CH9 - Homeowners Basic Form

Question 1

What are the two explanatory statements included in A Guide to Your Policy?

Answer 1

1) The first explanatory statement distinguishes between Section I and Section II.
2) The second explanatory statement is in boldface under the heading Important, which notes that various provisions limit the policy’s coverage and advises the insured to read the policy carefully, and that insurance cannot be a source of profit.

Question 2

How is the Agreement simpler than its counterpart the Basic Fire Policy or commercial property policies?

Answer 2

The Agreement simply states that the insurer provides the insurance described in the policy in return for payment of the premium and subject to the specified terms.

Question 3

What does the term domestic water container encompass?

Answer 3

This encompasses may object used in a private dwelling, such as hot-water heating tanks and their piping and radiators; hot-water storage tanks and associated piping; water beds; kettles; water reservoirs and dispensers included in refrigerators; aquariums; swimming pools; ornamental pools; fish pond. This is significant in the Water Damage peril.

Question 4

Other than the named insured, who is included in the definition of insured?

Answer 4

• the insured’s spouse
• the relatives of either the insured or the insured’s spouse
• any person under 21 in their care
• student who is temporarily living away from home to attend a school, college, or university
  Only the insured named in the Coverage Summary may take legal action to enforce the contract.

Question 5

What is the definition of premises in the Homeowners Basic Form?

Answer 5

Premises refers to the land within the lot lines on which the dwelling is situated. Goods in vehicles in course of delivery or areas beneath sidewalks are not included.

Question 6

What is the definition of residence employee?

Answer 6

A 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. For example: a babysitter; someone who takes care of yard duties or other household tasks but is not a contractor.

Question 7

If unoccupancy lasts more than 30 consecutive days, is the policy coverage interrupted?

Answer 7

No, as the vacancy exclusion does not apply to unoccupancy. This concerns the intention of the occupants, who intend to return to the home.

Question 8

What other structures or objects does Coverage A - Dwelling Building cover?

Answer 8

This coverage also applies to certain other property on the premises, such as: carports, decks, fences, gates.

Question 9

What are the three parts of Coverage C - Personal Property and what do they concern?

Answer 9

1) Part One covers contents of the dwelling, and the insured can include personal property of others as a good will.
2) Part Two covers personal property temporarily away from the premises anywhere in the world. This also extends to property in the insured’s possession but owned by someone else, such as a camera the insured borrowed.
3) Part Three covers personal property of any student insured by the policy who is temporarily living away from home to attend school.

Question 10

What are the three types of property excluded under Coverage C?

Answer 10

1) motorized vehicles or their equipment (except for watercraft, lawn mowers, wheelchairs, scooters for those with a disability)
2) camper units, truck caps, trailers, or their equipment
3) aircraft or their equipment

Question 11

List the eight Special Limits found in Coverage C that apply to loss or damage by all insured perils.

Answer 11

• business property, limited to $2,000 on the premises
• securities, limited to $2,000
• personal property used by an insured student temporarily living away from home, limited to $2,000
• money, including cash cards or bullion, limited to $200
• garden-type tractors along with their attachments and accessories, limited to $5,000
• watercraft and their furnishings, equipment, accessories, limited to $1,000
• computer software, limited to $2,500
• spare automobile parts, limited to $1,000

Question 12

The remaining five Special Limits apply to loss or damage caused by theft. What are they?

Answer 12

• jewellery, watches, gems, fur, limited to $2,000
• numismatic property (coin collections), limited to $200
• manuscripts, stamps, limited to $1,000
• collectible cards, limited to $1,000
• bicycle and its equipment/accessories, limited to $500

Question 13

What three coverages are combined in Coverage D?

Answer 13

1) Additional Living Expense
2) Fair Rental Value - coverage for reasonable time required to repair or replace the damaged part of the premises the insured has rented or is holding for rent
3) Prohibited Access applies when a civil authority orders the insured dwelling’s occupants to move for one of two reasons

Question 14

What are the two reasons for coverage to apply under Prohibited Access?

Answer 14

1) a neighbouring premises has sustained damage that poses danger to the insured premises (must be due to a peril that would have been covered under the policy) - maximum time limit is two weeks
2) a mass evacuation is required as a direct result of a sudden and accidental event within Canada or the United States (does not require that an insured peril have caused the evacuation)

Question 15

What six causes of evacuation does Prohibited Access coverage exclude?

Answer 15

• flood
• earthquake
• war risks
• terrorism
• nuclear incident
• radioactive contamination

Question 16

What is the time limit for property removed and property moving to another home?

Answer 16

The extension is limited to 30 days or until the policy expires, whichever comes first.

Question 17

Describe a situation in which the Change of Temperature extension would apply.

Answer 17

Thieves try to break into the insured’s home, breaking a large window. Cold winter air enters through the window and kills the tropical plants located in the room.

