Portable Toilet

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Relevant Background: 

• 【Portable Folding Size】Innovative folding design, folding size is just 12.4*11.8*4.3 inches, and compact size saves space for your outdoor backpack. We provide storage bags, which can be easily put into cars, suitcases and backpacks!
• 【Multifunction】Our camping toilets can be used outdoors, trucks, hiking, long-distance trips, boating and camping, and can freely switch between various use modes, such as storage boxes, trash cans, folding chairs and indoor toilets.
• 【Easy to use and clean】This camping toilet can be easily installed and folded in seconds. Super simple and fast. Our portable camping toilets are easier to clean, making it easy for you to do business on the road. Please put on the attached plastic garbage bag before use to keep the toilet clean and tidy.
• 【More stable】Square folding toilet has a more stable center of gravity compared with round folding toilet, which can adapt to various uneven terrain outdoors and is not easy to fall down.
• 【Excellent After-sales Service】With heart and soul, we provide you with high quality products! We accept returns and exchanges and offer 24 hours consultation. Any problem can be solved within 24 hours, please feel free to contact us if you have any questions... (Link)

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Relevant Material: ."

• In 2022, 57% of the global population (4.6 billion people) used a safely managed sanitation service.
• Over 1.5 billion people still do not have basic sanitation services, such as private toilets or latrines.
• Of these, 419 million still defecate in the open, for example in street gutters, behind bushes or into open bodies of water.
• In 2020, 44% of the household wastewater generated globally was discharged without safe treatment (1).
• At least 10% of the world’s population is thought to consume food irrigated by wastewater.
• Poor sanitation reduces human well-being, social and economic development due to impacts such as anxiety, risk of sexual assault, and lost opportunities for education and work.
• Poor sanitation is linked to transmission of diarrhoeal diseases such as cholera and dysentery, as well as typhoid, intestinal worm infections and polio. It exacerbates stunting and contributes to the spread of antimicrobial resistance...."(https://www.who.int/news-room/fact-sheets/detail/sanitation)

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Relevant Material: "

• In 2021, over 2 billion people live in water-stressed countries, which is expected to be exacerbated in some regions as result of climate change and population growth (1).
• In 2022, globally, at least 1.7 billion people use a drinking water source contaminated with faeces. Microbial contamination of drinking-water as a result of contamination with faeces poses the greatest risk to drinking-water safety.
• Safe and sufficient water facilitates the practice of hygiene, which is a key measure to prevent not only diarrhoeal diseases, but acute respiratory infections and numerous neglected tropical diseases.
• Microbiologically contaminated drinking water can transmit diseases such as diarrhoea, cholera, dysentery, typhoid and polio and is estimated to cause approximately 505 000 diarrhoeal deaths each year.
• In 2022, 73% of the global population (6 billion people) used a safely managed drinking-water service – that is, one located on premises, available when needed, and free from contamination..." (https://www.who.int/news-room/fact-sheets/detail/drinking-water)
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Relevant Material: " Some 2.4 billion people around the world have no toilet. Of these, 892 million have to do their business outside, often in the streets. More than 2 billion others have toilets, yet they aren’t disposing of their feces safely. Why? These toilets dump into overflowing septic tanks or into local rivers and lakes. In all, the World Health Organization finds, roughly 4.4 billion people — more than half the world — cannot safely and cleanly dispose of their bodily wastes....Rain can wash it off streets and soils. Like fertilizer, the waste is rich in nutrients — so rich that it can lead to algal blooms that kill fish and make the water in downstream lakes and rivers dangerous to drink....Sanergy sends workers to regularly collect the wastes. The company then turns the feces into animal feed and fertilizer, products it can sell.

To make the animal feed, Sanergy harnesses black soldier flies. The flies’ larvae — or maggots — consume organic wastes, such as feces. Once the maggots have dined on all the poop they can, the insects are boiled. This kills any germs they may have picked up. Their bodies are then dried, ground into a powder and added to other animal feed as a protein boost. Even the flies’ poop is recycled to make an organic fertilizer that farmers will later put on their fields to enhance crop growth.

Sanergy makes money by leasing the toilets at a low price, then selling its poop-derived products to farmers. Such a system is much better than trying to build enough sewers for everyone, argues Sheila Kibuthu. She manages communications for Sanergy,..Right now, firewood is Kenya’s main fuel. Since 2000, this country has lost nearly one in every 10 of its trees. They were cut down for fuel. But in Naivasha, not far from Nairobi, another company is turning poop into briquettes that industries can burn as fuel.

Burning poop for energy is not a new idea. Typically, however, people burned it for home use, not to fuel industries.

Naivasha and the surrounding areas are home to a lot of tea and flower farming.

This uses a lot of fuel and has drawn lots of workers to the region in a short period. Today, most Kenyans rely on latrines — just holes in the ground, usually under a small building. Latrines need to be emptied regularly so that they don’t overflow. In Naivasha, a company known as Sanivation works with groups that empty those latrines. They bring the collected wastes to the company for processing.

Sanivation uses a machine to squeeze the pee out of the wastes. That liquid will be treated separately. The feces are solar heated to kill germs, then dried out, mixed with sawdust and formed into briquettes. The end-product looks sort of like what your parents might use to fuel backyard grills. Except these briquettes are not made of charcoal and are far bigger."(https://www.snexplores.org/article/a-dirty-and-growing-problem-too-few-toilets)

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Relevant Material: ."San Francisco officials were quick to dispute Trump’s claims. But some of California’s most prized rivers, beaches and streams are indeed contaminated with levels of fecal bacteria that exceed state limits, threatening kayakers, swimmers — and the state’s reputation as a bastion of environmental protection.

The presence of fecal bacteria in water is usually the result of problems with sewer systems and septic tanks. But water quality officials agree that the source of at least some of the fecal bacteria is California’s growing homeless population, most of whom don’t have reliable access to toilets.

“I’ve carried 5-gallon buckets that were unambiguously being used as toilets,” said David Gibson, executive officer of the San Diego Regional Water Quality." (https://californiahealthline.org/news/fecal-bacteria-in-californias-waterways-increases-with-homeless-crisis/)

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Relevant Material: MIURA, KANAGAWA PREF. – 

It's cheap, recycled and has centuries of tradition: shimogoe, or "fertilizer from a person's bottom," is finding new favor in Japan as Ukraine's war hikes the price of chemical alternatives.

As in several parts of the world, the use of "night soil" to fertilize crops was once common in Japan.

However, the advent of sewage systems and treatment facilities, as well as chemical fertilizers, saw it fall out of fashion.

About a decade ago, Japanese treatment facilities wondered if they could revive interest to avoid sewage sludge disposal — a costly and potentially environmentally damaging process. But enthusiasm was limited, until Russia's invasion of Ukraine sent the cost of chemical fertilizers soaring. (https://www.japantimes.co.jp/news/2023/07/06/national/human-waste-fertilizer/)

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A. Travel & Health
B. Personal property coverage
C. Gps tracker, satellite phone, Panic Button, CCTV, Go Pro, Water Filtration
d. TFSA, credit card insurance, personal loan insurance, Line of Credit Insurance
e. Liability Coverage:
“What Liability policies Insure
The majority of liability Insurance policies share certain characteristics. This chapter focuses on features common to automobile, personal, and most business liability policies.
 
The Insuring Agreement
The main Insuring Agreement on most liability policies can be summarized as follows:
"The Insurer agrees to pay all sums which the Insured shall become legally obligated to pay to third parties as compensatory damage to a third party. It must be caused by an occurrence; it must occur during the policy period, and it must take place in the coverage territory"
 
The following is a brief analysis of this insuring agreement
1. Insure Bodily Injury & Property damage
Most liability policies insure the bodily injury and property damage caused by the Insureds
I) Bodily Injury
Bodily Injury refers to physical injury sustained, and associated with external causes. For example, a person who trips over loose carpeting or one who falls through defective stairs on the Insured's premises and is injured is considered to have suffered a bodily injury.
Bodily Injury also includes injury caused by:
** Sickness or Disease
and
Death resulting from any such injury at a later date will be considered as part of the same bodily injury.
Bodily Injury - A Broad definition
The definition of body injury contained in liability policies refers to actual harm to the body resulting from the Insured's actions, work or products. The following example illustrates the extent of the coverage provided:
 
Body Injury:
This morning Bert was in a rush to leave his store to attend a business meeting. As he was leaving, he negligently collided with an elderly customer who had just entered the building. As a result, the customer fell to the ground, causing her to break a hip. This injury to the customer falls within the coverages provided for bodily injury.
 
