Chapter 7 - RIBO Comprehensive Homeowner Tenant Condominium Unit Owner Package Policy

Question 1

Insured

Answer 1

“Insured” means the person(s) named in the coverage summary page and, while living in the same household,

•Their spouse. A spouse is defined as:

○Either a man or a woman who are married to each other or who have together entered into a marriage that is voidable or void; or

○Either of two persons who are living together in a conjugal relationship outside marriage and have so lived together continuously for a period of three years. Or, if they are the natural or adoptive parents of a child, for a period of one year.

• The relatives of either. (This can include children, parents, or grandparents; there is no age barrier.)
• Any person under 21 in their care. (This can include foster children or exchange students. However, roomers and boarders of any age are not included in this definition.)

Question 2

Premises

Answer 2

In the case of a Homeowner Policy, “premises” means the dwelling and the land contained within the lot lines on which the dwelling is situated. In the case of a Tenant or Condominium Unit Owner Policy, it means the dwelling or unit and includes garages, outbuildings, and private approaches reserved for the tenant’s use and occupancy only.

It is important to know this definition. If an insured owns or occupies property other than those covered by these definitions, that property should be added to the policy to ensure proper coverage.

Question 3

Vacancy

Answer 3

• Whether partially or fully furnished, the occupant(s) has/have moved out with no intent to return.
• A newly constructed dwelling is vacant after it is completed and before the occupants move in.
• The occupant has moved out and no new occupant has moved in.

Insureds make assumptions that policies will remain in force until expiry, no matter the circumstances of occupancy. As a broker, you’ll have to become familiar with these assumptions and help your clients become better informed.

Another common occurance is for an elderly person who lives alone and is moved into a long-term care facility (e.g. nursing home) for 2 months after an event like major surgery. Since there is the intent to return, the home is not considered vacant.

Question 4

Other Definitions

Answer 4

Other definitions - things that are important but not main focus

— such as “business,” “domestic water container,” “fungi,” “mold,” “ground water,” “surface water,” “residence employee,” and “watermain” — should also be studied, as they all have a direct impact on limits and coverages. They are no less important than the three terms noted above.

Question 5

Section I: Property Coverages

Answer 5

Coverage Property Applicability

Coverage A Dwelling building Homeowner

Coverage A1, A2, and A3 Condominium unit owner

Coverage B Detached private structurer Homeowner

Coverage C Personal property contents All

Coverage D Additional living expense All

Question 6

Coverage A: Dwelling Building (Homeowner Applicable Only)

The dwelling and attached structures

Answer 6

Structures such as an attached or built-in garage, a carport, a deck, or a sunroom would be insured under this limit and should be included when determining the building value.

Question 7

Coverage A: Dwelling Building (Homeowner Applicable Only)

Permanently installed outdoor equipment on the premises

Answer 7

This includes items permanently embedded in concrete or otherwise fixed to the land, such as swings, slides, and lawn sprinkler systems.

Question 8

Coverage A: Dwelling Building (Homeowner Applicable Only)

Outdoor swimming pool and attached equipment:

Answer 8

Both above- and in-ground pools are covered in this section. They should be noted in the Home Evaluation Calculator, which would determine their value — this takes away the guesswork of trying to determine ages of pools or landscaping costs.

Question 9

Coverage A: Dwelling Building (Homeowner Applicable Only)

Certain construction materials and supplies:

Answer 9

Material and supplies located on or adjacent to the premises intended for use in the construction, alteration, or repair of the dwelling or private structures on the premises. This applies for both houses under construction and for dwelling renovations.

Note: If theft is excluded from coverage while a dwelling is being constructed, then this coverage will apply only when the dwelling is completed and ready to be occupied.

Note: The building supplies must be intended for use on the insured’s premises and not some other building.

Question 10

Coverage A: Dwelling Building (Homeowner Applicable Only)

Building fixtures and fittings temporarily removed:

Answer 10

Storm doors, windows, and shutters temporarily removed for repair or storage are covered up to 10% of the building value. These items must be currently used; the coverage is not intended to cover items rendered obsolete by retrofitting with new, energy-efficient windows and doors. Obsolete items stored in a shed that subsequently burns down are not covered.

