Flashcards in Study 10: Residential Property Claims Deck (49)
What coverages are available for Residential property policies? (4)
-Coverage A: Dwelling building - includes main building, any attached structures, permanently installed outdoor equipment, outdoor swimming pool and attached equipment
-Coverage B: Detached private structures - structures separated from main building by a clear space. (garden shed, greenhouse, barn, boathouse, gazebo)
-Coverage C: Personal property - contents usual to a home.
-Coverage D: Additional living expenses - Extra costs incurred when an insured incurs additional costs because their insured property is to unfit to occupy. (hotel stays, grocery bills, etc.)
*homeowners policy provides coverages A,B,C,D. Tenants and condominium unit owners policies only offer coverage C and D.
What are some items that have typical policy limitations? (10)
Some policies may limit the amount of insurance for higher risk items. These include:
-Bicycles, their equipment and accessories ($500-1000)
-Jewellery, furs, collectable cards, comics, coin and stamp collections ($1000-$6000)
-Spare Auto parts (up to $1000)
-Garden type tractors and their accessories (up to $5000)
-Watercraft, their furnishing, equipment, and accessories ($1000-$2000)
-Computer software ($1000-$2000)
-Personal property of student away from home (up to $2500)
-Books, tools, and instruments pertaining to a business,but only while in a locked building on insureds premises. ($2000-$5000)
Differentiating between Residential building and contents. (3)
-The loss adjuster determines whether the loss qualifies under the building coverage or personal property.
-Any property permanently attached to structure is covered under the building portion of the policy, which also covers any building materials or supplies that are used to repair the building.
-Adjuster must be ready to listen carefully to insured's explanation and inspect property to resolve any ambiguity that would qualify property as either building or contents under the policy.
How does the tenants policy differ from the homeowners policy? (2)
-Has essentially the same basic coverage as a homeowners policy, but it is limited to personal property and additional living expenses. (Coverage C and D)
-Tenants policies also cover dwelling improvements and betterment's made at the insured's expense.
Condominium owners claims - What coverages/extensions are available under a condominium unit owners policy? (4) and who is responsible for the insurance coverage in different areas of the condominium complex? (1)
-Coverage C and D is available
The extensions of coverage available for a condo unit owners policy include:
- (1) Unit improvements and betterments
- (2) loss assessment
- (3) unit additional protection
-The condominium corporation is responsible for insurance coverage on the common elements and the standard units, and unit improvements and betterment's are covered under the condo unit owners policy.
Condominium owners claims - Describe special assessments and how deductibles are applied under the condominium corporations policy. (4)
-When an insured loss occurs that affects more than one unit owner, the corporation may apply special assessments.
-The condominium acts give direction as to who will be responsible for the condo corps deductible.
-In cases where the damage is significant and includes damages to common elements, the condominium corporation will issue a "special assessment" to recover the expense of the deductible under their policy.
-Certain policies provide coverage for such a charge against the insured.
If there is a conflict between the condominium act and the insurance act, who prevails? (1)
The condominium act
Residential property perils - Describe the FIRE peril. (3)
-The national fire protection association produces the NFPA 921 guide for fire and explosion investigations. It is the definitive standard for fire investigations.
-NFPA defines fire as a rapid type of combustion giving off light, head, and flame.
-A fire must be a hostile fire in order for it to fall within the coverage of an insurance policy.
What is the difference between a hostile fire and friendly fire? (3)
Hostile fire - A fire that occurs in or escapes to a place not anticipated. (a cigarette that burns the kitchen counter or an escaped ember from fireplace that burns rug)
Friendly fire - A fire that has been intentionally ignited and remains controlled and confined to its intended size and space. (Ex: Fireplace)
Adjuster must distinguish between both to see if the fire loss qualifies for coverage.
What questions can adjusters ask to determine if heat was the culprit that caused the damage rather than fire? (2)
-Has heat been applied?
-What resulting products of fire are in evidence?
