5.1 - Opening Sections of the Homeowners Form Flashcards
First section of Policy - Opening Statements
2 statements required by law:
1. advising the insured that the policy contains a clause that may limit the amount payable under the policy.
2. Various provisions limit the policy’s coverage and that the insured should read the policy carefully. Such limitations of liability include deductibles, coinsurance, and the special limits of insurance
-deductibles and special limits common in personal property policies, coinsurance is rare, used more in commercial property policies
-concludes with reminder to insured that insurance cannot be a source of profit but only a source of indemnity for actual losses incurred or for which the insured is liable.
Second section of Policy - A Guide to the Policy
Habitational policy insure private individuals, so the Homeowners forms begin with this page
-guide begins with 2 explanatory statements and ends with the agreement between the insurer and insured
A Guide to the Policy - First Explanatory Statement
Property Coverages:
-describes the insurance under Section I as consisting of property coverages including coverage of the insured’s dwelling; detached private structures; personal property; and, in certain circumstances, additional living expenses
A Guide to the Policy - Second Explanatory Statement
Liability Coverage:
-describes the insurance under Section II as consisting of liability coverage, including coverage for the insured’s legal liability for unintentional bodily injury to others or damage to their property arising out of the insured’s personal actions.
-Section II includes voluntary medical payment, voluntary payments for damage to property, and voluntary compensation for “residence employees” if they are injured while working for the insured
A Guide to the Policy - Agreement Between the Insurer and the Insured
-is simpler than its counterparts in the basic fire policy or in commercial property policies. It does not refer to direct loss, indemnity calculation, or insure perils
-says simply that the insurer provides the insurance described in the policy in return for payment of the premium and subject to the specified terms
-all monetary amounts are expressed in Canadian currency
Definitions
-first step to review a policy is to review the definitions
-alphabetic order and may apply anywhere in the policy
-definitions of significant terms simplify policy preparation and ensure clarity and uniformity in the use of certain words in the form
-widespread use of same definitions provides protection for insureds and their brokers and agents - leads to fewer misunderstandings
-most often policy language comes from the insurer and so will be interpreted in favour of the insured if terms are unclear or their meaning is uncertain - contra proferentem
IBC Homeowners forms - the definitions in the comprehensive form and the broad form comprise
-the terms defined in the basic form;
-three terms (data problem, fungi, and spores) not defined in the basic form but defined in the comprehensive and broad forms to exclude the exposures to loss they represent;
-one term (vacant) defined slightly differently from the basic form
Definition - Business
-habitational policy are not meant for business activities that form the primary source of income for the insured
-some insurers may cover small, non-complex business activity in a habitational policy for no additional premium, but such activity must be specified on the coverage summary page
-more commonly, insurers prefer to offer a home-based business endorsement at an additional premium
-activities permitted depend on the nature of business being conducted on premises
-a recognized trade, profession, or occupation, or any pursuit undertaken for financial gain, is regarded as a business pursuit if it is continuous or regular
Definition - Cash Cards
also known as gift cards, store a cash value by electronic means for use as a mode of payment, without a personal identification number and without access to a bank or other account
Definition - Civil Authority
includes any person acting under the authority of federal, provincial, territorial, or municipal legislation to protect persons and property in the event of an emergency
-this term becomes relevant under the prohibited access coverage of Coverage D - Additional Living Expense
Definition - Collection
an accumulation of similar objects gathered for novelty, personal interest, rarity, or value, among other possibilities
Definition - Data
means representation of information or concepts, in any form
-as simple as an email message, or as complicated as a scientific research paper
-data may be stored in various ways - on paper, or electronically, in a computer’s hard drive or in flash drives, or on CDs, among other possibilities
-prudent insureds regularly back up data to reduce the risk of losing it
-unwisely, however, many store the backup date in the same location as their primary storage device
Definition - Data Problem
-erasure, destruction, corruption, misappropriation, misinterpretation of data;
-error in creating, amending, entering, deleting, or using data; or