Question 18

What does the Freezer Food extension do?

Answer 18

This allows an exception in the Change of Temperature by covering food while it is in a freezer on the insured premises if loss or damage is caused by an accidental interruption of electrical power on or off premises or b mechanical breakdown. This is limited to $2,000 with no deductible.

Question 19

What are the four limitations on the protection provided by the Credit or Debit Cards, Forgery and Counterfeit Money extension?

Answer 19

1) Coverage applies to cards issued to or registered in the name of and personally used by the insured.
2) No coverage for the cards issued by the insured’s employer, unless the insured is personally responsible.
3) The insured must notify the insurer if a card has even lost or stolen.
4) The insured must have complied with all the conditions of the card agreement.

Question 20

What is the only limitation to the Explosion peril in the Homeowners Basic Form?

Answer 20

The only limitation is the exclusion of water hammer - the violent, momentary increase in pressure within a pipe when water flowing rapidly is turned off suddenly.

Question 21

Explain the Smoke peril.

Answer 21

Smoke is broader in the Homeowners form to extend coverage from any heating or cooking unit, instead of a stationary furnace. Smoke from fireplaces is excluded to encourage proper maintenance.

Question 22

What are the four sources of water damage?

Answer 22

1) Sudden and accidental escape of water from a waterman
2) Sudden and accidental escape of water or steam from within a plumbing, heating, sprinkler, or air conditioning system or domestic water container located inside dwelling
3) Sudden and accidental escape of water from a domestic water container located outside the dwelling; freezing is excluded
4) Water that enters the dwelling though an opening created suddenly and accidentally by an insured peril other than water damage

Question 23

What are exclusions in the water damage peril?

Answer 23

• freezing during the usual heating season
• continuous or repeated seepage or leakage
• escape from sewers, sumps, septic tanks
• ground water, as it is likely to seep
• surface waters (lakes/ponds)
• waterborne ice
• damage to a waterman or domestic water container
• occurring while the dwelling building is under construction or vacant, even if permission is granted

Question 24

What two water-related exclusions apply to the windstorm or hail peril?

Answer 24

1) loss due to weight, pressure, or melting of ice or snow as it can be very heavy and cause collapse
2) loss or damage due to waves or floods

Question 25

What is the Glass Breakage peril?

Answer 25

Glass breakage covers accidental breakage of glass where no other peril is involved or where the other peril is not covered. This does not apply while the building is under construction or vacant, even if permission is granted.

Question 26

Describe the transportation peril.

Answer 26

Transportation covers loss by collision, upset, overturn, derailment, stranding or sinking of an automobile or attached trailer. This applies to personal property temporarily removed from the premises, building fixtures or fittings when temporarily removed fro repair or seasonal storage. This does not apply to property in vacation or home trailer, or watercraft.

Question 27

How is the theft peril defined?

Answer 27

Theft is defined by stating what loss is not covered. The peril does not include loss or damage:

• that happens at any other dwelling owned, rented or occupied by the insured
• from the part of the dwelling rented to others caused by theft or attempted theft by any tenant, tenant’s employee, or member of tenant’s household
• to property in or from a dwelling under construction or of materials or supplies for use in construction
• to animals, birds, or fish
• resulting from an agreed change in ownership of property, even if it was brought about by trickery or fraud

Question 28

What is listed in the exclusions for Property Not Insured?

Answer 28

• buildings for business or farming
• property on exhibit
• property illegally acquired
• evidence of debt or title
• data

Question 29

What is listed in the exclusions for Loss or Damage Not Insured?

Answer 29

• property lawfully seized
• occurring while the building is vacant for more than 30 consecutive days, to the insured’s knowledge
• nuclear incident
• radioactive contamination
• war risks
• intentional or criminal acts
• application of heat
• earth movement
• fuel oil
• terrorism

Question 30

What are the conditions for replacement cost on the dwelling building?

Answer 30

Repair or replacement must be made at the same location, for the same occupancy, and with materials of similar quality; must be done with reasonable time after loss.

Question 31

What are the three alternative bases of settlement for personal property?

Answer 31

1) Electronic media - insurer will pay cost of reproduction from duplicates or from originals of the same media.
2) Other records, including books of account - the insurer will pay cost of blank books, pages, cards or other materials plus cost of actually copying the records.
3) Insurer will settle at replacement cost for all other property except: irreplaceable items (antiques, fine arts); souvenirs, memorabilia; property not maintained in good or workable condition; property no longer used for its original purpose.

Question 32

What is the definition of replacement cost?

Answer 32

Replacement cost is the cost, on the date of loss, of repairing the property with materials of similar kind and quality or with new articles of similar kind, quality and usefulness - whichever is less - with no deduction for depreciation.