CAIB 1: Chapter 2.1.1 - Textbook Questions

IBC's homeowner forms are seldom used in their unabridged form. Explain why this is so.

with increased competition for homeowners insurance business, many insurers began to amend these forms in order to make them more attractive to consumers

Identify 4 types of habitational risks which may be eligible for coverage under a homeowner's form.

• Single family dwellings occupied year around by the owners as their principal dwelling

• Dwellings containing more than one family

• Insureds having more than one principal dwelling

• Mobile homes situated on a full basement

• Dwellings in the course of construction when the insured intends to occupy the dwelling upon completion

The format or structure of all IBC homeowners forms is the same. Identify the 2 coverage Sections provided under all homeowners forms.

• Section I - Property Coverages

• Section II - Liability Coverage

Even though not named on the policy, a person who is not legally married to the Named Insured can qualify for coverage. Outline the criteria set by the insurer to determine if such person is eligible for coverage.

• Homeowners forms insure a person not named on the policy and not legally married to the Named insured if they are considered to be a spouse. The Named insured and his/her spouse:

  • Have lived together in a conjugal relationship continuously for 3 years, or;

  • Are the natural or adoptive parents of a child for a period of 1 year

Identify 3 types of property excluded under coverage C - Personal Property

• Motorized vehicles or their equipment

• Aircraft or their equipment

• Camper units, truck caps, trailers, or their equipment

Personal property which is temporarily removed from the insured's premises is covered under all IBC homeowners forms. State the territorial limits or coverage territory for this property.

• Territorial limits:

• World wide

Identify the 2 categories of property having Special Limits of Insurance

• 1: specified property items which have been stolen or which were lost or damaged by other broad perils

• 2: those which apply to specified property items, regardless of the cause of the loss

Special Limits: specified property items which have been stolen or which were lost or damaged by other broad perils

• Jewelry and furs up to $2000 in all

• Collectible cards up to $1000 in all

• Stamps/stamp collections and manuscripts up to $1000 in all

• Each bicycle, its equipment and accessories, up to $500 in all

• Coin collections up to $200 in all

Special Limits: those which apply to specified property items, regardless of the cause of the loss

• Garden type tractors, including attachments and accessories - $5000

• Computer software - $2500

• Property of students living away from home - $2500

• Business property - $2000

• Securities - $2000

• Spare automobile parts - $1000

• Watercraft - $1000

• Money or bullion - $200

explain the conditions applicable to any claim for additional living expenses under coverage D - Additional living expenses

• Coverage is provided when:

  • The dwelling is damaged by an insured peril; and

  • The damage is sufficient to make the dwelling unfit for occupancy, or requires that the insured move out while repairs are being made

• Payment is limited as follows:

  • Only those additional expenses incurred by the insured after the loss are covered

  • It must be shown that such expenses were necessarily incurred in order for the insureds to maintain their normal standard of living

explain the coverage provided for mass evacuation under the homeowners forms

Coverage is also provided for a period not exceeding 2 weeks for any necessary increases in living expense when an order for "mass evacuation" is made by a civil authority. The order must have been the direct result of a sudden and accidental event originating in Canada or the USA

provide a brief explanation for the following Extensions of Coverage provided by homeowners forms: Moving to another home

• Coverage is automatically extended to insure property while in transit to and at another location which is to be occupied by the insureds as their principal residence

• Coverage is restricted to Canada and is provided for 30 consecutive days only, or until the policy expires or is terminated, whichever is sooner

provide a brief explanation for the following Extensions of Coverage provided by homeowners forms: Change of temperature

Coverage is included on all homeowners forms for damage to personal property due to a change of temperature resulting from physical damage to the dwelling or equipment from an insured peril

provide a brief explanation for the following Extensions of Coverage provided by homeowners forms: freezer food

• The homeowners forms provide up to $2000 for food contained in a freezer located on the insured's premises when the loss or damage is due to:

  • Power failure

  • Mechanical breakdown

provide a brief explanation for the following Extensions of Coverage provided by homeowners forms: lock replacement

All homeowners forms provide up to $500 to replace or re-key the locks on the insured's principal dwelling. This coverage is available only when the insured's keys gave been stolen and the loss reported to the authorities

provide a brief explanation for the following Extensions of Coverage provided by homeowners forms: tear out

• Homeowners forms provide coverage for the repair of walls, ceilings, or other parts of insured buildings which must be torn apart before water damage from pipes or domestic appliances can be repaired.

• The cost of tearing out and replacing any part of the building to repair damage caused by swimming pools or public watermains is not insured

provide a brief explanation for the following Extensions of Coverage provided by homeowners forms: credit cards/debit or automated teller cards

• Coverage for the following is limited in total to $1000 during the policy period:

  • Credit cards (including Mastercard, VISA, gas, grocery and department store cards)

  • Coverage is provided for amounts billed to the insured resulting from the theft of unauthorized use of cards issued to or registered in the insured's name

  • Debit or automated teller cards

  • Coverage is provided for amounts taken from the insured's bank account when a debit or automated teller card has been stolen

outline the basis of claim payment for Personal Property under IBC homeowners forms

replacement cost (except for electronic media and records)

outline the basis of claim payment for Dwelling and Detached Private Structures under IBC homeowners forms

replacement cost

Assuming the insured's homeowners policy provides $140 000 coverage on the dwelling, indicate the amount of insurance provided for each of Coverages B and D under that policy

• Coverage B - Detached Private Structures (10% of Dwelling amount)

  • 10% of $140 000 = $14 000

• Coverage D - Additional Living Expenses (20% of Dwelling amount)

  • 20% of $140 000 = $28 000

Are the above insurance amounts included within the amount of insurance provided for Coverage A - Dwelling Building or in addition to it?

Insurance amounts described above are IN ADDITION to the coverage provided on Dwelling Building

How is the amount of insurance applicable to Coverage C - Personal Property usually determined?

• The amount of insurance applicable to Coverage C is determined as a percentage of the amount of coverage on Dwelling Building

• This amount may vary between insurers. However, most insurers require that the amount of insurance for personal property be equivalent to 90 or 100% of the insurance purchased for the dwelling building