Sickness or Disease: Thousands of Canadian women are the victims of failed breast implants. Legal actions in the mid 1990's against Dow Chemical, the company responsible for the faulty implants, alleged sickness due to implant rupture, painful joints, Muscle pain, tremors, memory loss and diseases such as Lupus and scleroderma. Liability policies providing bodily injury coverage would respond to pay such losses. Death resulting from any of these at any time When the deaths of others are attributed to bodily injury, sickness and disease caused by the Insured, payment will be provided under the policy. ii. Property Damage Unintentional damage to the property of others is generally covered by their liability policy. Property damage includes: ** Physical Injury to tangible property as well as resulting loss of use; It also includes the loss of use to tangible property that is not physically injured. Property Damage includes payment for loss of use of tangible property When there is a claim against the Insured for damage to tangible property, the wronged party will often incur other significant financial loss. Two years ago, the Butler's home was destroyed by a fire started by a neighbour's child. In addition to the damage caused to their dwelling, Bert and Betty incurred additional expenditures for the rental of a temporary dwelling, transportation, and to board Bowser at a local kennel. The additional costs arising out of the loss of use of their premises would be paid under the property damage coverage provided by the neighbor’s liability policy. 2. Third Party Coverage The coverage provided by all liability policies is for damage or injury caused by the insureds to third parties A third party is anyone or any entity that is not named in the policy. 3. Payment only when insured legally liable Although the insured may feel a moral obligation to the injured party, the policy will respond only when the insured is legally liable for the injury or damage caused. Negligence must be established. Determination of legal liability - A matter for the courts Last week, Betty lost control of their ... lawn mower and injured two children who were playing on a sidewalk next to the Butler's premises. The issue of Betty's legal liability for damages is the matter for the courts to decide. While betty may believe that she is legally responsible, she will normally have sufficient knowledge of the law to make that determination. In fact, it may be possible that she is not legally liable or as is often the case, is legally liable for only a portion of the damages. The message here is simple - only the courts have the authority to determine one's legal liability for injury or damage caused. It does not matter if the insured, insurer, and all the lawyers in the world believe someone is legally liable. Only a decision of the courts can make it so. This does not mean that all disputes involving bodily injury or property damage will be resolved by the courts. In the majority of the cases, the insurer will agree to an out of door settlement with the plaintiff when the evidence strongly supports that decision. 4. Coverage provided on Occurrence basis Occurrence is defined by the policy as an event…" Which occurs suddenly and unexpectedly; Technically, a sudden and unusual event which can be fixed in time is an accident. Or Which occurs over a long period of time BI/PD coverage provided on an occurrence basis Liability policies insure bodily injury and property damage on an occurrence basis. This includes coverages for unexpected injury and damage which happens: I. Suddenly or ii. Over long periods of time Accident The injuries caused to the children playing on the sidewalk near the Butler's premises when betty lost control of the... lawnmower constitute an accident. The injuries occurred unexpectedly and suddenly and can be fixed in time. Continuous or repeated exposure Last fall, the butler's neighbours installed a fireplace in their home. By November, Betty noticed a slight paint discoloration on their dwelling. She suspected this was caused by improperly vented smoke from the neighbour's chimney. After careful observation, that appeared to be the case. By March, the entire side of the Butler's home was severely discoloured. Their neighbour refused to pay for repainting the Butler's dwelling, his only comment being, "So, Sue me!" The neighbour’s liability Insurance policy will provide coverage for damage to others arising out of the "continuous or repeated exposure to substantially the same general harmful conditions" The limit stated on the policy for bodily injury and property damage liability is available for each occurrence. In other words, even if a claim has been paid, the limit stated in the policy will be available again to pay future claims. Limit of Insurance available for each occurrence. The pink flamingo lamps made and sold by the Butlers caused three major fire losses last year. The Butler's business liability policy, if written on an occurrence basis, would provide them with a limit of $1000000 insurance for body injury and property damage liability. The following describes how the Insurer dealt with each loss: Loss # 1 - February 13 Claim - $750,000 The entire amount of the claim will be paid if the butlers are legally liable for the loss. Loss #2 - June 7 Claim - $1,300,000 The insurer is obligated to pay only the first $1,000,000 of the loss, provided the Butler's are legally liable. The payment of the remaining $300,000 would be the responsibility of the Butler's. Loss #3 - September 30 Claim - $500,000 The entire amount of the claim will be paid if the butlers are legally liable for the loss After each occurrence, the entire limit of Insurance purchased by the Butler's is again available in the above example is based on an occurrence limit only. If the policy included an aggregate limit, the total will differ. Aggregate Limits An aggregate limit is the maximum amount paid for all valid claims during the policy term. In the above example, and if the policy was written with a bodily injury and property damage limit of $1,000,000 per occurrence and an aggregate limit of $2,000,000 the losses would be paid as follows: Loss #1: Paid $750,000. The loss is within the occurrence limit and within the aggregate limit. Loss #2: Paid $1,000,000. The loss exceeded the occurrence limit and therefore is subject to the occurrence limit of $1,000,000. When this loss is paid, this would also erode the aggregate limit by $1,000,000. Therefore, at this time, $1750,000 of the aggregate limit has been paid. Loss #3: Paid $250,000 The loss is within the occurrence limit but following loss # 2, there remains only $250,000 of the aggregate limit. Split limits or separate limits of liability policies may be written with split limits as compared to an inclusive limit. An inclusive limit could be $1,000,000 inclusive. This means that whether the claim be for body injury or property damage, there is an available limit overall of $1,000,000. However, if the liability policy is issued with split limits, the policy limits could be stated as follows: $100,000/$200,000/$50,000 When the policy includes Split limits, the three limits as shown in this example are as follows: The first number, $100,000, is the limit for bodily injury per person. The second number, $200,000, is the limit in total for bodily injury for all claimants for more than one person. However, this is still subject to the limit per person of $100,000. The third number, $50,000, is the limit for property damage per occurrence. For example, if a policy includes the split limits stated above and the damages are as follows: a) $110,000 b) $80,000 c) $25,000 The policy would pay as follows: a) $100,000 for bodily injury (limit per person) b) $80,000 for bodily injury c) $20,000 for bodily injury, total limit per occurrence is $200,000, leaving $5000 not covered Split Limits are used frequently with minimum limits applicable to auto insurance in the United States 5. Coverage for compensatory damages Liability policies pay for compensatory damages only Compensatory damages are those which are intended to compensate the third party/plaintiff for the injury or damage caused by the Insured (defendant) `There are other types of damages that may also be awarded by the courts. For example, the court may order the payment of punitive or exemplary damages. These damages are intended to punish the defendants for their actions and serve to deter others from similar behaviour in the future. The payment of punitive or exemplary damages is the sole responsibility of the Insured. Duties in the event of an occurrence, Claim or action Liability Insurers place a number of obligations on Insureds in the event of occurrence, claim or action. Insureds are required to: a) Provide the Insurer with prompt notification of any occurrence, claim or action. The information to be provided includes: Time, place and circumstances of the accident; The name and the addresses of the witness and potentially injured persons. Prompt notification allows the Insurer to quickly assess the potential of a successful action against the Insured. It also gives the Insurer the opportunity to collect all the facts concerning the accident while they are still fresh in the Insured's mind. Potential liability claims against Insured required to be reported promptly. The Fortress Insurance company requires that the Butler's provide prompt notification of any occurrence which may lead to a claim. Too often, Insured's will ignore this requirement for notice, believing that no claim will be made against them. Two weeks ago, an elderly customer, Mr. B. Good, tripped over an electrical extension cord which was strung across a store aisle. Bert helped him to his feet and insisted on driving him home even though Mr. Good maintained he was "all right", Bert did not inform the Fortress Insurance company of the accident. Shortly after the accident and, unknown to Bert, Mr. Good began to experience a stiffness in his left hip which made it increasingly difficult for him to get around. Finally, 12 days after the accident, he could stand the pain no longer and consulted his doctor. The Doctor advised him that he had fractured his hip which made it increasingly difficult for him to get around. Finally, 12 days after the accident, he could stand the pain no longer and consulted his doctor. The doctor advised him that he had fractured his hip and that it would require surgery. Mr. Good consulted a lawyer and was advised to bring a suit for damages against the Butlers. As a condition of coverage, Bert owed an obligation to inform the Fortress Insurance company promptly of his potential liability claim. This would have allowed the Insurer the opportunity to collect all the facts while they were still fresh in Bert's mind and to interview witnesses who were in the store at the time. The more time passes, the more details tend to be forgotten or misstated. Immediately provide the Insurer with copies of any legal documents received. When notice of legal action is received, it is responsibility of the Insured to inform the Insurer immediately and to provide copies of all legal documents received. This is known as a notice of a claim. This condition is important because it gives the Insurer the opportunity to declare it's intention to the court and to defend the action against the Insured. Authorize the Insurer to obtain records and other information Written reports filed with police, fire and other authorities may contain information valuable to the Insurer in defending the claim. This condition authorizes the Insurer to access those records. ** Assist in Investigation, settlement or defense of the claim or action; Assist in the investigation, settlement or defense of the claim or action; Sometimes an insured knows the plaintiff and may be openly "on their side". When this happens, the Insurer may have difficulty in the following areas: Investigation When Insureds are reluctant to cooperate, the Insurer may be denied important information Settlement Insured's may actively resist any attempt by the Insurer to settle a claim out of court. This usually happens when Insured's feel they are not legally liable for injury or damage caused. This can be a source of frustration for Insurer's who are usually acting on legal advice. Defence When Insurers decide to defend an action against their Insured, they are usually convinced that there is not legal basis for the claim. In such cases, the Insured may be called upon to provide testimony. Any refusal by the Insured to do so could seriously undermine the Insurer's case. Not, except at their own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without the consent of the Insurer. The rights to investigate, defend and settle claims belongs exclusively to the Insurer. Any payments made or promised to the plaintiff by the Insured are an infringement upon those rights and are prohibited. The rights to investigate, defend and settle claims belongs exclusively to the Insurer. Any payments made or promised to the plaintiff by the Insured are an infringement upon those rights and are prohibited. The only financial obligations which can be passed on to the Insurer without its consent are those made for first aid at the time of the accident. Unless Otherwise Authorized, financial obligations assumed by Insured on behalf of the Insurer limited to those for first aid. Sometimes insureds will attempt to earn the good will of others to whom they cause injury or damage. In fact, when another customer tripped on loose carpeting in their store last Tuesday, Bert offered her $500 to "forget the whole thing". A local restaurant offered $1000 to all people who became ill after eating their "fish surprise" The Insurer will not reimburse the Insured for payment they voluntarily make to others. In fact, to do so, will be seen by the court as an admission of liability. The only monetary obligation an insured is entitled to incur on behalf of the Insurer without its consent is that directly related to the rendering of First Aid to the victim. The payment is not viewed as admission of liability but, rather, as the action expected of a responsible person when people are injured. This action also may mitigate damage incurred. Supplementary Payments The limit of Insurance provided by the policy for bodily injury and property damage is reserved for the payment of claims. The additional expenses incurred by insurers and Insureds in investigating, settling and defending a claim are provided under a separate insuring agreement entitled supplementary payments. The costs insured by this agreement include: i. Costs of defense; Actual legal cost to conduct a defense can, in a complicated action, amount to hundreds of thousands of dollars. Also, an Insurer may hire an independent adjuster to Investigate and negotiate any settlement of a claim. For many Insureds, the agreement of the Insurer to pay defense costs more than justifies the cost of purchasing liability Insurance. ii. Reasonable Expenses incurred by the Insured at the Insurer's request to assist in the investigation and defense of the claim; iii. Court Costs assessed against the Insured The court may rule that court costs be borne by either, or both the plaintiff and the defendant. iv. Interest from the date the judgement was rendered but only on the amount which is within the limit of Insurance provided by the policy. Insurer liable for payment of Interest costs from the date of the judgement. Last fall, the Butler's were found legally liable for damages in the amount of $2,000,000. The Insurer believed the court erred and took three months to decide whether to appeal the decision. Finally, the Insurer agreed to pay the claim. When the award is made by the court, the plaintiff is entitled to immediate payment. The Insurer is liable to the plaintiff for loss of interest. The interest is calculated from the date of the judgement and the Insurer is liable only for that portion provided on bodily injury and property damage limit of $1,000,000 only, and a judgement was for $2 million, the Fortress Insurance company would be required to pay interest on $1 million only. Supplementary payments are extremely important for all Insureds. They are usually not limited to any specific amount, and with most policies are provided in addition to other coverage limits in the policy. Liability policies restricted to specific activities Liability policies generally deal with specific activities and are not designed to insure all exposures faced by the Insureds. For example, a separate policy will be required for each of the Insured's personal, business, and professional liability exposures. In addition, the liability exposure associated with automobiles and aircraft is so great that they are required to be insured under their own policy. Chapter 10: Liability Insurance Policies The discussion for personal liability in this chapter is applicable to the RIBO comprehensive Homeowner, Tenant, Condominium Unit owner package policy. Howeverm the RIBO wording also includes: Coverage I - Loss Assessment (Applicable to Condominium Unit Owner only) - RIBO - pg. 24 The Insurer agrees to pay up to 2505 of coverage A1 (unless a higher amount is stated in the declaration). The purpose of this coverage is to pay on behalf of the Insured any amount assessed by the corporation should the limits under the corporation's liability policy be inadequate or exhausted. It will not respond to any assessment made necessary by any deductible on the corporation's policy. Insuring Personal Liability - The Homeowners Forms Most individuals and businesses would be unable to withstand the financial strain a judgement for damage would impose upon them. Fortunately, insurers will agree to assume many of their exposures to financial loss. Most Insurance companies include liability coverages in the habitational property Insurance policies they sell. This eliminates the need for homeowners and tenants to purchase a separate policy for their liability exposures. The liability coverages normally provided under homeowner's forms are also designed to be used with the following habitational forms: a) Tenants Package Form; b) Mobile Homeowners Form; c) Condominium Unit Owner Forms; (with additions for loss assessment coverages for the most part, the coverages provided are the same for all forms. This discussion of personal liability is based on Section II- Liability coverage of the RIBO Comprehensive Homeowner, Tenant, Condominium Unit Owner package policy. Please refer to the provided booklet while studying this chapter. Coverages There are four coverages provided by this Section, namely: Coverage E - Personal Liability Coverage F - Voluntary Medical Payments Coverage G - Voluntary payment for damage to property Coverage H - Voluntary compensation for Residence Employees. Limits of Insurance The limit of Insurance for each of the three coverages is indicated on the coverage summary page. Insurers set their own limit for each of the three coverages is indicated on the coverage summary page. Insurers set their own limits for each coverage. For example, many of the homeowner forms issued by some insurers provide the following coverage limits: Coverage E: Personal Liability - $1 million Coverage F - Voluntary Medical payments - $1000 Coverage G: Voluntary payment for damage to property - $500 Coverage H: Voluntary Compensation for residence employees - As per schedule The limit for coverage E - Personal liability can usually be increased for an additional premium. These coverages are not subject to deductible but one may be inserted for property damage losses when the Insured has a history of frequent claims. Key Definitions I. Persons Insured (RIBO pg. 17) Persons insured by section 1- Property coverages are also insured under this section. In addition, four (4) other categories of people are insured. 1. Persons or organization legally liable for damages caused by a watercraft or an animal owned by the Insured which the policy covers. 2. Residence Employees while performing duties in connection with the ownership, use or operation of motorized vehicles and trailers covered by the policy. 3. A legal representative having temporary custody of the insured premises after the Insured's death for the liability arising out of the Insured's premises. 4. Anyone Insured by the policy who continues to reside on the premises after the Insured's death. ii) Premises Insured (RIBO pg. 17) The coverage provided by the policy insures "all premises where the person(s) named as insured in the Declarations, or his or her spouse maintains a residence, including seasonal or other residences, provided such premises are specifically described in the Declarations." Liability coverage can be extended to seasonal and other dwellings owned by the Insured. Bert's Brother Bart and his wife own two homes - a summer home in Winkler, Manitoba and another in Winnipeg where they spend their winters. Three years ago, they purchased a small cottage at Clear Lake, a popular resort. The Homeowners Forms will provide liability coverage at all three locations provided such locations are specifically described on the coverage summary page. Coverage is also provided at the following locations: "1. Premises where you are residing temporarily or which you are using temporarily, as long as you are not: a) The owner of the premises; Coverage provided for claims originating on Premises of others while Insured Temporarily residing there. Last Summer the Butlers rented a cottage for two weeks at Green water Lake, Saskatchewan. On their third day there, a friend who came to visit suffered a broken leg when she was knocked to the ground by Bowser, The Butler's Dog. Their friend, a water-skiing instructor, was unable to work for the entire summer and, in an attempt to recover the amount of her financial loss, sued Bert and Betty for damages. The Homeowners Form will respond when a claim arises out of the premises of other while being temporarily used by the Insured for residential purposes. Other premises insured would include apartments, hotel rooms, camps and campgrounds anywhere in the world. ** The lessee or tenant of the premises under any agreement which is longer than 90 consecutive days." There is not coverage for claims arising out of premises which are rented or leased for more than 90 consecutive days. This coverage limitation will be important to insureds who spend three or more months away each winter and to students living away from home. In such cases, Insureds must be advised to purchased additional coverage. 2. Premises in Canada to be occupied by you as your principal residence from the date you acquire ownership or take possession but not beyond the earliest of: a) 30 consecutive days; b) The date the policy expires or is terminated; c) The date upon which specific liability Insurance is arranged for such premises." Insureds who purchase another home which is to be occupied as their principal residence are automatically insured from the date, they take possession of the home. However, coverage is for a limited time period only. For example, if the Insured's policy expires in five days, there is no coverage for such dwelling beyond five days. In the event arrangements have been made for new Insurance, the coverage provided by this policy ceases immediately. In no event shall the coverage provided by this policy exceed 30 consecutive days. "3. Individual or family cemetery plots or burial plots;" All premises owned by the Insured represent a potential liability exposure. As such, it is important that family-owned cemetery plots or burial vaults be included within definition of "premises" insured by the policy. "4. Vacant land in Canada you own or rent other than farm land;" Vacant land purchased as a future dwelling site, for investment purposes, or for other purposes, or for other reasons can expose the Insured to claims for injury or damage when people go onto that land. For example, snowmobilers crossing such land may be injured when they run in to tree stumps, rocks or fences. The coverage provided by this section extends to those premises. However, it is important to note that this additional coverage applies only to vacant land located within Canada. For example, Insureds who buy a vacant lot in Texas or Hawaii would be required to purchase additional coverage. There is no coverage for claims arising out of vacant farm land. "5. Land in Canada where an independent contractor is building a one, two or three-family residence to be occupied by you" Insureds who hire a contractor to build a one, two or three-family home which they will occupy do not have to purchase additional liability Insurance for that location during the period of construction. Liability Coverages Coverage E - Personal Liability Personal Liability coverage is designed to Insure the legal liability of Insureds in their role as private citizens while anywhere in the world. Accidental Injury or damage originating on the Insured's premises or caused while on holidays, at public meetings, or while shopping, fishing, golfing or playing ball are included within the kinds of private wrongs insured by this Insuring agreement. Liability for personal acts Insured anywhere in the world. Bert and Betty are planning a summer holiday and have narrowed their choices down to Taiwan, Greece, and China. As this Insuring Agreement provides them with personal liability coverages anywhere in the world, they will not need to purchase a separate liability policy to cover their legal liability for injury or damage to others while on their vacation. Condition of Insured's Premises a Major source of Liability Claims. The condition of the Insured's premises and the activities conducted thereon can be a major source of liability claims. Types of losses thereon can be a major source of liability claims. Types of losses for which coverage is provided by the policy include: a) Injury to postal employee caused by the Insured's dog; b) Drowning of neighbor's child in Insured's swimming pool or hot tub; c) Injury to other children who use skate board ramp on the Insured's driveway or trampoline in the Insured's yard; d) Fire damage to neighbouring property from sparks from an outdoor barbeque pit. Exclusions "We do not Insure claims made against you arising from: 1. "Liability you have assumed by contract unless your legal liability would have applied even if no contract had been in force, but we do insure claims made against you for the legal liability of other persons in relation to your premises that you have assumed under a written contract" Insureds cannot voluntarily assume the liability of others and expect their Insurer to pay for the injury or damage caused by such persons. For example, the insurer would not provide payment when the Insured agrees to assume the liability of a friend when that friend borrows the Insured's electric golf cart. However, there are two exceptions to this general rule. The Insurer agrees to make a payment: a) When the Insured would have been liable anyway; In the above example, if the golf cart is defective and injury or damage is directly due to such condition, the Insurer agrees to provide coverage in the event the Insured is judged liable. b) When the liability being assumed is related to the Insured's premises. For example, if the Insured hires a contractor to build a fence on the premises and agrees in writing to assume the liability of that contractor for unintentional injury caused to passerby or for damage to neighbouring property, the Insurer would respond in the event of a claim. 2. "damage to property owned by an Insured" It makes sense that damage caused by Insureds to owned property would be excluded. Paying for such claims would lead to abuse by Insureds. Provided the damage the Insureds caused was accidental, Section 1 would pay for this damage. 3. "damage to property if used, occupied, leased or rented by or in the care, custody or control of an Insured, except for unintentional property damage to premises owned by others, or their contents, which they are using, renting or have in your custody or control caused by fire, explosion, water damage or smoke. This means smoke due to a sudden, unusual and faulty operation of any heating or cooking unit in or on the premises, but not smoke from fireplaces. Water damage has the same meaning as in Section I" This exclusion is common to all liability policies. The Insurer believes that when Insureds have control over the property of others, they are in a position to prevent its loss or damage. In these cases, separate property coverage can be purchased. No coverage for damage to property in Insured's care, custody or control the following are examples of property which may be damaged by Insureds while in their care, custody and control and for which coverage is excluded by the policy: 1. Rented or Borrowed property Last Saturday, Bert damaged the transmission in the riding lawnmower borrowed from a neighbour. The cost for repairs is estimated at $600. There is no coverage under this policy. This exclusion would also apply to watercraft, recreation vehicles, tools, movies and other property rented or leased from others. 2. Property Being stored for others Damage caused to clothing, sports equipment or other property being stored for a friend in the Insured's basement will not be paid under the policy even if the Insured is responsible for its loss.
Note: Homeowner Forms provide coverage for the uninsured property of others (except roomers and boarders) under section 1 - Property Coverages. Any claim for damage caused to such property can be made under that section and payment will be made without regard to fault. Also, if people who leave their property in the care, custody or control of the Insured have their own Insurance, they can claim directly from their Insurer in the event of a loss. However, unlike the liability coverages provided by this policy, claims made under Section 1 - Property Coverages will be subject to the application of a deductible.
 