Application of heat - is a heat loss covered under the fire peril? (2)
-No, its not covered unless a fire ensues. When an item simply melts without ignition occurring, the event does not qualify as a fire and therefore no claim is payable.
-When heat is applied to an item, the policy excludes damage to the property caused by such application, however, any ensuing fire damage to other insured property would be covered. ( A shirt catches fire while being ironed, shirt is not covered but other property damaged will be)
Fire loss obligations - What can be done to minimize fire damage? (5)
- Board up exposed areas
- Air and deodorize the premises
- Washing the walls should be attempted ASAP to determine what painting would be required.
-Protective barriers or fencing to limit trespassing or further damage.
- In cases of complex or large losses still under investigation, the property may require on site security to protect the area.
What are some exclusions under the fire peril? (10)
-Act of foreign enemy
Describe the LIGHTNING peril and how to distinguish between lighting damage and electrical appliances that may have already been damaged before the lighting strike (4)
-If a bolt of lightning strikes an insured house, the resulting damage is covered.
-Virtually any of the electrical appliances plugged into the wall at the time of the lighting strike can be affected.
-The adjuster may appoint a qualified expert to differentiate between lightning damage and other causes of electrical failure in appliances.
-An item reported damaged after an electrical storm may have already needed repairs. Adjuster should confirm that the item was actually plugged into a circuit to determine if it was indeed damaged by lighting
Describe the EXPLOSION peril and its exclusions. (2)
-Peril of explosion in residential homes is commonly associated with natural gas leaks and subsequent explosions.
-Water hammer - a pressure shock wave induced in plumbing systems when a sudden change occurs in the stability of the water, causing a banging noise in the pipes.
(exclusion not found in all risk policy forms)
Describe the SMOKE peril and its exclusions. (3)
-Smoke losses under this peril must result from something other than fire, because smoke from fire loss is already covered under fire peril.
-Covers damage caused by the sudden, unusual, and faulty operation of any heating or cooking unit.
-Agricultural smudging and industrial operations
Describe the following perils and their exclusions:
-Falling object (1)
-Impact by aircraft or land vehicle (1)
Falling object - this peril covers falling objects that strike exterior of building. There is no coverage for objects that fall within the house.
Impact by aircraft or land vehicle - covers damage done to the dwelling. Does not cover for losses when the insured owns or operates the vehicle that causes the damage and also does not cover injury to animals.
Riot - When at least 3 or more people are involved in damaging property, it could qualify as riot under riot peril. It excludes losses caused by war, invasion, civil war, rebellion, revolution, act of foreign enemy, etc.
Describe the VANDALISM and MALICIOUS ACTS peril. (2)
-Wilful destruction of another's property.
-Recently has been the centre of legal debate regarding grow ops. Some courts ruled that because of absence of a grow up exclusion, these losses are covered under this peril, but now many policies are written with grow ups exclusions because of this issue.
Describe the WATER ESCAPE peril and what occurrences would be covered under this peril? (5)
-Covers the escape of water from a water supply system.
The following 4 occurrences would be covered:
-Sudden and accidental escape of water from watermain.
-Sudden and accidental escape of water from plumbing, heating system.
-Sudden and accidental escape of water from domestic water container located outside dwelling
-Water that enters the dwelling through opening created suddenly and accidentally by an insured peril.
What are the restrictions on the policy for water escaping from frozen pipes that have ruptured? (3) and what are the exclusions for the water escape peril? (5)
-If frozen pipes rupture, causing damage, and the insured has been away from the premises for more than 4 consecutive days, there is no coverage unless one of following precautions has been taken:
---insured arranged for someone to enter house each day to ensure heating was being maintained.
---insured shut off water supply and drained all the pipes.
-continues or repeated seepage
-sewer back up (unless endorsement purchased)
-ground water or rising water table
-shoreline ice buildup
Describe the WINDSTORM peril and its exclusions. (3)
-Any wind strong enough to cause damage to insured property would qualify under the windstorm peril.
-Roof damage is most typical claim.
Exclusions include windstorm damage to outdoor antenna's or satellite receivers.
