Study 8 - Other Property Coverages: Summary

Question 1

Secondary homes - loss exposure

Answer 1

When there are two homes, secondary is lived in often, not just in summer or for infrequent weekends or vacations

Question 2

High-valued homes - loss exposure & specialized coverages

Answer 2

• Distinctive home with custom features and a high replacement value
• Requires special appraisal
• Must be over $1M in value to qualify as high value
• Usually waive the deductible for high claims
• Includes cash-out option
• Increases the special limits for valuable property
• Includes the following: (1) equipment breakdown, (2) kidnap expense coverage, (3) home invasion coverage

Question 3

Modular homes - loss exposure & coverage

Answer 3

• Factory-built and moved to site in sections, built on foundation
• Usually covered under homeowners forms

Question 4

Mobile homes - loss exposure & coverage

Answer 4

• Factory-built homes on their own chassis, constructed to code, towed to site and placed on foundation of concrete or concrete blocks or heavy timber supports
• Mobile homeowners form includes property and liability, covers named perils
• Excludes the following: (1) Loss or damage occurring while the building is being moved, except in an emergency, (2) Loss due to conversion, embezzlement, or secretion by any person in possession of the building

Question 5

Rented dwellings - loss exposure & coverage

Answer 5

• Generate a higher than acceptable loss frequency if not underwritten properly
• Residential basic form: simpler named-perils form suitable for a rented dwelling

Question 6

Accommodation sharing (e.g. AirBnB) - loss exposure & coverage

Answer 6

• Damage to dwelling and contents of hosts: damage may be excluded if building is used for business.
• Accommodation-sharing service providers may provide coverage
• Property of guests: not covered under host’s insurance, as unrelated renter
• Theft exclusions: host’s policy may exclude theft since theft from a rented dwelling is excluded, but depends on wording (i.e. if a single room is rented, theft from other rooms may still be covered)

Question 7

Seasonal dwellings

Answer 7

• A second dwelling for purely recreational purposes

- Seasonal residence form: named perils policy similar to the residential basic form

Question 8

Hobby farms

Answer 8

A special policy form or rider can cover limited farming activities. To qualify as a hobby farm under a homeowner’s policy, the farm must be:

• Less than 25 acres
• Primarily dwelling owner occupied
• Max 5 farm animals, 10 poultry
• Max farming income of $10,000
• No employees, custom farming, horse boarding, training
• Max $25,000 farm equipment and $25,000 farm-related outbuildings

Question 9

Condominiums - loss exposures

Answer 9

• Each province or territory has its own condo legislation
• Owners collectively make up a condominium corporation (in BC, strata corporation)
• Owners select a board of directors to manage corporation
• Standard unit bylaw: determines property covered by corporation building policy
• Condominium corporation insurance: policy covering entire building, for common loss

Question 10

Condominium unit owners forms

Answer 10

• A basic form and a comprehensive form
• Omits Coverages A and B for a dwelling and detached private structures
• Coverage C - Personal Property is similar to homeowners
• Coverage D - Additional Living Expense is similar to homeowners

Question 11

Condominium-specific coverages (i.e. Coverage “U”)

Answer 11

• Coverage U1 - Unit Improvements and Betterments
• Coverage U2 - Loss Assessment
• Coverage U3 - Unit Additional Protection

Question 12

Basis of claim payment for condominiums

Answer 12

Reflects the unique form of property ownership of unit and common property

Question 13

Tenants - loss exposures

Answer 13

Underwriting concerns:

• Short-term occupancy
• Too many roommates

Question 14

Tenants Comprehensive Form

Answer 14

• All-risks form, coverage determined by exclusions
• Differences from homeowners forms reflect the absence of building coverage (Coverage A)
• Coverage C - Personal Property includes dwelling improvements and betterments made by tenant
• Coverage D is identical, but set as percentage of Coverage C
• Extensions for tear out, damage to dwelling due to theft, vandalism or malicious acts, impact of vehicle

Question 15

Tenants Basic Form

Answer 15

• Basically the same as comprehensive form, but with more limitations
• Coverage C - Personal Property, stored property only covered for 30 days for perils included in the form. After 30 days, only covered for theft
• No extension for damage caused by vehicle impact
• Differences from homeowners forms reflect the absence of building coverage (Coverage A)