Exception: This exclusion does not apply to unintentional property damage to premises owned by others, or their contents which the Insured is using, renting or which is otherwise in the Insured's custody or control. Payment will be made for the following causes of loss: a) Fire; b) Explosion; c) Water Damage; d) Smoke… excluding smoke from a fireplace Limited Coverage for damage to premises in care, Custody or control of Insureds The homeowners Forms provide the following coverages for Insured's who temporarily rent or use the premises of others for habitational purposes. Payment will be made only when the Butlers are legally liable for the damage. Coverage is limited to: a) Fire: Last Summer, the Butlers were having an evening wiener roast on the premises of a cabin they rented. A spark from the open fire caused a grass fire which burned the cabin to the ground. b) Explosion: Later that summer, friends gave the Butlers the use of their cottage for the August holiday weekend. On the first night, Bert had difficulty lighting the barbeque. Rather than turning the gas supply off and trying again later, Bert kept pushing the ignition button hoping it would start. Finally, after ten minutes of constant effort, the gas ignited. The resultant explosion tore the lid off the barbeque and hurled it through the glass patio doors of the cabin, The damage was estimated at $1250 c) Water Escape: During a weekend stay at a hotel, Betty forgot that she has left the water running in the bathroom tub, when she returned from shopping three hours later, she found that THE WATER HAD DAMAGED THE TILING AND WALL BOARD in the bathroom. The cost to repair the damage was estimated at $1750. d) Smoke: Last Summer, the Butler's attended the Calgary stampede. They rented a two-bedroom unit at the Ranch hotel. On the first night, they found the room chilly and brought in a kerosene heater they had packed with their camping gear. In each of the above examples, the policy would respond to pay the claim. 4. "Damage to personal property or fixtures as a result of work done on them by you or anyone on your behalf." No coverage for property damage arising out of work performed by Insureds Last month, Bert agreed to sand an antique table for a neighbour. He was not as careful as he should have been and caused gouges in the surface of the table which could not be repaired. The damage to the table is not covered by the policy. 5. "Bodily Injury to you or to any person residing in your household other than a residence employee" The law in certain provinces may allow family members living in the same household to sue each other for injuries caused by negligence of another member. The amount of judgement against the responsible party is not insured by this policy. This exclusion also applies to claims made by roomers or boarders. Exception Residence employees are normally not required to be Insured under the provincial workers' compensation plan. As a result, a residence employee who is injured on the job as a result of the Insured's negligence is entitled to take legal action against the Insured for damages. The Homeowners Forms provide coverage in such situations. HOME OWNERS FORMS cover legal liability of employers for injury to residence employees Each Summer, When Benji and Barbie are out of school, the Butlers hire a University student to "babysit" The, and, at the same time, to maintain their home and yard. Last Summer, the Butlers bought a new 15 H.P. lawnmower. The manufacturer's instructions clearly stated that the lawnmower should not be operated unless the bag to catch the grass clippings was in place. Failure to follow this procedure could result in injury to the operator and others. On her first day on the job, Julie Ann was instructed to cut the lawn. She removed the bag because she didn't think it was needed and, besides, she had not been told where to dump the clippings. On her first pass, she ran over a bone Bowser had left on the lawn, The blade of the mower broke the bone in to a number of pieces which were then propelled out of the opening where the bags should have been. One of the bone fragments pierced Julie Ann's eye and doctors were not able to save her sight. In the ensuing legal action, it was ruled that Butlers should have advised Julie Ann of the operating instructions and they were held liable for her injuries. The personal liability coverage provided by the policy would respond to pay the claim. 6. "The personal actions of a named Insured who does not reside on the premises described in the coverage summary page" There is no coverage for a person who is named on the policy but who resides elsewhere. Persons most affected by this exclusion would be named insureds who have separated or divorced. Defence, Settlement, Supplementary payments (RIBO pg. 19) As is common to liability policies, the Insurer agrees to pay all costs associated with the defence and settlement of claims, including the following specified supplementary payments, even if the claim made against the Insured is groundless or without merit. The Insurer agrees to investigate, negotiate and settle any claim if they decide it is appropriate to do so, and will pay for legal counsel of the Insured that they select. The Insurer agrees to investigate, negotiate and settle any claim if they decide it is appropriate to do so, and will pay for legal counsel of the Insured that they select. The Insurer also agrees to pay: 1. All expenses the Insurer should incur in the defence of the action 2. All costs charged against the Insured in any suit insured under section E - Personal Liability of the policy. 3. Any interest accruing after judgement on that part of the judgement which is within the limit of the liability Insurance purchased. 4. Premiums for appeal bonds required, or bonds to release property that is being held as security, up to the amount of Insurance, but the Insurer is not obliged to apply for or provide these bonds. 5. Expenses the Insured may incur for emergency medical aid following an accident or occurrence insured. 6. Reasonable expenses including loss of Income up to $100 per day that the Insured suffers at the Insurer's request. Coverage F - Voluntary Medical payments This Insuring agreement provides for the payment of medical expenses when an Insured unintentionally injures another person or if they are accidentally injured while on the Insured's premises. The types of claims for which payment will be made include surgical, dental, hospital, nursing, ambulance service and funeral expenses. The Insurer agrees to voluntarily make such payments on the Insured's behalf. In other words, there is no requirement that the Insured be legally liable for the injury before payment will be made. When payment is made, it will be: a. Limited as to amount; Limit of Insurance will be indicated on the Coverage Summary Page. While this amount may vary between Insurers, $1000 is common. ** Limited to one year from the date of the accident Payment is not provided when the Injured person is covered by a provincial worker's compensation plan, a hospitalization plan, or other private Insurance. Medical Payments provided without regard to Fault Two years ago, the Butlers invited neighbours over for a barbeque. While playing lawn darts, Bart threw a dart and struck a guest in the face. It took two operations to repair the bone damage. Two weeks ago, their friend peter came to spend the weekend. While going to the table for dinner, peter stumbled over his own feet and fell, hitting his head on the hardwood floor. An ambulance was called and peter spent the night in hospital. When released, he was more embarrassed than hurt. Medical expenses incurred by others who are unintentionally hurt by an Insured or who are accidentally injured on their premises are insured by the policy, whether the Insureds are liable or not. However, as indicated above, certain coverage limitations apply. Coverage G - Voluntary Payment for Damage to Property Under this Insuring agreement, the Insurer agrees to make a voluntary payment for property damage: ** Which has been unintentionally caused and for which the Insured would not be legally liable; The Insurer agrees to "voluntarily" pay for unintentional damage caused to property of others even when the Insured is not legally liable for such damage. Coverage G - Voluntary payments for damage to property Last weekend, the Butler's neighbours, Lilly and Red white, held a garage sale. On Friday evening before the sale, Red asked Bert for help in moving some of the heavy furniture. When they were moving a China cabinet down a set of stairs, Red went too quickly, causing Bert to drop his end of the cabinet. While there was little structural damage, the glass in both doors broke. Red estimates it will cost $50-$75 to repair the damage and believes Bert should pay. This spring, the Butler's Lawnmower was being repaired at a local shop. When repairs had still not been made after two weeks, Bert asked to borrow the Whites' mower. Red's comment at the time Bert picked up the lawnmower was simply, "Take it. It's all ready to go. That's what neighbours are for". Red had neglected to tell Bert that he had drained the oil from the motor and had not yet replaced it. After 10 minutes of use, the motor seized. Red estimates it will cost $600 to replace the motor. As far as Red is concerned, Bert should pay for the repairs. This Insuring agreement pays for unintentional direct damage caused by Insureds to property of others even though they had not been legally liable for such damage. There is, however, a limit applicable to this coverage, usually no more than $500 in each occurrence. ** Which has been intentionally caused by an Insured 12 years of age or under Most Insurance policies will not respond to pay claims for loss or damage which is deliberately caused. However, when children are involved, an exception is provided under the liability coverages provided by home owner forms. Coverage, however, is restricted to damage intentionally caused by an insured 12 years of age or under. Insurer agrees to make voluntary payment when property damage deliberately caused by certain children. Last week, 11-year-old Benji tried out for a community baseball team. He did extremely well at the tryouts and expected to be made team captain. However, the coach's son was given that honour. As circumstances would have it, the coach and his family live just across the streets from the Butlers. When Benji came home from practice that day, he was so frustrated that he picked up a rock and deliberately threw it through the kitchen window of the coach's home. The cost of repair is estimated at $200. This insuring agreement provides for the payment of direct damage intentionally caused by an insured 12 years of age or under. The amount of Insurance available to pay losses under this Insuring agreement is limited, usually not exceeding $500 in each occurrence. Exclusions As with most Insuring agreements, certain exclusions will apply. There is no coverage for: 1. "Damage to property you or your tenants own or rent" This Insuring agreement does not cover property owned by one Insured and which is damage by another Insured. This exclusion also applies to rented property such as yard or garden equipment., movie videos and recreational equipment such as bikes and watercraft. This exclusion applies whether such property is owned or rented by the Insureds or their tenants. 2. "Damage to Property which is Insured under section 1" All Homeowner forms provide limited coverage under section 1 - Property coverage for personal property belonging to others. When the loss of that property is caused by a peril insured under section 1, it cannot be claimed under this Insuring agreement. 3. "Claims resulting from the loss of use, disappearance or theft of property." No payment will be made for property of others which has been stolen or which is claimed to have disappeared. Also, any payment for financial loss due to loss of use of property damaged by an Insured is not covered. Coverage H - Voluntary Compensation for Residence Employees Coverage E - Personal Liability provides coverage for the Insured's legal liability for injury or death of residence employees. However, when such employees are injured or killed through no fault of the Insured, there is no coverage. Coverage H - Voluntary Compensation for Residence Employees ** Is designed to provide all occasional residence employees with limited benefits in such situations. Permanent residence employees are insured only when stated on the coverage summary page. The amounts provided by this Insuring agreement are outlined in a separate schedule of benefits and include payment for: a) Loss of Life, including funeral Expenses; b) temporary total disability; c) Permanent Total Disability; d) Injury Benefits (Weekly Indemnity); e) Medical Expenses The limits payable and the duration of payments varies with each of the above categories.
These payments are made voluntarily. No suit or action is required by the injured employee: in fact, should the Injured employee bring an action against the Insured, the injured party is not entitled to voluntary payments...” (RIBO)
 
