Study 7 - Endorsements and Floaters Flashcards
Endorsement
An amendment added to a written document, particularly an agreement between parties, altering its provisions.
Endorsements override specific terms in the policy by:
- removing coverage for certain property or perils
- adding warranties or additional conditions
- altering or removing policy conditions or limitations; or
- offering permission for activities, occupancy, or parties that may not otherwise be covered
Manuscript wording (free-form endorsement)
Policy wording that does not conform to the standard wording in general use within the insurance industry and that is unique to the policy involved
Sewer Backup Endorsement
Damage caused by the escape of water from a sewer, sump, or septic system is not covered. To address that, a sewer backup endorsement must be added to the policy. The limit is generally $25k or higher but is often limited to $10k in flood-prone areas.
Water Endorsement
Need because flood is often used loosely and incorrectly. The sewer backup endorsement does not cover damage from flooding so many insurers developed distinct endorsements for residential risk.
Earthquake Endorsement
The homeowner’s forms exclude damage caused by earthquake but it may be added via endorsement. Rates for such coverage are based on the below:
- Geographic location
- Building design, construction, and age
- Occupancy
- Soil conditions
Vacancy Permit
Vacancy is excluded in several named perils, including vandalism or malicious acts, water damage, and glass breakage. If an insurer grants permission for the vacancy via a vacancy permit, an additional premium is usually charged.
Bylaws Endorsement
The endorsement does not increase the limits of the policy, it only covers the the costs actually incurred by the policyholder to comply with the minimum code requirements
Home-Based Business Endorsement
When a business is being run from the home, additional risks may arise that are material to the underwriting of the policy, which is why applications include questions regarding business use. All business exposures must be understood and appropriately underwritten.
The HBBE may be added to the policy to enhance property limits or perils and ensure proper coverage for property, liability, and consequential losses.
Floater Policy
Additional coverage for movable items, like jewellery or antiques, beyond what’s included in the basic homeowner’s policy. Also called a “rider” or “endorsement”. A policy designed to cover property that floats, or moves from location to location.
Floaters operate in 3 ways
- Floaters enhance limits or perils for property insured in the policy wording
- Most commonly jewellery, collectibles, or other valuable items where a special limit of insurance would apply - Floaters provide coverage for scheduled items - that is, items of certain types of property shown on a schedule of insurance
- Floaters offer coverage on property that might not be covered otherwise
Appraisals
Appraisals are often required for property insured under a floater. Appraisals verify:
- the existence of the item to be insured
- its value
- its ownership
- its condition
Schedule of Insurance
A list of items individually covered by a policy; for example, a list of jewels under a jewellery floater, a list of cars under one automobile policy, or a list of buildings under a fire policy
Common Types of Floaters
- Fine Arts Floater
- Personal Articles Floater
- Other Limited Property Floater
- Watercraft Floater
- Vacation or Recreational Trailer Floater
Personal Articles Floater
A policy that covers certain kinds of personal property in a principal residence more broadly or for higher limits than do policies, such as a homeowners policy, of more general scope. A property appraisal is often required.
