Questions - Chapter 2 - Habitational Insurance; Section 1 - The Development of Habitational Insurance

Question 1

What are the three most common Homeowners policies used today?

Answer 1

I) Homeowners Basic Form
II) Homeowners Broad Form
III) Homeowners Comprehensive Form

Question 2

Four other risks besides a single family dwelling that may be eligible for a Homeowners policy?

Answer 2

1) Dwelling with more than one family.
2) Insureds with more than one principal dwelling.
3) Mobile Homes on a full basement.
4) Dwellings in construction with the insured’s intension of occupying the premise upon completion.

Question 3

Homeowners policy has two sections with coverages under each. Please identify.

Answer 3

1) Section I - Property Coverages
Coverage A - Dwelling Building
Coverage B - Detached Private Structures
Coverage C - Personal Property
Coverage D - Additional Living Expenses

2) Section II - Liability Coverages
Coverage E - Personal Liability
Coverage F - Voluntary Medical Payments
Coverage G - Voluntary Compensation for Residence Employees.

Question 4

How would a single limit policy affect the limits under Section I?

Answer 4

The limits of insurance are combined into one inclusive limit of insurance.

Question 5

List four other persons while living in the same household who would qualify as an insured on the coverage summary page?

Answer 5

1) A spouse
2) Relatives of either
3) Any persons under 21 in their care
4) A student enrolled in school who depends on the Named Insured or the spouse for financially support.

Question 6

Define ‘spouse’.

Answer 6

A man or a woman who’ve married each other or, two persons living together in c conjugal relationship outside of marriage continuously for three years or have adopted or have a child together.

Question 7

List four persons who would qualify as a ‘relative of either’.

Answer 7

1) Parents
2) Grandparents
3) Children
4) Other family members who reside at the same dwelling as the insured.

Question 8

List two people who qualify as “any person under 21” in their care.

Answer 8

1) Foster children

2) Exchange Students

Question 9

A client’s 22 year old son attending university in another province is not dependent in any manner on the named insured. Would or wouldn’t they be covered under the policy, and why?

Answer 9

No the 22 year old son would not be covered under the named insured’s policy as they are not dependent on the insured financially for support and maintenance.

Question 10

Identify four items of property covered under Coverage A - Dwelling Building.

Answer 10

1) Dwelling and Attached Structures
2) Permanently installed outdoor equipment on the premise.
3) Outdoor swimming pool and attached equipment on the premise.
4) Materials and supplies located on or adjacent to the property for construction, alteration, or repair of the dwelling or private structures.

Question 11

Identify two other items of property under the limit of insurance for “dwelling buildings” and special limitations that are available for each.

Answer 11

1) Building Fixtures and Fitting Temporarily Removed.
- For example window shutters or doors damaged by a windstorm or storm doors stored away when not in use. The insured can opt to apply as much as 10% of the amount of insurance from Coverage A - Dwelling Building to building fixtures and fittings.

2) Outdoor Trees, Shrubs, and Plants
- The insured can opt to apply 5% of the amount of insurance from Coverage A - Dwelling Building to outdoor trees, shrubs, and plants. Max limit of $500 for any one tree or shrub. No coverage for windstorm or hail losses.

Question 12

Would an insured loss to a greenhouse in the insured’s yard that’s connected to the dwelling by a fence, be covered under Coverage A or B?

Answer 12

Coverage B - Detached Private Structures. Any structure or building separated from the dwelling by a clear space.

Question 13

What are the three Insuring Agreements for personal property under Coverage C?

Answer 13

1) Contents of the insured’s dwelling
2) Other personal property owned, worn or used by the insured while on the premises which is usual to the ownership and maintenance of the dwelling.

Question 14

Identify three property items or their equipment that aren’t covered under Coverage C - Personal Property.

Answer 14

1) Motorized vehicles or their equipment
2) Camper Units, truck caps, trailers, or their equipment
3) Aircraft or their equipment

Question 15

What three motorized vehicles are considered personal property under Coverage C?

Answer 15

1) Motorized lawnmowers
2) Gardening Equipment
3) Snow Blowers

Question 16

List seven types of personal property items included in Coverage C - Personal Property but are limited to the amount payable.