F. Travel & Health
"Travel Health Insurance Providers Travel Health Insurance is provided to travellers by a partnership of three organizations: 1. A distributor (intermediaries), usually licensed; 2. An underwater (the carrier); 3. A claims manager, known as a Third-Party Administrator (TPA) who takes over management at times of claim and claimant recovery. Distribution Firm The distribution firm that markets the plan will provide the original plan design concept to be marketed, outline the detailed coverage schedules, and provide some basic field underwriting. They will also negotiate costs, commissions, and underwriting requirements with a licensed underwriter. The products developed are most commonly distributed through a network of intermediaries or channels, including travel agents, financial Institutions and financial planners, life and general Insurance agents, brokers, Internet, affinity associations, and tour organizations. Other channels offering travel Insurance include credit card companies and group employee benefit plans. Some companies use their own distribution network while others use a variety of marketing sources. Underwriter The underwriter will be a life Insurance or casualty company that is licensed to underwrite this type of risk. Their main products (other than travel health Insurance) may include group accident benefits or casualty products. They will negotiate with the distributor to provide claim and expense protection, but generally will act in partnership with the marketing network. Claims Manager (Third Party Administrator) At the time of a claim, an independent managed-care company or a special department within the underwriting Insurance company manages the whole claim process, including the claimant's recovery. Their function is to provide claims management or the return of the Insured to health and/or country of origin. Third party administrators are prominent players in the managed care industry and have the expertise and capability to administer services, including claims administration, premium collection, enrollment, and other administrative activities. Agreement The distributor who markets the product negotiates the cost of the benefits that will be provided. The distributor and the underwriter sign an agreement with one or managed care services. Fees and commissions are added to the basic underwriting costs and premiums are determined much like any other Insurance product. When an Insured traveller encounters a medical emergency, the primary facilitator functions as a managed care provider. Facilitators can be reached using an 800 services number or a call collect system. In the event, of multiple Insurer's underwriting the risk, the first one called will become the facilitator and call on the resources of the other providers as determined by the contract. They may also recover claim costs from the appropriate government health Insurance Provider (GHIP). Standards for registrants registered by RIBO - including travel health Insurance Introduction: These standards for registrants with respect to travel health Insurance have been adapted to conform to the provincially harmonized national skill profile for general Insurance Brokers. They have been approved by RIBO Council for the "Including Travel" restriction on registration. They are based on basic skills levels and describe in detail the skills that are required to pass the RIBO travel examination. The depth of knowledge to be possessed of each skill is shown. The committee has revised the level of knowledge required for certain skills. Three levels of knowledge have been defined ranging from Level 1 (the most basic) to level 3 (the most comprehensive). The required level of knowledge assigned is a measure of its importance to the basic skills that Insurance brokers registered "under supervision" are required to possess. The complete knowledge of level descriptions and the comprehensive description are shown in the following skills profile section. It is hoped that this information will be a useful guide for educators to follow in designing courses and seminars for potential candidates for this examination. It should also help applicant who choose self study to prepare for this test. Skills Profile for General Insurance Brokers Skills Levels Basic Skills When we say that a broker needs a basic skill level in a particular area of expertise, we are saying that a broker needs to have knowledge and comprehension of that particular area. Definition of Knowledge: The broker recalls or recognizes information, ideas and principles in the approximate form in which they learned. Definition of Comprehension The broker translates, comprehends, or interprets (explains or summarizes) information based on prior learning. Intermediate Skills When we say broker an intermediate skill level in a particular area of expertise, we are saying the broker needs to apply and analyze the knowledge and comprehension of that particular area. Definition of Apply: The broker selects, transfers and uses data and principles to complete a problem or task with a minimum of direction. Definition of Analyze: The broker distinguishes, classifies and rates the assumptions, hypotheses, evidence, or structure of a statement or question. Advanced Skills: When we say that a broker needs an advanced skill level in a particular area of expertise, we are saying that a broker needs to be able to synthesize and evaluate the knowledge and comprehension of that particular area. Definition Of Synthesize: The Broker originates, integrates and combines ideas in to a product, plan or proposal that is new to him or her. Definition of Evaluate: The broker appraises, assesses or critiques on a basis of specific standard or criteria. Skill Types (Areas of Expertise) The following describes various areas of expertise and the skill level required within each area. Skill 1: Technical Skills Outline: Develop and maintain related Insurance, technical and personal competence. Complete appropriate studies, including courses and seminars, to attain and maintain Insurance, technical and personal standards established for RIBO registration and continuing Education requirements. Description Brokers are required to demonstrate skills and knowledge required for registration to include travel health Insurance and Intermediate level awareness of RIBO continuing Education requirements. Brokers must have Advanced level knowledge of travel health Insurance. They must understand the ongoing responsibility to maintain competence to perform effectively as Insurance brokers The technical skills above have been condensed for the purpose of keeping the skills profile and concise. The following is a more comprehensive list of the individual area of expertise with Travel Health Insurance. Travel health Insurance - Common Clauses Health a) Pre-existing conditions; b) Sporting activity exclusions; c) Excess Hospital, medical and extended care for Canadian Travellers; d) Regular hospital coverage for visitors to Canada; e) Accident dental treatment; f) Emergency Transportation g) Travel of a family member Death or disability Funeral Expense; Repatriation; Death benefits - accident (ground or Air); Disability and loss of sight benefits - accident Travel Health Insurance - Other coverages Trip cancellation or interruption (usually standalone) ; Baggage and other possessions (Standalone) Return of automobile; Delay of return travel; Child care attendant; Collision waver for rental vehicles; Pet return (often restricted to dog or cat) Flight Insurance (usually standalone) Skill 2: Client Service and Sales skills Outline: Manage new and existing clients. Analyze and review risk and provide ongoing service. Description Brokers must possess intermediate level understanding of techniques to review and evaluate the risks and need of each travel health Insurance client. Brokers must have Intermediate level ability to negotiate with Insurers and use their rate manuals. Brokers must have intermediate level knowledge of office procedures in order to process data and information accurately and quickly. They must have intermediate level ability to organize their daily schedules to permit client service work to be undertaken regularly and promptly, including Insurance policy maintenance and claims processing. Skill 3: Risk Management skill Outline: Identify and assess exposures of travellers and recommend methods to manage the risks associated with travel. Description: Brokers must have intermediate level knowledge and understanding of how to identify exposures of Canadians travelling out of province/country and of foreigners travelling to and within Canada. Brokers must have advanced level ability to identify activity exposures of travellers, including frequency and duration of trips. In particular, planned undertaking of hazardous sports or recreation during trips must be determined. Brokers must have advanced level knowledge and understanding for the financial exposures of Canadians travelling outside the province/country and of foreigners travelling to and within Canada. Advanced level knowledge is required to assess those exposures and quantify them. Brokers must then be able to select the Insurer offering the coverage required by clients and help clients complete the application. Brokers must have Advanced level knowledge and understanding to advise travellers of the appropriate Insurance response to their needs. This also entails clear expectations of terms and limitations, including the procedures to be followed in order to make a claim under a policy. Advanced level skill is required to keep up-to-date on changes to industry travel policy forms and wordings. Prescribed medication changes, other than to generic brand, must not have occurred within the 12-month period immediately preceding each departure date or the applicant's effective date. Length of time may vary with different carriers. Definitions: Definitions may vary amongst Insurers; the following is intended to provide a basic understanding. Accident: Unintentional, sudden and unforeseeable event due exclusively to an external cause inflicting, directly and independently of all other causes, bodily harm. Activate (Activations) Selection of, and payment of the appropriate premium for, the Multi Trip Annual Plan, Single trip annual plan, and/or any top up Extension coverage by the client. Carrier The Insurer underwriting the risk Change of prescribed Medication dosage or frequency being reduced, increased, stopped and/or new medications being prescribed and or taken by applicant (Insured) A change of prescribed medication will be considered for coverage when supported in writing by the applicant (insured's) Physician when 1. The active ingredient or dosage of the medication remains the same or is decreased due to improvement of the medical condition, or 2. Newly developed Drugs introduced to the market are prescribed where a definite improvement in the applicant's condition is anticipated 3. Prescribed Medication changes, other than to a generic brand, must not have occurred within the twelve-month period (12 month) period immediately preceding each departure date or the applicant's effective date. Length of time may vary with different carriers. Common Carrier A public land, Air, or water conveyance licensed to carry passengers for hire. Company The Insuring company Critical In danger of death or life-threatening Deductible The amount that the applicant must pay before any benefits are payable by the company. A deductible, if chosen, is retroactive to the first day of the applicant's trip and applies to each unrelated medical emergency that leads to an eligible claim. Departure Date The earlier of the date the applicant a) Boards of the ticketed transportation, or b) Leaves Canada on an insured trip, unless the applicant requested coverage to begin on the date the applicant leaves his/her province/territory of residence. Departure points: The location where the applicant departs from their province or territory of residence. Dependant (s) Any unmarried children residing at home, who are at least 15 days of age, but under 19, and who are living with and dependant upon the applicant for their sole means of support. Effective date for the multi-trip annual plan, means the date indicated on the applicant's confirmation letter, when the application and the required premium are received by the company or its representative. If the coverage is purchased after the applicant's departure date, emergency sickness related benefits shall become effective 48 hours after the date and time the required is received by the company. For the policy, means the date this policy is issued to the applicant and as indicated on the applicant's confirmation letter. For Top up- Extension, means the date immediately following the termination date of the applicant's existing emergency travel health Insurance coverage. Elective treatment Medical Treatment, surgery or any other procedure scheduled by the applicant's physician to occur at a future date. Emergency An unexpected or unforeseeable sickness or injury that requires immediate non-discretionary medical attention, treatment or care. Extended Family: The applicant's spouse, the applicant's children, their spouse's, the applicant's parent's or guardian(s), the applicant's in -laws, brother, sister's, grandparents and grand children. Government Health Insurance Plan The ministry in each province overseas a health Insurance plan for its residents. Each province has its own regulatory fee guides and may refer to the plan by different names; e.g., In Ontario, It is called Ontario Health Insurance plan (OHIP) Hospital A facility equipped to perform surgery and which regularly treats patients on a medical emergency in patient and out patient basis and is identified and licensed as a hospital in the area where the hospital services are performed. In no event, shall this include a nursing, home, a rest home, convalescent home, rehabilitation center or home for the aged. Injury Sudden body harm that is directly caused by an accident during an Insured trip, and that is independent of sickness and all other causes. Insured A person or persons named on the application form and confirmation letter for whom insurance coverage is in effect for this policy. Insured Trip A trip on which the applicant is travelling outside Canada (or the insured's province/territory of residence, if requested) for which coverage is in effect under a multi-trip annual plan, a single trip daily plan or a top up extension coverage the applicant has activated for that trip. Coverage on a trip begins on the Insured's departure date and ends on earlier of the date the Insured returns to the province, or the number of days of coverage under the plan purchased. Medical Director The medical doctor acting on behalf of the company. Medical Emergency An unexpected and unforeseeable sickness or injury, which requires immediate non-discretionary medical attention, treatment or care. Medical Stable and Controlled Medical treatment must not have been recommended, or required, or obtained, or symptoms must not have appeared or changed and there is no change of prescribed medication (see definition) Medical Treatment Medical Advice, Investigation, Consultation, care, service, diagnosis, or prescription rendered by a physician for the Insured's sickness or injury. Multi-trip Annual Plan Coverage for an unlimited number of Insured's trip of duration of 30, 60, 90, or 120 days within a continuous 365 - day period commencing from the effective date. Ontario Health Insurance plan - OHIP A health Insurance plan for all Ontario residents which the Ontario government oversees and administrates. This plan covers the basic health providers and services as outlined by the applicable health act. Physician Medical director or person, other than a relative, who is legally qualified and licensed to practice medicine or perform surgery in the location where services are performed. Policy period The Period between the effective and termination date covered by the policy. Preexisting Medical Condition Sickness, injury, or medical condition, or any medical condition directly or indirectly related thereto, which existed on or prior to the effective date or any departure date. Reasonable and Customary Costs that are customarily charged for covered benefits and that are not in excess of the standard fee for the geographical area where the charges are incurred for the comparable medical treatment, services or supplies for a similar sickness or injury Representative The financial Institution, agent or other location where payment arrangements have been accepted by the company Sickness Illness or disease Single Trip Daily plan (per Trip) A fixed number of days of coverage equal to the total length of the Insured's trip, including the Insured's departure date and return date. Terminal Prognosis A clinical assessment performed by a licensed physician who determines that an existing medical condition, sickness or injury is expected to result in the Insured's premature death within a specified time, commonly twelve months following any departure date. Termination Date for an Insured's trip, means the date any activated coverage ends, being the earlier of the date that the insured returns to their province of residence or the number of days coverage the Insured purchased under the Insured's multi-trip annual plan option, Single trip daily plan, or top up extension coverage for that trip. For the policy, means 364 days after the effective date for the policy. Third Party administrator (TPA) An organization that processes Insurance claims for a separate entity. This can be viewed as outsourcing the administration of the claims processing, since the TPA is performing a task traditionally handled by the company providing the Insurance. Travelling Companion Any person, up to a specified number of persons, including the Insured, who is sharing prepaid accommodation and/or transportation arrangements with the Insured. Unstable condition A sickness or injury that would cause an ordinarily prudent person to expect to need medical treatment or investigation following departure. Vehicle A private passenger automobile, station wagon, or mini-van defined as a vehicle manufactured and designed a transport a maximum of seven passengers and used exclusively for the transportation of passengers, or a trailer either owned or rented by the Insured. Vehicles also include motor homes and camper units. Motor home means a self-propelled vehicle containing living quarters that are an integral part of the vehicle and are not removable. Camper Unit means a specifically constructed unit for living purposes mounted on or removable from a vehicle. You or yours Means Each Insured Risk Management & Product types foreign destinations have always had a wide appeal to the members of the world community and to Canadians in particular. All travel attracts various common and other more uncommon risks. Every destination has a certain associated risks - and some may even be considered too high risk to be eligible for travel Insurance - each method of travel attracts unique risks that need to be Insured against. In this section, we look at: a) Types of travel risks; b) Broad categories of travel Insurance Products; and c) Types of private plans in detail in the next section, we look at details of typical coverages in private plans Travel Risks Medical risks Travellers are faced with many risks that may result in financial loss to themselves or members of their families, in the event of sickness, accident or death. In remote areas of the world, even if western style healthcare were available, the services of a hospital or clinic would cost between $3000 and $5000 US per day. Enormous increase in foreign healthcare costs and cutbacks in government coverage have resulted in ever-increasing premiums. In an effort to moderate these increases, the carriers have included large deductibles, more exclusion and in some cases very restrictive underwriting practices. Personal claim deductibles now vary in size from $100 to $25000. One company has a $100,000 deductible, which reduces the premium by 80%. In this particular case, it is used as a top up for federal retirement travel benefit. These many changes have resulted in an increased risk to the travelling public. Now in addition, to the concern of lack of coverage, is the risk that the coverage is not broad enough or that benefits may run out due to the exclusions and maximums. Non- Medical Risks The traveller could also be faced with costs related to the following: a) Loss of baggage or other personal possessions; b) Delays in arriving at, or returning from, a trip; c) The disability of others such as travel companions, or their trip interruption, resulting from an early or late return from a trip. d) Automobile Return e) Rental Vehicle damage f) Child care g) Pet return h) Flight accident I) Common Carrier travel accident j) Return of deceased insured k) Emergency dental l) Return of Insured to destination Advising the client of the risk Cautious travellers, before leaving home, are now faced with a bewildering array of plans and coverages from more than 50 different Insurers. The traveller's individual situation and needs will dictate which plan is required. The Broker's skill and knowledge provides the necessary insight for travellers to make educated decisions to minimize risk. A large part of your value as a professional advisor will be in how well you keep abreast with the policy changes and innovations that are constantly advanced by the carriers. Professionalism should be composed of equal parts, knowledge, skill and ethical practice. Product Types - All providers A wide spectrum of travel Insurance coverage is available under the following: 1. Provincial government health Insurance plans (GHIP), with coverage varying from one province to another. See Appendix A for provincial and territorial GHIP residency requirements and for details of Ontario's out of country coverage. See Appendix B for typical benefits provided under the provincial and territorial GHIP's. Individuals who incur health costs while out of the country would be reimbursed at the listed lower amounts. 2. Group Insurance plans (if available), which usually provide out of province/country coverage that pays in excess of what is covered, or which may not be covered at all, by government plans. These private group plan have limitations, exclusions, and maximums that must be examined carefully. See Appendix C for typical benefits provided under group Insurance plans. 3. Private Travel plans, (Individually purchased travel health Insurance), which often include benefits not available through either government or group plans. Private plans are also referred to as personal plans. Private travel health Insurance is designed to supplement the coverage that the traveller requires in addition to their GHIP. The government health act prohibits private carriers from competing with the government plan. The private carriers can provide coverage only when the government plan has a) Been exhausted and ceases to pay; and/or b) Does not provide coverage The most typical private travel plans are classified by duration, purpose, and by whether travel is outbound (commonly four types) or inbound for visitors to Canada. Plan coverages also vary according to whether or not travellers are covered by their provincial health care plan. Product Types - Private plans Four broad categories of private travel Insurance cover risks associated with outbound travel. A fifth type covers risks associated with Inbound travel to Canada, and can be standalone or incorporated in to the one of the first four types. Different travel health Insurance providers may classify their products in other ways; e.g., medical only, comprehensive packages covering medical and non-medical risks; single trip versus annual plan coverage, various standalone coverages etc. You will need to become familiar with each provider's products in order to advise your client knowledgeably. This text primarily deals with travellers who are outbound but coverage for various inbound travellers is described briefly. The travel Health Blueprint at the end of this section is a useful guide for determining which product an insured need. Out bound Travel Insurance Short term or one trip coverage short term trips are those taken by Canadians who are travelling for a relatively short period for up to 90 days. Short term coverage extends coverage offered under the GHIP plan and offer certain benefits that are not normally included in government plans. Example of wording for single trip coverage short term trips are those taken by Canadians who are travelling for a relatively short period for up to 90 days. Short term coverage extends coverage offered under GHIP plan and offer certain benefits not normally included in government plans Long-Term One-Trip coverage.. long term trips usually refer to those taken by Canadians who vacation outside Canada for an extended time that does not exceed the coverage time frame specified by the provincial GHIP. In Ontario, OHIP currently has a limit of 212 days, after which the coverage is cancelled. (See Appendix A) For many long-term travellers, split residency has become part of their lifestyle. It is common, for example, to describe our long-term winter travellers as snow birds, defined as Canadians aged 55+ (now also sometimes known as zoomers) who spend 31+ consecutive nights outside Canada. While the travel patterns of today's retirees are changing, snow birds still account for a sizeable market - it is estimated that their trips account for over $86 million in premiums spent on over 690,000 trips in 2006 and these figures are growing as the baby boomers mature. Frequent travellers Annual plan Frequent travel whether for business, pleasure or caregiving to elderly parents, for example, is a way of life for many people. Business travel has become a routine for many. This type of travel incurs special risks that need to be examined and properly insured. As its name implies, this is an annual; coverage for frequent trips. It is identical to short term plans but is paid for on an annual basis. The plan offers a variety of durations, 3-90 days being common but limits the number of days contracted. The traveller is covered for any number of trips in the one-year period. Expatriate Insurance This plan requires that the person must not be Insured or eligible for benefits under a Canadian government health Insurance plan. The person must be either: i) A Canadian citizen residing outside of Canada; ii) A Canadian citizen returning to reside in Canada and awaiting coverage under a government health Insurance plan, or; iii) A non-Canadian citizen residing outside their country of origin while employed by a Canadian company. Coverage is world wide. The Canadian government recognizes that certain types of extended stays warrant special consideration. Missionaries, diplomats, health care specialists, students and certain other individuals who are out of Canada for extended absences, may receive preferential treatment and can apply for, and have, their GHIP coverage extended and topped up for years. Those with GHIP coverage would also require a traditional travel Insurance plan. Other travellers who are away for extended periods and whose GHIP coverage expires are exposed to all health care costs. Expatriate Insurance therefore becomes effective after GHIP coverage expires, and covers health costs from the first dollar. Generally, contracts can be renewed annually as required. Inbound Insurance Inbound Insurance is for travellers arriving in Canada. This includes international workers, professionals who are here on a time limited work basis, visitors, landed immigrants, refugees and students who come to Canada for higher level of education. Inbound Insurance provides benefits for a new sickness or accident incurred while covered. In bound insurance contracts cover health costs from the first dollar. Contracts covering inbound travellers include various restrictions and limitations depending on the carrier. For example, overall policy maximums can vary between $10,000 and $2,000,000. Inbound travel Insurance is available only to individuals who are not covered by GHIP coverage. The following regulations refer to the waiting periods for government coverage for various categories of visitors to Canada, and may vary from province to province. Landed Immigrant The effective date of coverage varies between one and three months. In Ontario, coverage becomes effective three months after the date of arrival in the province with Immigrant status, or three months after the immigrant status is acquired if the traveller arrived without Immigrant status. Refugee Coverage is effective immediately from the date of arrival in the province for convention refugees. Claimant refugees are covered under the federal government. International Students eligibility varied from province to province. In Ontario, International students are not eligible for coverage. International Workers Coverage is effective on the day of arrival, provided that the applicant has a minimum of a three-month visa. Family coverage is available if a correct visa is approved by Immigration Canada. Visitors to Canada Visitors to Canada are not eligible for any government Insurance plan coverage. Inbound Insurance policies will not automatically cover preexisting conditions and are subject to an elimination period or a stability period for Visitors to Canada; for other inbound travellers, coverage varies by carrier. Coverages Coverage Overview The number of companies offering travel Insurance has increased tremendously in the last several decades. In the early 1990's only seven carriers offered competitive coverages; this has now increased to over 50 providers. For a listing of current travel Insurance providers, refer to the travel health Insurance Association of Canada (THIA) website, http://thiaonline.com. THIA member companies who are members of the Canadian Life and health Insurance Association (CLHIA) would also be covered under Assuris, the life Insurance Industry's consumer protection plan. Distribution Channel The products are distributed through a network of intermediaries or channels. a) Travel Agents (Responsible for the most sales); b) Banks and other financial Institutions c) Life Insurance Agents; d) General Insurance Brokers; e) Licensed Financial planners; f) Travel health Insurance Sites on the Internet; g) Affinity Associations; h) Cruise or other tour organizations, and airlines Other channels offering travel Insurance include credit card companies and group employee benefit plans Some companies use only their own distribution network while others use a variety of marketing sources. Typical Outbound Travel Health Insurance Benefits Types, Amounts, and wordings of travel Insurance benefits may vary from company to company. The following is intended to provide a general explanation. Note that the following describes typical benefits for most outbound Insurance coverages, with the exception of Expatriate Insurance, which by its nature may contain unique benefits. It, for example, will not include coverage for excess hospital or medical benefits. Similarly, inbound Insurance coverages would not cover the excess or extended benefits described below. To protect the consumer, contracts must be compared in terms of the following: a) Benefits; b) Benefits descriptions; c) Limitations, exclusions, and maximums; d) General Provisions; e) Premium Costs (least Important) All coverages are prefaced by the caution that the company will pay the reasonable and customary charges for the costs incurred outside the country of residence. It also states that benefits will be paid for charges in excess of amount allowed and/or paid for by any government health Insurance plan (GHIP). The maximum aggregate limit will also be stated. Most insurance providers have stringent rules about written permission from their medical doctor, written direction from the attending physician and copies of receipts for all expenditures. Excess Hospital This benefit pays for public ward, semi-private, or private ward hospital accommodation, when directed by the doctor in charge. All other hospital services and supplies for the emergency in excess of what GHIP pays are also included. The limit allowed by OHIP (as of 2008) is $400 per day. All charges in excess of this amount are the responsibility of the patient. Travel health Insurance will pay this excess, within the limitations of the contract. Excess Medical This benefit pays charges in excess of what GHIP pays, which are incurred by an insured for services of a legally qualified physician or surgeon who is licensed to practice medicine in the local area where the services are performed. Extended Health care Coverage may include the following: 1. Private duty nursing services by a registered nurse up to a stated maximum; 2. Prescribed medication; 3. X-Ray and laboratory Fees; 4. Local Ambulance Services; 5. Appliances and related services such as for wheel chair rental, crutches, and braces; 6. Paramedical Practitioner services, such as chiropractor, osteopath, chiropodist or physiotherapist. In some contracts, a maximum overall dollar value may be stated for each of these practitioners. Out of pocket expenses This benefit provides reimbursement of additional out of pocket expenses when an insured is hospitalized (e.g., telephone and television rental charges) up to a daily maximum and an overall dollar maximum. Minimum stay requirements are stated. Additional uses for the allowable "out of pocket expenses" are found in the "transportation of family members" benefit. Child care attendant This benefit reimburses costs for a child care attendant (non-relative) to care for the children who were accompanying the Insured in the event the Insured is hospitalized. The benefit will be paid after a minimum hospital stay requirement, and will pay up to a stated maximum. Emergency Air Ambulance If the attending physician recommends (in writing) that you must return to your province or country of residence for immediate medical attention following an emergency, the Insurance company will pay the cost of an Air Ambulance, if the patient is unable to return on a regular flight. The Insurance company must approve this in writing and a stated maximum will apply. Trip Cancellation, Interruption or Delay Travellers frequently experience unavoidable situations that affect their plans in one of three ways: 1. Personal or family situation such as death or sudden medical emergency that necessitates the cancellation of the trip; 2. An emergency involving family members at home that occurs after the commencement of the trip, requiring the Insured to interrupt the trip to return home early; 3. A situation that delays the scheduled return home, or delays the traveller's departure. These delays are considered to be outside the Insured's control, and may lead to delays or missed flights and connections. The coverage is generally broad enough to cover not only the insured traveller, but also members of the immediate or extended family. In addition, this coverage usually extends to a travelling companion or business associate. Other circumstances include: a) Being called to Jury duty; b) Being subpoenaed; c) Being quarantined (at the Insured's residence); d) Medical Emergency; e) Death Note: Non-medical benefits are not always included in the trip cancellation insurance. Benefits of trip cancellation Insurance The following benefits insure the risk outlined in the three situations described above. 