Chapter 6 Flashcards
What is among the most important part of any property policy provision?
What is not covered: the exclusions
List 2 types of losses removed by exclusion
Types of property that are not insured
Perils that are never insured against or sometimes not insured against
True or false exclusions never expand policy coverage but always restricted it
True or false: they removed loss exposures that are considered undesirable or uninsurable
Both statements are true
True or false some exclusions may be amended or overridden by special endorsements or coverage?
True
True or false exclusions must be permanent
False: exclusions may be temporary or permanent.
T/F: exclusions May exclude only a part of the coverage
T/F: Canadian quartz interpret coverage provisions narrowly and exclusion clauses broadly
First statement is true
Second statement is false: these principles are used by Canadian courts to interpret property insurance policies. Generally, the coverage provisions are interpreted broadly and the exclusion clauses narrowly
Explain how exceptions to exclusions are used and how they relate to specified perils
In the IBC all risks habitational forms, some of the exclusions that limit coverage are qualified by exceptions to those exclusions in the form of the specified perils listed later in the policy. That’s, the exclusion applies to all losses except a loss that is caused by one of the specified perils
Why is it important that the claims adjuster understands the exclusion wording of the insurance policy?
It’s important that the claims adjuster understands the exclusion wording of the policy because named pearls coverage ensures only against loss or damage caused by the list of perils but all risk coverage ensures against loss or damage caused by apparel that is not excluded, that makes it critical to understand it not only the perils and trade against under the policy but also the exclusions.
explain how the owner shifts from the insured to ensure Earth and back to the insured when reading the perils, exclusions, and exceptions to the policy
- determine whether there is coverage under the policy by looking at what the insured under the policy and under what circumstances. The onus is on the insured to show that the loss or damage falls within coverage
- if there is coverage, next determine whether any exclusions apply to the circumstances of the loss or damage. The ownership to the insurer to demonstrate that the coverage is excluded
- if an exclusion applies. Determine whether there is an exception to the exclusion that restores coverage despite the exclusion. The owners falls back to the insured to establish that an exception is triggered
T/F all property excluded under broad forms is also excluded under comprehensive forms
T/F all property excluded under broad forms is excluded under basic forms
First statement is false since the comprehensive form is the broadest form, all the property it excludes is also excluded under the broad and basic forms.
Second statement is true
T/F all pearls excluded under broad forms is also excluded under comprehensive forms
T/F all perils excluded under broad forms is excluded under basic forms
First statement is false since the comprehensive form is the broadest form, all the property it excludes is also excluded under the broad and basic forms
Second statement is true
If a peril is excluded from comprehensive forms via exclusion, then it is excluded under basic forms list the three possibilities as to why this is true
It does not fall under the named perils coverage of either form
It is specifically excluded within the description of a named peril
Falls within the exclusions listed in the form
T/F: in order to exclude coverage based on the legality of possession of certain property, the insured must first have been convicted under the law of the illegal possession.
True
Explain what subject to forfeiture means regarding property not stolen give an example
it would be against public policy to provide coverage for property that can be lawfully subject to forfeiture. A common example of this involves an insured who illegally imports personal property into Canada by not declaring the goods in accordance with the customs act. the property is subject to forfeiture for a period of 6 years after it is illegally imported into Canada
Why are each of the following exclusions used? buildings for businesses or farming, property on exhibit, property illegally acquired or subject to forfeiture, and evidence of debt or title.
Buildings for businesses or farming - habitual insurance is more homogenous and highly automated than commercial insurance and must be managed differently
Property on exhibit - property on exhibit faces unique exposures to loss not contemplated in the design of these forms
Property illegally acquired or subject to forfeiture - the policy excludes such loss subject to the criminal code and other laws
Evidence of debt or title - the exclusion for evidence of debt or title denies coverage for property that may be insured by other forms specifically designed for it
Why is sports equipment excluded from broad and basic forms but not comprehensive forms?
this exclusion is not found in the homeowners basic or broad form because in both of those forms coverage C is not insured for all risks. The risk is more then the policy can sustain
You’re expensive purebred dog is killed via a specified peril is the loss covered? If the peril is being hit by a car is lost covered?
animals, birds, or fish are excluded unless the laws are damaged is caused by a specified peril other than impact by aircraft or land vehicle.
