Chapter 3 Flashcards

1
Q

Vacant

A

“empty”; or when the normal occupant is absent and the contents have been removed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Unoccupied

A

Lack of habitual presence of human beings temporarily

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Loading

A

An additional rate charged over and above the fire rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Centrifugal Force

A

The inertia of a body that tends to move it away from the center around which it revolves

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Mechanical Breakdown

A

a failure in the working mechanism of the machinery… a functional defect in the moving parts of the equipment which causes the latter to cease functioning or to function improperly

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Electrical Breakdown

A

A failure in the electrical mechanism of machinery, appliance or device

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Trade Loss

A

The types of losses which might be expected as a part of the every day operation of a business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Wear & tear

A

“… deterioration or depreciation (i.e. value by ordinary and reasonable use of the subject matter)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Gradual Deterioration

A

The deterioration of an object which arises naturally over time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Latent Defect

A

A hidden or concealed defect. One which could not be discovered by reasonable and customary inspection; one not apparent in face of goods, product, document, etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Mysterious Disappearance

A

Disappearance under circumstances which cannot be explained

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Three leading causes of fire losses

A

Failure or malfunction of mechanical or electrical equipment
Arson, suspected arson and other set fires
Misuse of source of ignition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Explain how the defining of policy period in this way can cause potential problems for Insurers

A

The problem with the wording is that it is 12:01 on that day. so if someone wanted to obtain the insurance halfway through that day, they could technically work around the fact that the insurance is retroactive for 12:01 a.m. Some brokers will amended the insurance to indicate the time of day in which the application for insurance was made, and coverage bound

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

After a total fire loss to Insured property, the Insurer paid the full amount of the claim directly to the Insured. The Insured immediately left town and was never heard from again. Does the mortgagee named on the policy have any rights of action against the insurer? Explain

A

The Insurer is obligated to pay the mortgagee so long as they are listed in the policy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Insurers often do not provide a breakdown of the individual rates charged for coverages provided by the policy. What reason might the Insurer have for adopting this practice?

A

The reason they do this is to hide the costs of specific items from the competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the policy period start applicable to most policies of commercial property insurance?

A

Policy period takes effect at 12:01 a.m. local time at the address of the Named Insured as stated on the policy.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Six pieces of information shown on the declaration page

A

Names of parties to the contract
Policy period
Loss payable or payee
Summary of insurance coverage(s) and amounts for which Insurer may be liable
Rate and premium charged
Subject matter of insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Does the practice of hiding individual rates charged for coverage comply with the legislated requirements for disclosure of costs of insurance?

A

It does not conform exactly to the legislated requirements. To soften potential litigation, must Insurers will willingly provide rating details to Insureds and their brokers when requested.

19
Q

The Insurance Acts of the Common Law provinces require that all policies insuring against the peril of fire also insure direct losses caused by

A

Lightning
Explosion of natural, coal or manufactured gas

20
Q

Will increased cost of construction due to compliance with local building bylaws be covered by commercial policies

A

No

21
Q

What conditions increase the physical hazard for which coverage is excluded by the fire policy

A

Vacancy, unoccupany and when premises are shut down

22
Q

Summarize the coverage provided by the Debris Removal clause

A

Insurer will indemnify the Insured for expenses incurred in the removal of debris from the premises of the property insurance, occasioned by loss or damage to such property, for which loss or damage insurance is afforded under this policy

23
Q

What is the importance of the Fire Policy, even though it is rarely used?

A

Because any policy insuring the peril of fire must comply with fire insurance legislation. This policy serves as the model for other broader commercial property coverage forms

24
Q

Outline the provisions of the Removal clause

A

Coverage is provided for property which is at a location(s) not indicated on the policy, provided the Insured is able to show that such property was “necessarily” removed to prevent loss

In the event of loss to property at an unnamed location, the amount to be paid by the Insurer is limited to the amount of insurance remaining after the payment of any losses at the location Insured by the policy

25
Q

Summarize the by-laws exclusion contained in commercial property insurance policies

A

By-law requirements which make it impossible to repair/reinstate the property as it was prior to the loss. Cost to build in compliance with the by-laws must be paid by the insured

26
Q

Named perils insured on a Fire and Extended Coverage forms

A

Fire or Lightning
Explosion
Impact by Aircraft, Spaceship or Land Vehicle
Riot, Vandalism or Malicious Acts
Smoke
Leakage from Fire Protective Equipment
Windstorm or Hail

27
Q

True or False: Coverage is excluded for damage caused to electrical devices and appliances by lightning

A

False. It has now been extended to include this.

28
Q

True or False: There is no coverage under this policy for explosion of a boiler which is owned, operated or controlled by the insured

A

True, not covered

29
Q

True or False: A tenant never needs to purchase a Boiler and Machinery policy

A

False, if tenants are the ones operating or controlling boilers, they may need to purchase coverage and or be concerned about coverage

30
Q

True or False: Coverage is provided for the explosion of certain owned pressure vessels so long as their internal operating pressure does not exceed 25 pounds per square inch

A

False

31
Q

True or False: Impact losses include damage caused to building glass by rocks thrown up by the tires of a customer’s automobile

A

False, this would not qualify as impact

32
Q

True or False: Damage caused to insured property by a land vehicle driven by the insured or their employee is not covered by the policy

A

False, it is covered

33
Q

True or False: Under Impact by Aircraft, Spacecraft, or Land Vehicle, coverage is provided for cumulative damage only

A

False, this is provided on an occurrence basis only

34
Q

True or False: Riot includes coverage for freezing of waterpipes resulting from the disruption of power to the insured building by employees who have been locked out

A

False

35
Q

True or False: Under Riot, Vandalism or Malicious Acts, there is no coverage for theft under this peril

A

True

36
Q

True or False: Damage from smoke is covered only if it results from the sudden, unusual and faulty operation of any stationary furnace

A

True

37
Q

True or False: Leakage From Fire Protective Equipment covers damage caused to Insured’s stock by accidental discharge of sprinkler system installed in the building

A

True

38
Q

True or False: Before the Insurer will agree to pay for loss caused to the interior of the building or its contents, the Insured must provide evidence to show that the loss being claimed occurred concurrently with and is directly attributable to the entrance of wind or hail through an opening caused to the building by such windstorm or hail

A

True

39
Q

Three examples of local building bylaws which may effect building re-construction

A

1) Improved building materials
2) Installation of sprinkler systems
3) Handicapped accessibility

40
Q

What parts of the building are not insured by Building Damage by Theft extension?

A

Glass

41
Q

Six advantages of the Broad Form policy

A

Theft or attempted theft
Water damage due to rupture and freezing of waterlines
Impact by land vehicles driven by insureds or employees
All sources of smoke damage, excluding agricultural smudging or industrial operations
Expansion and rupture of hot water heaters less than 24 inches in internal diameter and used for domestic purposes only
Roof collapse from various causes e.g. snow-load

42
Q

Four types of explosion excluded by Fire and Extended Coverage forms?

A

1) All boilers
2) Piping connected to boilers under pressure
3) Steam generating boilers
4) Smelt dissolving tanks

43
Q
A