Chapter 3 Flashcards
Define risk
The chance of a loss. Specifically, the possible loss or destruction of property or the possible incurring of a liability. Sometimes referred to as the subject of an insurance contract
Peril defined
A peril is an event that may cause injury, loss, or destruction. It may be natural or human made event. A peril may or may not be insurable.
What is a fortuitous event?
The concept of fortuity is fundamental to insurance: insurable perils are accidental events. The property insurance policy is not intended to be a maintenance policy, intentional acts ( for example, arson by the owner) an expected events for example wear and tear on a property are excluded)
Define named perils policy
A policy in which the perils insured against are listed as opposed to one that insured against are listed as opposed to one that insures against “ all risks “
All- risk policy defined
A named given to an insurance policy that covers each and every loss except for those that are specifically excluded. If the insurer does not exclude it, then if is automatically covered. This is the broadest type of policy that can be purchased
What does named perils cover?
Named perils coverage insures against direct physical loss or damage caused by only listed perils. The onus is on the insured to prove the loss or damage was caused by an insured peril and that no exclusion of coverage applies. Names perils tend to vary between personal and commercial property forms
What does all risk coverage cover ?
All risks coverage insures against direct physical loss or damage caused by any peril provided it is not excluded and the insured satisfies the other conditions of the policy. The insured has to prove that loss or damage to the insured property at an insured location occured during the policy term and that the loss was fortuitous. But the onus is on the insurer to prove that an exclusion applies otherwise the physical damage is insured
Specified perils
Perils insured against that are specifically named in a policy losses resulting from the perils listed are covered under the policy. This is the flip side of all risk coverage where losses resulting from the perils listed are excluded
Exclusions
All property policies, whether for named perils or all risks contain exclusions. Exclusions remove certian losses from the policy coverage. Losses are usually excluded in two different ways
- They list types of property that are not insured
- They list perils that are never insured against or sometimes not insured against
Fire - what is a friendly fire or hostile fire ?
Combustion manifested in light, flame, and heat, for useful purposes ( friendly fire ) or destructive purposes ( hostile fire )
What is the first IBCs named perils that is included in all names peril forms ?
Fire. It includes any uncontrolled or unintended ignition, howsoever caused. By the provincial statute, a fire insurance policy may only exclude fire if it results from:
Property undergoing a heat process
Riot or civil commotion, war, invasion, act of foreign enemy, hostilities ( whether war declared or not ) civil war, rebellion, revolution, insurrection, or military power a collection of perils often called war risks
Radio active contamination/ loss by a nuclear incident
What does innocent co- insureds mean?
If the spouse of an arsonist was not involved in the act and didn’t know of it he or she would still be covered for his or her share of the property damage.
Lightening is the second peril included. What does the statute of provincial and territorial insurance acts state?
Provincial and territorial insurance acts, a fire insurance policy must cover loss due to lightening but loss to electrical devices or appliances caused by lightening or other electrical currents are not covered unless fire originates outside the article itself and then only loss caused by that fire is covered
Explosion is the third of IBCs named perils, what is covered under explosion and what is excluded (personal property)
In the insurance acts fire insurance extends to explosion of natural coal or manufactured gas in a building not forming part of gas works, whether fire ensures or not. But this coverage does not apply if the explosion is the result of a riot, civil commotion, or any of the other excluded causes listed for the fire peril. Explosion excluded water hammer ( the shock wave created by closing a faucet or tap )
Commercial property explosion forms
In commercial property forms the explosion peril often excludes loss caused by the explosion, rupture, or bursting of most boilers and pressure vessels and their associated piping and apparatus where the maximum normal internal working pressure exceeds 15 pounds per square inch above atmospheric pressure. The explosion and mechanical and electrical breakdown perils are insured by a specific equipment breakdown policy, which is outside of IBCs scope
Smoke ( 4th named peril )
Smoke is the fourth of IBCs named perils and is included in all the named perils forma. In IBCs named perils forma. Smoke means smoke due to sudden unusual and faulty operation of any heating or cooling unit in or on the premises but not smoke from a fire place. IBCs all risks forms, smoke howsoever caused is covered, except for smoke from agricultural smudging and industrial operations. Loss caused by such is excluded because it comes from a friendly fire
Falling object
Falling object is the fifth of IBCs named perils and is included in all the named perils forma in the IBCs named perils forma falling object means any falling object that strikes the exterior of the building: for example, a tree blown down during a storm and striking the building, causing damage to the building and property inside. The peril would also encompass a strike by meteorite or by an object ejected from an aircraft or from part of decayed satellite
Impact by aircraft or land vehicle
Impact means loss of or damage to insured property causes by being struck by an aircraft or land vehicle. Animals considered personal property are often struck by vehicles. They are not covered under this peril. The perils excludes loss caused by any vehicle owned or operated by the insured or any of the insured employees. Wear and tear such as might occur when delivery trucks repeatedly strike the loading dock and corners of a building are not covered
Riot
Riot Is the seventh of IBCs named perils and is included in all the names perils forma. In the IBCs personal forms ( both for named perils and for all risks) riot is not defined. Still it has precise legal meaning which he briefly states as:
An act or threat of violence by one or more persons who are part of an assembly of three or more persons
That might give rise to damage to property or injury to persons
Strikers inside or outside the premises who have quitted work and locked out employees
Vandalism or malicious acts
Vandalism or malicious acts is normally the eighth of IBCS named perils.
