CH8 - Habitational Insurance

Question 1

Equivalent to the Dec Page used in commercial ins., habitational policies refer to a Coverage Summary page. What is included?

Answer 1

• the name and postal address of the insured
• the address of the property insured
• the policy’s effective and expiry dates (policy period)
• the occupancy, construction, and public fire protection
• the name and addresses of loss payees
• the form that applies - Homeowners, for example
• the amount of ins. for each form and each item, section, and coverage if separate amounts apply
• the deductible
• the premium

Question 2

What are the two parts of a Homeowners form, and what four parts compose of those two main parts?

Answer 2

Section I concerns property insurance, which is composed of Coverage A - Dwelling Building; Coverage B - Detached Private Structures; Coverage C - Personal Property; Coverage D - Additional Living Expense. Section II concerns personal liability ins, which is composed of Coverage E - Personal Liability; Coverage F - Voluntary Medical Payments; Coverage G - Voluntary Payment for Property Damage; Coverage H - Voluntary Compensation for Residence Employees.

Question 3

What is the Coverage Summary page used?

Answer 3

This is used to summarize information so it does not need to be repeated in the form, which makes issuing policies easier.

Question 4

What form serves those who are ineligible for an insurer’s package policy or who have a location that is ineligible for broader coverage?

Answer 4

The Residential Basic Form as it is thought of as a habitational version of the Basic Fire Policy.

Question 5

How does the package approach allow an insurer two reduce premiums?

Answer 5

The package approach allows the insurer to reduce premium in two ways: first, by reducing the risk of adverse selection; two, by issuing uniform contracts, which simplifies policy-issuing and claims adjustment.

Question 6

What is CDP?

Answer 6

CDP stands for Composite Dwelling Policy, which has been refined into the Homeowners Form.

Question 7

How is the Limited Form different from the Basic Form?

Answer 7

The Limited Form does not include the theft peril for either the building or personal property. This was a form targeted to those wanting a lower premium, but has since been dropped by insurers.

Question 8

What was an all risks policy form that was originally offered as inland marine coverage?

Answer 8

The Personal Property Floater (PPF) was an expensive all risks policy covering personal property worldwide and offered only to wealthy people who often travelled abroad.

Question 9

The IBC Homeowners forms 1151, 1153, and 1155 are better known by what names?

Answer 9

• 1151 is the Homeowners Basic Form
• 1153 is the Homeowners Broad Form
• 1155 is the Homeowners Comprehensive Form

Question 10

What was the original limit for Coverage C for Homeowners policies on dwellings house three families?

Answer 10

The original limit was 25% of Coverage A, but today may be higher at about 50%.

Question 11

In what three ways can insurers reduce the expense associated with deviations from the simple standard for determining limits and premiums under a Homeowners form?

Answer 11

1) to modify computer programs and so widen the range of policies that can be issued
2) decline business that existing computer programs cannot accommodate
3) to manually rate, draft, and issue a policy