Question 11

Coverage A: Dwelling Building (Homeowner Applicable Only)

Outdoor trees, shrubs, plants, and lawns:

Answer 11

The insured can opt to apply up to 5% of the value of Coverage A: Dwelling Building to outdoor trees, shrubs, plants, and lawns. There is a maximum of $500 for any one of these perils including debris removal, and the coverage is limited to:

○Fire.

○Lightning.

○Explosion.

○Impact by aircraft or land vehicles.

○Riot and vandalism.

○Malicious acts.

There is no coverage for the perils of windstorm, hail, or theft. Coverage is for domestic plants only.

Question 12

Coverage A1, A2, and A3 (Condominium Unit Owner Applicable Only)

Answer 12

A condominium is defined as

“a system regulated by statute to allow clear and full ownership of a specific unit with a building and a shared interest and responsibility in the Common elements (known as common property).”11

The ownership of the condominium building is in the name of the condominium corporation (also known as a strata corporation in some parts of Canada) and, once established, the condominium corporation enacts its own by-laws to govern and direct its actions. Individuals may own one or more units and will have a proportionately divided interest in the condominium’s common elements, which include:

• Parking areas.
• Walkways.
• Landscaping.
• Recreational areas.
• Pools.
• Saunas.

It is the responsibility of the condominium corporation to insure the value of the building and all its common elements under a master policy.

Individual owners of the units are responsible for insuring the contents of their units.

Question 13

COVERAGE A1: THE UNIT

Answer 13

For Coverage A1, $100,000 is provided as the minimum amount on the unit itself, excluding any improvements and betterments if no insurance is carried by the corporation, or that insurance limit is inadequate or ineffective. However, this limit can be increased.

Coverage A1 also provides coverage for:

• Building fixtures and fittings.
• Frescoes.
• Plate glass, other glass.
• Permanently installed outdoor equipment located anywhere on the property administered by the corporation.

This coverage cannot be used to pay any portion of any deductible under the corporation master policy.

Question 14

COVERAGE A2: LOSS ASSESSMENT

Answer 14

If coverage under the corporation master policy is inadequate to cover losses to collectively owned property, a special assessment may be levied against each unit owner. This could occur because of under-insurance, a large deductible, the application of a co-insurance penalty, the cause of the loss not being an insured peril, or a breach of the policy conditions.

This form provides the unit owner with loss assessment coverage in the amount of $10,000, which can be increased by payment of additional premium. This form does not cover all assessments, and it will apply only when the assessment is due to a loss insured under the unit owner’s policy. If the loss is excluded under the unit owner’s policy, there is no coverage available. Coverage cannot be used to pay any portion of any deductible under the condominium master policy.

*I think this means if the corporation sucks and they can’t insure everyone, A2 gives a basic of 10k assessment coverage to see how much can be insured..”

Question 15

COVERAGE A3: UNIT IMPROVEMENTS AND BETTERMENTS

Answer 15

Any betterments or improvements made to a condo unit made by the condo owner will increase the replacement value of the unit. Such increases are not recoverable under the condominium corporation’s master building insurance policy. In the past, high-rise condominium corporations typically defined a standard unit to include the values of the original carpeting, wall covering, and the plumbing fixtures of each unit. These values were factored into the amount of insurance provided by corporation master building insurance policy. It is important to note that most new and many older condominium corporations have amended the description of a unit to the effect that some or all of the above items are all considered under betterments and improvements. (i.e. they are not part of the standard unit and will not be covered by the corporation’s master building insurance policy. The result is each unit owner is responsible for insuring those items.) Brokers really need to discuss this matter with their clients and ensure adequate coverage limits for unit improvements.

Coverage A3 provides 100% of the limit shown in Coverage A1 for the unit improvement and betterments made or acquired by the insured, including any building, structure, or swimming pool on the premises and any material and supplies on the premises for use in such improvements and betterments. As Coverage A3 follows Coverage A1, an increase in Coverage A1 will increase Coverage A3.

