3.2 - Named Perils in IBC Habitational Forms: Discussion Flashcards
Named Peril - 1. Fire
> “Fire” - Combustion manifested in light, flame, and heat for useful purposes (friendly fire) or destructive purposes (hostile fire)
-included in all the named-perils forms
-fire includes any uncontrolled or unintended ignition, howsoever caused.
-By Provincial Statute, fire ins. policy can only exclude fire if it results from:
property undergoing a heat process (but resulting damage to other property is covered)
riot, civil commotion, war, invasion, act of foreign enemy, hostilities (whether war declared or not), civil was, rebellion, revolution, insurrection, or military power - a collection of perils often called “war risks”
radioactive contamination
-loss by nuclear incident, (federal NLaCA) whether indirect or direct, is also excluded, except for ensuing loss directly from fire or explosion
-fire as a result of other event may not be excluded - example, resulting from EQ is covered, except damage directly caused by the EQ is excluded
-fire deliberately set by the insured (if insurer can prove) is not covered. Some Provinces provide “innocent co-insureds” in their legislation
Named Peril - 2. Lightning
-included in all the named-perils forms
-by Provincial and Territorial Ins. Acts, fire ins policy must cover lightning, but loss to electrical devices or appliances caused by lightning or other electrical currents are not covered unless fire originates outside of the article itself - and then only loss caused by that fire is covered
-lightning is a natural phenomenon produced by electrical discharge between clouds or between clouds and the ground. the term is not defined in the insurance policy so the courts use a dictionary definition
-typical lightning strike discharges 30,000 amps with the power of 1000 gigawatts, but duration of strike is very short - 30 microseconds, causing surrounding air to be heated to 25,000 degrees Celsius
-resulting power surge can destroy unprotected electronics, may result in fire, and the shock wave may shatter windows
-another natural phenomenon is the solar storm or coronal mass ejection. IBC definition of lightning does not include solar storms; thus not an insured peril on a named-perils form
Named Peril - 3. Explosion
-included in all the named-perils forms
-in the Insurance Acts, fire extends to explosion of natural, coal, or manufactured gas in a building not forming part of a gas works, whether fire ensues or not
-this coverage does not apply if the explosion is the result of riot, civil commotion or any of the other excluded causes listed for the fire peril
-in IBC named-perils forms, explosion excludes water hammer (the shock wave created by closing a faucet or tap)
-this peril is somewhat different between personal and commercial policy forms
-in Commercial policy forms the explosion peril often excludes loss caused by the explosion, rupture, or bursting of most boilers and pressure vessels and their associated piping and apparatus where the max normal internal working pressure exceeds 15 pounds per square inch above atmospheric pressure. The explosion and mechanical and electrical breakdown perils are insured by a specific equipment breakdown policy, which is out of IBC’s scope
Named Peril - 4. Smoke
-included in all the naned-perils forms
-in IBC’s named-perils forms, smoke 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
-in IBC’s all-risks forms, smoke howsoever caused is covered, except for smoke from agricultural smudging and industrial operations. Loss caused by such smoke is excluded because it comes from a friendly fire
Named Peril - 5. Falling Object
-included in all the named-perils forms
-in the IBC named-peril forms, falling object means - any falling object that strikes the exterior of the building; for example, a tree blown down during a storm and striking the building, causing damage to the building and property inside
-the peril would also encompass a strike by meteorite or by an object ejected from an aircraft, or from part of a decayed satellite
Named Peril - 6. Impact by Aircraft or land vehicle
-included in all the named-perils forms
-in the IBC named-peril forms, “Impact” means loss of or damage to insured property caused by being struck by an aircraft or a land vehicle
-Animals, considered personal property, struck by vehicle is not covered under this peril
-this peril excludes loss caused by any vehicle owned, or operated by the insured or any of the insured’s employees
-Wear and tear, such as might occur when delivery trucks repeatedly strike the loading dock and corners of a building, is not covered
Named Peril - 7. Riot
-included in all the named-perils forms
-in the IBC personal forms, riot is not defined
-legal meaning: an act or threat of violence by one or more persons who are part of an assembly of three or more persons that might give rise to damage to property of injury to persons
-in IBC Commercial forms, extend the meaning of riot to include open assemblies of: strikers inside or outside the premises who have quitted work; and locked-out employees
Named Peril - 8. Vandalism or Malicious Acts
-included in all the named-perils forms
-“vandalism” means willful or malicious destruction of or damage to property
-the term “malicious damage” originally identified a peril but was later broadened to malicious acts to better describe the intended scope of the policy protection
-examples of vandalism - creating graffiti, breaking windows, cutting off power, and plugging a sink and turning the water on
-IBC named-perils form specifically excludes vandalism or malicious acts:
>occurring while the building is under construction, even if builders risk endorsement has been issued (exclusion also in the all-risks form)
-occurring while the building is vacant, even if vacancy permit has been issued (exclusion also in the all-risks form)
-perpetrated by any insured (exclusion also in the all-risks form)
-caused by theft or attempted theft
Named Peril - 9. Water Damage
-included in all the named-perils forms
-in the IBC named-peril forms, “water damage” encompasses loss or or damage to insured property caused by only the following 4 scenarios:
