C12 Ch3

Define peril in property insurance.

An event that may cause injury, loss, or destruction, which can be natural or human-made.

What is a fortuitous event?

An accidental event; the property insurance policy is not intended to be a maintenance policy.

How do risk and peril differ?

Risk generally refers to the subject matter of insurance, while peril refers to the event causing loss or damage.

What is a named-perils policy?

A policy in which the specific perils insured against are listed, and the onus is on the insured to prove coverage.

What is an all-risks policy?

A policy that covers each and every loss from direct physical damage except for those that are specifically excluded.

What are exclusions in a property policy?

Provisions that remove certain types of property or specific perils from the policy's coverage.

What are specified perils?

Perils specifically named in a policy that can serve as exceptions to limit all-risks exclusions.

How is fire defined in IBC forms?

Combustion manifested in light, flame, and heat for useful purposes or destructive purposes, including any uncontrolled ignition.

When may a fire insurance policy exclude fire?

When resulting from heat processes, war risks, or radioactive contamination.

What is the insurance rule regarding lightning?

Policies must cover loss due to lightning, but electrical device damage is excluded unless fire originates outside the device.

What does the explosion peril cover in insurance acts?

Explosion of natural, coal, or manufactured gas in a building not forming part of a gas works, whether fire ensues or not.

How is smoke defined in IBC named-perils forms?

Smoke due to a sudden, unusual, and faulty operation of any heating or cooking unit on the premises, excluding fireplaces.

What does a falling object mean in IBC named-perils forms?

Any falling object that strikes the exterior of the building, such as a tree, meteorite, or aircraft part.

What does the impact by aircraft or land vehicle peril exclude?

Loss caused by vehicles owned or operated by the insured or employees, and normal wear and tear like loading dock scrapes.

What is the legal meaning of riot in insurance?

An act or threat of violence by one or more persons part of an assembly of three or more persons giving rise to damage or injury.

What is vandalism?

The wilful or malicious destruction of or damage to property.

What four water scenarios are covered under named-perils water damage?

Escape from water main, plumbing/heating/AC/container within dwelling, outdoor container, or aperture opened by another insured peril.

What is windstorm or hail coverage dependent on for personal property?

The storm must first create an opening that allows access to the interior for interior personal property damage to be covered.

What does glass breakage mean in IBC named-perils forms?

Accidental breakage of building glass or doors howsoever caused, unless resulting from an excluded peril like war.

What does the transportation peril encompass for personal property?

Loss or damage caused during transportation by collision, upset, overturn, derailment, stranding, or sinking of the conveying vehicle.

How is theft treated in IBC named-perils forms?

It is not defined; instead, the scope is established by specific exclusions such as tenant theft or uncompleted construction.

What does electricity mean in IBC named-perils forms?

Sudden and accidental damage from artificially generated electrical current, such as a power surge.

Are wildfire, hurricane, and tornado covered under property policies?

Yes, because they fall within the broad definitions of the named perils of fire and windstorm or hail.

Is collapse covered under named-perils forms?

No, collapse is not a named peril, but it is covered under all-risks forms because it is not specifically excluded.

What is earth movement?

A general term including earthquake, landslide, snowslide, and volcanic eruption, which are always excluded unless endorsed.

Is sewer backup covered under standard property policies?

No, damage caused by the backing up of water from a sewer or septic tank is excluded under both named-perils and all-risks policies.

What does sump pump failure exclusion cover?

Damage caused by the backing up of water from a sump system, ground water, or a rising water table.

What is fluvial flooding?

Flooding caused by the overflow of a river.

What is pluvial flooding?

Flooding caused by heavy rain overwhelming storm systems.

Why is ice damming damage generally excluded?

Because the aperture through which water enters the roof was not created by an insured peril.

Why is continuous or repeated water leakage excluded?

Because property insurance is for sudden and accidental events; continuous leakage is considered a maintenance issue.

What is a hazard?

An attribute of the property or its surroundings that can lead to a peril or cause loss or damage to be more severe.

What is a physical hazard?

A hazard arising from the physical condition or characteristics of the insured object, such as construction type or location.

What is a moral hazard?

A hazard arising from the character, intent, habits, and lack of integrity of the insured, involving intentional acts.

What is a morale hazard?

A hazard based on the insured's careless attitude toward belongings because they are insured.

What are the two basic categories of fire protection?

Public fire protection (like fire departments) and private fire protection (like smoke alarms, extinguishers, and sprinklers).

What risk management solution can prevent major water damage from old hot water heaters?

Installing a drain pan with a monitored water detector, automatic shut-off valves, or replacing tanks before they fail.

What factors increase earthquake damage exposure based on construction?

Unreinforced concrete and masonry have high exposure due to poor tensile strength, whereas wood and steel offer flexibility and strength.

What is a conflagration?

A fire involving two or more risks or extending over a wide area, or any unusually large fire.

What is a sublimit?

A limitation in an insurance policy on the amount of coverage available to cover a specific type of loss.

Why does vacancy present an increased hazard?

Unoccupied premises lack daily oversight to catch problems like minor leaks or heating failures, inviting vandalism, theft, and arson.

What are the key elements of COPE in property risk assessment?

Construction, occupancy, protection, and exposure.

Practice Question: If an owner deliberately sets fire to their insured building, is the loss covered?

No, intentional acts are excluded, though provincial legislation may protect innocent co-insured spouses.

Practice Question: A pipe bursts while the homeowner is away for 6 days without draining pipes or arranging daily checks. Is resulting water damage covered?

No, water damage occurring after being away for more than four days without required precautions is excluded.

Practice Question: Does a standard property policy cover damage from a severe earthquake?

No, earth movement is excluded, though ensuing fires resulting from the earthquake are covered.

Practice Question: How can a homeowner protect against sewer backup if municipal systems fail?

By having a backflow prevention valve professionally installed and maintained.

Practice Question: If a tree falls on a roof during a storm and damages the interior, is it covered under a named-perils policy?

Yes, falling object is a standard named peril covering the exterior impact and resulting damage.

Practice Question: What hazard is introduced when a homeowner accumulates excessive clutter throughout a dwelling?

Hoarding hazard, which increases fuel load for fires and blocks firefighter access.

Practice Question: What endorsement is needed to cover damages caused by coastal storm surges or river overflows?

An extended water endorsement (such as IBC 1148), which covers flood, ground water, and surface water.