1. Prior to the start of the trip: The insured is forced to cancel due to emergency, or to the death of the Insured and/or a family member of the Insured's extended family, travelling companion, or the business associate with whom the insured is travelling. The benefit will pay a) The non-refundable portion of any prepaid transportation such as air, rail or cruise ship, or b) The non-refundable portion of any of the unused, prepaid travel arrangements. This would include: a) Hotel; b) Meals; c) Airplane fare; and d) Other scheduled expenses arranged prior to departure. Some travel health plans stipulate "after you leave home" and therefore do not cover cancellation prior to departure. 2. Interrupted Trip Benefits Apply to a trip already in progress. If an occurrence prohibits the Insured from completing the trip as scheduled, the benefit will return: a) Any non-refundable portion of any unused prepaid accommodation; and/or b) The extra cost to change the return ticket to a one-way economy fare by regular scheduled transportation back to the departure point or to the group's next destination 3. Delayed Departure Benefits will cover the scheduled benefits as in (2) above if the departure is delayed due to an emergency. Delayed Departure causes include: ** Severe weather conditions; ** Mechanical Breakdowns; ** An accident involving land transportation to your departure point Trip cancellation Insurance is most often sold as an integral benefit to completely round out a travel health Insurance benefit for both domestic and foreign travel. Other Benefits: Other less typical benefits include the following: Pet Return Provides funds up to a stated maximum for return of an accompanying pet, usually limited to a cat or dog Rental Car Collision Provides funds up to stated maximum for damage to a vehicle rented from a commercial rental agency Automobile return Provides funds to a stated maximum to return a personal vehicle (land or water) to the home destination, due to a covered sickness or injury. Flight Accident Insured may choose amongst several levels of coverage; e.g., $200,000 to $500,000 for death and loss of limb(s), sight, etc., due to an aircraft accident whether in flight including but not limited to on the airport premises before boarding or immediately after alighting from an aircraft. Limitations and Exclusions The study of travel Insurance would not be complete without examining the exclusions and limitations section Exclusions and limitations prevent undue selection against the carrier and the premium paying consumer, and limit the exposure to normal travel risks. Benefits may vary slightly, but the real challenge lies in comparing the different companies’ policy wordings. Typical Exclusions in Outbound Travel Insurance Note: As mentioned in explaining typical benefits, the following describes typical exclusions for most outbound Insurance coverages, with the exception of Expatriate Insurance, which by its nature may contain unique exclusions. Similarly inbound Insurance coverages would contain various different exclusions 1. Any sickness or injury that occurs while the policy is not in effect, or during a trip or part of the trip that is not an insured trip, or for trip arrangements for which no premium was paid before departure. 2. Sickness or injury: which does not relate directly to an emergency, including general assessments or check ups, experimental drugs, preventative medicines or vaccines, elective treatment, elective or cosmetic surgery in any form, or treatment that can be delayed until return to the Insured's country of residence. 3. Expenses due to early or delayed return home, when caused by a situation that, before leaving, was aware would make it unlikely to complete the trip as booked. 4. Expenses due to trip delay or interruption: When the purpose of the trip is to visit a person who is ill, and the medical condition of the ill person worsens or death occurs, causing a delay or interruption to the Insured. 5. Hospital or medical treatment: Where the policy is sought specifically for the purpose of obtaining such treatment, whether or not recommended by a physician. This would include the birth of a child whole travelling, prenatal care or complications of a pregnancy or child birth within eight weeks of expected delivery date. 6. Pregnancy, Child Birth, Miscarriage, or any complications due to pregnancy occurring within eight weeks of the expected delivery date is a common limitation to coverage during pregnancy. This would include the birth of a child while travelling, prenatal care, or complications of the pregnancy or child birth. Some policies totally exclude any costs related to pregnancy. 7. Suicide or self-inflicted Injury: Or attempt thereat whether sane or insane, insanity, mental or emotional disorders (anxiety, depression) unless hospitalized, abuse of medication, drugs or intoxicants, or treatment of same, or accidents related thereto. This exclusion would encompass expenses incurred because the Insured failed to follow prescribed therapies or treatment. 8. Civil disorders, war or acts of war (whether war be declared or not). Action of foreign enemies or wilful exposure to peril, except in an attempt to save a human life. 9. Air Travel: Other than as a passenger in a commercial aircraft licensed to carry passengers for hire 10. Continuing medical treatment: If the insured is medically fit to return to their country of residence following treatment of a critical sickness or injury. 11. Sporting Activity Exclusions: Any costs incurred due to an injury as a result of participation as a paid professional in a… competitive sport, or as a result of hand-gliding rock climbing, mountaineering, parachuting, para-sailing, skydiving, bungee jumping, snorkelling, scuba diving, cave exploration, or motorized speed or racing contests will not be covered. The sport activities exclusions may differ with different insurers. 12. Certain destinations may be excluded due to political unrest, or other circumstances. 13. Pre-existing conditions: This is undoubtedly the most often referenced limitation and exclusion clause. Because of its importance, it is discussed in detail in the section that follows. Pre-existing conditions of all the limitations and exclusions that exist, none are more referenced and restrictive than "pre-ex" There are many variations, but all focus on the question, "What happened to you medically in the preceding days, months and sometimes years, prior to leaving on this trip?' Typical Pre-ex question What medical history, occurrence, or symptoms have you experienced prior to the date of application? Remember that last year's medical occurrence may become this year's pre-existing condition. Worse still is the situation involving another's company's benefits. Consider the following: Company A issues a policy providing coverage for 60 days, and the insured incurs a medical condition during those sixty days. Company B has issued a top up policy with a 60-day elimination. Company B declares the occurrences pre-ex, even though it is the same trip and the insured has not yet made it home. A second consideration complicates the issue. A clear - cut situation would reflect symptoms for which the ill or injured person would consult a medical authority and receive a diagnosis. However, would this situation be considered a pre-ex if the symptoms were not acted on immediately? The consensus is "YES" if a "person" experiencing such symptoms, whether or not the condition was deteriorating. An additional consideration concerns medicines or treatment prescribed to the applicant whether or not the applicant had acted on it. To further complicate the issue, a change in the prescription dosage, or type (increase or decrease) would also activate the pre-existing condition. The pre-existing period may extend from three, six, or nine months, or up to one full year prior to the date of issue. The company may include the 48 hours after purchasing the policy in the pre-existing period. In most policies, any medical condition that occurs prior to departure will trigger the pre-existing clause and it is up to applicant to provide any information regarding medical changes right up to their date of departure; otherwise, the policy may not be valid. The only remedy may be full disclosure to underwriting, asking either for elimination of the pre-ex-clause or a weighted offer. The response could also be denial of issue, limitation of benefits, or caps on expenditures. Examples of pre-existing condition wording 1. Any medical pre-existing condition which existed, or caused symptoms, or was treated or investigated, whether or not it was deteriorating, or for which medication was changed in type or dosage, on or prior to departure date. 2. Any pre-existing condition that is unstable in the three months before the traveller leaves home, or before the date policy coverage starts. In some instances, the carrier provides for another method to eliminate the exclusion. This may take the form of a) Underwriting b) A top up requiring additional premiums; or c) A departure date within a prescribed time limit of policy purchase. Brokers, to receive full and open disclosure from their clients and to conduct their own due diligence, must realize that diagnosis is not necessary to define pre-existing conditions. It asks only if the symptoms existed. The fact that abnormal symptoms existed prior to the purchase of the policy, or that any symptoms or signs of illness or disease were known to the insured prior to the effective date of policy is sufficient. Once this occurs, it is up to the Insurer to determine the extent of the risks and the amount of premium required. Insuring agreement Each contract contains a statement known as the Insuring agreement. This is a broad statement of the benefits and the purpose of the policy. This statement is then augmented by the benefits and restricted by exclusions and limitations. An example of an Insuring agreement in consideration for the application of Insurance and the payment of the appropriate premium for the plan and coverage option you select, and subject to What is covered and what is not covered, the company will pay reasonable and customary charges up to the amounts specified below, which are in excess of any deductible amounts, for expenses incurred as a result of a medical emergency while on an insured trip. Under this policy, only medical emergencies which are unexpected or unforeseeable and not related to pre-existing conditions are covered, unless you have been underwritten and received approval to have pre-existing medical conditions covered. Under this policy, only medical conditions that are unexpected and unforeseeable, and not related to Pre-existing medical conditions are covered, unless you have been underwritten and received approval to have pre-existing medical conditions covered. The Insuring clause becomes effective after the application has been completed, signed and forwarded with the appropriate premium. Extension of Coverage Extension of Coverage falls in to two categories: 1. Voluntary decision to remain at the trip destination past the original intended date of return (or termination date) 2. An involuntary extension past the date of return, for reasons beyond the control of Insured person. Voluntary extension Some plans provide no extension of benefits past the date of termination (or return date). If the Insured is out of Canada. Others may provide extension (or top up) while the Insured is at their destination, provided there has been no change in their medical condition that may result in a claim. Conditions may include a requirement that a request be made before a minimum period prior to the planned date of return, a minimum extension period (e.g. four to seven days), and a minimum premium. Some contracts require that extension requests not exceed a maximum number of days; e.g., 212 days in Ontario. A requirement may be that no extension will be granted if the request is made beyond 12 months after the Insured originally left home. Involuntary Extension This generally results from a medical condition that causes a delayed return. Other conditions may also apply. This extension may be offered to 1. The insured only 2. A member of Insured's family 3. A travelling companion Trip interruption coverage usually outlines the involuntary extensions and details the circumstances under which extensions will be granted and length of time allowed. Example: An automatic extension of up to 72 hours may be granted without extra premium, if the Insured trip is delayed due to circumstances beyond their control, such as a) An emergency involving the Insured b) A delay to the Insured's common carrier c) Extreme weather causing hazardous travelling conditions d) Other situations that may be submitted for consideration Coordination of benefits with other Insurance plans The benefits in a private plan will pay in excess of the GHIP of the Insured's home province. Benefits are also coordinated with other existing plans held by the Insured; e.g. Benefits will not be paid under current policy if the other coverage would have paid, had the current policy not been in effect. The travel health policy becomes, in effect, 2nd payor. Coordination of benefits is intended to ensure that benefits payable under all policies do not exceed 100% of all eligible expenses incurred. Other Coverages would include, but not limited to: a) Home owner's Insurance b) Tenant's Insurance c) Multi-risk Insurance d) Extended Health care (Group or personal plans) e) Auto Insurance Benefits; f) Credit Card Policy If an insured receives payment from a second insurer that should have been from a first Insurer, the second Insurer is entitled, under the subrogation clause, to recover their costs from the first Insurer. Example of subrogation clause If the Insured acquires the right of action against any individual, firm, or corporation, for a covered loss, for which payment has been made under this policy, this right of claim must be transferred to the Insurer upon their request, so that they can recover expenses paid. Applications and Underwriting Applications forms vary widely from company to company, but all attempt to elicit the same information. Some are simple -- most are not! - but they do have some similarities. They provide for a full and open disclosure of the past (pre-existing) and present health of the applicant, to allow complete and accurate underwriting of the risk. Application Forms - Outbound Insurance As noted earlier with respect to benefits and exclusions, expatriate and inbound Insurance applications would differ significantly. The following describes a typical application for outbound travellers, excusing expatriate Insurance. All applications need to show the time exposure involved in the trip. It may list an effective date and/or date of departure, and termination date (completion date). The only exception would be for top up or add- on benefits added to existing coverage. The effective date then would be the date of termination of the existing coverage. If the policy is an instant issue, the effective date will be the date written. The effective date provides not only the time and date from which all coverage commences, but also a start point from which all pre-existing health conditions are measured. All applications are designed in sections to supply the following information: 1. Name (In Quebec, maiden name must be provided); 2. Age; 3. Residence Address; 4. Date and point of departure; 5. Destination and date of return (or Termination of coverage); 6. Single, Couple or family coverage, and names of those to be covered; 7. Existing Supplemental Insurance Section 1: Policy Coverage This section determines who is to be covered under the policy. There may be a primary Insured and a dependant's section that would list the spouse and any dependant children travelling with the Insured. Section 2: Date of Birth The date of birth is required for most applications, and last age is commonly used to calculate the premium. The premium may be based on exact age, or more likely on five -year age bands (e.g., 40-44, 45-49, 50-54, etc) Section 3: Home Address Applicants are required to provide their home address in their province of residence Section 4: Dat and point of departure This section may look simply but can have complications. Consider the following: 1. Are the effective date and departure date two separate dates or the same date? Is the date the coverage is required the same as the date the applicant will leave the country of residence, or will they already be at their destination (i.e., is the plan topping up or adding on to an existing plan)? 2. Point of departure may be meaningless if the Insured is already at his/her destination when this coverage ceases. 3. If the Insured has to return home in response to a home emergency, and then leave the country to continue their scheduled trip, coverage would cease upon re-entry and would become effective again only when they depart. Section 5: Destinations and Date of return (Termination of coverage) Destinations may be one location (Vacation location) or a series of locations (cruise or tour). Generally speaking, the first location to be reached will be listed as the destination. The date of return may also differ from the termination date of the plan. Some coverage applies only to a set period, e.g., 30-90 days. The applicant, however, may be away longer and may insure the balance with a top up plan or decide to leave the remainder uninsured. Either way, it is important to the underwriter to know the exact terms of coverage and the dates to which they apply. Section 6: Covered Individuals Many families travel together, but occasionally people travelling together may not be family, but may be friends or travelling companions. Families receive reduction in premiums but non-related travelling companions do not! Section 7: Existing Supplemental Insurance Frequently, associations or affinity groups will provide travel health Insurance for a limited duration. It is important that the traveller disclose this pre-existing coverage. Some companies will not provide top up Insurance and some require this add-on Insurance to be written prior to leaving the home province. A few companies will issue after the termination date when the applicant is at their destination, but all companies will want to know the original company's coverage and duration. Broker Identification 1. Name and Telephone Number; 2. Broker Code Additional Information This section seeks to disclose other pertinent details such as: a) Smoker and Non-smoker status b) Date of last medical and health status; c) Provincial health card number; d) Deductibles (If any); e) Additional non-medical benefits (Riders and options) Pre-existing Conditions Most companies today provide a comprehensive medical questionnaire that may be required when pre-existing conditions have been disclosed. The applications may be rejected entirely or the applicant may be offered one of the following: a) Coverage subject to paying additional premiums b) Coverage allowing for one or two conditions; c) Co-Insurance or a limitation on coverage; d) Elimination of coverage of all pre-existing conditions, in which case coverage applies only for medical conditions or accidents that are new or not previously experienced and that originate after the trip commences. To underwrite any pre-existing condition, the client and the broker must have sufficient time before the client's departure date to obtain the necessary information, including medical reports, if required. Clients who request coverage only days before departure will not have the advantage of having the pre-existing condition (S) underwritten. As a broker, you should encourage and educate your clients to apply for coverage well in advance of their departure dates to allow for a proper underwriting analysis. Premium Calculation Each plan has standard coverage that requires a basic premium calculation. This is followed by options that will increase or decrease the premium. Some examples are: a. Excess flight coverage above the minimum offered in the plan; b) Single, couple or family coverage, which require different premiums; c. Coverage including both departure and return day; d. good health reductions, if available; e. Non-Smoker reductions; f. Deductibles, if any; g. Coverage for pre-existing conditions that require an additional premium charge. The contract may offer this surcharge, OR if only one or tow of the pre-existing conditions apply, may offer full coverage subject to additional premiums; h. In Quebec only, certain additional coverages that are required (with an extra premium charge) Companies may offer deductibles as a method of reducing the premium. The percentage of premium reduction corresponds to the size of the deductible. This may be in the form of a straight dollar value reduction, or of a separate policy offer. Co-Insurance and deductibles are used not only as a method of reducing premiums, but may also be used as a provision by claims administrators when some failure to comply with plan requirement occurs. An example would be an applicant's failure to notify the claims administrator immediately (or within 24 or 48 hours) of the commencement of the medical emergency, in which case the Insurer could void the contract or revert to larger deductibles. Each consideration should be calculated before completing the application. For example, should a husband or wife who are travelling together or returning separately have two policies or one? It may not matter, or it may to their advantage to have two separate contracts. Over a certain age (55-60), it may be mandatory to issue separate policies. Underwriting Pre-existing conditions Due to the tremendous impact of pre-existing conditions on claim costs, the applicant may be required to complete a medical questionnaire after a preliminary disclosure of an existing medical condition (or symptom and/or separate treatment). This form will seek to determine the existence and extent of a pre-existing condition (S). Medical questions have long been the primary method life and health Insurance companies use to determine the degree of risk. Many of the travel health Insurance underwriters are now using this method as well. For these travel Insurers, the initial defence has been the disclosure of pre-existing conditions. A current alternative is to channel the risk in to plans with restricted benefits. When an applicant indicates a medical condition, the application itself can divert the applicant to the restricted plan. The application form is divided in to sections which develop the following information in addition to the general information described earlier, such as name, address, date of birth, provincial health card number, etc. The application form is divided in to sections which develop the following information in addition to the general information described earlier, such as name, address, date of birth, provincial health card number, etc. Physicians’ Information 1. Name, Address and telephone number; 2. Date of last visit; 3. reason and results Medical Condition This is a general statement of health Impairments, followed by a detailed listing of diseases and illnesses. The applicant will be required to list medication dosage and medical status when the last symptom, treatment or medication change had taken place. Additional Information frequently requested would include 1. Details of any surgery; 2. Future treatment or medical recommendation, not yet fulfilled; 3. Smoker status Declaration or Release Statement This statement, which must be signed and dated, may be found on the underwriting questionnaire or application. Its purpose is to provide full disclosure to enable accurate underwriting. a) It verifies that the statements made by the applicant (S) are, to the best of their knowledge, true and fully disclosed. b) It verifies the questionnaire forms part of their application. c) It verifies that the health status changes between the date signed and the date of departure, the Insured will notify the company. This may be negated, i.e., this rule does not apply, if the time to departure is short (two weeks or less). d) It authorizes the release of all medical information held by doctors and other medical providers. e) It acknowledges that if at the time of claim, it is discovered that any question was not answered truthfully, accurately, and completely, it will result in the rejection of the claim (non-payment of the claim). In this event, the policy becomes null and void, and all premiums will be refunded. In effect, this acknowledgement gives notice of penalty provided for fraudulent intent, without stating it. No broker is to be party to underwriting at the time of claim due to lack of true information at the time of issue. All brokers and licensed intermediaries are responsible for assisting in ensuring that all required information is provided to the Insurance company. Claims Administration The very nature of travel health Insurance guarantees that a certain percentage of policies issued will result in claims. These claims can develop within weeks or even days of the effective date. It is important that the broker's understand and assist, however possible, in the claims process. The broker's most important task, however is to explain the coverage to the applicant at the time of purchase. Procedure at time of claim: The following is a basic outline of claims procedures. Most Insurance carriers provide (and insist that it be used immediately) a communication system for their travelling insureds who find themselves in a traumatic health or other emergency situation. The first and foremost function of the entire system is the restoration of the health of the Insured or, failing that, the arresting and stabilizing of the situation that caused the emergency. A secondary purpose is the orderly and timely payment of the resulting charges. The Hotline Toll free 1-800 service numbers Emergency response: (Managed Health care services) The first step is the use of a hotline or the emergency response telephone number usually located somewhere on your policy documentation or wallet card to notify the Insurance carrier. For Insureds covered by two, three or more Insurers, the Canadian Life and health Association (CLHIA) has put together a protocol for multicarrier claims management and payments. The basic premise is that the first Insurer called provides case management and claims payments. After the GHIP payments, the insurers are assessed for payments for all claims according to the terms of their contracts. The protocol provides for an orderly coordination of claims payments. The 24-hour WORLDWIDE EMERGENCY assistance hotline will: a) Assist Insured in obtaining emergency medical care; b) Direct Insured to the nearest appropriate physician or medical facility, and if possible to a contracted facility (which will often offer discounts), to meet the Insured's needs; c) Contact friends or relatives on Insured's behalf; d) Contact the health care provider to outline the terms of Insured's Insurance policy and payment arrangements; e) Case manage and monitor progress daily; f) Arrange appropriate transportation home and accompanying medical staff if required The actual claims process is quite complex, Once the claim has been accepted, the claim(s) will proceed as shown on the claims management flow chart at the end of this section. However, before it is accepted or declined, it must follow a critical path for evaluation and adjudication. The notification of the claim can come from one or several sources: a) Broker/Agent; b) Insured/Family; c) Medical Provider It will be processed and completed by the hotline or mail system, but if required, the Insured will be directed to a managed care unit that is part of the health Maintenance organization (HMO). Many of the providers and services have been prearranged and/or contracted. Note that this terminology applies primarily to claims occurring in the United States. "The language of Managed care" in Appendix D provides more detail on this aspect of the US system. Outside the US, the Insured would be directed to an appropriate healthcare facility. At this point, the claims administrator takes full control of the medical solution, surgery, or other required treatment in coordination of the medical facility and the personnel. They may also contact the policy holder's personal doctor and family for additional consultation. The billings will be directed to an assessor who adjudicates the statements, and makes critical decision on whether to pay or decline based on a strict interpretation of the policy, with particular attention to exclusions and pre-existing conditions. The assessor may request additional information before making the decision. Most declines are open to appeal on additional information not previously reported. Cost reductions and Containments Costs will be contained by avoiding a lengthy hospital stay and reducing time in the hospital prior to the repatriation charge. The costs of the claim are controlled and prearranged through the following techniques or services. Managed Care Unit * Physicians on call; * Pre-admission management * Surgical options; * Air Evacuations Cost Containment Unit * Utilization and coding review * Reasonable and Customary charges * Expanding preferred provider Organizations network (PPO) Prep ricing * Clinics, hospitals, physicians are managed through PPO's; * Hospitals issue Usual and Customary rates (UCR) * UCR rates can be repriced and significantly discounted * Physician's bill may be discounted up to 40% * Hospital Bills may be discounted by up to 10% after the fact Claims Assessment A claims assessor reviews the claim and pays, declines, or defers it for further review, subject to additional information A claim is paid: if all relevant information has been received and policy mandates payment on the submitted claim. A claim is declined if the medical or other situation does not meet the policy requirements. A claim is subject to further review if factors do not permit a pay or decline decision. These factors may include; a) Insufficient Information * Possible appearance of fraud, misrepresentation or other legal complication; * Possible errors and excesses in submitted invoices. Claims adjudication Terms and conditions are established to determine the nature of claims payout. Discretion in the adjudication process increases the risk of claims payout. Subrogation may substantially reduce claims pay out. Claims Adjusting * Review for non-payment, in whole or in part; * Review medical reports for pre-existing conditions; * Review for fraud and Misrepresentation, etc. * Administer in accordance with established discounting relationships (PPO's) * Administer for retrospective discounts (quick pays, etc) Subrogation Initial primary responsibility falls with the provincial GHIP for payment of a claim. As noted earlier, subrogation can occur when more than on Insurer's coverages makes them liable for the claim. The primary Insurer is allowed to collect (subrogate) from the second carrier (s) with Insurance policies in effect at the time. Audits of hospital invoices for substantial amounts ($50,000) almost always result in a reduced billing. Claims procedures and payments have the potential of