1. Sudden and accidental escape of water from a water main (ex. burst water main)
2. Sudden and accidental escape of water or steam from within a plumbing, heating, sprinkler, or air conditioning system or domestic water container (ex. toilet, washing machine, HWH, or dishwasher) located within the dwelling
>excludes such loss within any unheated portion of the dwelling or caused by freezing in the heated portion if the insured has been away for more than 4 days unless the insured has either shut off and drained all the pipes and domestic water containers, or arranged for a competent person to inspect the dwelling daily to ensure that the heat is still on
3. Sudden and accidental escape of water from a domestic container located outside the dwelling (ex. hot tub) - freezing is specifically excluded
4. Entrance of water through an aperture created concurrently with another insured peril (ex. hurricane blows off part of the roof off, allowing the storms rainwater to enter the interior of the dwelling)
-if insured accidentally leaves window open and rainwater enters, this is not covered
-also excluded is the damage to the actual system or domestic water contained from which the water or steam escaped; only resultant damage to other insured property is covered
-excludes continuous seepage or leakage, sewer backup, flood, and hydrostatic pressure
-In IBC’s all-risks forms, same coverages and exclusions apply
-Commercial all-risks forms cover all water damage except as caused by exclusion such as sewer backup and flood, but do insure against accidentally leaving a faucet running or leaving a window open
Named Peril - 10. Windstorm or Hail
-included in all the named-perils forms
-in the IBC named-peril forms, windstorm nor hail is defined, instead the scope of the peril is established by exclusions.
-“windstorm” includes tornadoes and hurricane
-these perils do not include LoD caused by waves, floods, or the weight, pressure, or melting of ice or snow
-outdoor antennae and satellite receivers are not insured property with respect to these perils
-personal property is not insured for LoD caused by these perils, unless the storm first created an opening that allows the storm access to the interior of the dwelling, and then the interior damage occurs coincidentally (during the same storm)
Named Peril - 11. Glass Breakage
-included in all the named-perils forms, except for:
>Tenants, condo unit owners (glass is part of the building which is not covered in these forms), residential basic, and seasonal residence (can be added for additional premium)
-In the IBC named-peril forms, “glass breakage” means accidental breakage of the building glass or doors howsoever caused, unless the breakage results from an excluded peril (such as war or terrorism)
-IBC named-perils form specifically excludes glass breakage: occurring while the building is under construction (even if builders risk end issued), or while the building is vacant (even if permission for vacancy issued)
Named Peril - 12. Transportation
-included in all the named-perils forms, except Residential Basic Form
-in the IBC named-peril forms, the transportation peril encompasses loss of or damage to insured personal property caused during the transportation of the property by collision of the automobile transporting the property
-other perils that may occur to the auto or trailer conveying the property include upset, overturn, derailment (truck or trailer is being transported on a train piggyback trailer, or container on flatcar), stranding, or sinking (on ferry or vehicle breaks through ice road)
-also extends to personal property that is being temporarily removed from the premises, as well as to building fixtures and fittings that are temp removed from the premises for seasonal storage
-named-perils forms specifically exclude watercraft (and their furnishings, equipment, accessories, and motors), as well as property in an owned vacation or home trailer
Named Peril - 13. Theft, Including Damage caused by Attempted Theft
-included in all the named-perils forms except for - Residential Basic, and Seasonal Residence (optional for burglary and robbery instead)
-“theft” is extremely broad and policies that provide theft coverage inevitably rely on exclusion to limit the scope of the coverage
-in the IBC named-peril forms, theft is not defined, instead scope of this peril is established by exclusions. Does not include LoD:
>occurring at any other dwelling or DPS which the insured owns or rents, or occupies, unless the insured is temporarily living there
>from the part of the dwelling or DPS rented to others caused by theft or attempted theft, by any tenant, tenant’s employee, or member of the tenant’s household (exclusion also present in the all-risks forms)
>caused by theft or attempted theft, or property or building materials from any dwelling or the DPS under construction until the dwelling is completed and ready for occupancy (exclusion also present in the all-risks forms)
>to animals, birds, or fish (a pet)
>caused by voluntary parting of property via false pretense
-extends to include damage to real and personal property sustained during the actual or attempted theft, whether directly or incidentally (breaking door)
Named Peril - 14. Electricity
-included in all the named-perils forms
-in the IBC named-peril forms, “electricity” means sudden and accidental damage from artificially generated electrical current
-common example is power surge of artificially generated electricity that causes damage to electrical appliances and electronics (as opposed to lightning or solar storm)
-damage must be sudden and accidental rather than, for example, burnout due to wear and tear during the normal use of an electrical appliance
-the electricity peril is somewhat different between personal and commercial forms - commercial exclude loss caused by electrical breakdown, artificially generated current, and arcing, unless fire ensues. Explosion and mechanical breakdown are covered by a specific equipment breakdown policy, which is outside of IBC’s scope
Personal Property
Legally, any property of an insured other than real property. More often used to refer to the personal property of family members insured under a homeowners policy
-movable property
