Chapter 10: Liability Insurance Policies

Question 1

State the 4 coverage and limits sections under Section 11 Liability Coverage

Answer 1

1. Coverage E- personal legal liability ($1mill)
2. Coverage F- voluntary medical payments ($5000)
3. Coverage G- voluntary payment for damage to property ($500)
4. Coverage H- voluntary compensation for residence employees (as per schedule)

Question 2

Premises insured includes…

Answer 2

1. premises where insured or spouse maintains residence if not owner
2. temporary residence rented for no longer than 90 days
3. premises in Canada intended to be principle residence of insured for up to 30 days
4. family cemetery plots
5. vacant land in Canada owned or rented by insured (except farm land)
6. land in Canada where you’re building a 1-3 family residence to be occupied by insured

Question 3

Coverage E- Personal liability

Answer 3

insures liability arising out of private activities from anywhere in the world

supplementary payments are covered

Question 4

Personal Liability Exclusions

Answer 4

1. when insured voluntarily assumed liability of other except (insured would have been liable anyways, and assumed in contracts in relation to insured’s premises
2. damage to “own” property
3. damage to property use by in care/custody/control of insured (but covers property of others when caused by fire, explosion, water or smoke)
4. damage to personal property/fixtures resulting from work done on them by insured
5. injury to insured and anyone residing in insured’s household (excluding residence employees)
6. personal actions of named insured not residing at premises

Question 5

Coverage F- Voluntary Medical Payments

Answer 5

payment to other person accidentally injured

payment limited to amount stated on the policy and 1 year from date of accident

Question 6

Coverage G- Voluntary Payment for damage to property

Answer 6

1. when unintentionally caused to others and insured isn’t legally liable
2. intentionally caused by insured person under 12yrs old

(limited amount; usually not exceeding $1000)

Question 7

Voluntary Payment for damage to property Exclusions

Answer 7

1. damage to property “owned” by insured or his tenant
2. damage to property insured under Section 1- Property Coverages
3. claims resulting from loss of use, disappearance or theft

Question 8

Coverage H- Voluntary Compensation for Residence Employees

Answer 8

limited benefits to occasional residence employees should they accidentally be injured, even though insured may not be liable

pays for:

1. loss of life (including funeral expense)
2. temporary/permanent total disability
3. injury benefits
4. medical expense

employee who accepts these benefits can’t sue insured

Question 9

Special limitations on personal liability

Answer 9

1. damage arising out of watercraft & motorized vehicles owned by insured
2. damage arising out of vehicles not owned by insured
3. trailers
4. business or business property

Question 10

Exclusions applicable to all personal liability policies

Answer 10

1. regular business pursuits or unauthorized business use of premises
2. professional services
3. intentional damage or criminal act by insured
4. abuse or corporal punishment
5. failure to prevent abuse
6. transmission of disease by insured (ie. AIDS)
7. ownership/use of aircraft

Question 11

Liability exposures of business includes…

Answer 11

1. business premises: related to condition of premises
2. business operations: work performed on or away from business (ie. during installation or moving stock)
3. medical payments: for people injured on premises
4. tenant’s legal liability: (ie. repaying landlord for damage)
5. products: (ie. food sold by business consumed away from premises)
6. completed operations: finished work put to use, causing injury/damage
7. personal injury: to personal character or business reputation

Question 12

Liability Insurance for Professionals: 2 types

Answer 12

1. Malpractice Insurance: for those administering health care (ie. doctors, dentists, druggists)
2. Errors and Omissions Insurance: for those who give advice and counselling (ie. accountants, lawyers, architects)

Question 13

Garage Liability Insurance is…

Answer 13

CGL (Commercial General Liability) excludes for businesses that sell, repair, install, transport or operating vehicles (owned or not)

Standard Garage Automobile Policy: insures 3rd party liability and damage to customers care due to negligence

Question 14

Umbrella Liability Policy is…

Answer 14

additional liability on top of existing insurance

1. must have primary liability policies in place to be eligible
2. will only pay when not enough insurance or no coverage under primary policy
3. self-insured retention