either major assistance or major frustration to the Insured. Denial of payment can result in financial hardship or, in some cases, bankruptcy. The best protection is to provide full disclosure at time of writing the application. Claims Management Flowchart Insured experiences travel health emergency - Call the hotline - Managed care Unit - Assessor reviews and decides - Decline the claim - pay full or partial - Defer: Request more information from provider, broker/agent, and/or insured Broker Responsibility To be responsible broker involves much more than product knowledge. To be regarded as competent professionals requires a constant updating of knowledge and practice of the art of full disclosure to both our clients and our underwriters. As in many other professions, the responsibilities of the broker have greatly increased. New regulations, continuing education requirements, and a determination by the Insurers to know all the facts prior to the issue, have all combined to strengthen the facilitator - advisor role of the broker. This, together with the Insurer's unwillingness to pay claims when faced with non-disclosure of pre-existing conditions or other prejudicial information, requires more from the broker than simply completing the application. The first of the professional skills that are required is the "know of your client" rule. Brokers must remember that they don't make medical prognoses and that symptoms that appear of no consequence in the "pre-app chat" can highly significant at claims time. Sales & Service Providing effective sales and service involves the following: ** Selecting the carrier (See Travel Health Insurance Checklist, page 14-53); ** Completing the application (See Broker Checklist, Page 14-54); ** Calculating the premium; ** Analyzing the client's needs (See client profile, page 14-55); ** Determining the client's medical condition. Selecting the proper Carrier Selection of the proper carrier requires due diligence and involves the following two steps Research the market Each Insurance carrier has an Insuring philosophy and type of coverage that they market. A careful reading of the sales material may not fully prepare you to deal with the public. When in doubt, request further descriptions of coverage and insuring clauses from the companies. Sample wordings are available on the Internet from many companies. Understand the Key areas Sales Brochures from different providers will all offer attractive approaches to the products. The benefits will appear to have similar protection. It is only when you compare the exclusions, limitations and definitions that the true coverage become apparent. Benefits that appear broad may have restricted maximums. Always compare the pre-existing conditions. Determine which of the carriers offers the maximum coverage at the most reasonable price. Price and commissions payable are not necessarily the deciding factors in determining which company(ies) you wish to offer to the consumer. Due to the enormity of the claim exposure, the broadest, most comprehensive benefit description will often be the deciding factor in the sale. Completing the application: The previous section dealt extensively with the application form. It is of the utmost importance that this form (some complex and some simple) be filled out in its entirety with full and adequate disclosure. Adding to the complexity of the application form is the variety of plans and options that are available to your client. The better you understand your client’s history and travel plans, including his or her destination, the better you are able to inform the underwriter. This will also facilitate a quick policy issue. Calculating the premium Calculating the premium may or may not be as easy as it first appears. The following questions must take in to consideration: a) Is this a short-term, Long-term, Expatriate, Frequent Traveller, or Inbound policy? b) Are premiums charged by the attained age or by age bands? Is it age restricted? c) What is the duration of the travel time? d) What additional options have been chosen? e) Are there any pre-existing conditions or is health history clear? f) Are there any special rates for cruises and tours? g) Are there deductibles and/or co-insurance>? h) Are there special rates for individually underwritten plans? I) Is tax payable on any of the optional non-medical benefits>? All companies maintain toll-free telephone numbers that are available to applicants and agents to request additional information or confirm rates. Analyzing the Client's needs Each type of traveller, and indeed each individual traveller, has unique needs that require examination prior to commitment by completing the application. For ease of examination, we will present them in the following categories: a) Type of Traveller; b) Trip Duration c) Destination d) Analyzing Existing Coverage; e) Uncovering prior medical history Type of Traveller As previously mentioned, travel health Insurance falls in to fairly well-defined categories of travel outside Canada. a) Short term (One-trip) b) Long Term (One trip) c) Expatriate Coverage d) Offered both inside and outside Canada; e) Frequent Travellers Trip Duration Trip duration is important because statistics show that the longer the Insured is away from home, the greater the risk of substantial claim. Rates therefore favour short-term durations and costs increase substantially as the period away lengthens. Destination has always had an effect on the premium rates and the validity of the contract. Costs to destinations where western style medical care is available and where the area enjoys political stability will less than to a country with less than desirable medical care, political unrest and any medical outbreak. No coverage is available if foreign affairs has issued a warning to avoid any specific country. Analyzing Existing coverage Travellers need to integrate or at least be aware of coverage that protects them ** Most group Insurance plans already offer "out of Canada" health coverage as well as travel emergency options. Benefits in their out of Canada Insurance are similar to what the plan covers within Canada. ** Credit cards often offer coverage that is automatic with a card purchase or is available with a check off selection ** Certain travel clubs, affinity groups and business organizations have travel benefits which may simply require an application. ** Lastly, all GHIP's offer some limited out of Canada benefits. See appendix A for details of out of Canada coverage provided by Ontario and Appendix B for typical GHIP benefits provided by all provincial governments and territories. Appendix A: Provincial/Territorial Residency requirements and OHIP Out of country Coverage. If you have a valid provincial health card you are entitled to certain benefits when outside Canada. But because coverage for out-of-country health care services is limited, you should purchase supplementary Insurance. When planning a trip outside Canada, get all the facts about your health coverage first - and get extra health Insurance before you leave. Remember, one day in American hospital can cost as much as $5000 per day up to $10,000 for specialized care. Provincial Residency requirements Most provinces and territories require residents to reside within their province for a specified number of days (in most cases - 183 days - approximately six months) in order to maintain their provincial health Insurance Coverage. If this requirement is met, the resident or the Insurer on behalf of the resident would be eligible to claim against applicable GHIP plan for a percentage of medical costs incurred either out of province, or out of Canada. Note: Residency requirement periods may differ from the period an insured is allowed to be outside of Canada and still qualify for out of country coverage. a) Province Newfoundland and labrador Annual requirement: 4 months Flexibility in Application: None b) Nova scotia Annual requirement: 183 days: Short absences permitted beyond 183 days. C) Prince Edward Island: 183 days: Short absences within the country permitted beyond 183 days d) New Brunswick: 183 days: Short absences permitted beyond 183 days e) Quebec: 182 days Trips up to 21 days do not count against the 182 days f) Ontario 153 days A 30 day grace period will be permitted g) Manitoba: 183 days Year long absences are permitted every 3 years h) Saskatchewan: Short absences within the country permitted beyond 183 days I) Alberta: 183 days Short absences within the country permitted beyond 183 days j) British Columbia: 183 days Short absences within the country permitted beyond 183 days k) Yukon: 183 days Short absences within the country permitted beyond 183 days l) NWT: 183 days Short absences within the country permitted beyond 183 days m) NWT: 183 days Short absences within the country permitted beyond 183 days n) Nunavut: 183 days Short absences within the country permitted beyond 183 days Temporary residency requirement exemptions for Ontario Residents Ontario Residents are already allowed to receive continuous OHIP coverage while out of the country, once in a life time, for up to: a) Duration of academic or education program (unlimited) b) 5 years for employment or duration of missionary assignments on behalf of an Ontario Employee for specific voluntary service outside Canada (unlimited) c) 2 years for vacation or other reasons Without exemptions, a person whose residency had lapsed would have to live in Ontario for three months again before becoming eligible for OHIP benefits. Out of country costs that OHIP covers the maximum time allowed outside Ontario is 212 days. Claims will not be paid after that time limit unless you have notified OHIP in advance and have received approval for the additional time. For people travelling outside Canada, OHIP covers only emergency health services. If you travel out of country for elective medical services that are available in Ontario and/or can be planned ahead of time, you are not covered. Emergency health services are those given in connection with an acute, unexpected condition, illness, disease or injury that arises outside Canada and requires immediate treatment. As of September 2008, you are injured or become ill while travelling outside Canada, OHIP will pay for emergency health services as follows: a) If you receive emergency care from a physician or other eligible health care provider, OHIP will pay only as much as that service would cost in Ontario; b) Emergency inpatient hospital services eligible for OHIP coverage will be paid up to a maximum of $400 a day or the amount billed, whichever is less; ** Up to $400 for complex hospital care, such as surgery or coronary, neonatal, pediatric or intensive care; ** Up to $200 for less intensive medical care ** Emergency outpatient service, with the exception of dialysis, will be paid to a maximum of $50 for all out-patient services provided on any one day. Out of country dialysis treatment will be paid at a rate of $210 (Canadian) per treatment. ** OHIP will cover services only in hospitals or other health care facilities that are licensed by local governments ** For out of country services, the health care facilities must routinely perform both complex medical and complex surgical procedures. For outpatient services, they must routinely perform either complex medical or surgical services ** For outpatient services, they must routinely perform either complex or medical surgical services. Reimbursement For emergency care outside Canada If you should have purchased supplementary Insurance, check with your insurance carrier about how you should submit your bills. Otherwise, send your itemized bill to your nearest OHIP office within 12 months of receiving treatment. With the bill, send: 1) Details of your treatments; 2) Your original receipts for payment; 3) your name and current Ontario Address; 4) Your health number. To avoid delays, do not hold your bills and receipts until your return to Ontario. Mail them to your insurance carrier or the ministry as soon as you receive them. Payment for out of country health services with prior approval OHIP will pay in full for health services outside of Canada if: ** The patient gets written authorization from the ministry of health and long term care before the treatment is given; and ** The treatment is generally accepted in Ontario; and * The treatment or equivalent procedure is not performed in Ontario, or * The treatment is performed in Ontario but it is necessary that the person travels outside Canada to avoid a delay that would result in death or medically significant irreversible tissue damage In order to obtain consideration for full funding of treatment outside Canada, your Ontario physician must apply to the ministry for prior approval while you are in Ontario, before you receive out- of country treatment Appendix B: Provincial/Territorial Health Insurance Benefits The Canadian Life and health association Inc. provides current contact information (telephone and email addresses) for each province, at http://www.clhia/.ca/domino/html/clhia/CLHIA_LP4W_LND_Webbstation.nsf/resources/Consumer+Brochures/$file/Brochure_Guide_To_Travel_ENG.pdf The detailed coverage information for each province and territory in the chart that follows the Ontario coverage information is current as of September 2008, and is provided by TIC Travel Insurance Coordinators. Claims for out of province or out of country costs incurred would be paid- if approved - at the provincial or territory rates applicable to the Individual's province or territory of residence. Typical Ontario Benefits while in Canada Note: This information is subject to change according to the Health Insurance Act. Physician's services ** Provided that your doctor is licensed to practice medicine in Ontario, your health card allows you to receive Insured, medically necessary services, including diagnostic services and treatment ** The law does not allow doctors to bill extra for medical services covered by the provincial plan Hospital Services The ministry of health will pay for a bed in a standard ward in hospital, the nursing care that you need there, all diagnostic services (laboratory, X-Rays, ECG, etc) any drugs your doctor orders (but not the drugs that you take home), and operating room and anaesthetic facilities. The ministry does not pay the extra cost of a semi private or private room. In recent years the services and supplies have been greatly curtailed. Other Health care services: The ministry pays only part of the costs for and office visit to a podiatrist, chiropractor, or osteopath. For example, the Ministry pays a chiropractor a maximum amount per person, per visit, per year. These health care providers may charge an extra amount over and above the ministry payment. Usually, they will advice patients of this practice before providing a service. Physiotherapy services Physiotherapy treatment is free of charge when received in hospitals, and most hospitals have a physiotherapist on staff. Some physicians employ a physiotherapist and can provide services payable by the ministry. A limited number of private physiotherapists have been approved for ministry payment, by the Ministry does not cover the services of most private clinics. Optometry services: The cost of eye examinations, contact lenses or eye glasses is not covered. Dental Services: The Ministry pays for a limited number of surgical-dental procedures, but only when they are done in a licensed hospital. The hospitalization must be medically necessary, and prior approval must be obtained from the Ministry. The Ministry does not pay for dental services in a dentist's office, whether it is in a hospital or any other facility, with the exception of children born with cleft lip and/or palate. Medical Laboratory services: The cost of Insured services by a private medical laboratory is covered if the lab is licensed in Ontario and tests are ordered by a physician. Other Ministry services and programs from which you may benefit, subject to specific program criteria, include: a) Ambulance services b) Assistive Devices program c) Chronic Hospital care d) Home care program e) Northern Health Travel grant program f) Nursing homes and homes for the aged Typical Provincial/Territory Benefits while outside of Canada Note: Rates are subject to change form time to time 1 a) Province: BC; b) Provincial Health Insurance plan (In patient): Physicians, labs and x-rays, emergency hospital services, with prior approval will pay up to BC rates for services available within the province and 100% of the services unavailable in the province c) Maximum: BC rates $75/day for adult and $41 / newborn infant d) Provincial Health Insurance plan (Out Patient): Physicians charges, Out patient coverage (Emergency Room), (All ancillary charges should be submitted) e) Maximum (BC rates - No coverage except $293 for dialysis) 2 a) Province: Alberta b) Provincial Health Insurance plan (In patient): Physician Charges, Emergency hospitalization, Extra $100 a day with blue cross optimum plan c) Maximum: $100/day; Provincial Health Insurance plan (Out patient): Physicians charges, Out patient coverage, allowance for CAT scan ($190) and MRI ($645) d) Maximum: Alta Rates: $50/day 3. a) Province: Saskatchewan b) Physician's charges, Emergency Hospitalization, For services unavailable in Saskatchewan, 100% coverage if referral and prior approval c) Maximum: Alta Rates $100/day d) Provincial Health Insurance plan (Outpatient): Physician charges, out patient coverage, Allowance for CAT scan ($190) and MRI ($645) e) Maximum: Alta Rates: $50/day 4. a)Province: Manitoba b) Provincial Health Insurance plan (In patient): Physician and Hospital Charges, Emergency Hospitalization based on bed capacity: ** 1-100 ($280 a day) beds, 101 - 500 beds ($365 a day), 501 beds and more ($570 a day) , Referrals: Greater of $75% of actual charge and: 1- 100 beds ($349 a day), 101-500 beds ($491 a day), 501 beds and more ($1043 a day) c) Maximum: As stated above d) Provincial Health Insurance plan (Out patient): Physician Charges, Out patient coverage, For referrals, greater of 75% of actual charge and $100 e) Maximum: Manitoba Rates: $100/day 5. a) Province: Ontario b) Provincial health Insurance plan (In - patient) Physician charges, Emergency Hospitalization - Intensive medical care, Emergency Hospitalization - Less Intensive Medical care, For services unavailable in Ontario, prior approval is required for full reimbursement c) Ontario rates ($400 a day and $200 a day) d) Provincial Health Insurance plan (Out patient): Physician's charges, Out-patient coverage, dialysis treatment ($210) e) Ontario Rates: $50/day 6.a) Province: Quebec b) Provincial Health Insurance plan: Physician charges, Emergency hospital charges, For service not available in Canada, referrals from two physicians are needed for 100% coverage c) Maximum: $100/day d) Provincial Health Insurance plan (Out patient): Physician charges, Out patient coverage, Dialysis treatment ($220) e) Maximum: Quebec Rates - $50/day 7. Province: New Brunswick b) Provincial Health Insurance plan (In patient): Physician charges, Emergency hospital services including X-rays, Standard Ward, where services are unavailable, prior approval is required. c) Maximum: $100/day d) Provincial Health Insurance plan (Out patient): Physician charges and out patient coverage e) Maximum: $50/day 8. Province: Nova scotia a) Provincial Health Insurance plan: Emergency hospital service rates based on average of Halifax metro hospitals, 100% coverage for referrals with prior approval b) Maximum: Nova scotia Rates: $525/day c) Provincial Health Insurance plan (Out patient) Physician's charges, out patient coverage (incl. labs, radiology, MRI) d) Maximum: NS rates and No coverage 9. PEI: a) Provincial Health Insurance plan (In patient): Physician's charges, Emergency Hospital services, 100% coverage for services unavailable in province or Canada. b) Maximum: PEI rates: $990/day c) Provincial Health Insurance plan: Out patient: Physicians charges, out patient coverage, 100% coverage for services available in province or Canada d) Maximum: PEI rates - $169/day 10. New found land: a) Physician's charges, Emergency Hospitalization in a community hospital ($350 a day), Emergency Hospitalization in a Specialized hospital ($465 a day) b) Provincial Health Insurance plan (Out patient): Physician's charges, out patient coverage, Dialysis c) Maximum: Newfoundland rates ($62/day, $220/treatment) 11. a) Province: Yukon: b) Maximum: Yukon rates: $1297/day c) Provincial Health Insurance plan: Physician's charges and out patient coverage d) Yukon rates: $110 a day maximum 12. a) Province: NWT b) Physician's charges, Emergency Hospital services, Prior approval required for services not available in Canada, 100% coverage c) Prior approval required for services not available in Canada, 100% coverage; Maximum: $1269 a day, Physician charges and out patient coverage d) Maximum: $231/day Appendix C: Typical Group Insurance Benefits The following examples are for illustration purposes only. Actual benefits are outlined by contract. Extended Health care May include in a calendar year deductible ($50/$100) and/or a co-Insurance factor (80%). The co Insurance factor would be applied to all claims except semi-private hospital and eye care. Benefit and overall life time maximums may vary from carrier to carrier. Coverage: a) Hospitals: Semi private or private b) Convalescent Hospital: Daily Limit of $50/day for a maximum period of 120 days c) Out of Canada/Province: Provide the same benefits and services as inside the province or residence, usually subject to an overall maximum. d) Prescription Drugs: A comprehensive list of prescription drugs e) Para medicals: Fee for service charge of chiropractor, pediatrists, osteopaths, naturopaths, speech therapists, clinical psychologists, and masseurs. Annual Maximum - $500 f) Nursing care: Registered Nursing services - $10,000 maximum g) Hearing Aids: $500 in a five year period h) Ambulance: In the event of no-government run services i) Services and Appliances: Braces, supports, crutches, and splints, as directed by the doctor j) Accidental Death benefits: Coverage will include the services of a dentist or a dental surgeon for a repair of natural teeth, as a result of an accidental direct blow to the mouth Group Travel Emergency Coverage Provides a world access operation centre reached by a 1-800 telephone number from anywhere in the world Benefits may include travel emergencies for Referrals to a physician, dentist, or medical facility for medical emergencies; ** Medical transportation to the nearest appropriate medical facility; ** Frequent contact with patient, attending physician, personal physician, and family; ** In the event of a death outside the province of residence, the return of the remains to a maximum of $5000 (or similar limit) Financial Assistance ** Cash deposits for doctors and hospital authorities; ** Personal cash advances from credit cards or family, to post bail and pay legal fees. Legal referrals are also included; ** Return of rental vehicles (Maximum benefit of $1000) Family Benefits ** Escorted return of minor children; ** If scheduled flight has been missed due to a medical emergency, the benefit will pay for economy class transportation; ** Will pay for the round-trip economy class transportation for a family member to attend the ill family member. Out of pocket expenses to a maximum of $150 per day are included The group Travel Provider will use a case Manager(Third Party) in the same way that Individual providers utilize administrators Group Travel Health Insurance Typical travel health Insurance benefits for emergency treatment only a) 1-800 Emergency response telephone access; b) Medical referrals to physicians, dentists or facility; c) Return Home, Medivac (Air Ambulance) or commercial Air; d) On-site Hospital Payment; e) Repatriation of the deceased They typically do not include the following benefits a) Return of the dependent children; b) Trip delay; c) Visit by family member; d) Return of vehicle or pet; e) Legal referrals; f) Lost documents and ticket replacements Note Limitations ** Length of travel - limited to 60 continuous days; ** Designated countries ** Company is not responsible for any medical or legal advice given ; ** Company is not liable for negligent or wrongful acts of practitioners Appendix C: Typical Group Insurance Benefits The following examples are for illustration purposes only. Actual benefits are outlined by the contract. Extended Health care May include a calendar year deductible ($50/$100) and/or a co-Insurance factor (80%). The co-Insurance factor would be applied to claims presented except semi-private hospital and eye care. Benefit and overall life time maximums may vary from carrier to carrier. Coverage Descriptions a) Hospital: Semi private or private b) Convalescent hospital: Daily limit of $50 per day for a maximum period of 120 days c) Out of Canada/Province: Provide the same benefits and services as inside the province of residence, usually subject to an overall maximum d) Prescription Drugs: A comprehensive list of prescription drugs e) Para medicals: Fee for service charge of chiropractor , podiatrist, osteopaths, naturopaths, speech therapist, clinical psychologists, and masseurs. Annual maximum is $500. f) Nursing care: Registered nursing services - $10,000 maximum g) Hearing Aids: $500 in a 5 year period h) Ambulance: In the event of no government-run services i) Services and appliances: Braces, Supports, crutches, and splints, as directed by the doctor j) Accidental death Benefits: Coverage will include the services of a dentist or dental surgeon for the repair of natural teeth as a result of an accidental direct blow to the mouth Benefits may include travel emergencies for: a) Referrals to a physician, dentist, or medical facility for medical emergencies; b) Medical transportation to the nearest appropriate medical facility; c) Frequent contact with patient, attending physician, personal physician, and family; d) In the event of death outside the province of residence , the return of the remains to a maximum of $5000 or similar limit. Financial Assistance ** Cash deposits for doctors and hospital authorities; ** Personal cash advances from credit cards or family, to post bail and pay legal fees. Legal referrals are also included; ** Return of rental vehicles (Maximum benefit of $1000) Family Benefits ** Escorted return of minor children; ** If scheduled flight has been missed due to medical emergency, the benefit will pay for economy class transportation; ** Will pay for the round-trip economic class transportation for a family member to attend ill family member. Out of pocket expenses to a maximum of $150 per day are included. The group travel provider will use a case manager (Third Party) in the same way that individual providers utilize Administrators Group travel health Insurance Typical travel health Insurance benefits for emergency treatment only 1) 1-800 Emergency response telephone access; 2) Medical referral to physicians, dentists, or facility; 3) Return Home, Medivac (Air Ambulance) or commercial Air; d) Onsite Hospital payment e) Repatriation of the deceased They typically do not include the following benefits a) Return of dependent children b) Trip Delay; c) Visit by family member; d) Return of vehicle or pet; e) Legal referrals f) Lost documents and ticket replacements Note Limitations a) Length of travel - limited to 60 continuous days; b) Designated countries; c) Company is not responsible for any medical or legal advice given; d) Company is not liable for negligent or wrongful acts of practitioners Appendix D: The language of Managed care Capitation: Under a capitation system, a managed care plan pays a doctor or hospital a flat monthly fee for the care of each policy provider. The provider is paid regardless of whether the patient receives services. However, the provider does not receive additional payment if cost of care exceeds the set fee Copayment or Co-Insurance: The portion of covered health care expenses that must be met by the policy holder, in addition to the deductible. This figure is usually expressed as a percentage. For example, in a traditional 80/20 plan, the insurer pays 80% of the doctor's bill and the patient pays 20%. This 80/20 calculation is based on the insurance company's definition of what constitutes a physician's reasonable and customary fee. Note: Many physicians charges are higher than the reasonable and customary fee and the patient is responsible for 100% of the access amount. This is known as "balance Billing". In all HMO's, a patient 's copayment will be only $5 to $15 per visit Credentialing: Managed care plans review a physician’s background and current professional standing before contracting with a physician. This will usually include requiring evidence of graduation from an accredited medical school, a current state medical license, and hospital privileges in good standing. A professional liability claims history, including malpractice coverage, and an inquiry in to past actions include chemical dependency, criminal convictions and disciplinary actions. Deductible: The amount an insured must pay, before the Insurance company begins to pay its portion of claims. The higher the deductible, the lower the cost of the health plans. Gatekeeper: A primary physician. In a managed care plan, the gate keeper is responsible for monitoring a patient's care and deciding when specialized care or tests are needed. The term encompasses family physicians and practitioners, internists, paediatricians and sometimes obstetricians/gynaecologists. Health Maintenance Organization (HMO): An HMO provides members, through a network of selected physicians and hospitals, with a basic and supplemental health maintenance and treatment package in exchange for a prepaid premium. There are generally small payments, no deductibles, and no claims to file. The HMO provides no reimbursement (or a reduced amount) for non-emergency care with a physician or hospital outside of the network. There are several types of HMO's: a) A staff Model: A type of HMO's that hires its own doctors, who usually practice under one roof and are salaried. b) Independent Practice Association (IPA): An "HMO with walls" - in which patients choose doctors from a select list and are treated at the physician's private offices. IPA physicians are free to contract with more than one HMO at a time as well as fee for service patients. c) Point of service plan (POS): The latest development in negotiated care, this type of HMO allows the patient to see either an in-network or out-of-network provider. However, the patient pays more for opting out of the system. In those instances, reimbursement is only 50-80% and the patient must submit a claim and has deductible and co-payment charges just as he or she would under a traditional fee-for-service Insurance policy. d) Indemnity or Fee- for service plan: Medicine the old-fashioned way. Patients receive a bill from the doctor or hospital for each service rendered. They submit the bill to their insurance company and the company pays for it. These plans provide maximum choice of physicians and hospitals but are the most expensive kind of plan. Critics argue that this method gives doctors an incentive to perform more, sometimes unnecessary, procedures. e) Managed Care: A general term for organizing doctors and hospitals in to health care delivery networks with the intent of lowering costs and providing appropriate care by managing the medical care provided. HMOs were the earliest form of managed care; currently, there are many different kinds of plans. f) Network: A selected group of physicians, hospitals, laboratories, and other health care providers who participate in a managed care plan's health delivery program. They agree to follow the plan's procedures, submit monitoring of their practices, and provide certain negotiated discounts, in exchange for a guaranteed patient pool. Out of pocket maximum: A limit on all of the Insured's out of pocket expenses (including deductible and co-payments) for treatment of illness or injury. At this maximum, the Insurance company will begin covering 100% of the charges. If you use in-network providers, your out-of-pocket maximum will usually be between $1000 and $2000. If you choose to go out of network, your out-of-pocket maximum could be as high as $10,000. Preferred provider organization (PPO): A type of managed care plan in which doctors and hospitals agree to provide an insurance company or employer with discounted rates. PPOs usually don't exercise tight management over medical care; for example, they normally don't use primary care "gate keepers" patients are reimbursed 80-100% for treatment within the PPO versus 50-70% outside of it. Premium: The monthly fee paid by consumers to Insurance plans for coverage. It does not include deductibles or co-payments. The premium is usually shared between the employer and employee. Utilization Review: A general term for all Insurance plans oversight of the healthcare its members receive. It includes: a) Precertification: the plan must approve, in advance, certain medical procedures before the insurer will agree to pay for them. b) Case management: A nurse employed by the plan coordinates your care and rehabilitation, often in your home. c) Second Opinion reviews - the plan decides, before approving payment, whether a second opinion for a surgical procedure is necessary...” (RIBO)

