Study 8 - Other Property Coverages Flashcards
What is the difference between a primary home and a secondary home?
The primary home is the home the insured lives in most of the time, the second home is the one they live in often. Both homes are for the personal use of the insureds and are not rented to others when the insureds are away.
In what way is a second home different from a summer cottage?
It is more like a traditional home, in which the insured cares for and maintains the dwelling with the same care as for the main home.
How will insurers provide coverage for a secondary home?
Insurers will use the same policy forms to cover a secondary home as they use to cover a primary home.
What distinguishes high-valued homes from other homes?
A high-value home is a home distinguished by architectural design, custom features (marble counter tops, hardwood floors), and a high replacement cost. They may also contain items such as antiques, fine arts, wine collections etc that are not usual to a normal home.
How high must the replacement value be for a home to be considered high-valued?
This may vary between insurers, and also may change over time. Recently, a common threshold of high value has be $1,000,000.
What distinguishes high-valued home insurance from standard home insurance?
They require more specialized insurance coverage, which costs more. But they may included more innovative added coverages such as home appraisal expenses, cash-payout options, increased special limits, kidnap expense coverage and equipment breakdown coverage.
Explain Kidnap Expense Coverage.
Insureds who own and live in high-valued homes are often high-profile families within their community, and their children can be targets for kidnappers seeking ransom. Coverage up to a specified limit for costs resulting from child abduction, including travel and phone costs, medical, dental and psychiatric fees.
Explain Equipment Breakdown coverage.
Provides a specified amount of insurance for accidental breakdown of the equipment or system used in the dwelling, even if caused by human error, improper installation, or lack of maintenance. In addition, should the insured have to move out of the house temporarily due to equipment breakdown, the extra expenses would be covered.
Explain Home Invasion coverage.
High-value homes are more attractive to thieves. Should the insured’s family be present during a home invasion, there may be coverage up to a specified amount to pay medical, psychiatric, home security and other expenses associated with trauma.
Explain Home Appraisal coverage.
Due to high-value homes having custom features, standard cost calculators may not be able to calculate the correct replacement value. Insurers hire professional home appraisers to provide expert, detailed reports of the characteristics of high-valued homes. This ensures that an adequate amount of insurance is carried on the home.
Explain Disappearing Deductible.
Insured’s with high-valued home insurance are usually concerned with major losses and tend not the report small losses. High-valued home policies usually waive the deductible for a loss of a specified amount, perhaps $10,000 or more, and pay such a loss in full.
Explain Cash-Out Option.
Under a high-valued home insurance policy, the insured may receive a cash payment up to the policy limit without deduction for depreciation and without having to rebuild or replace the damaged or destroyed building.
What makes the condominium form of ownership an attractive alternation for many people?
- Tend to cost less that detached houses
- Free insured’s from regular maintenance such as yardwork and building upkeep
- Offer the freedom to temporarily leave without having to arrange for someone to check the house or pick up the mail
What is the role of the condominium corporation?
A condominium corporation is created under provincial legislation, without share capital and whose member are the condominium owners. The owners elect a board of directors from among them to administer the affairs of the condominium corporation. They are responsible for managing the condominium and any assets. The board of directors may pass by-laws, binding on all the members of the corporation, establishing their rights and duties as members.
What coverage is provided under Coverage U or the Condominium Unit Owners forms?
Coverage U encompasses 3 different coverages:
U1 - Unit Improvements and Betterments
U2 - Loss Assessment
U3 - Unit Additional Protection
What legislation do condominiums fall under?
They fall under provincial jurisdiction, each province has its own legislation governing condominiums.
Define Standard Unit By-Law.
A by-law passed by a condominium corporation to assign responsibility between the unit owner and the condominium corporation for loss or damage to a unit and to designate whose insurance policy should cover repairs to damaged improvements. The condominium corporations building policy will cover the item listed in the by-law (what is standard to the condo) and the items not found on this list would be considered improvements and covered under the unit owner’s policy (insured changed the countertops)
What must be covered under the condominium corporations policy it’s in own name?
The entire building, including individual units, and common property (available for use to all owners such as lobby’s, elevators, hallways) for loss or damage cause by major perils such as fire, lightning, smoke, windstorm, hail, explosion, water escape, riot or civil commotion, impact by aircraft or vehicles, and vandalism or malicious acts. This is written under a commercial form.
What are the two IBC Condominium Unit Owners Forms?
Basic and Comprehensive.
Why do Condominium forms omit Coverages A and B?
The condominium building and common property are covered under the policy of the condominium corporation.
What is covered under Coverage C for the Condominium Unit Owners Forms?
Coverage C in the Condominium Unit Basic Form is the same as Coverage C in the Homeowners Basic Form. And Coverage C in the Homeowners Comprehensive Form is the same as Coverage C in the Homeowners Comprehensive Form. The Homeowners forms refer to the insured’s dwelling, which is referred to as unit in the Condominium forms.