from child abduction, including travel and phone costs, medical, dental and psychiatric fees.
6) What coverage is provided under equipment breakdown coverage?
Equipment breakdown coverage provides a specified amount of insurance for accidental breakdown of the equipment or system, even if caused by human error, improper installation, or lack of maintenance.
7) What coverage is provided under home invasion coverage?
Should the insured’s family be present during a home invasion, high-valued home insurance may offer up to a specified amount of coverage to help pay medical, psychiatric, home security, and other expenses associated with trauma.
8) What is disappearing deductible and how does it work?
Insureds with high-value home insurance are usually concerned with major losses and tend not to report small losses. High-valued home policies usually waive the deductible for a loss of a specified amount – perhaps $10,000 or more, and pay such a loss in full.
9) What is a cash-out option and how does it work?
Typically the insured must satisfy certain conditions to receive the replacement cost of a damaged or destroyed building: The building must be promptly rebuilt on the same site, at the same location, with new materials or property of like kind and quality and for like occupancy. If the insured does not comply with these conditions, the insurer will pay only the actual cash value of the damaged property.
Under a high valued home insurance policy, the insured may receive cash payment up to the policy limit without deduction for depreciation and without having to rebuild or replace the damaged or destroyed building.
10) How do increased special limits work in respect to homeowners forms?
Significant amounts of valuable property tend to be more common in high-valued homes. That means there is less danger that such property will skew the blanket limit for contents coverage or require separate coverage under a floater. Instead, the high-valued home policy simply increases the special limits for valuable property over what is normally available in standard policies such as the Homeowners forms.
11) What is a condominium?
Individual ownership of a single unit in a multi-unit building or group of buildings, including a percentage interest in the part of the total property owned jointly by all unit owners. In an apartment building, each apartment would be considered as a unit, and the stairways, pathways and parking areas would be commonly owned.
12) What is the condominium act?
Housing falls within provincial jurisdiction. The activities within a condominium complex must comply with eh provincial legislation governing condominiums. The relevant legislation is called the Condominium act.
13) What is a condominium corporation and what function does it play?
A corporation without share capital, created under provincial legislation and whose members are the condominium owners.
The condo owners elect a board of directors from among them to administer the affairs of the condominium corporation.
14) What is a standard unit by-law and how does it work in respect to condominiums?
A by-law passed by a condo corporation to assign responsibility between the unit owner and the corporation for loss or damage to a unit and to designate whose insurance policy should cover repairs to damaged improvements.
The by-law defined the standard unit in a condominium corporation by describing in detail the original fixtures and finishes in each unit and specifying that improvements to a unit are not the corporation’s obligation to insure and repair.
15) What is covered under condominium corporation insurance?
Each condo corporation is required by statute to have an insurance policy covering the entire building, including individual units, and common property for loss or damage cause by major perils, such as lightning, smoke, windstorm, hail, explosion, water escape, riot or civil commotion, impact by aircraft or vehicles, and vandalism or malicious acts.
16) What is the difference in coverage between the Condominium Unit Owner Basic and Comprehensive forms?
The condominium building and common property are covered under the policy of the condominium corporation. The condo unit owners forms omit Coverages A and B for a dwelling and detached private structures.
17) What is covered under Coverage C of the Condominium Unit Owner Basic and Comprehensive Forms?
In the condo unit owners forms, the same optional extension of coverage providing 5% of the amount of insurance of the insured’s unit. (Instead of dwelling)
18) What is covered under Coverage D of the Condominium Unit Owner Basic and Comprehensive Forms?
Coverage D is the same in both forms, the only difference is referring to the unit instead of dwelling.
19) What is covered under Coverage U of the Condominium Unit Owner Basic and Comprehensive Forms?
In addition to providing insurance coverage for the unit owner’s personal property, will cover losses and expenses that are unique to owners of the condo unit.
20) What is covered under Coverage U1 of the Condominium Unit Owner Basic and Comprehensive Forms?
U1 covers unit improvements and betterments made or acquired by the insured up to t a specified amount of insurance, including:
• Any building, structure, or swimming pool on the premises
• Materials and supplies on the premises for use in such improvements and betterments.
21) What is covered under Coverage U2 of the Condominium Unit Owner Basic and Comprehensive Forms?
Under coverage U2, the condo form will pay up to a specified amount of insurance, for the insured’s share of any special assessment imposed by the condo corporation for loss or damage to the common elements.
22) What is covered under Coverage U3 of the condo unit owner’s forms?
If loss or damage occurs to an individual unit and the coverage in the corporation’s building policy is inadequate or insufficient, the unit owner must bear the difference between the amount available from the building insurance and the damage to the individual unit. Coverage U3 under the condo unit forms will cover the difference.
23) How does the Basis of Claim Payment of the condo unit owners form work?
The condo forms pay up to the insureds financial interest in the property or the amount of insurance for any one occurrence, whichever is less.
24) What coverage is available to tenants?
Covers the tenant’s personal belongings not covered by the landlord’s policy.
25) What underwriting concerns do insurers have concerning tenants?
Short-term occupancy: Sometimes tenants move without notifying their insurers. The frequency with which tenants move can generate additional work for the insurer that is time-consuming and costly.
Too Many Roommates: As the number of roommates increases, so does the exposure to vandalism, theft, and liability.
26) What is the difference in coverage between the Tenant’s comprehensive and homeowners’ comprehensive forms?
The notable difference is that the tenants forms omit Coverage A and B for a dwelling and detached private structures.
27) What is the difference in coverage C between the Tenant’s comprehensive and homeowners comprehensive forms?