 

G. Errors and omissions coverage for rental and insurance agreements

H. Habitational and commercial coverage: 

Property Insurance - A major source of Insurance Premiums

Almost 35% of all premiums paid by Canadian Consumers are for personal and commercial property. Personal Property Insurance refers to Insurance policies provided for property having a personal or non-business use. Types of personal property policies include:

a. Tenant Insurance

b. Home Owner's Insurance

c. Mobile Home Insurance

d. Condominium Unit owner Insurance;

e. Secondary Dwelling Insurance;

f. Seasonal Dwelling Insurance

 

Commercial Property Insurance refers to Insurance policies provided for property having a business use.

ATTRIBUTES OF PROPERTY POLICIES

1. No standard Policy: Brokers, adjusters and Insurance company personnel will often refer to the Insurance contract as a policy, wording, or form. The term most commonly used is policy.

Insurance companies provide consumers with a variety of options or choices when selecting the policy which is best for them. Policies may be limited in the number and type of perils they cover or be so broad as to insure a wide variety of perils. Insurance policies which name the perils they insure are generally referred to as named perils policies. When a loss is caused by a peril not named in the policy, there is no coverage.

Broader coverage is available from most Insurers. Rather than name the perils they cover, these policies "insure against all risks of direct physical loss or damage subject to policy conditions and exclusions" In other words, all causes of loss are insured unless specifically excluded by the policy.

 

The Role of IBC in Forms development

Many of the Insurance policies sold by the Insurers were developed by the Insurance Bureau of Canada (IBC), a trade association representing more than 125 Insurance companies. Insurers are permitted to make any changes or modifications to these forms.

 

2. Identify Property Insured and location

Property Insurance policies contain a definition of the property they Insure. Also, unless otherwise stated, coverage is restricted to the location stated on the policy.

Property Insured Defined in Policy

 

Personal Property

The home owners’ forms used by Insurers automatically provide coverage for all of the following property items.

 

a) Dwelling Building

b) Detached Private structures

c) Personal Property

 

A definition of each is provided in the policy and the location of insured property is clearly stated.

 

Commercial Property

The Butlers will require a commercial property Insurance policy to insure the following business property.

a) Building

b) Stock

c) Equipment

 

Coverage is provided only for those items for which an amount of Insurance is indicated on the policy. In other words, the Fortress Insurance Company has no requirement that the Butler's Insure all the property used in the business. As with personal property Insurance policies, the location of the Insured property is stated on the policy.

 

3. Insure Direct Damage

Property Insurance policies insure direct damage only. When the object of Insurance is damaged or destroyed by an insured peril, the loss to that object is a direct loss.

 

Direct damage Insured

Two weeks ago, the Butlers suffered a fire loss. The fire started in the furnace room of their store and before it was extinguished, the following damage occurred:

a) Water damage to other parts of the building which were hosed down by fire fighters in order to prevent the spread of fire;

b) Physical damage to the roof caused by firefighter's axes;

c) Smoke and heat damage to adjacent storage shed

d) These losses are recoverable within the peril of fire when they are judged to be the direct result of such fire.