Vandalism means: wilful or malicious destruction of or damage to property. The term malicious damage originally identified a peril in property insurance but was later broadened to malicious acts to better describe the intended scope of the policy protection. Examples of vandalism include: creating graffiti, breaking windows, cutting off power, and deliberately plugging the sink and turning on the water.
Exclusions of vandalism and malicious acts
Occuring while the building is under construction, even if a builder’s risk endorsement has been issued
Occuring while the building is vacant even if a vacancy permit has been issued
Perpetrated by any insured
Causes by theft or attempted theft
Water damage 9th named peril
Water damage encompasses loss of or damage to insured property causes by only the following four scenarios
- Sudden and accidental escape of water from a water main
- Sudden and accidental escape from water or steam from within a plumbing, heating, sprinkler, or air conditioning system or domestic water container located within the dwelling
- Sudden and accidental escape of water from a domestic water container located outside the dwelling example freezing is specifically excluded
- Entrance of water through an aperture creates concurrently with another peril for example, a hurricane blows part of a roof off allowing the storms rain water to enter the interior of the dwelling
Personal property
Legally any property an insured other than real property. More often used to refer to the personal property of family members insured under a homeowner’s policy
Real property
Land and any property that is tangible and usually fixed or attached to land
Exclusions to water damage
Leaving a window open and allowing rainwater to enter the dwelling.
Damage to actual system or domestic water container from which the water or steam escaped only resultant damage to other insured property is insured.
The water damage peril also excludes continuous seepage or leakage of sewer backup flood and hydrostatic pressure
Windstorm or hail exclusions
The 10th named peril
Windstorm nor hail excludes damage caused by:
Waves, floods, or weight, pressure, or melting of ice or snow.
Personal property is not insured for loss or damage caused by windstorm or hail unless storm first creates an opening that allows the storm access to the interior of the dwelling and then the interior damage occurs coincidentally during that same storm.
Glass brakeage
11th named peril
Glass brakeage means accidental breakage of the building glass or doors howsoever caused unless the breakage results from an excluded peril such as war or terrorism
Exclusions of glass breakage
Occuring while the building is under construction even if a builder’s risk endorsement has been issued
Occuring while the building is vacant even if vacancy permit is issued
Transportation
12th named peril
The transportation of the property by collision of the automobile transporting the property. Other perils that may occur to the automobile or trailer conveying the property include upset, overturn, derailment, stranding, or sinking. The transportation peril also extends to personal property that is temporarily removed from the premises for seasonal storage.
Specifically excluded Warcraft as well as property in an owned vacation or home trailer
Theft or attempted theft exclusions
Occuring at any other dwelling or detached private structure which the insured owns or rents or occupies unless the insured is temporarily living there
From the part of the dwelling or detached private structure rented to others caused by theft or attempted theft by any tenant tenants employees or member of the tenants household
Caused by theft or attempted theft of property or building materials from any dwelling or detached private structure under construction until the dwelling is completed and ready for occupancy
To animals birds fish ( a pet )
Causes by voluntary parting of property via false pretense
Electricity ( personal property)
14th named peril
Electricity means sudden and accidental damage from artificially generated electrical current. The most common example is power surge of artificially generated electricity that causes damage to electrical devices. The damage must be sudden and accidental rather than, for example a burnout due to wear and tear during the normal use of an electrical appliance.
Electricity commercial property
The commercial property forms exclude loss caused by electrical breakdown, artificially generated current and arcing unless fire ensues. Explosion and mechanical and electrical breakdown are covered by specific equipment breakdown policy which is outside the IBCs scope
Define wildfire
Uncontrollable or destructive fire in a Forrest.
Wild fire is covered under both names perils and all risks
Hurricane
Hurricanes fall within the windstorm or hair peril and are thus covered whether the property is insured against named perils or all risks
Tornado
Tornado falls within windstorm or hail peril and are thus covered under named perils or all risks
Collapse
Collapse is not covered under a named perils forms
However loss caused by collapse is covered under an all risks form because it is not specifically excluded
Earth movement
A general term that includes earthquake landslide snowslide and volcanic eruption among other phenomena
Accidental breakage of property under all risks exclusions
For breakage of fragile or brittle articles unless caused by a specific peril accident to a land vehicle, watercraft, or aircraft or theft or attempted theft
To personal property undergoing any process or while being worked on where the damage results from such process or work but resulting damage to other property is insured
Personal property that is not fragile or brittle I’d covered for breakage caused by any sudden and accidental event.
Earth movement endorsement exclusions
Excludes loss or damage directly caused by tidal waves damage inside the building caused by windstorm, hail, or coincidental rain or snow; and earthquakes that occur before the endorsement takes effect or after it expires. The endorsement has its own higher deductible, which may be expressed as a dollar amount or a percentage of the value of the insured property.