Many owners of older condominium units will undertake major renovations to replace outdated kitchens and bathrooms, so brokers must make the insured aware that recovery for these expenses is made through their own policy and not the master policy. It’s wise to mention this at every renewal review so that the limits can be addressed.

Question 16

Coverage B: Detached Private Structures (Homeowner Applicable Only)

Answer 16

The policy insures structures or buildings on the premises separated from the dwelling by a clear space and not included under Coverage A: Dwelling Building. Even if they are connected by a fence, utility line, or a similar connection, they will be considered detached. The normal limit is 10% of Coverage A: Dwelling Building, and the policy does not prorate that limit if there is more than one private structure. Because this coverage is automatic, the detached structures do not have to be declared. If the detached structure is a large building and its value is more than the 10%, this should be noted on the policy.

Question 17

Coverage C: Contents (Applicable to All)

Answer 17

Under this section, residential contents are covered at three different locations: on-premises coverage, off-premises coverage, and student coverage.

Question 18

Coverage C: Contents (Applicable to All) - ON-PREMISES COVERAGE

Answer 18

This insuring agreement includes “all personal property you own, wear or use while on your premises, which is usual to the ownership or maintenance of a dwelling.” This definition of personal property is extremely broad. It includes all dwelling contents, clothing, and other personal items, and any other property owned or used on the premises.

If the insured wishes, this coverage can be extended to include “uninsured personal property of others” while it is in a portion of the dwelling occupied by the insureds. Payment will be made whether the insured is responsible for the loss. However, property of roomers and boarders who are not related to the insured are an exception — their property is not covered under this form, and they need to purchase the required coverages under their own policy.

Question 19

Coverage C: Contents (Applicable to All) - OFF-PREMISES COVERAGE

Answer 19

Personal property is covered while it is temporarily away from the premises, anywhere in the world. If the insured wishes, they can include uninsured personal property belonging to others while in the insured’s possession or belonging to a residence employee travelling with the insured.

Property in storage, in a controlled access location, is covered on an all-risks basis for only 30 days. If requested in writing, coverage may be extended beyond that date, but only for the peril of theft.

Question 20

Coverage C: Contents (Applicable to All) -

STUDENT COVERAGE

Answer 20

This covers the personal property of any student insured by this policy, who is temporarily living away from home for the purpose of attending a school, college, or university. This coverage would cease when the student graduates or ceases to be a tuition-paying student. They would be required to purchase their own policy at that time. This coverage has a special limit with respect to theft.

Question 21

Coverage C: Contents (Applicable to All) - APPLICABLE TO TENANTS

Answer 21

In addition to the three types of contents coverages above, there is one more component: applicable to tenants. This is coverage provided for improvements or betterments that insureds make or acquire to the dwelling that they rent. They are included under personal property.

Question 22

Coverage C: Contents (Applicable to All) - Exclusions and exceptions

Answer 22

• Motorized vehicles or their equipment (except for watercraft, lawn mowers, other gardening equipment, snow blowers, remote-controlled caddies, wheelchairs, or scooters having more than two wheels and that are specifically designed for the carriage of a person who has a physical disability).
• Camper units, truck caps, trailers, or their equipment.
• Aircraft or their equipment, including audio, visual, recording, or transmitting equipment powered by the electrical system of a motor vehicle or aircraft. Equipment does not include spare automobile parts.
• Personal property normally kept at any other location owned, rented, or occupied by the insured.
• Outdoor trees, shrubs, plants, lawns, or other items grown for commercial purposes.

Question 23

Coverage C: SPECIAL LIMITS OF INSURANCE

Answer 23

These special limits can be divided into two categories:

1) Those that apply to specified property items, regardless of the cause of the insured loss.
2) Those where there is no limit if the loss is caused by a specified peril.

