Chapter 2, Section 1

Question 1

Identify the three most common Homeowners polices in use today

Answer 1

• Homeowners Basic Form (IBC 1151)
• Homeowners Broad Form (IBC 1153)
• Homeowners Comprehensive Form (IBC 1155)

Question 2

In addition to single family dwellings, identify four other risks that may be eligible for a Homeowners policy

Answer 2

• Dwellings containing more than one family
• For insureds having more than one principle dwelling
• Mobile homes situated on a full basement
• Dwellings in the course of construction when the insured intends to occupy the dwelling upon completion

Question 3

Regardless of the Homeowners policy selected, they all have a common format of structure. Identify the two sections of coverage and the coverages under each.

Answer 3

Section I - Property Coverages 
A - Dwelling Building
B - Detached Private Structures 
C - Personal Property
D - Additional Living Expense

Section II - Liability Coverage
E - Personal Liability
F - Voluntary Medical Payment
G - Voluntary Payment for Damage to Property
H - Voluntary Compensation for Residence Employees

Question 4

In all Homeowners, the policy definitions are uniform, or the same in each. In addition to the person(s) inspired on the coverage summary page, and while living in the same household, identify four other persons who qualify as an insured

Answer 4

• his or her spouse
• the relatives of either
• any person under 21 in their care
• a student who is enrolled in and actually attends a school, college or university and who is dependent on the Named Insured or his or her spouse for support and maintenance even if temporarily residing away from the principle residence stated on the coverage summary page

Question 5

Define spouse

Answer 5

• Either of a man and woman who are married to each other or who have together entered into a marriage that is voidable or void
• Either of two persons who are living together in a conjugal relationship outside marriage and have so lived together continuously for 3 years or, if they are the natural or adoptive parents or a child for a period of 1 year

Question 6

Identify four persons who would qualify as a “relative of either”

Answer 6

• Children
• Parents
• Grandparents
• Other family members who live with the insured’s

Question 7

Identify two persons who would qualify as “any person under 21 in their care”

Answer 7

• Foster children

- Exchange students staying with them

Question 8

Your clients 22 year old son is attending university in another province and is not dependent, in any manner, upon the Named Insured. Explain why or why not the son would or would not be covered on the policy. Would the son be covered on the policy? Explain.

Answer 8

The son would not be covered on the policy as he is not dependent in any manner upon the Named Insured. At age 22, if you’re not dependent on your parents/guardian, you require your own policy for coverage

Question 9

Identify the four items of property that are included in the definition under Coverage A and give a brief description and examples of each

Answer 9

• The Dwelling and attached structures
  In addition to the dwelling, the value of structures which are attached to the dwelling would be insured within the limit of insurance.
  Ex: garage, greenhouse, sun deck
• Permanently installed outdoor equipment on the premises
  Includes value of permanently installed outdoor equipment. Must be embedded in concrete or affixed to land in some other way.
  Ex: Swings, lawn sprinkler systems.
• Outdoor swimming pool and attached equipment on the premises
  The value of a swimming pool and attached equipment would be insured within the limit of insurance.
  Ex: Above and below ground pools
• Materials and Supplies located on or adjacent to the premises intended for use in the construction, alteration or repair of your dwelling or private structure on the premises. We insure against the peril of theft only when your dwelling is completed and ready to use.
  Homeowners forms can be used to insure dwellings in the course of construction. Coverage is needed for the materials and supplies that are on or adjacent to the premises.

Question 10

Identify two other items of property also included under the limit of insurance for dwelling buildings, and special restrictions/limitations that are available for each.

Answer 10

• Building Fixtures and Fittings Temporarily Removed
  temporarily removed from the insured’s premises for repair or seasonal storage.
  Ex: window shutters, storm doors.
• Outdoor Trees, Shrubs and Plants
  Must be on premises
  Limited to: Fire, lightning, explosion, impact by aircraft or land vehicles, riot, vandalism or malicious acts.
  No coverage for windstorm or hail losses.
  Maximum limit of $500 for any one tree/plant/shrub including debris removal expenses.
  No coverage for any grown for resale. Lawns are excluded under all IBC homeowners forms.

Question 11

Is the limit for Coverage B - detached private structure, in addition to or included in the limit under Section A?

Answer 11

In addition to

Question 12

Would an insured loss to a greenhouse in the insured’s yard that in connected to the dwelling by a fence, be covered under Coverage A or B?

Answer 12

Coverage B, when structures or buildings are connected to the dwelling by a fence, utility line or similar connection only, they are considered to be detached structures

Question 13

Identify the three different Insuring Agreements for personal property under Coverage C.

Answer 13

• On Premises Coverage
• Off Premises Coverage
• Property of Students

Question 14

Identify three property items or their equipment that are not covered under personal property.

Answer 14

• Motorized vehicles
• Camper units, truck caps, trailers or their equipment
• Aircraft or their equipment

Question 15

Identify three types of motorized vehicles that would be considered personal property.

Answer 15

• Motorized lawn mowers/other gardening equipment and snow blowers
• Watercraft
• Wheelchairs/scooters having more than two wheels and specifically designed for the carriage of a person who has a physical disability

Question 16

List eight types of personal property items included in Coverage C but are limited to the amount payable, regardless of the cause of the loss; and state the limit applicable for each.

