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Study Guide > Chapter 3 - Section 2 > Flashcards

Chapter 3 - Section 2 Flashcards

Common Habitational Endorsement Forms

1
Q

Define endorsement

A

An extra sheet(s) or slip(s) of paper attached to the policy indicating in writing that the insurer and the insured have agreed to a change in the terms of the insurance contract

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2
Q

List five functions that endorsements serve

A
  • Provide coverage for excluded property or perils
  • Increase limits for property subject to Special Limits of Insurance
  • Broaden coverages
  • Decrease the deductible
  • Remove coverages
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3
Q

Identify six objects that are generally regarded as “fine arts”

A
  • Paintings/Pictures
  • Valuable Rugs
  • Marbles and Bronzes
  • Rare books
  • Manuscripts
  • Rare Glass
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4
Q

Identify three perils that are included in this form (Fine Arts) that are not included under either Homeowners form

A
  • Marring or scratching
  • All sources of smoke
  • Earthquake
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5
Q

List three exclusions to the form (Fine Arts)

A
  • Breakage unless caused by perils named in this endorsement
  • Birds, vermin, rodents or insects
  • Any process or work
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6
Q

Briefly explain the following special provisions (Fine Arts):
Newly Acquired Articles

A
  • Up to 25% of the amount of insurance is provided for newly acquired articles
  • Important for insureds who need immediate coverage on objects purchased from a gallery, auction or other source
  • Limited to a period of 30 days
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7
Q

Briefly explain the following special provisions (Fine Arts):
Packing and Unpacking

A
  • Proper packing can eliminate/reduce the amount of damage caused by an accident during transit
  • It is a condition this endorsement that the fine arts must be packed/unpacked by competent packers
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8
Q

Identify six types of high value personal property that would be insured under a “Personal Articles” Endorsement

A
  • Cameras, projectors, films and accessories
  • Firearms
  • Furs
  • Jewelry, precious stones, and watches; musical instruments (non-professional)
  • Silverware
  • Stamps and coins
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9
Q

Identify three perils that are included in the Personal Articles form that are not included under either Homeowners form

A
  • Loss or damage to sporting equipment due to its use
  • Chipping, marring, scratching or breakage
  • Accidental loss or damage while actually being worked upon
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10
Q

Briefly explain the “valued coverage option” (Personal Articles)

A
  • Insured has an option to purchase coverage on the basis of the agreed value of the object(s) insured
  • Under a valued policy, both insured and insurer agree at the time the policy is issued as to the value of the property. In the event of a loss, the agreed value is paid
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11
Q

Briefly explain the following special provisions (Personal Articles):
Partial loss to a coin collection

A

When coverage is provided on a blanket basis:
- The maximum amount payable for a single article is $250. If this is insufficient, items having higher values can be scheduled under this endorsement

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12
Q

Briefly explain the following special provisions (Personal Articles):
Newly acquired articles

A
  • Up to $5,000 additional coverage is provided for newly acquired articles which are of the type already insured by this endorsement
  • When coverage is provided on a scheduled basis, new acquisitions are insured for 30 days
  • This extension would not apply to insure newly purchased camera equipment if cameras were not already insured
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13
Q

Identify three underwriting considerations of the Personal Articles form

A
  • When coverage is provided on a scheduled basis, each article must be separately described and a specific amount set for each
  • Coverage is provided only for items used for personal and private purposes only. If coverage is required for property being used professionally or for remuneration, full details are required to be submitted to the insurer. Persons who might be eligible for coverage under this endorsement include part-time musicians and photographers
  • Current valuation usually required on individual items of jewelry or furs beyond a certain value. A bill of sale or recent appraisal is normally sufficient to meet this underwriting requirement
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14
Q

Briefly explain the purpose of the “Increased Cost - Demolition or Construction” Endorsement

A

Pays additional costs which are required to comply with any law regulating demolition, repair or construction of buildings after a loss

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15
Q

Briefly explain the following special provisions (Increased Cost - Demolition or Construction):
Sprinklered By-Law Extension

A

The insurer agrees to pay the additional cost of installation or repair to comply with any by-law, law or ordinance requiring the installation of a sprinkler system. However, payment is limited to the minimum amount required to comply with such by-law, law or ordinance

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16
Q

Briefly explain the following special provisions (Increased Cost - Demolition or Construction):
Demolition or Construction Extension

A
  • Insurer agrees to pay the additional cost of demolition, construction or repair to comply with any law regulating demolition, repair or construction of buildings. The insurer will not pay more than the minimum amount required to comply with such law
  • Coverage under either extension is available only if the insured repairs or replaces the damaged or destroyed building on the same premises with a building of the same occupancy constructed with materials of similar quality within a reasonable time after the damage
17
Q