Question 24

Coverage C: Special Limits A

Answer 24

Business property - 2k total, while items are on insured’s premises- instruments pertaining to business, samples and goods held for sale are not insured

Securities - Stocks, bonds, and other securities - 2k in all

Personal property used by any student insured and living temp away from home - 2.5k all

Money - $200

Garden type tractors - 5k

Watercraft - 1k

Computer software - 2.5k - smart home, games, etc things that are not hardware

Spare automobile Parts - 1k

Question 25

Coverage C: Special Limits B - stolen

Answer 25

The limits below apply to specified property items that have been stolen. Types of property affected by this limitation include:

Up to $200 in all:
○Numismatic property (such as coin collections).

•Up to $500 in all:
○Each bicycle, its equipment, and accessories.

•Up to $1,000 in all:
○Manuscripts.
○Stamps.
○Philatelic property (such as stamp collections).
○Collectible cards (such as sports personality cards).

•Up to $2,000 in all:
○Jewellery.
○Watches.
○Gems.
○Fur garments and garments trimmed with fur.

Question 26

Coverage C: Special Limits B - stolen - special

Answer 26

While the special limits above apply to losses caused by theft, insureds can also purchase coverage for unlimited losses caused by specified perils. For example, jewellery valued at $25,000 would be insured for its full value when the loss is caused by any of the following specified perils:

•Fire.
•Lightning.
•Explosion.
•Smoke due to a sudden, unusual, and faulty operation of any heating or cooking unit in or on the premises.
•Falling object that strikes the exterior of a building.
•Impact by aircraft or land vehicle.
•Riot.
•Vandalism or malicious act, not including loss or damage caused by theft or attempted theft.
•Water damage caused by:
○The sudden and accidental escape of water from a watermain.
○The sudden and accidental escape of water or steam from within a plumbing, heating, sprinkler, or air conditioning system or domestic water container which is located inside the dwelling.
○The sudden and accidental escape of water from a domestic water container located outside the dwelling (but such damage is not covered when the escape of water is caused by freezing).
○Water that enters the dwelling through an opening which has been created suddenly and accidentally by an insured peril.
•Windstorm or hail.
•Transportation, meaning loss or damage caused by collision, upset, overturn, derailment, stranding, or sinking of any automobile or attached trailer in which the insured property is being carried. This also applies to any conveyance of a common carrier, but does not include loss or damage to property in a vacation or home trailer owned by the insured.

Question 27

Coverage C: Special Limits B - Deductibles on Special Limit Claims

Answer 27

For claims involving personal property in which a special limit of insurance applies, the limitation applies only to losses exceeding the deductible amount. For example:

Loss of garden tractor caused by fire:        $8,000
Deductible selected by insured:            $500
Amount of loss after deductible applied:      $7,500
Maximum payable (special limit of insurance):     $5,000

Question 28

Coverage D: Additional Living Expense (Applicable to All) - ADDITIONAL LIVING EXPENSE

Answer 28

Additional living expense 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 that the insured(s) move out while repairs are being made.

Other costs that might be incurred after a loss that were not present before that loss include:

• Cost to place family pet in a kennel.
• Taxi fare to take children to and from school.
• Costs of moving personal effects to a new temporary location.

The insurer is obligated to pay additional living expenses only. In other words, payment is limited to costs “over and above” what it would normally have cost the insureds to live if the loss had not occurred.

Payment for additional living expense is made only for:

• The reasonable time that is required to repair or rebuild the dwelling; or
• If the insured decides to permanently relocate, the reasonable time required to settle elsewhere.

Question 29

Coverage D: FAIR RENTAL VALUE

Answer 29

In the following situations, the insurer pays additional living expense and fair rental value for a period not exceeding two weeks:

• When access to the insured’s property is prohibited by order of civil authority. (e.g. Riot)
• When the peril that caused the order to be given is insured under the insured’s own policy.