So the loss would not be covered if the animal got hit by a car
you live in bath and purchase firewood and kindling for $500 for your backyard. Fire Rangers confiscate the wood and destroy it viewing it as a fire hazard. Is the lost covered? they also sees a stereo that was reported stolen with registered serial number is that covered?
under property lawfully seized coverage is restored if the property was seized and destroyed by government agencies to prevent the spread of fire. So the first claim would be covered however the second claim would not be covered because most residential forms exclude lost to property lawfully seized confiscated especially if the policy covers loss by theft
Explain why satellite dishes are excluded from extreme weather events coverage such as hail, and windstorm, etc. For which if any of basic, broad, and comprehensive covers is it not excluded?
loss or damage to outdoor radio and TV antenna including satellite receivers and their attachments is not covered when caused by windstorm or hail weight of ice snow or sleet or collapse.
this exclusion is found in the wind storm or hail peril in the homeowners basic form but reappears in the broad and comprehensive form as a policy exclusion to ensure that the loss is not covered under any of the policies.
explain how scratches and chipping is handled for breakable items? When are they covered? When is the coverage reintroduced? Can the insured get coverage for all perils if they so choose? And why the need for this type of exclusion?
Many types of personal property may be scratched or braided small accidents may damage them seriously even Irreparably, severely reducing their worth. Fragile or brittle articles breaker chip easily with normal handling or when dropped, knocked over, or accidentally struck by another object. Such losses are excluded in the homeowners forms
but special insurance is available for a special vulnerable articles, often under separate policies or a separate rider’s attachment to the homeowners policy
breakage of fragile or brittle articles is excluded and less caused by a specified peril, and accident to a land vehicle, watercraft or aircraft or theft or attempted theft.
which forms have the wear and tear exclusion, why is it necessary, and what can the insured do to mitigate or handle the loss?
the comprehensive and broad forms exclude loss dut to wear and tear deterioration or defect. This is an exclusion of a kind often found in the all risks coverages.
It’s purpose is to avoid disputes about what a risk is. In this case, the excluded causes of loss or not unexpected events but inevitable or inherent in the objects concerned.
The remedy for them is adequate maintenance or to accept them as business or inevitable losses
Which forms exclude laws due to poor design or workmanship? why is it necessary, and what recourse do insurance have if any?
All risk policies exclude loss due to the cost of making good faulty design, material, or workmanship. These are losses due to lack of expertise, lack of care, or both. Insurers do not want to pay for someone else’s poor workmanship.
Cracking is a very nuisance exclusion explain it in detail
the comprehensive and broad forms exclude laws due to settling, expansion, contraction, moving, bulging, buckling, or cracking, including loss or damaged caused by or resulting from pressure exerted by groundwater, except resulting damage to glass of the dwelling and of the detached private structures and less directly or indirectly caused by earthquake.
On this interpretation, if the settling is a direct resultant of sudden, human-made, fortuous events such as compaction of soil on an adjacent property,. a broken water main on municipal property, or a leak in the neighbor sprinkler system, the insurer will not be able to rely on this exclusion and will be required to pay the loss
Why would data loss from a fire be covered but not data loss from viral infection
Data loss from a viral infection is not covered because it can infect thousands of computers and the insurance company wouldn’t survive covering that much loss.
It’s covered from a fire because it’s a fortuitous loss to a single computer so it’s more affordable for the insurance company to cover that type of loss
How many days can a property be vacant before coverage is suspended? When, if ever, is it reinstated?
the exclusion is triggered after 30 consecutive days of vacancy and applies for as long as a vacancy persist after that. The policy is not terminated, however, coverage is automatically reinstated as soon as the vacancy ends
Why are nuclear incidents excluded? Is there an exception?
Both direct and indirect loss caused by nuclear incident are excluded, except for ensuing loss or damage which results directly from fire or explosion
how is radioactive contamination treated by insurers? What is available to inserts who use radioactive materials extensively? What is their major risks?
the homeowners form exclude loss or damage caused by contamination of radioactive material except for ensuing loss or damage which results directly from fire or explosion, this exclusion is taken from the insurance acts of the common law provinces and territories.
Contamination insurance is highly specialized and usually obtained only by a few who handle radioactive substances. In hospitals or laboratories property could be rendered unusable, which is really a business risk.
The major exposure for operations that use radioactive material extensively is a liability to others. Insurance for such risks is available through specialty sources
T/F war risks are considered uninsurable
True
Explain the difference when a coinsured minor, under the care of the insured causes damage versus a coinsured adult causing the damage without the knowledge or consent of the insured. What part, if any of the loss is covered in each case?