The one difference in Coverage C is that the tenants form includes coverage for improvements and betterments. Under the homeowners form, there is no need for a clause addressed to an insured who does not own the building.
28) What is the difference in coverage D between the Tenant’s comprehensive and homeowners comprehensive forms?
The amount of insurance for Coverage D in the tenants form is a set percentage of Coverage C.
29) What coverage is available for Tear Out in the tenant’s comprehensive form?
The tear out extension in a tenants form applies to any insured tenants improvements or betterments that must be removed or torn apart before insured water damage can be repaired. The difference from the homeowners form reflects the fact that the tenants form doesn’t cover the building.
30) What coverage is available for Damage to Dwelling in the tenants comprehensive form?
The comprehensive form extends coverage to allow the insured to apply to up to a specified dollar amount ($500 in the IBC form) of the Coverage C limit to damage:
-To Part of the dwelling the insured occupies as a private residence: if that damage was caused directly by theft or attempted theft.
-To the interior or part of the dwelling the insured occupies as a private residence: if that damage was directly caused by vandalism or malicious acts.
-To the part of the dwelling the insured occupies as a private residence: if that damage was directly caused by impact of a vehicle operated by the insured.
What is excluded under the Tenants Comprehensive form?
-The tenants form excludes lawns and outdoor trees, shrubs, and plants
-excludes loss due to settling, expansion, contraction, moving bulging, buckling, or cracking.
-Excludes loss caused by birds, vermin, raccoons, rodents, or insects.
-excludes the theft or attempted theft in or from a dwelling under construction of materials and supplies in the use of the construction.
What is the difference in coverage between the tenants basic and homeowners basic forms?
The major difference between the two forms is the difference between named-perils and all risk coverage.
33) What is the difference regarding coverage C between basic and comp tenants forms?
In both forms, personal property stored in a warehouse is insured against the peril of theft. The basic form covers such property only against theft. The comprehensive form also covers loss to such property caused by any other peril, but only for 30 days.
34) What is a mobile home?
Manufactures housing, commonly called house trailers, usually placed in one location and left there permanently but retaining the ability to be moved, as required in many areas. Behind the cosmetic work fitted at installation to hide the base, there are strong trailer frames, axles, wheels and tow-hitches.
35) What is a tie-down?
Heavy straps passing over a mobile home and fastened to the foundations on either side or to the ground if the unit rests on piers or heavy timber.
36) What is a modular home, and how does it differ from a mobile home?
Modular homes and mobile homes differ in their construction standards, materials and foundations. Modular homes are built in a factory and moved to the building site in large individual sections.
Unlike a mobile home, a modular home, once placed on a slab or concrete foundation, is not movable and may be considered a permanent structure.
37) What coverage is available for mobile homes?
The Mobile homeowners form is a package that includes property and liability coverages. It insures against named perils.
38) How do the homeowners and mobile homeowners forms differ?
They differences in coverage between the two forms reflect the differences between mobile homes and traditional homes.
39) What coverage is provided under Emergency Removal Expense for mobile homes?
It permits the insured to use up to 5 percent of the amount of insurance under Coverage A for any reasonable expense incurred to remove the building to protect it from an insured peril. The deductible will not apply to this allocation of coverage.
40) What is the difference regarding Coverage C – Personal Property between the Mobile Homeowners and the Homeowners basic forms?
In the description of the mobile home building, it includes the appliances, furniture or equipment forming a permanent part of the building. In the homeowners forms, those items would be insured under Coverage C. In the mobile homeowners form, they are excluded under C, as they are insured under A.
41) What two exclusions are unique to Mobile Homeowners form?
• Loss or damage occurring while the building is being moved, except in an emergency to protect it when endangered by an insured peril.
• Loss due to conversion, embezzlement, or secretion by any person in possession of the building
42) What is a rented dwelling?
A dwelling or apartment unit occupied or available for occupancy by persons other than the owner under a rental agreement, written or oral, with or without compensation for the owner.
43) What underwriting risks do rented dwelling pose to insurers?
Maintenance: the owners of rented dwelling may not show as much pride of ownership as they would if they lived in the dwelling.
Marijuana Grow Ops and Meth labs
Vacant Dwelling: When a house is vacant it is more susceptible to damage.
Occupancy – Too Many Renters: Too many people occupying the same dwelling can be hazardous.
Vandalism and Malicious Acts
44) What is the Residential Basic Form and what coverage does it provide?
It is a named perils form that offers coverage that is simpler or more modest than the popular package of property and liability insurance. The insured may choose to cover only the building or both the building and contents.
45) What is a seasonal dwelling?
A dwelling occupied or intended to be used as a recreational residence, not as a permanent residence. It is usually occupied for only part of the year.
46) What coverage is provided for seasonal dwellings under the Seasonal Residence Form?
It is a named perils policy. Similar to the Residential Basic Form.
47) What is excluded under the Seasonal Residence Form?
• Fair rental value as a result of the damage to the dwelling by an insured peril
• Fair rental value because access has been prohibited by civil authority
• Personal property away from the premises
• Additional living expense as a result of damage to the dwelling by an insured peril
• Additional living expense because access has been prohibited by civil authority.
48) What special limits are available under Coverage C of the Seasonal Residence Form?
If the insured chooses to add coverage for burglary and robbery then the seasonal form applies Special Limits of Insurance under coverage c to loss from the peril to the following property:
Securities, money, jewelry, collectibles, bikes
49) What is a hobby farm?
A Small farm operated for pleasure or supplemental income rather than for primary income.