Question 30

Extensions of Coverage - Additional coverages provided to all insureds

Answer 30

The following additional coverages are provided to all insureds under the RIBO Homeowner Policy forms:

• Debris removal: additional debris removal cost at max 5% of insurable amount
• Property removed: 30 days, coverage for property that has been removed for protection
• Moving to another home: 30 days coverage to protect property while in transit
• Damage to dwelling (applicable to tenant): tenant yes $500. contents to pay for damage caused to the portion of dwelling
• Fire department expenses: $1000 for fire department charges
• Change of temperature: personal property damage due to temperature changes (house plants die, etc) but cant be negligent
• Freezer food: $2000 for food contained in freezers due to power failure but cannot be negligent

Question 31

Extensions of Coverage - Not insured

Answer 31

• Mechanical breakdown - not subject to a deductible
• Lock replacement: up to $500 is provided to replace or re-key locks. Only available when insured’s key are reported
• Tear out : tearing down walls to repair things caused by water/ pipe. Cost to cover this. But not cover pools
• Arson and burglary conviction reward: $1000 for information which leads to a conviction for arson or burglary
• Credit or debit cards, forgery, and counterfeit money: $1000 for forgery, counterfeit, stolen debit cards, etc
• Inflation protection: Automatic IncreasesSection I: Property Coverages of the Homeowner Policy forms by amounts which are solely attributable to inflation.

Question 32

All-Risks Coverage

Answer 32

The greatest advantage to insureds purchasing this form is that all property owned by the insured is covered on an all-risks basis. As stated in an All-Risks policy, “insures against all risks of direct physical loss or damage subject to policy conditions and exclusions”. In simple terms, all losses to property are insured unless they are specifically excluded.

Question 33

ALL-RISKS EXCLUSIONS

Answer 33

Some exclusions (such as sewer backup and earthquake) can be removed by endorsement, but most of the others cannot be removed.

Too many to count - impossible to remember

Question 34

Single-Limit Policies

Answer 34

Many insurers are issuing the Homeowner Policy form on a single-limit basis. Under this approach, the limits of insurance under Coverages A through D in Section I: Property Coverages are combined into one inclusive limit of insurance.

For example, if Coverage A: Dwelling Building had a limit of $220,000, it would be doubled under the single-limit basis to a single limit of $440,000.

Single-limit policies can be advantageous to insureds. For example, when policies are issued with separate limits for Coverages A. B, C, and D, there is a chance that insurance limits may be inadequate for one or more of those coverages. Under single-limit policies, the only time the insured would not receive a complete indemnity is when the total amount of insurance purchased was inadequate to cover the loss.

Question 35

Insurance Under More Than One Policy

Answer 35

In some cases, the insured may have another insurance policy that applies to a loss or claim and would have applied if this policy did not exist. In these situations, this policy will be considered excess insurance, and the insurer would not pay any loss or claim until the amount of the other insurance is used up.

Question 36

OTHER POLICY FORMS: SECONDARY AND SEASONAL RESIDENCES

Answer 36

Insurance companies prefer risks that meet the standard of being owner-occupied year-round, with both fire hydrant and fire hall protection. When the location doesn’t meet these standards, as in the case of secondary and seasonal residences, the risk for the insurer increases.

For example, a secondary dwelling may have the advantage of being within range of a fire hydrant, but the non-owner occupancy both reduces the coverages available and increases the premium. Or a seasonal dwelling may be owner occupied, but its increased distance away from fire protection and its non-occupancy for part of the year both reduces the coverages available and increases the premium. There are many exceptions, but these are the general rules as we look at the following two policy forms.

Question 37

Secondary Residence Form: Fire and Extended Coverage

Answer 37

This form is designed for individuals who own an additional dwelling that is usually rented in part or totally to others, and that would not qualify for the coverages available to single-family, owner-occupied dwellings.

When clients place insurance for their secondary residence, this additional location is added to the primary policy as Location 2. For our purposes, it is not treated as a standalone policy. There is only one section of coverage under this form, covering the dwelling building and contents. Liability coverage is extended from Section II: Liability Coverages of the insured’s primary package policy to cover this location, and it must be indicated on the declarations page for coverage to be in effect.

Question 38

Secondary Residence Form: Fire and Extended Coverage - Coverage A: Dwelling Building

Answer 38

The amount of insurance indicated on the declarations page for Coverage A: Dwelling Building include the values of:

• The dwelling and attached structures.
• Outdoor swimming pool and attached equipment on the premises.
• Permanently installed outdoor equipment on the premises.
• Material and supplies located on or adjacent to the premises intended for use in the construction, alteration, or repair of the dwelling or private structures on the premises.

