Questions - Chapter 3 Section 2 - Common Habitational Endorsement Forms

Question 1

Define endorsement.

Answer 1

An endorsement is an extra sheet 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.

Question 2

Five functions that endorsements serve.

Answer 2

1) Provide coverage for excluded property or perils.
2) Increase limits for property subject to special limits of insurance.
3) Broaden coverages.
4) Decrease the deductibles.
5) Remove coverage.

Question 3

Six objects generally regarded as ‘Fine Arts”.

Answer 3

1) Paintings
2) Pictures
3) Rare books
4) Valuable Rugs
5) Rare jewelry
6) Manuscripts

Question 4

Identify three perils that are included in this form that are not included under either Homeowners forms.

Answer 4

1) Earthquake
2) All sources of smoke
3) Scratching

Question 5

List three exclusions to the form.

Answer 5

1) Breakage unless caused by perils named in this endorsement.
2) Birds, vermin, rodents or insects.
3) Any process or work.

Question 6

Explain the following special provisions:

a) Newly Acquired Articles
b) Packing and Unpacking

Answer 6

a) Up to 25% of the amount of insurance for objects purchased from a gallery, or auction.
b) A condition of this endorsement that the fine arts must be packed and unpacked by competent packers.

Question 7

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

Answer 7

1) Cameras and accessories
2) Jewellery
3) Firearms
4) Fur
5) Silverware
6) Stamps and coins

Question 8

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

Answer 8

a) Chipping, scratching, or breakage.
b) Accidental loss or damage while actually being worked upon.
c) Snowslide, earthquake, landslide or any other earth movement.

Question 9

Explain the ‘valued coverage option’.

Answer 9

Under a valued policy, both the insured and the insurer agree at the time of the policy is issued as to the value of the property. In the event of a loss, the agreed value is paid.

Question 10

Explain the following special provisions:

a) Partial loss to a coin collection
b) Newly Acquired Articles

Answer 10

a) Represents the total value of the collection. When coverage is provided on a blanket basis, losses are adjusted. The max payment is $250 for a single article. If items have a larger value, they can be placed on a schedule endorsement.
b) Up to $5,000 additional coverage is provided for newly acquired articles and are covered for 30 days until they need to be added on a scheduled endorsement.

Question 11

Identify three underwriting considerations of the form.

Answer 11

1) When coverage is provided on a scheduled basis each item must be properly described and an amount set for each item.
2) Current valuation is usually required on individual items such as jewellery or furs.
3) Before agreeing to provide coverage the insurer may request an appraisal be provided.

Question 12

Explain the purpose of the “Increased Cost - Demolition or Construction’ endorsement.

Answer 12

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

Question 13

Explain the following special provisions:

a) Sprinklered By-law extension
b) Demolition or Construction Extension

Answer 13

a) The insurer agrees to pay the additional cost of installation, or repair to comply with any by-law, law requiring the installation of a sprinkler system. The payment is limited to the minimum amount require to comply with the law.
b) The 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 minimum amount will be paid that’s required by law.

Question 14

Explain the following special provisions of the following endorsements:

a) Residence Glass
b) Sewer Back-Up
c) Earthquake
d) Vandalism or Malicious Acts (seasonal dwelling)

Answer 14

a) Adds accidental glass breakage coverage to buildings insured under the policy, most frequently used as a means of reducing the deductible.
b) Broadens coverage under Section 1 - Property Coverages to include “the backing up or escape of water from a sewer or drain, sump, septic tank, eavestrough or downspout.”
c) Coverage is subject to a 10% deductible to the amount of insurance on the dwelling.
d) This endorsement removes the exclusion under seasonal dwelling policies for this peril.

Question 15

Identify the four items on the Coverage Summary page that are insured under the Outboard Motor and Boat policy.

Answer 15

1) The boat
2) The motor
3) The boat trailer
4) Boat equipment

Question 16

What are the two types of losses that the watercraft policy will respond to?

Answer 16

1) Transportation Losses

2) Collision with underwater rocks and other objects

Question 17

What are three exclusions to the watercraft policy?

Answer 17

1) Accumulative damage, however it may be caused.
2) Wear and tear, gradual deterioration.
3) While insured property is rented or leased to others.

Question 18

Explain ‘loss of use’ coverage provided by the Watercraft policy.

Answer 18

Some insurers will provide a amount of $20 per day to rent a substitute motor or boat when the insured watercraft is damaged by an insured peril.

Question 19

Explain the “minimum retained premium” provision of the watercraft policy.

Answer 19

The greatest exposure to loss occurs during the summer months and the premium charged is based on that assumption. Most policies contain a clause limiting the premium to be refunded to the insured if coverage were to be cancelled during the term, in most cases up to 75%.

Question 20

Explain the purpose of the ‘travel trailer floater’.

Answer 20

This endorsement removes the exclusion for owned trailers and their contents which are contained on all IBC habitational forms. Coverage is generally provided on an “all risks” basis.

Question 21

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

Answer 21

1) Motorized vehicles such as golf carts
2) Horses and livestock
3) Bicycles
4) Business property
5) Sports equipment