How do adjusters determine if damage is caused by windstorm or from other causes? (4)
-Should look at weather reports from the time of damage to establish that there was a storm to cause the damage.
-If insured reports water damage inside the house due to windstorm, the adjuster must establish that the storm created an opening in the building first.
-Up to insured to prove his or her case, but usually, insurers send a roofing expert or a loss adjuster to inspect the damage and report on the findings.
-Another problematic case that often occurs is wind damage to a fence post that is rotting and in precarious state. Adjuster must determine if wind damage was what caused loss, or if loss was a result of rotting,
Describe the HAIL Peril (1) and give examples of some common roofing problems that have nothing to do with hail damage. (3)
-Hail may cause roofing shingles to split or put dents in them. If a large percentage of the roof shingle tabs have been broken, the whole roof may need to be replaced.
Examples of common roofing problems include:
-Moisture trapped in the roofing material may cause bubbling.
-Sheathing that expands and contracts may cause wrinkling.
-Oils evaporating from the roofing materials may cause an alligator type pattern on the roofing surface.
Describe the following perils:
-Glass breakage (1)
Glass breakage - glass that forms a part of the building or private structures, including glass in storm windows and doors, is insured against accidental glass breakage.
Transportation - covers property while its being transported against the following perils: Collision, derailment, upset, stranding, overturn, and sinking.
Electricity - provides coverage for electrical damage for voltage surges caused by artificially generated electricity.
Describe the THEFT peril (2) and its exclusions. (4)
-Covers insured property anywhere in the world subject to certain limits.
-Theft that happens at another dwelling owned, rented, or occupied by the insured is covered only when insured is temporarily living there.
-theft caused by a tenant in a part of the insureds home that is rented to a tenant. (Example on page 10-17)
-theft from a dwelling under construction
-theft of animals, birds, or fish
-when by fraud or trickery, a change of ownership in property takes place with the insureds agreement.
Additional coverage considerations - Property away from the premises. (3)
-property in the insured’s possession is covered if it is not otherwise insured and can include uninsured property of others anywhere in the world
-personal property is insured while it is temporarily away from the insureds premises, anywhere in the world, unless the personal property is normally kept at another location
-personal property of students temporarily living away from home is covered
*Look at example of page 10-19
Claims under all risk coverage - what must an adjuster do when examining a claim that has an all risk policy in effect? (3)
-Adjuster must first examine the exclusions to determine whether loss falls within it.
-Must also examine other limiting features such as special limits.
-A common loss on personal property under an all risk policy is mysterious disappearance.
What are the extensions of coverage available under a residential policy? (11)
-Debris Removal - covers the costs to remove debris from insured property following a loss.
-Removing Insured Property - covers costs of removing insured property from premises to protect it from loss for up to 30 days or until policy ends, whichever comes first.
-In transit – covers property in transit while moving to a new residence.
-Fire department charges – usually limited dollar amount ($1000)
-Change of temperature – personal property damaged by a change of temperature is covered. (food, plants)
-Freezer food endorsement - covers loss of food in freezer caused by mechanical breakdown or interruption of electrical power (up to $2000)
-Lock replacement – if keys lost / stolen and up to stated dollar amount
-Tear out – tearing out of walls. ceilings, or other parts of the insured building damaged in the course of repairs
-Arson Conviction -awarded to people who help provide info of guilty parties who commit arson acts
-Credit card, debit card, forgery and counterfeit money - up to $1000
-Inflation protection – protects against possible inflation. Limits are increased by inflation amount
What must loss adjusters be aware of when property is vacant or unoccupied? (4)
-Must be aware of the limitations of coverage associated with property being vacant or unoccupied when a loss occurs.
-Should know difference between vacant (no contents, no occupants) and unoccupied. (some contents, no people)
-Theft or vandalism losses that occur while building is vacant or under construction are not covered, even when permission has been granted for vacancy or construction.
-Vacancy is permitted up to 30 days for other losses before coverage lapses.