Answer 16

• Business property - $2,000
• Securities - $2,000
• Property of students temporarily living away from home - $2,500
• Money or bullion - $200
• Garden type tractors, including attachments and accessories - $5,000
• Watercraft - $1,000
• Computer software - $2,500
• Spare automobile parts - $1,000

Question 17

List the five types of personal property items included in Coverage C but are limited to the amount payable when stolen, and state the limit applicable for each.

Answer 17

• Jewelry, watches, gems, fur garments and garments trimmed with fur, up to $2,000 in all.
• Numismatic property (such as coin collections) up to $200 in all.
• Manuscripts, stamps and philatelic property (such as stamp collections) up to $1,000 in all.
• Collectible cards (such as sports personality cards) up to $1,000 in all.
• Each bicycle, its equipment and accessories, up to $500 in all.

Question 18

Identify the three coverages under Coverage D.

Answer 18

• Additional Living Expense
• Fair Rental Value
• Civil Authority

Question 19

Explain the purpose and types of expenses covered under additional living expense.

Answer 19

The insurer is obligated to pay additional living expenses only.
Payment is limited to those costs “over and above” what would have normally cost the insured’s to live had the loss not occurred
Ex: putting pet in kennel, etc.

The coverage applies when:

• The dwelling is damaged by an insured peril; and
• The damage is sufficient to make the dwelling unfit for occupancy, or requires the insured(s) to move out while repairs are being made

Question 20

Your insured has been prohibited access to his house by order of civil authority. Is there any coverage under Section D, and if so, for what period?

Answer 20

Coverage is provided for a period not exceeding two weeks for any necessary increase in living expense when an order for mass evacuation is made by a civil authority. The order must have been the direct result of a sudden and accidental event originating in Canada or the U.S.A.

Question 21

Explain the coverage and/or restrictions for this extension of coverage:
Debris Removal

Answer 21

Coverage available when loss or damage caused by an insured peril. If the amount payable for loss, including expense for debris removal, is greater than the amount of insurance, an additional 5% of that amount will be available to cover debris removal expense.

Question 22

Explain the coverage and/or restrictions for this extension of coverage:
Moving to another house

Answer 22

Coverage automatically extended to insure property while in transit to and at another location which is to be occupied by the insureds as their principle residence. Coverage is restricted to Canada and is provided for 30 consecutive days only, or until the policy expires or is terminated.

Question 23

Explain the coverage and/or restrictions for this extension of coverage:
Change of temperature

Answer 23

Coverage included on all homeowners forms for damage to personal property due to a change of temperature resulting from physical damage to the dwelling or equipment from an insured peril. Before coverage will be provided under the policy, it must be shown that:

• There was actual physical damage to the building/its equipment from an insured peril.
• The property being claimed was in the dwelling at the time of its loss

Question 24

Explain the coverage and/or restrictions for this extension of coverage:
Frozen food

Answer 24

Homeowners forms provide up to $2,000 for food contained in a freezer located on insureds premises when the loss or damage is due to:

• Power failure
• Mechanical breakdown

Question 25

Explain the coverage and/or restrictions for this extension of coverage:
Lock Replacement

Answer 25

Provide for up to $500 to replace or re-key the locks on the insureds principle dwelling. Available only when insured’s keys have been stolen and the loss reported to authorities.

Question 26

Explain the coverage and/or restrictions for this extension of coverage:
Tear out

Answer 26

Provide coverage for the repair of walls, ceilings or other parts of insured buildings which must be torn apart before water damage from pipes or domestic appliances can be repaired.
The cost of tearing out and replacing any part of the building to repair damage caused by swimming pools/public water mains is not insured,

Question 27

Explain the basis of claim payment on:

Dwelling building and detached private structures.

Answer 27

The settlement will be based on a replacement cost basis.

When there is a loss or damage to an insured building, the insurer agrees to pay the cost of repairs or replacement (whichever is less) with out deduction for depreciation. However, such repair or replacement is required to be completed within a reasonable amount of time and must be:

• on the same location
• for the same occupancy
• from materials of similar quality

Question 28

Explain the basis of claim payment on:

Personal property

Answer 28

The settlement will be based on a replacement cost basis for personal property, except for:

• electronic media and records
• clothing items no longer in fashion
• electrical appliances which have been replaced but not discarded

The except items will be settled on an actual cash value basis

Question 29

Explain the coverage provided on dwelling building if a “Guaranteed Replacement Cost” endorsement is attached.

Answer 29

The insurer agrees to pay the full cost of repairs or replacement even if it is more than the amount of insurance purchased for the dwelling building.

Question 30

List three conditions placed upon the insured if the “Guaranteed Replacement Cost” endorsement is attached to the policy.

Answer 30

• Amount of insurance purchased on the inception date of the policy, or the most recent renewal date or the increased amount under the inflation protection coverage on the date the increase took effect was not less than 100% of the cost to replace the dwelling building, as determined by a valuation guide acceptable to the insurer;
• The insured has not reduced the amount of insurance below the amount determined by the valuation guide; and
• The insured has notified the insurer within 90 days of the start of work or any improvement, extension or addition which has been made to the dwelling building.

Question 31

Would any additional costs incurred by the insured to comply with any municipal by-laws to improve the standard of construction be covered by the policy?

Answer 31

No, they are not insured.

Question 32

How would a single limit policy affect the limits under Section I?

Answer 32

Under a “single limit” basis, the coverages are combined into one inclusive limit of insurance. There is an advantage to insured’s when policies are issued on a single limit basis because there is a single dollar limit that applies to any combination of bodily injury and property damage liability claims as opposed to individual limits for each