Question 39

Secondary Residence Form: Fire and Extended Coverage
Coverage A: Dwelling Building
EXTENSIONS OF COVERAGE

Answer 39

Gaetan owns one primary building and two outbuildings (above picture). If the primary building is worth $100,000, this would make $10,000 available for outbuildings. The two outbuildings consist of a garage worth $8,000 and a shed worth $4,000. Their combined value is over the $10,000 limit. If the garage were to burn down, Gaetan would not receive the full $8,000; instead, the payment would be based on what the value of the garage was to the total value of the outbuildings. The combined value is $12,000, and the garage, at $8,000, is 66.66% of that total. This means Gaetan would receive 66.66% of the limit available of $10,000 ($6,666) as settlement for the lost garage, less the deductible. If the shed were to burn down, the same process would be followed: the shed at $4,000 is 33.33% of $12,000, so the payment for this loss would be 33.33% of $10,000 ($3,333).

Question 40

Coverage C: Personal Property

Answer 40

This section is designed to insure the owner’s personal property at the secondary residence. It does not provide any coverage to the tenant. Coverage is provided for:

• Personal property the insured owns, wears, or uses while on their premises which are usual to the ownership or maintenance of the dwelling.
• Motorized wheelchairs and scooters having more than two wheels and that are specifically designed for the carriage of a person who has a physical disability, remote controlled caddies, watercraft, motorized lawn mowers, other gardening equipment, and snow blowers while on the insured’s premises.

The following personal property is not insured:
•Motorized vehicles, trailers, camper units, truck caps, and aircraft or their equipment (except for motorized vehicles described above).

The following extensions of coverage are available, up to 10% of the amount of Coverage C: Personal Property. They do not increase the limit of insurance under Coverage C: Personal Property.
•Uninsured personal property of others.
•Personal property temporarily removed, limited to Canada or the continental United States.
•Additional living expenses.

Special limits of insurance include:
•Books, tools, and instruments pertaining to a business while on the premises: up to $2,000.
•Garden tractors, including their attachments and accessories: up to $5,000.
•Watercraft, their furnishings, equipment, accessories, and motors: up to $1,000.

Question 41

Coverage C: Personal Property - Extensions of Coverage

Answer 41

• Debris removal: This is the cost of removal of debris from the property as result of damage or loss caused by an insured peril. This extension does not increase the amount of insurance.
• Property removed: If one must remove insured property from the premises to protect it from further loss, it is insured for 30 days or until the policy ends, whichever comes first. This extension does not increase the amount of insurance.
• Fire department charges: Includes up to $1,000 (with no deductible) for fire department charges arising from attending to the insured’s property to save property from loss. This extension does not increase the amount of insurance.
• Inflation protection (if specified in the declaration): This mirrors the coverage under the primary policy, but is only applicable to Coverage A: Dwelling Building.

Question 42

Insured Perils: Fire and Extended Coverage

Answer 42

A fire and extended coverage policy works in the opposite way. In these situations, we look at the perils listed as covered. If the coverage is not on the list, then the loss is not covered by the policy. Perils that are insured include:

• Fire or lightning.
• Explosion.
• Smoke.
• Falling object.
• Impact by aircraft or land vehicle.
• Riot.
• Burglary and robbery (if specified), subject to special limits.
• Vandalism or malicious acts.
• Water damage.
• Windstorm and hail.
• Electricity.

Question 43

Basis of Claim Payment

Answer 43

For the building and private structures, the insured can choose between the two basis of claim options below, subject to the applicable amount of insurance shown in the declarations and their financial interest in the policy:

1) The ACV of the damage at the date of the occurrence.
2) The RC, subject to the same conditions as the Comprehensive Policy Form. Failure to comply means that the claim will be settled on an ACV basis.
* For personal property, only the ACV is provided as the basis of settlement.

