Study 6 - Anatomy of a Property Policy: Exclusions Flashcards
Exclusions
- Never expand policy coverage but always restrict it
- Remove exposure to loss considered undesirable or uninsurable
- Exposure to trade risk or maintenance costs
- Exposures to inevitable (non-fortuitous) loss
- Exposures that reflect underwriting and rating considerations
Buildings for Business or Farming
Helps ensure that insureds who present business or farming exposures will be be covered instead under commercial or farm policies that are more appropriate for the exposure
Property on Exhibit
Generally can be insured under an exhibition floater
Property Illegally Acquired or Subject to Forfeiture
Property stolen or illegally imported into Canada
Evidence of Debt or Title
Denies coverage for property that may be insured by other forms specifically designed for it
Sporting Equipment
Loss or damage due its use is excluded
Animals, Birds, or Fish
Excluded unless the loss or damage is caused by a specified peril other than impact by aircraft or land vehicle
Property Lawfully Seized
Supports public policy by denying coverage for property to which the insured has no legal claim
Outdoor Radio and TV Antennae, Including Satellite Receivers
Not covered when caused by windstorm or hail, weight of ice, snow, or sleet; or collapse
Marring, Scratching, Abrasion, Chipping, or Breakage
Unless caused by:
- A specified peril
- An accident to a land vehicle, watercraft, or aircraft; or
- Theft or attempted theft
Wear and Tear
Purpose is to avoid disputes about what a risk is. Excluded because the cause of loss is inevitable
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
Settling, Expansion, Contraction, Moving, Bulging, Buckling, or Cracking
Intended to exclude damages from gradual, naturally occurring events
Data or Data Problem
May result in financial loss. Excluded unless directly caused by resultant fire, explosion, smoke, or water damage
Vacancy
Excludes loss or damage if it occurs after the dwelling has, to the insured’s knowledge, been vacant for more than 30 consecutive days. Vacancy is material to the insurer’s acceptance of the risk
Nuclear Incident & Radioactive Contamination
Excluded except for ensuing loss or damage which results directly form fire or explosion
War Risks
Generally, the events listed in this exclusion are considered uninsurable
Intentional or Criminal Acts
Recent legislation has been passed in some provinces to protect “innocent co-insureds”
Property Being Worked On
Where damage results from that process or work. Resulting damage to other property is still covered
Water Damage
In the IBC named-perils forms, water damage encompasses loss or damage to insured property caused by only four specific scenarios. Coverage for these scenarios is insured by making them exceptions to the exclusion of water damage.
- The S&A escape of water or steam from within a plumbing, heating, cooling, sprinkler, or A/C system or domestic water container which is located within the insured’s dwelling or detached private structures
- The S&A escape of water from a domestic water container which is located outside the dwelling or detached private structures
- The S&A escape of water from a watermain located outside the insured’s dwelling or detached private structures
- Water that enters the dwelling or detached private structures through an opening created suddenly and accidentally by an insured specified peril other than water damage
Seepage
A slow flow of water that takes place over a more extended period of time than accidental discharge, usually through porous material
Watermains
Damage caused by water suddenly escaping from a watermain is covered, but damage to the watermain itself is not.
Pests
Loss due to birds, vermin, raccoons, insects, or rodents including bats is excluded except for loss or damage to glass of the dwelling or detached private structures
Smudging and Industrial Smoke
Loss caused by such smoke is excluded because it comes from a friendly fire - a fire for useful purposes
Earth Movement
Loss or damage caused by snowslide, earthquake, landslide, or any other earth movement
Theft from Part of the Dwelling Rented to Others
Loss or damage due to theft or attempted theft is excluded if part of the insured’s dwelling is rented to others partially or fully furnished and the tenant’s employee or household member steals insured property from the rented portion
Vandalism or Malicious Acts or Glass Breakage While Dwelling Under Construction or Vacant
This exclusion alerts the insured that such losses are virtually inevitable and will not be recoverable, so the insured should act prudently to avoid them
Theft from a Dwelling Under Construction
Excluded for the same reason as vandalism, malicious acts, or glass breakage. Such premises are often targets for vandals and thieves
Rust or Corrosion, Wet or Dry Rot, Fungi or Spores
These events occur naturally but can be prevented or controlled by adequate maintenance
Fuel Oil
Loss due to the the release, discharge, or dispersal of fuel oil is excluded
Trickery or Fraud
The possibilities are almost endless, and such losses may be difficult to prove
Terrorism
Significant concern about terrorism continues, and it is widely thought that loss from such attacks, like loss from war risks, should not be covered under a property policy
Electrical, Electronic, and Mechanical Breakdown
Loss or damage caused by breakdown is likely due to mechanical failure, wear and tear, or deterioration and is therefore not covered
