Chapter 10 - Liability Insurance Policies

Question 1

The liability coverage provided by the Homeowners Forms are also designed to be used with other habitational insurance Forms. Identify these other Forms.

Answer 1

1. Homeowners Package Form
2. Tenants Package Form
3. Condominium Unit Owner Form
4. Mobile Homeowners Form

Question 2

State the four coverage Sections under Section 1 liability coverage.

Answer 2

1. Coverage E - Personal Legal Liability
2. Coverage F - Voluntary Medical Payments
3. Coverage G - Voluntary Payment for Damage to Property
4. Coverage H - Voluntary Compensation for Residence Employees

Question 3

Insurable under Section 11 - Liability Coverage YES/NO?
If so indicated on the policy, premises on which a seasonal dwelling is located.

Answer 3

All premises where the person named as insured on the Coverage Summary , or their spouse maintains a residence, including seasonal or other residences, provided such premises are specifically described on the Coverage Summary page.
COVERED

Question 4

Insurable under Section 11 - Liability Coverage YES/NO?
Rented or revenue properties.

Answer 4

There is NO COVERAGE for claims arising out of premises which are rented or leased for more than 90 consecutive days UNLESS for student’s premises.

Question 5

Insurable under Section 11 - Liability Coverage YES/NO?
Vacation home in Florida being leased by insureds for four months.

Answer 5

Premises where you are residing temporarily or which you are using temporarily, as long as you are not the owner of the premises.
COVERED

Question 6

Insurable under Section 11 - Liability Coverage YES/NO?
Two cemetery plots purchased by the insured.

Answer 6

Individual or family cemetery plots or burial vaults.
COVERED

Question 7

Insurable under Section 11 - Liability Coverage YES/NO?
Vacant land on Vancouver Island purchased as a future dwelling site or for Investment purposes.

Answer 7

Vacant land in Canada you own or rent other than farm land. COVERED
* Additional coverage applies only to vacant land within Canada. Insureds would be required to purchase separate insurance for a vacant lot purchased in Florida, for example.

Question 8

Insurable under Section 11 - Liability Coverage YES/NO?
Vacant farm land.

Answer 8

Claims arising out of vacant farm land.
NOT COVERED.

Question 9

Insurable under Section 11 - Liability Coverage YES/NO?
Land where an independent contractor is constructing a single family dwelling for the insureds.

Answer 9

Land in Canada where you or an independent contractor is building a one, two or three-family residence to be occupied by you.
COVERED
**Coverage does not extend to any home greater than a three-family home.

Question 10

Insurable under Section 11 - Liability Coverage YES/NO?
Premises rented by the insured at a local resort for a two week summer vacation.

Answer 10

Premises where you are residing temporarily or which you are using temporarily, as long as you are not the owner of the premises.
COVERED

Question 11

Provide a brief summary of the coverage provided by Insuring Agreement E

Answer 11

Personal Liability - Designed to insure the legal liability of insureds in their role as private citizens while anywhere in the world.

Question 12

Provide a brief summary of the coverage provided by Insuring Agreement F

Answer 12

Voluntary Medical Payments - Provides for the payment of medical expenses incurred within one year of the date of the accident, if the insured unintentionally injures another person or if they are accidentally injured while on your “premises”.

Question 13

Provide a brief summary of the coverage provided by Insuring Agreement G

Answer 13

Voluntary Payment for Damage to Property - The insurer agrees to make a payment for property damage:
- Which has been unintentionally caused and for which the insured would not be legally liable.
- Which has been intentionally caused by an insured 12 years of age or younger.

Question 14

Provide a brief summary of the coverage provided by Insuring Agreement H

Answer 14

Voluntary Compensation for Residence Employees - designed to provide all occasional residence employees with limited benefits should they accidentally be injured or die while working for the insured., even though the insured may not be liable.
*Permanent residence employees are insured only when stated on the Coverage Summary page.