Question 44

Seasonal Residence Form: Fire and Extended Coverage

Answer 44

As mentioned above, the extensions of coverage for the secondary residence apply to the seasonal residence as well. With multiple outbuildings, the proportionality of value determines the payment of a loss to any of the structures.

However, there are two differences to note between the two policy forms:

•Vandalism was included as an insured peril in the Secondary Residence Form. For the Seasonal Residence Form, it must be purchased — otherwise, there is no coverage provided. (Burglary must be purchased on both forms.) Additionally, there are some exclusions for seasonal vandalism (for example, if caused by theft or attempted theft).

The basis of claim payment does not give the insured the option of receiving the RC on building and private structures. Claims for this policy are settled on an ACV basis.

In summary, we can see that the coverages available (including extensions) have been greatly reduced or are non-existent when comparing secondary and seasonal residences to the Comprehensive Policy Form.

Question 45

ENDORSEMENTS

Answer 45

For some insureds, the coverages and limits of insurance offered under the standard habitational forms are not adequate. Insurers have responded by offering endorsements that address these coverage limitations.

An endorsement is an extra sheet(s) of paper attached to the policy indicating that the insurer and the insured have agreed to a change in the terms of the insurance contract. An endorsement can do several things: provide coverage for excluded property or perils, increase limits for property that is subject to the special limits, broaden coverages, decrease deductibles, or remove coverages.

Question 46

ENDORSEMENTS - Personal Articles Coverage

Answer 46

This provides coverage for certain types of high-valued personal property for an amount listed in the declarations, on an all-risk basis except as excluded, while located anywhere in the world.

Examples of property covered include, but are not limited to:

• Cameras and accessories.
• Firearms.
• Furs.
• Jewellery, precious stones, and watches.
• Stamp and coin collections.
• Musical instruments.
• Newly acquired articles, similar to those already listed on the policy, are automatically insured up to 30 days to a maximum of $5,000.

For personal articles, the basis of payment is ACV unless the insured has purchased coverage based on the agreed value of the object insured. Under a valued policy, both the insured and insurer agree on the value of the property at the time the document is issued. In the event of total loss, the agreed value is paid. There is no deductible applied for any insured loss to any item scheduled.

Question 47

ENDORSEMENTS - Personal Articles Coverage

Watercraft, Outboard Motor, Trailer, and Miscellaneous Equipment Coverage

Answer 47

Additional Coverage for:

Coverage is provided only for the items described on the coverage summary page, including:

• The boat, including permanently attached equipment.
• The motor(s).
• The boat trailer.
• Boat equipment not included in the items above.

Most policies allow for coverage on an all-risks basis, except as excluded. Transportation losses and collision with underwater rocks and other objects, including objects floating on the water, are examples of such exclusions.

Coverage is normally restricted to Canada and the continental United States. Insureds must insure to 100% of the value of the property, and a $100 deductible applies.

Automatic coverage is provided for up to 30 days for newly acquired watercraft, outboard motors, trailers, and miscellaneous equipment, up to $5,000.

Question 48

ENDORSEMENTS - Personal Articles Coverage

Food Freezer Coverage

Answer 48

Applicable to secondary and seasonal dwellings for frozen food

Question 49

ENDORSEMENTS - FINE ARTS COVERAGE

Answer 49

his coverage provides insurance on an all-risks basis for objects regarded as fine arts for the amounts as listed on the declarations page. Examples of fine art objects are paintings, pictures, etchings, tapestries, rare books, antique furniture, and porcelains.

Location restrictions apply. The property is covered at the locations specified in the declarations, while in transit between those locations, or in any other location in Canada or the continental United States. The exception is when the property is located at fairgrounds or expositions. In these situations, the limit is reduced to 10% of the amount shown on the declarations.

There are several exclusions to note. Newly acquired items are covered for up to 30 days but limited to 25% of the sum insured. For an additional premium, breakage can be deleted as an exclusion from the coverage.

Question 50

Endorsements - Earthquake Coverage

Answer 50

Damage caused by an earthquake is excluded under all habitational forms; however, insureds can purchase earthquake coverage.

