3.1 - The Scope of Property Insurance

Question 1

Property Insurance

Answer 1

first-party Insurance that indemnifies the owner or user for LoD to insured property by an insured peril

Question 2

Peril

Answer 2

Event that may cause injury, loss, or destruction.
-It may be natural or a human-made event
-A peril may or may not be insurable

Question 3

Risk

Answer 3

The chance of loss. Specifically, the possible loss or destruction of property or the possible incurring of a liability. Sometimes referred to as the subject of an insurance contract
-underwriting term that refer to the subject matter of insurance

Question 4

Named-Perils

Answer 4

A policy in which the perils insured against are listed, as opposed to one that insures against “all-risks”

-coverage insures against direct physical LoD caused by only the listed perils
-the onus is on the insured to prove the LoD was caused by an insured peril and that no exclusion of coverage applies
-named perils tend to vary between personal and commercial policy forms

Question 5

All-Risks

Answer 5

A name given to an insurance policy that covers each and every loss except for those that are specifically excluded. If the insurer does not exclude it, then it is automatically covered. This is the broadest type of policy that can be purchased

-coverage insures against direct physical LoD caused by any peril, provided that the peril is not excluded - and that the insured satifies the other conditions of the policy
-the insured has to prove that LoD to the insured property at an insured location occurred during the policy term and that the loss was fortuitous
-onus is on the insurer to prove that an exclusion applies; otherwise, the physical damage is insured
-more appropriately called “All-perils” but All-risks is the common industry name

Question 6

Exclusions

Answer 6

All property policies, whether named perils or all risks, contain exclusions. Exclusions remove certain losses from the policy’s coverage. Losses are usually excluded in two different ways:

1. They list types of property that are not insured
2. They list perils that are never insured against or sometimes not insured against

Question 7

Named Perils in IBC Habitational Forms

Answer 7

Named Perils differs between forms - listed in the insured perils sections of the forms for:
>Homeowners Basic, Homeowners Broad (some property against named perils, other property against all risk), Mobile HO, Tenants, condo unit owner, Residential Basic, Seasonal Residence

Coverage for all risks applied in the following forms:
>Fine Arts, Personal Articles, HomeOwners Comprehensive, Tenants comprehensive, Condo unit owners comprehensive, Scheduled personal property

Peril insurance against reflected in the title of the following IBC Endorsements:
>Limited SBU, Ice Dam, EQ

Question 8

Specified Perils

Answer 8

Perils insured against that are specifically named in a policy; losses resulting from the perils listed are covered under the policy. This is the flip side of all-risks coverage, where losses resulting from the perils listed are excluded
-the exclusion applies to all losses except a loss that is caused by one of the specified perils
-example, loss due to a “data problem” is excluded, but any ensuing loss by fire, explosion, smoke, or water damage, as described under specified perils, is covered

In their own forms, some insurers use the term specified perils for the perils in their named-perils forms rather than for perils listed in an all-risks form