Question 15

Discuss the coverage, limitations and exceptions in respect of liability arising out of the following:
a) Owned/non-owned watercraft.
b) Owned/non-owned motorized vehicles.

Answer 15

1. Coverage is provided for owned watercraftL
   a) with an onboard motor of no more than 12kw (16 HP)
   b) with another type of motor no more than 38kw (50 HP)
   c) non-motorized & no more than 8m in length
2. Coverage is provided for insured’s operation of non-owned watercraft, but only for their resulting liability, not for damage to such vehicles.

Question 16

The liability coverages provided by the Homeowners Forms are not intended to insure injury or damage rising out of the insured’s business activities. State three exceptions

Answer 16

1. Your personal actions during the course of your trade, profession or occupation which are not related directly to your trade, profession or occupation.
2. The occasional rental to others of the portion of the dwelling usually occupied by you as a private residence.
3. The rental to others of portions of your two or three-family dwelling usually occupied in part by you as a private residence provided no family unit includes more than 2 roomers or boarders in any family unit.

Question 17

Key Definitions:
Persons Insured

Answer 17

Persons insured by Section 1 - Property Coverages are also covered under this section.

Question 18

Key Definitions:
Premises Insured

Answer 18

The coverage provided by the policy insures all premises where the person named as insured on the Coverage Summary, or their spouse maintains a residence, including seasonal or other residences, provided such premises are specifically described on the Coverage Summary page.

Question 19

Liability Coverages for Trailers

Answer 19

Coverage is provided for injury or damage arising out of your ownership, use or operation of any trailer or its equipment, provided such trailer is not attached to, carried on or being towed by motorized vehicle subject to motor vehicle registration.

Question 20

Liability Coverage for Business and Business Property Generally business activities of insureds are generally not insured under a personal liability policy. These are the exceptions:

Answer 20

1. Your personal actions during the course of your trade, profession, or occupation which are not related directly to your trade, profession or occupation. 2. The occasional rental to others of the portion of the dwelling usually occupied by you as a private residence. 3. The rental to others of portions of your two or three-family private dwelling usually occupied in part by you as a private residence provided no family unit includes more than 2 roomers or boarders. 4. The rental of space in your residence to others for incidental office, school or studio occupancy. 5. The rental to others, or holding for rent, of not more than three car spaces or stalls in garages and stables. 6. The temporary or part-time business pursuits of an insured person under the age of 21 years.

Question 21

General Exclusions to Personal Liability Coverage - Section II In addition to the exclusions to liability policies, there is no coverage for claims arising from:

Answer 21

1. Business pursuits or any business use of the premises unless specifically included. 2. The rendering or failure to render any professional service - Bodily injury or property damage caused by any intentional or criminal act or failure to act by: a) Any person insured by this policy; or b) Any other person at the direction of any person insured by this policy. 3. The policy excludes coverage for injury to a third party as a result of: a) Sexual, physical, psychological or emotional abuse, molestation by, at the direction of, or with the knowledge of any person insured by this policy; or b) Failure of any person insured by this policy to take steps prevent sexual, physical, psychological or emotional abuse, molestation or harassment or corporal punishment; 4. The transmission of communicable or sexually transmitted disease, including Acquired Immune Deficiency Syndrome, by any person insured by the policy. 5. The ownership, use or operation of: a) Any aircraft b) Premises used as an airport or landing facility; and all activities related to either.

Question 22

Types of liability exposures common to businesses.

Answer 22

1. The condition of the premises. 2. Business operations. 3. Medical Payments.
2. Tenants’ legal liability. 5.Products liability 6. Completed operations liability 7. Personal injury liability.

Question 23

Special Liability Insurance for Professionals

Answer 23

The Commercial General Liability Policy is NOT designed to insure the special liability needs of professionals. There are two major classes of professionals:
1. Those administering health care: this includes doctors, dentists & druggists. These professionals purchase Malpractice Insurance to cover their legally liability arising out of the rendering or the failure to render professional services.
2. Those who give medical advice & counselling: This includes accountants, lawyers, architects & insurance brokers. These professionals purchase Errors & Omissions Insurance to cover their legal liability arising out of the rendering or failure to render professional services.

