Study 6 - Anatomy of a Property Policy (Exclusions): Summary

Question 1

The need for exclusions in a property policy

Answer 1

• All property policies contain exclusions
• Exclusions remove certain losses from the policy’s coverage (i.e. types of property not insured, perils that are never / sometimes not insured against)
• Never expand coverage, always restrict it
• May exclude only a part of the coverage
• Remove exposures to loss that are considered undesirable or uninsurable
• May be temporary or permanent
• May be amended by special endorsements or wordings

Question 2

Step 3 Policy Reading - Reviewing Exclusions

Answer 2

• Determine the coverage
• Determine if exclusions apply
• Determine if there is an exception

Property excluded on comprehensive form also excluded on broad and basic forms. Perils excluded on comprehensive form also excluded (or not insured) on broad and basic forms.

Question 3

Buildings for business or farming exclusion

Answer 3

Habitational coverage must clearly not apply to business risks

Question 4

Property on exhibit exclusion

Answer 4

Exhibits can be insured under an exhibition floater

Question 5

Property illegally acquired or subject to forfeiture exclusion

Answer 5

Denies coverage for property that was acquired illegally, or acquired from someone who acquired it illegally

Question 6

Evidence of debt or title exclusion

Answer 6

Denies coverage for property that may be insured by other forms specifically designed for it

Question 7

Sporting equipment exclusion

Answer 7

Excluded where the loss is due to use

Question 8

Animals, birds or fish exclusion

Answer 8

Excluded from loss, unless caused by a specified peril (other than impact by aircraft or land vehicle)

Question 9

Property lawfully seized

Answer 9

Coverage is restored if seized / destroyed by government to prevent the spread of fire

Question 10

Outdoor radio and TV antennae, including satellite receivers exclusion

Answer 10

Weather-related loss not covered

Question 11

Exclusions in homeowners forms concerning loss or damage not insured (part 1)

Answer 11

• Marring, scratching, abrasion, chipping, or breakage
• Wear and tear
• Faulty design, material, or workmanship
• Settling, expansion, contraction, moving, bulging, buckling, or cracking
• Data or data problem
• Vacancy
• Nuclear incident
• Radioactive contamination
• War risks
• Intentional or criminal acts
• Property being worked on
• Water damage
• Watermains

Question 12

Exclusions in homeowners forms concerning loss or damage not insured (part 2)

Answer 12

• Pests
• Smudging and industrial smoke
• Earth movement
• Theft from part of the dwelling rented to others
• Vandalism or malicious acts or glass breakage while dwelling under construction or vacant
• Theft from a dwelling under construction
• Rust or corrosion, wet or dry rot, fungi or spores
• Fuel oil
• Trickery or fraud
• Terrorism
• Electrical, electronic, and mechanical breakdown

Question 13

Examples of four types of water damage covered

Answer 13

1. A leaking water heater
2. Escape from a domestic water container
3. A broken watermain
4. A hole in the roof created by wind damage