The adult is responsible for a Minor’s acts so damage is not covered under a policy however more recently legislation has been passed in some provinces to protect innocent co insureds that had no knowledge of the damage, so their half of the loss would be covered
What does the exclusion property being worked on imply
All homeowners forms exclude damage to property undergoing any process or well-being worked on, where the damage results from that process or work. Resulting damage to other property is still covered
Listen explain four sources of water damage covered. Give an example of each. Under which forms are they covered?
Named perils forms and to the corresponding exclusion in all risk forms coverage is often extended to otherwise excluded losses
- the sudden and accidental escape of water or Steam from within a plumbing, heating, cooling, sprinkler, or air conditioning system or domestic water container for which is located within the insurance dwelling or detached pirate structure (leaking water)
- Poseidon and accidental escape from water from a domestic water container which is located outside the dwelling or detached Private structure (swimming pool)
- the sudden and accidental escape from water from water main located outside the insurance dwelling or detached Private structure (broken water main)
- water that enters the dwelling or detach private structures through an opening creating sudden and accidentally by an insurance specified parallel other than water damage ( a hole in the roof created by wind damage )
List several types of water damage excluded by all homeowners forms
Freezing during heating season
Continuous or repeated leakage or discharge of water
Escape from a sewer, septic system, or sump
Water system or domestic water container
Building under construction or vancit
Freezing involving domestic water containers
Surface water
Groundwater
Shoreline ice buildup and waterborne ice
Flood
Why are losses due to pest excluded but resulting damage from them are covered?
the policy excludes damage by rodents to electrical wiring installation. But if a short circuit arising from that damage causes a fire, the policy will cover the resulting fire loss
Explain smudging and why is it excluded
In agricultural smudging, containers of slow burning combustible material are ignited to create a blanket of smoke. They are called smudge pots and are used in operations such as fruit orchids or Groves when low temperatures are expected the smoke is not hot but is warm enough to provide a blanket for these trees to prevent loss of their fruit. Losses caused by such smoke is excluded because it comes from a friendly fire a fire for useful purposes
Explain Earth movement and why is it excluded
the exclusion of Earth movement in the homeowners forms provide that loss or damaged caused by snow slide earthquake landslide or any other Earth movement is not covered. There is, however, and exception to this exclusion that restores coverage if any of these perils result in a fire or explosion, the resulting loss or damaged is insured
Why is vandalism excluded when a building is vacant or under construction, even if permission from the construction such vacancy is given by the insurer?
The exclusion alerts that insured that such losses are virtually inevitable and will not be recoverable, so the insured should act prudently to avoid them
T/F the word mold appears in homeowners forms. T/F the word fungi occurs in homeowners forms T/F mold is considered a type of fungi
The first statement is false : the word mold does not appear in the exclusion, but mold is included in the definition of fungi which appears in their definitions clause of the homeowners forms
Last two statements are true
Why is the wet / dry rot and fungi damage excluded? Explain the nuisance that exists when the damage is from mold
These events occur naturally but can be prevented or controlled by adequate maintenance. In the right conditions, it is almost inevitable. but mold May develop after property suffers a damage from some other cause and increase the damage.
Why is a loss of fuel tank leaks excluded?
Many insurers are unwilling to cover damage caused by heating oil leaking from residential oil tanks unless the tanks are relatively new. The causes of leaks occur inside the tanks, making meaningful inspection almost impossible. Tanks more than 25 years old are suspect, but there is no firm benchmark, and tanks less than 25 years old May leak. Therefore, lost due to the release, discharge, or dispersal of fuel is excluded
Why is trickery and fraud excluded? From which forms are they excluded from?
Was the rising from trickery or fraud is excluded in all three of the homeowners forms. The possibilities are almost endless, and such losses may be difficult to prove. Most insurers will not cover the risk that someone often a perfect stranger is Honorable and will act on good faith.
What is the definition of terrorism according to the homeowner’s forms what forms are they excluded from
terrorism is defined in all three of the homeowners forms so as to exclude the peril it represents an ideologically motivated unlawful act or acts committed by or on the behalf of any groups organizations or governments to influence any government and or instill fear in the public or a section of the public
why is mechanical breakdown excluded what forms are they excluded from and what are the insurance resulting choices to deal with it?
All risk policies exclude losses caused by electrical, electronic, and mechanical breakdown are disturbance, with the exception that lost her damage resulting from fluctuations and artificially generated electronic current is covered.
Loss or damaged caused by breakdown is likely due to mechanical failure, wear and tear, or deterioration is therefore not covered. The remedy for this is adequate maintenance or to accept losses of the sort is inevitable