Question 24

Garage Liability Insurance.

Answer 24

The Commercial General Liability Policy excludes payment for injury or damage to others arising out of ownership, use or operation of any automobile.
These coverages can be provided by the SPF No. 4 Standard Garage Automobile Policy which cover the following:
- Section A - Third Party Liability
- Section E - Legal Liability for Damage to a Customer’s Automobile While in the Care, Custody or Control of the Insured.

Question 25

Umbrella Liability Policy

Answer 25

• To broaden coverage and to increase the limit, individuals or businesses can purchase an Umbrella Liability Policy.
• To be eligible for this policy, insureds must provide the insurer with evidence that they already have existing liability policies in place.
• Umbrella policies may be used to extend coverage for known exposures such as automobile, watercraft, aviation, business operations or residences. These existing liability policies are referred to as “primary policies”.

Question 26

When there is a claim, the Umbrella Liability Policy will pay only when:

Answer 26

• When there is not enough insurance under the primary policy.
• There is no coverage provided under the primary policy.
  NOTE: When a commercial exposure, a high deductible called an SIR (Self-Insured Retention) applies when the Umbrella Liability Policy is used to pay claims excluded under the primary policy. Typically, the self insured retention on Personal Umbrella Liability Policies are $500 - $1,000.

Question 27

Liability Insurance for Businesses. True and False
___ An “operations” liability claim can occur when bodily injury or property damage occurs on or away from the insured’s premises.

Answer 27

TRUE

Question 28

Liability Insurance for Businesses. True and False
___ Manufacturers are responsible for injury or damage arising out of defective products made by them

Answer 28

TRUE

Question 29

Liability Insurance for Businesses. True and False
___ “Completed operations” coverage is essential for contractors and others whose work may result in injury or damage when such work is put to its intended use.

Answer 29

TRUE

Question 30

Liability Insurance for Businesses. True and False
___ “Personal injury” coverage insures humiliation or stress caused to the plaintiff in instances of libel, slander, wrongful eviction or malicious prosecution.

Answer 30

TRUE

Question 31

Liability Insurance for Businesses. True and False
___ Errors and Omissions Insurance insures the legal liability of medical professionals arising out of the rendering or failure to render professional services

Answer 31

FALSE

Question 32

Business Operations Coverages

Answer 32

A claim for injury or damage against a business may arise out of:
1. The condition of the premises - Business Liability Polices insure injury or damage that result when insureds fail to take reasonable steps to insure the safety of their premises.
2. Businesses have the potential to cause injury or damage while performing work:
* On their premises
&/or
* On the premises of others
Business liability policies insure the injury or damage while performing work on or away from the premises.

Question 33

Medical Payments coverage

Answer 33

All businesses have an exposure to claims from persons injured on the premises. Business liability policies insure this exposure.

Question 34

Tenants’ legal liability coverage

Answer 34

Many businesses operate from rented premises. Tenants have a legal obligation to their landlord for damage they cause to the portion of the portion of the building they occupy. This exposure can be insured under business liability policies but an additional premium may be required.

Question 35

Products liability coverage

Answer 35

Consumers have a right to expect that the goods they purchase will be safe. When the use of these goods results in injury or damage, legal action can be taken against the liable party. Business liability provides coverage for this.

Question 36

Completed operations liability coverage

Answer 36

When completed work is put to its intended use and injury or damage results, the party responsible for the work may be sued for damage. Business liability policies provide coverage for this exposure.
**Appliance repair shops, plumbing, heating & electrical contractors all have a completed operations liability exposure.

Question 37

Personal Injury liability coverage

Answer 37

Personal injury coverage protects the insured for claims such as:
- Libel
- slander
- malicious prosecution
- wrongful entry or eviction
- discrimination