Answer 16

1) Business Property - $2,000
2) Securities - $2,000
3) Property of students temporarily living away from home - $2,500
4) Money or bullion - $200
5) Garden type tractors, including attachments and accessories - $5,000
6) Watercraft - $1,000
7) Computer Software - $2,500

Question 17

List five types of personal property in Coverage C - Personal Property that are limited to the amount payable when stolen.

Answer 17

1) Jewellery, watches, gems, fur garments up to $2,000
2) Coin collections up to $200
3) Manuscripts, stamps up to $1,000
4) Collectible cards up to $1,000
5) Bicycle and equipment up to $500

Question 18

Identify two coverages under Coverage D - Additional Living Expense

Answer 18

1) Additional Living Expense

2) Fair Rental Value

Question 19

Explain the purpose and types of expenses covered under “additional living expense”.

Answer 19

The dwelling is damaged by an insured peril and the damage is sufficient to make the dwelling unfit for occupancy or requires the insured to move out while repairs are being done.

Question 20

Your insured has been prohibited access to their house by order of civil authority. Is there coverage under Coverage D- Additional Living Expenses and if so for what period?

Answer 20

Yes there is coverage under Coverage D - Additional Living Expense. The insurer agrees to pay for additional living expense and fair rental value for up to two weeks.

Question 21

Explain the following coverage and/or restrictions of the following extensions of coverage.

1) Debris Removal
2) Moving to Another House
3) Change of Temperature
4) Frozen Food
5) Lock Replacement
6) Tear Out

Answer 21

1) Debris removal -coverage is available when loss or damage by an insured peril. If the expense of debris removal is greater than the amount of insurance an additional 5% of that amount will be available to cover debris.
2) Moving to Another House - Coverage is restricted to Canada for only 30 days to insure property being moved to and at another location which is to become the insured’s principal residence.
3) Change of Temperature - Coverage is included for damage to personal property inside the dwelling resulting from physical damage to the dwelling from an insured peril.
4) Frozen Food - Up to $2,000 for food contained in a freezer located on the insured premise when the loss or damage is due to a power failure, or mechanical breakdown.
5) Lock Replacement - Up to $500 to replace or re-key the locks on the insured’s principal dwelling. When the insured’s keys have been stolen and the loss has been reported to the authorities.
6) Tear Out - Coverage for repair to walls, celling, or other parts of the building before water damage from pipes or domestic appliances can be repaired. Damage caused by swimming pools or public watermains is not insured.

Question 22

Explain the basis of claim payment on:

a) Dwelling building and detached private structures
b) Personal Property

Answer 22

a) The repair or replacement must be completed within a reasonable time and must be:
- On the Same Location
- For the same Occupancy
- From Materials of similar quality

When dwelling building coverage is provided on a Guaranteed Replacement Cost basis, the insurer agrees to pay the full cost of repairs or replacement even if its more than the amount of insurance purchased.

b) Personal Property
-Electronic media is restricted to the cost to reproduce lost or damaged media from duplicates of from originals.
-Records, including books of account, drawings or card index systems is limited to the cost of blank books plus the cost of transcribing the records.
Settlement will be made on a replacement cost basis except for items that cannot be replaced with new articles or property that has not been maintained which will be settled on an actual cash value basis.

Question 23

Explain the coverage provided on dwelling building if a ‘Guaranteed Replacement Cost’ endorsement is attached.

Answer 23

When settlement is made on a replacement cost basis, the insurer agrees to pay the lower of the following costs without deduction or depreciation:

• the cost to repair the property with materials of similar kind and quality and,
• the cost to replace the property with new articles of similar kind, quality, and usefulness.

Question 24

What three conditions are placed upon the insured if the ‘Guaranteed Replacement Cost’ endorsement is attached to the policy?

Answer 24

1) Actual Cash Value
2) Pair and Set
3) Parts

Question 25

Would any additional costs incurred by the insured to comply with any municipal by-laws to improve the standard of construction be covered by the policy.

Answer 25

The additional costs incurred by the insured to comply with such by-laws are not insured.