-inability to receive transmit, or use data
-data not necessarily electronic, though the term “data problem” very often applies to the use operation of a computer, the definition applied to problems with data of any kind
-“data problem” is defined in the comprehensive and broad forms because they are all-risks policies and so must define the term in order to exclude the exposure it represents. It is not defined in the basic form because the exposure it represents is not named in that named-perils form and so need not be excluded
Definition - Domestic Water Container
-hot-water heating tanks and their piping and radiators
-hot-water storage tanks and associated piping
-water reservoirs and dispensers, whether contained in an appliance or not
-bathtubs, sinks, or toilets
-aquarium or waterbeds
Definition also includes
-outdoor private swimming pools or wading pools
-ornamental pools or fish ponds
-hot tubs
Definition - Dwelling
used to distinguish the residence building from outbuildings or other structures that may be on the premises. This is important because coverage for the residence building is separate from coverage for detached private structures
Definition - Flood
-often loosely used to describe carious kinds of water damage
-IBC homeowners forms formally define the term to include - but not limited to - waves, tides, tidal waves, tsunami, dam breaks, seiche, or the rising of, the breaking out, or the overflow of any body of water or watercourse, whether natural or human-made
Definition - Fungi
-includes but is not limited to any form or type of mould, yeast, mushroom, or mildew, whether or not allergenic, pathogenic, or toxigenic, and any substance, vapour, or gas produced by, emitted from, or arising out of any fungi or spores or resultant mycotoxins, allergens or pathogens
-fungi is defined in Comprehensive and broad form because they are all-risks policies and must define the term in order to exclude the exposure it represents, it is not defined in the basic form because that is named-perils and so does not need to be excluded
Definition - Ground Water
-water found in the cracks and spaces in soil, sand, and rock beneath the ground surface
-it may constitute the water table or water from heavy or prolonged rain or melting snow, hail, or ice that is percolating to the water table
Definition - Insured
Includes people other than the named insured, though these others are not named anywhere in the policy
-while living in the same household:
>the insured’s spouse
>the relatives of either the insured or the insured’s spouse; and
>any person under 21 in their care
-also includes a dependent child who is temporarily living away from the principal residence while attending school or university. This extension ensures that the student is still a member of the household, protects their interest during temporary absence, but the student must be dependent on the named insured (or spouse) for support and maintenance. Student may still earn money toward living expenses or school costs, but if student is self-supporting, the extension does not apply
-only the insured named in the coverage summary may take legal action to enforce the contract
Definition - Premises
does not include municipal property adjacent to the insured premises, including boulevards, sidewalks, or roadways
Definition - Residence Employee
-works for the insured, part-time or full-time, in connection with the maintenance or use of the premises but not with the insured’s business
-includes babysitter or someone who takes care of yard duties, cutting grass, snow removal, and other occasional household tasks, working under the insured’s direction
-does not include anyone who works as a contractor, such as someone who determines when an how such work is done.
-the term is relevant to the description of property insured under Coverage C
Definition - Specified Perils
In the IBC all-risks habitational forms, some of the exclusions that limit coverage are qualified by exception to those exclusions in the form of the specified perils
-they are similar, though not identical, to the perils insured against in the IBC named-perils forms
Definition - Spores
-part of fungi or mould and can form as quickly as 24 hours after a loss
-in the IBC homeowners comprehensive and broad forms the term “spores” includes but is not limited to one or more reproductive particles or microscopic fragments produced by, emitted from, or arising out of any fungi
-defined in the comprehensive and broad forms because they are all-risks policies so must define the term in order to exclude the exposure it represents, does not need to be defined in basic form because the exposure it represents is not named in this named-perils form and does not need to be excluded
Definition - Spouse
-in accordance with the Canadian Charter of Rights and Freedoms, the homeowners forms define spouse to include not only legally married partners but also heterosexual and same-sex partners who live together in a conjugal relationship outside of marriage and have continuously done so for at least 3 years; if the partners are the natural or adoptive parents of a child, the period is reduced to one year