Briefly explain the purpose and any special provisions of the following endorsements:
Residence Glass

A
  • Adds accidental glass breakage coverage to buildings. Most frequently used as a means of reducing the deductible for glass breakage under the policy
  • Coverage generally not provided on dwellings in course of construction, or on rented or vacant properties
18
Q

Briefly explain the purpose and any special provisions of the following endorsements:
Sewer Back-Up

A
  • Broadens the coverages provided under most habitational policies to include loss or damage caused by the backing up or escape of water from a sewer or drain, sump, septic tank, eavestrough or downspout
  • Not all insurers endorsements are the same
  • In areas having history of previous losses, insurers will often increase the amount of deductible
19
Q

Briefly explain the purpose and any special provisions of the following endorsements:
Earthquake

A
  • Removes exclusion contained in habitational policies for this peril
  • Coverage subject to a percentage deductible which is normally no less than 10% of total amount of insurance on dwelling, detached private structures and personal property
  • No change to limits of insurance when this endorsement is added to habitational policy
  • Amount of any additional premium is based on the geographical area which the dwelling is located
20
Q

Briefly explain the purpose and any special provisions of the following endorsements:
Vandalism and Malicious Acts (seasonal dwellings)

A
  • Removes exclusion under seasonal dwellings policies for this peril
  • Coverage is excluded for loss or damage:
    - Occurring while building insured is vacant
    irrespective of any permissions for vacancy
    elsewhere in this policy
    - Occurring while a building insured or containing
    property insured is in course of construction
    irrespective of any permission elsewhere in this
    policy to complete construction
    - To glass constituting part of the building
    - Property insured directly or indirectly caused by
    theft or attempt theft
    - Caused by insured’s spouse or any member of the
    same household

Deductible normally applies

21
Q

Identify the four items, when described on the Coverage Summary page, are insured under the Outboard Motor and Boat policy

A
  • The boat, including permanently attached equipment (except outboard motors)
  • The motor(s), including fuel containers and electric starting equipment or controls supplied as integral equipment by the manufacturer
  • The boat trailer
  • Boat equipment not included in (a) or (b) above, including batteries and battery chargers, oars, oar locks, boat covers, boxes, cushions, flares, life preservers, fire extinguishers, horns, pumps and similar equipment
22
Q

Identify two types of losses to which this form (Outboard Motor and Boat) will respond

A
  • Transportation losses

- Collision with underwater rocks and other objects, including objects floating in water

23
Q

Identify three exclusions common to this form (Outboard Motor and Boat)

A
  • Accumulative damage, however caused
  • Wear and tear, gradual deterioration, latent defect, mechanical breakdown, corrosion, rust, dampness of atmosphere, freezing or extremes of temperature
  • Any work done on the insured property, except for resultant damage caused by fire or explosion
24
Q

Briefly explain “Loss of Use” coverage provided by this form (Outboard Motor and Boat)

A

Some insurers provide for limited coverage in the amount of $20 per day (subject to $200 limit during the policy period) for the rental of a substitute motor and/or boat when the insured watercraft is damaged by an insured peril

25
Q

Briefly explain the “minimum retained premium” provision of this form (Outboard Motor and Boat)

A

The premium charged is an annual premium. Generally, insurers recognize that the greatest exposure to loss occurs in the summer months and the premium charged is based on that assumption. Thus, most policies contain a clause limiting the amount of premium to be refunded to the insured if coverage is cancelled during the policy term. One insurers policy calls for a minimum retained premium equivalent to 75% of the annual premium

26
Q

Briefly explain the purpose of the “Travel Trailer Floater”

A
  • Removes the exclusion for owned trailers and their contents which are contained on all IBC habitational forms
  • Coverage generally provided on an “All Risks” basis and is restricted to losses occurring in Canada and the continental U.S.A.
  • This floater usually limits the amount of insurance provided for jewelry, precious and semi-precious stones, watches, fur garments and garments trimmed with fur to a specified percentage of the amount of insurance purchased on contents, subject to a limit of any one article
  • Insureds purchasing this coverage will not need to buy additional physical damage coverages under a separate automobile policy
27
Q

Identify five other types of property for which special endorsements are available

A
  • Motorized vehicles such as golf carts, all terrain vehicles and snowmobiles
  • Horses and livestock
  • Bicycles
  • Business property
  • Sports equipment, including sports wear

Study Guide (18 decks)

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