Coverage is provided on an occurrence basis, because earthquakes are unique (that is, each shock may be accompanied by one or more aftershocks). The insurer agrees that when more than one earthquake shock occurs within any 168 hours, it is deemed to be a single occurrence.

The coverage is all-risks, and there are three exclusions. The deductible is a percentage of the total amount of insurance on Coverages A, B, C, and D. The country is divided into zones based on the potential for earthquakes to occur, determined by the underlying geology (the coast of British Columbia and the Ottawa Valley are two of the higher-rated zones).

Earthquake coverage can be applied to a condominium on an all-risks basis, which would provide coverage for personal property, additional living expense, unit improvement and benefits, loss assessment, and additional unit protection. The deductible is stated as a percentage of the coverages.

Question 51

Endorsements - Personal Computer Coverage

Answer 51

This coverage is provided on an all-risks basis, except as excluded for personal computer equipment, media, and software listed on the declarations page, and subject to the deductible, anywhere in the world.

Additionally, there are two special conditions that brokers should be aware of:

1)Newly acquired articles are insured for 30 days, subject to the following limitations:

○Equipment: $5,000.

○Media or software: $1,000.

2)If the loss occurs by theft from an unattended vehicle, the property is covered only if there was forcible entry into a locked vehicle.

Question 52

Endorsements - Residence Glass Breakage Deductible

Answer 52

For an additional premium, the insured can have the deductible on building glass reduced or, in some cases, eliminated altogether.

Question 53

Endorsements - Sewer Backup

Answer 53

Exclusion 19c states that loss or damage is not covered if caused by the backing up or escape of water from a sewer, sump, or septic tank. This is a very important coverage to add to any policy, because basements in houses have gone far beyond being mere storage and furnace rooms. They are now an integral part of the living area of many houses.

Sewer backup claims used to be a matter of pumping out the water and washing the contents. We now realize that this effluent causes serious damage, requiring sophisticated and very expensive cleanup in some cases. Contents are now mostly disposed of, increasing claim costs.

The coverage extends to include water escape from eavestroughs or downspouts, or from the melting of ice or snow on the exterior of the roof. As houses are built closer together and storms become more violent, there is an increased chance of sewer systems being overwhelmed.

The premium for this coverage will vary, based on the prior risk experience of the location. For example, risks in locations with old, inefficient sewer systems will pay a higher premium for the endorsement than risks in locations with updated infrastructure and a better claims experience.

Question 54

Endorsements - Mass Evacuation Coverage

Answer 54

This endorsement will pay for all necessary and reasonable increases in living expenses if a civil authority proclaims an order for mass evacuation as a direct result of a sudden and accidental event in Canada or the continental United States. The amount of mass evacuation coverage will not be limited, up to a maximum of two weeks.

Exclusions to mass evacuation coverage are:

• Flood.
• Earthquake.
• War.
• Nuclear incident.

Question 55

Endorsements - Vacancy Permit

Answer 55

Normally, the habitational policy excludes any losses that occur after the insured property is vacant, to the insured’s knowledge, for more than 30 consecutive days. This endorsement allows the insured dwelling to be vacant beyond 30 days, but only for the following perils:

• Fire or lightning.
• Explosion.
• Smoke.
• Falling object.
• Impact by non-owned aircraft or land vehicle.
• Riot.
• Windstorm or hail.

Vandalism and water damage are important perils not covered above. It’s important to note that vacant properties pose a greater hazard than occupied properties, particularly because they present an allurement to children and vandals. This endorsement may be difficult to obtain, and it is generally very costly. Since it is not high on many insurance companies’ list of acceptable risks, it normally carries a very high deductible.

Question 56

Endorsements - Home Business Extension Endorsement

Answer 56

The Home Business Extension was introduced to meet this new reality. It amends the exclusions in the habitational policy to fit the business use of the premises. Every insurance company has a different form, and their underwriting considerations will include the type of business, values of the business property, annual sales/receipts, and details of security. Not all classes of home-based business are eligible for these policies, and some may ultimately require a commercial policy.