Sewer backup
damaged caused by the backing up or escape from water from a sewer or septic tank is excluded whether the coverage is for named pearls or all risks. sewer backup inside the dwelling is the usual result when flooding outside the dwelling overwhelms the municipal sewer system. So we’re back up can occur without flooding. sewer backup can also occur when materials from nearby road construction clog the local sewage system, backing up the sewer drains within a dwelling after even a normal rainstorm.
Sump pump failure
Damage caused by backing up or escape from water from a sump pump system or by groundwater or the rising of water table is excluded whether the coverage is for named perils or all risks.coverage for loss or damage due to a sump pump failure may be added by endorsement. The IBC form limited sewer backup endorsement semicolon the coverage is the same as for sewer backup.
Flood
Flood means waves, tides, tidal waves, tsunami dam breaks, or the rising, the breaking out, or the overflow of any body of water or water chorus, whether natural or human made. More generally, however, the term is often loosely applied to any accumulation of large amounts of water in a dwelling. Coverage for damage caused by a flood may be added by endorsement, extended water endorsement.it is not necessary to purchase both this endorsement and The limited sewer backup endorsement in order for both sir backup and flood to be covered; the extended water endorsement provides coverage for both perils.
Fuvial flooding
The overflow of a river
Puvial flooding
Flooding caused by rain
Ice damming
damage caused by the entrance of water into the dwelling through the roof due to ice damming is excluded whether the coverage is for named perils or all risks. in either case, the damage is excluded because the aperture through which water enters the dwelling was not created by a named or a specified peril other than water damage. coverage for loss or damage due to ice damage can be added by endorsement semicolon the ibcs form is ice dam endorsement.
Water seepage
damage caused by continuous or repeated seepage or leakage of water is excluded whether coverage is for named perils are all risks.the property and trans policy is intended for sudden an accidental fortuitous events continuous or repeated seepage or leakage of water is thus considered a maintenance issue.
Hazard
One a risk or probability that the event insured against might occur. Two a condition that engenders or increases the chance of a loss
Physical hazard
A hazard a rising from the physical condition or characteristics of the object that is insured
Moral hazard
A hazard a rising from the character, interest, habits and lack of integrity of the insured or person concerned.
Mold and wood rot
damage caused by roster corrosion, wet or dry rock, and fungi, sports, or mold is excluded whether it coverage is per named pearls or all risks. Such damage, is however, covered if it directly results from an insured peril.
Fire hazard: what follows are some common domestic fire hazards.
Cooking hazards, unintended portable heaters, clothes - dryer lint, overloaded electrical circuits, faulty or old, outdated wiring, unintended candles, good fireplaces and wood stoves.
Fire protection is the key to minimizing fire hazards. There are two basic categories for fire protection
- Public fire protection - this is an element of COPE- THE FACTORS, INCLUDING CONSTRUCTION, OCCUPANCY, PROTECTION, AND EXPOSURE, TO BE ASSESSED IN ANY PHYSICAL RISK
- Private fire protection - this includes smoke alarms, fire extinguishers, and sprinklers.
What is the most expensive peril for the Canadian insurance industry?
collectively, the water perils are among the most expensive perils for Canadian Insurance industry, more frequent but less severe than fire. Water devices are present in almost all dwelling semicolon in most Canadian geographical locations, water is also abundant outside the dwelling.
Listed hazards for property insurance
Fire hazard Lightning hazard Water perils hazards Water damage hazard Flood hazard Sewer back up hazard Sump pump hazard Ice damming hazard Wind or hair hazard Roof collapse Earthquake hazard Fuel oil hazard Concentration of values hazard Collections hazard Hoarding hazard Vacancy hazard Age hazard Theft hazard Neighbourhood hazard Unusual hazards
Configuration
A fire involving two or more risks or extending over a wide area. Any unusually large fire
Sublimit
A limitation in an insurance policy on the amount of coverage available to cover a specific type of loss
List the 14 named perils in order
- fire
- Lightning
- Explosion ( personal / commercial )
- Smoke
- Falling object
- Impact by aircraft or land vehicle
- Riot
- Vandalism or malicious acts
- Water damage
- Windstorm or hail
- Glass breakage
- Transportation
- Theft or attempted theft
- Electricity
list the names peril habitation forms
Homeowners basic form Homeowners broad form Mobile homeowners form Tenants basic form Condominium unit owners basic form Residential basic form Seasonal residence form
List the coverage for all risks IBC habitational forms
Fine arts endorsement Person articles endorsement Homeowners comprehensive form Tenants comprehensive form Condominium unit owners comprehensive form Scheduled personal property endorsement
List the peril insured against is reflected in the title of the following IBC endorsements
Limited sewer backup endorsement
Ice dam endorsement
Earthquake endorsement
Non standard perils that are covered under all risks
Wild fire Hurricane Tornado Collapse Accidental breakage of property Earth movement Sewer backup Sump pump failure Flood Ice damming Water seepage Mould/ wood rot
