Study 7 - Endorsements and Floaters: Summary

Question 1

Nature and role of endorsements in a personal property policy

Answer 1

Endorsements

• Amendments to a written agreement between parties
• Override specific terms in the policy by:
  (1) removing coverage for certain property or perils,
  (2) adding warranties or additional conditions,
  (3) altering or removing policy conditions or limitations,
  (4) offering permission for activities, occupancy, or parties not otherwise covered
• Mostly standardized
• Free-form endorsements written for specific need
• Overly restrictive endorsements may not be enforceable

Question 2

Common Types of Endorsement (7 endorsements)

Answer 2

• Sewer back up endorsement
• Water endorsement: residential water exposures, excludes flooding
• Earthquake endorsement: rates based on location, building characteristics, occupancy, soil conditions
• Vacancy permit: adds coverage after 30 days of vacancy, with additional premium
• Bylaws endorsement: covers repair delays due to building codes compliance
• Home-based business endorsement: enhance property limits or perils
• Identity theft endorsements: costs of restoring an insured’s identity

Question 3

Nature of floater

Answer 3

• Comes from inland marine insurance
• Applied to property in transit, any property that could be moved
• May be issued as a separate policy; more often attached to property policy
• Term more commonly used in the past, now often called endorsements
• Still a distinction between a floater and an endorsement

Question 4

Role of floater

Answer 4

1. Enhance limits or perils for property insured in the policy wording
2. Provide coverage for certain types of property on a schedule of insurance
3. Offer coverage on property that might not be covered otherwise

Question 5

Common types of floater (6 types)

Answer 5

• Fine arts floater: often fragile, irreplaceable, high value
• Personal articles floater: jewellery, coins, stamps, and collectible cards, bicycles and accessories
• Scheduled personal property endorsement: similar to personal articles, collectibles, cameras, furs, or jewellery. Especially good for computers (does not cover loss of data)
• Other limited property: floaters may be underwritten to provide coverage beyond special limits
• Watercraft floaters: generally list each component and value, such as hull, outboard motors
• Vacation or recreational trailer floaters: Coverage A represents the unit itself, including built in accessories. Limited coverage for personal property. May cover additional living expenses

Question 6

Potential costs covered by an identity theft endorsement (7 costs)

Answer 6

• Legal costs to notify the appropriate authorities
• Liaison between the insured and credit bureaus, credit-card companies, and other financial institutions
• Lost wages as result of time off work to mitigate the loss; coverage is limited to a dollar amount, usually $500 per week
• Loan application fees
• Legal fees to defend against lawsuits as a result of identity theft
• Long-distance phone charges
• In some cases, a credit monitoring service for a specified period after the identity theft