 

Insureds also face an exposure to financial loss from indirect losses. These are losses which arise as a consequence of direct losses. Examples of indirect losses include:

a) Loss of food in a freezer when the electrical motor is damaged by a lightning strike;

b) Loss of rental Income from an apartment building after a major fire;

c) Loss of profit to the business after a tornado destroyed the building

 

Unless the policy is otherwise endorsed, the loss of business income which results as a consequence of a direct loss is not Insured. Coverage can be added by Business Interruption and Extra Expense forms available from most Insurers. Habitational policies generally provide separate coverage for indirect losses caused to freezer contents.

 

Indirect losses not Insured by property Policy

On good Friday, a small fire damaged a utility pole supplying power to the dew drop by Grocery store. It extinguished itself within 10-15 minutes, but not before causing loss of power to the building. As the store was closed for three days over the holiday, the owners were not aware that the power to all refrigerating equipment had been interrupted. When they opened the store the following Tuesday, they soon discovered that most of the meats, dairy products and other perishable stock items were unsaleable. The only direct damage caused by fire was to electrical wiring leading to the store. The loss to stock is an example of an indirect loss for which there is no coverage under commercial property Insurance policies. Coverage, however, can be added for an additional premium.

 

4. Conditions and Warranties

1. Conditions

A condition imposed upon insureds requires them to do or not to do something. Two common types of conditions found in Insurance policies include;

a) Statutory Conditions

Statutory conditions are found in all of the following types of Insurance policies:

a) All property policies insuring the peril of fire;

b) Accident and Sickness Insurance;

c) Automobile Insurance

These conditions are established in statue and are legally binding on all parties to the contract.

 

Policy Conditions

Policy conditions are common to property and other Insurance policies. They are specifically developed by Insurers to deal with important coverage areas

 

Policy Conditions - Deal with Important coverage areas

The Butler's furniture store is equipped with a sprinkler system and a burglar alarm. The policy issued by the fortress Insurance company contains a policy condition requiring that Butlers notify it immediately when any known defects exist.

 

2. Warranties

A warranty is a promise by Insureds that certain facts are truly as they are represented to be and they will remain so. Should the Insured's breach the warranty, the contract is nullified and there is no coverage.

The warranty requires exact compliance. A breach of warranty entitles the Insurer to deny the coverage, regardless of whether the breach was directly linked to the cause of the loss.

 

Warranties - Equivalent to Guarantees

B. Iron, a friend of the Butler's operates a welding and metal fabrication shop. The Fortress Insurance Company included a "No Spray-Painting Warranty" on the policy provided to the business. Mr. Iron chose to ignore the warranty and occasionally would do some spray painting at the back of his shop. Yesterday, a fire was caused when welding metal pipe for a customer. There is no coverage even though the loss was not caused from spray painting operations. As one British court ruled, "a great advantage of warranties to Insurers is that their breach entitles them to repudiate quite irrespective for their materiality." In other words, any breach of warranty entitles the Insurance company to deny coverage even though the breach was not directly linked to the cause of the loss.

 

5. Exclusions

Property policies contain two types of exclusions, namely:

1. Property Excluded

The following types or classes of property will usually be excluded under personal and commercial property Insurance policies.

a) Evidences of debt or title;

b) Securities;

c) Automobiles;

d) Water Craft;

e) Aircraft;

f) Money;

g) Other Motor Vehicles;

h) Books of account;

i) Vacant Property (more than 30 consecutive days)

Generally, these items represent a greater than normal potential for loss and are more properly insured by other policy forms.

 

2. Perils Excluded

There is no policy which covers insureds for all losses they might incur. Policies insuring named perils cover only those losses caused by the perils that they name. Even policies insuring "against all risks of direct physical loss damage" contain exclusions

 

Exclusions common to both personal and commercial Insurance property policies are:

a) Earthquake

b) Flood;

c) Smoke due to agricultural smudging or industrial operations;

d) Wear and tear; or gradual deterioration;

e) Rust; Corrosion;

f) War

g) Nuclear Incident;

h) Increased costs of repair and construction due to enforcement of any by-law

i) Sewer Back up

There are reasons for excluding losses caused by certain perils. For example, the potential for catastrophic losses is of concern to all insurers. War is a loss that could jeopardize the solvency of Insurers, and therefore coverage is not included. Also, coverage for rust, corrosion, and wear and tear is not included. However, coverage for earthquake and flood is readily available.

 

Even the broadest property Insurance policies contain exclusions

Insureds need to be told that even the broadest property insurance policies exclude certain property items and perils. Conscientious brokers will review these exclusions with Insureds at the time of purchase, upon delivery of the policy and prior to each renewal period. This will ensure that key exclusions are not forgotten or ignored.

 

6. Deductible Clause

Almost without exception, a deductible clause is included on all property policies. A deductible represents the amount the Insured is required to pay for each loss before receiving any payment from the Insurer. For example, if the deductible stated on the policy is $500, the insurer is responsible only for those amounts over $500.

 

What deductibles Accomplish: The Rationale

The application of a deductible to all losses helps to keep Insurance affordable. Insurers normally provide insureds with deductible options. The higher the deductible, the lower the premium paid. All insureds should be encouraged to select a deductible which reflects an amount which they can realistically afford to pay in a loss situation. The deductible is considered to be a partial retention of loss amount. The amount of the deductible is the amount the insured retains or contributes to the loss settlement.

 

Selecting a deductible

Most Insurers provide various deductible options for their clients.

 

Personal property

The Butler's would generally be required to select a deductible amount from a range of deductible options (e.g., $200 - $1000) The deductible chosen applies to all property for which coverage is provided by the policy.

 

Commercial Property

The policy form used by the Insurer may allow Bert and Betty to select different deductibles for each class of property insured. For example, they may choose a deductible of $250 on stock, $500 on equipment, and $1000 on building. The recommendation and common practice is to have a common deductible. While minimum deductibles of $500 are standard, if the Butler's choose a higher deductible amount, their premium will be reduced.

 

7. Claims payment

Every property policy contains a description of the method(S) used to determine the amount required to provide the insureds in the event of a claim. The intent is to provide the insureds with complete indemnity; that is, to ensure they receive the actual amount of their loss, no more and no less. As such, the factors considered by adjusters in arriving at that amount are similar for both personal property and commercial property insurance policies.

 

Determining Indemnity

The Butler's personal property and commercial property insurance policies contain the details outlining how claims are paid.

 

Personal Property

The details regarding claim settlements in home owners and other personal property insurance policies are outlined in a separate provision entitled Basis for claims payment

 

Commercial Property

Commercial property Insurance policies normally contain an Indemnity agreement. Sometimes details regarding claim payment are provided under specific Insuring agreement used by the Insurer to describe Insurance coverage.

 

Sometimes, it is difficult to determine what constitutes a complete indemnity. This is particularly true when settling claims on property which consists of a pair or set or which is made up of several parts when all the property has not been destroyed

 

Determining Amount of Indemnity not always easy

1. Pair and set

Last March, thieves stole most of Betty's Jewellery. The only item left was a single emerald earring which they had apparently dropped on their way out. In betty's opinion, the single remaining earring had no value. In the proof of loss, she filed with the Fortress Insurance company, Betty claimed $2000, the amount for which both earrings were appraised.

 

2. Parts

Just a week before the jewellery loss, two youths broke in to the Butler's home. One of the things they did before leaving was to pour paint on the carpet in one corner of the living room.  Bert claimed $3000 to replace the entire living room carpet. Many insurers incorporate the rules for the settlement of such claims in their policies.

 

The Rules

I. Pair & Set:

Loss or damage to one item of a pair or set does not constitute loss or damage to the entire pair or set. The item not lost continues to have value and this amount will be deducted from the amount of the claim payment.

 

ii. Parts

When there is a loss to only one part of the property which consists of several parts, the basis of settlement shall be the value of lost or damaged part, including the cost of installation. For example, if a piece of machinery has an insured loss to a particular part of the machine, the parts clause will limit the payment to the cost of replacement part plus cost to install the replacement part.

 

Factors Used to determine amount to be paid

The following indemnity agreement is contained in commercial property Insurance policies. Its provisions are also typical of the approach used by insurers to determine the amount of any personal property loss:

"In the event that any of the property insured be lost or damaged by the perils insured against, the Insurer will indemnify the insured against the direct loss so caused to an amount not exceeding whichever is the least of:

i. The actual cash value of the property at the time of loss or damage;

ii. The interest of the insured in the property;

iii. The amount of Insurance specified on the "declarations page" in respect of the property lost or damaged."

 

Indemnity Agreement - An analysis

The insurance adjuster will consider each of the above factors when determining the amount of loss. When the amount has been arrived at for each, the insured will be offered a settlement based on the least of those amounts.

 

Step 1 - ACV (Actual Cash value) at Time of Loss

Generally, ACV is determined according to the following formula:

ACV - replacement Cost - Depreciation

 

The Insurance adjuster will first attempt to determine the replacement cost of the lost or damaged item (s). The onus is on the insured(s) to provide adjusters with price quotes or estimates from suppliers and contractors. In most cases, arriving at the replacement cost of a property item(S) is not that difficult.

Next, the insurance adjuster determines the amount of depreciation to be charged to the insured. The logic is that when Insureds use an item(S) over a period of time, they will have used up some of its value, the amount of which should be deducted from the settlement.

 

Factors influencing the amount of depreciation charged include:

** Condition of the item (S)

** Obsolescence;

** Resale Value;

** Normal Life expectancy

 

The difference between the replacement cost and the depreciation charged is the ACV of the item (S)

 

Step 2: Interest of the Insured

Insurable interest is required of all insurance contracts. In this step, the insurance adjuster determines the extent of the Insured's ownership or financial interest in the property for which Insurance is being claimed.

When these steps have been completed, the insured is offered a settlement based on the least mount.

 

Step 3: Limit of Insurance

In this step, the insurance adjuster simply checks the insured's policy to determine the limit of Insurance purchased for property item being claimed. When these steps have been completed, the insured is offered a settlement based on the least amount.

 

Replacement Cost - Buildings

When replacement cost coverage is being claimed for building losses, coverage is subject to all the following provisions:

a) Replacement shall be affected by the insured with due diligence and dispatch.

This provision helps Insurers to control claims costs. Labour and material costs generally will increase over time. Any delays in replacing lost or damaged property will increase those costs. The onus is on insureds to do all they can to replace the property as soon as possible. For example, replacement cost coverage is not jeopardized if construction cannot be started because of delays by the city in approving building plans.

 

b) Replacement shall be on the same site or adjacent site;

Same site provision reduces moral hazard

After the Butler's store was destroyed by fire, betty's brother suggested they relocate their business to the Yukon. This sounded like a good idea and last week, Bert and Betty advised the Fortress Insurance Company they were going to rebuild in Whitehorse.  The insurer is not obligated to provide settlement on a replacement cost basis when Insureds do not rebuild on the same or adjacent site. This provision serves a practical purpose by removing the temptation insureds may have to cause a deliberate loss in order to relocate their business.

 

c) Settlement on a replacement cost basis shall be made only when replacement has actually been affected.

When a claim is made, the insured will be offered a settlement based on the ACV of the building. The difference between the amount and the replacement cost is due only when replacement has actually been affected.

 

Insureds must satisfy all of the above requirements if settlement is to be made on a replacement cost basis. If they fail to comply with even one of these provisions, settlement will be made on an ACV basis.

 

Replacement Cost - Property

Replacement cost coverage is available for personal property and business's stock and equipment.

For settlement to be on a replacement cost basis, insured's will generally be required to show that:

a) The property was useable for its original purpose at the time of loss;

For example, settlement will not be provided on a replacement cost basis for electrical appliances which have been replaced but not yet discarded.

 

b) The property was repaired or replaced promptly.

 

Meaning of replacement cost

When applied to Insurance losses, replacement cost means:

a) Replacing:

This simply involves replacing the lost or damaged item with another one. The Insurer is prohibited from settling the claim with used property or repairing damaged with used materials. Insureds are entitled to new property or materials of like kind and quality as existed prior to the loss.

 

i. Insurer shall not make any deductions for depreciation

The main advantage to Insureds whose claims are settled on a replacement cost basis is that there is no depreciation charged on the lost or damaged property.

Or.

ii. Repairing, Constructing or reconstructing

When replacement is not an option, payment may be made for the costs of labour and material to repair damage to insured property.

 

Claim settlement - Actual Cash value and replacement cost

Two weeks ago, a severe hail storm caused extensive damage to the asphalt shingles on the Butler's store. The shingles were in reasonably good condition although they had not been changed since the store was built 20 years ago.

 

Settlement on Actual Cash Value basis

i. Replacement Cost = $6000

II. Depreciation = $3000 (based on 2.5%/year)

Settlement = $3000 (less deductible)

 

Settlement on replacement cost basis

When settlement is made on a replacement cost basis, insureds are not charged any depreciation on the lost or damaged property.

 

2. Valued Policies

When Insured's have property which cannot be replaced, such as original art, family jewellery, furs, antiques and memorabilia, the insurer may agree to provide coverage on a valued basis. When there is a loss to insured property, the basis of settlement will be the value agreed to by the Insured and Insurer.

the insurer may agree to provide coverage on a valued basis. When there is a loss to insured property, the basis of the settlement will be the value agreed to by the Insured and the Insurer.

Insurer will normally valuation by qualified appraiser.

 

8. Standard Mortgage clause

Most Canadians rely on loans to purchase homes and businesses. Mortgages will insist that that their interest be protected with Insurance and that certified copy of the policy and all subsequent renewals be provided to them. A mortgagee is anyone having an insurable interest in the property insured. It can include a bank, trust company, credit Union, Individual or group of people.

 

Certified copy of Insurance policy required by Mortgagee

When Bert and Betty purchased their store, 70 % of the purchase price was borrowed from hank's bank. As a condition of their loan, the Butler's were required to:

a) Purchase Insurance, naming Hank's Bank as a payee; and

b) Provide Hank's Bank with a certified copy of the policy.

When processing the Butler's policy, the Fortress Insurance Company will produce a certified copy for Hank's Bank. Bert and Betty are responsible for ensuring that their bank receives this confirmation of Insurance coverage. To help their clients fulfill this obligation, many brokerages will forward certified copies to mortgagees as soon as they are received

 

Standard Mortgage clause

To protect the interests of the mortgagee, the standard Mortgage clause was developed. It includes the following guarantee to the mortgagee:

1. Guarantee of payment when Insured breaches any policy conditions.

a) Breach of policy conditions:

Coverage cannot be denied to the mortgagee to any breach of the policy conditions by the Insured, including the following:

a) Neglect: When Insureds make no effort to save property from loss when a reasonable opportunity exists, they will be denied coverage on that property. The Mortgagee is entitled to payment.

b) Omission or Misrepresentation: There are times when Insurer can deny Insurance coverage to Insureds who misrepresent or fault to disclose a material fact on their application for Insurance. The mortgagee is entitled to payment.

 

Mortgagee Paid when act of Insured breaches a policy condition.

Page Binder borrowed $60,000 from Hank's bank to purchase a local book store. A year later, she was still struggling to meet the financial obligations to the bank.

Last month, page added a donut and coffee service to her business. Just three days later, the fat in the deep fat donut fryer she was using ignited. Firefighters were unable to save the building. Page's Insurance claim was denied because she failed to report a material change in business operations. However, Hank's bank received payment to the extent of its insurable interest.

 

2. Guarantee that the Insurer will not reduce coverages to the prejudice of the mortgagee nor terminate the policy without providing it with the same notice required by law to be given to the Insured. The Insurer promises not to change the policy to the disadvantage of the mortgagee. In such case, the mortgagee would be required to consent to the change(s). Also, the mortgagee is entitled to the same notice as would be given to the Insured in the event the Insurer decides to terminate the policy.

 

iii) Surety

A surety is "one who undertakes to pay money or to do any other act in the event that his (the) principal fails therein", for example, the bonding company.

 

2. No losses expected

Surety is based on the extension of credit without risk. Theoretically, the surety expects no losses to occur.

 

3. Principal liable to surety

When the principal fails in its obligation to the obligee, the surety must fulfill the promise. The principal is then obligated to the surety for the amounts it paid.

 

4. Bond Premium

Although the word premium is commonly used, it is a misnomer. As surety underwriting does not contemplate losses occurring, the sum charged for pre-qualification and other company expenses is more appropriate described as a service fee rather than a premium.

 

5. Bond Limit/Penalty

This limit represents the amount of penalty which the surety is prepare to pay in the event the principal should default. The penalty of the bond remains unchanged throughout the period of the contract and does not reduce during the performance of the obligation.

 

6. Of Indeterminate length and non-cancellable

Some types of surety bonds are non-cancellable and terminate only when the principals’ obligations have been fulfilled.

 

7. Written Contract

A surety contract must be provided in writing and executed under the seal of surety and the principal.  Oral contracts are not binding on the surety.

 

Not Insurance

Contracts of suretyships are not insurance contracts. Indeed, the differences between them are substantial. Unlike, bonds, Insurance policies:

a. Are two party agreements:

b. Anticipate losses occurring;

c. Payment of losses is made directly to the Insured and the Insurer is not required to be reimbursed by the Insured;

d. The premium charged is based on current underwriting costs and future claim expenses.

e. Additional Limits of Insurance can routinely be added by the payment of an additional premium;

f. Issued for specific periods of time and are cancelable by the Insurer during the policy period;

g. An oral agreement is just as binding on the parties to the contract as is a written agreement.

 

Types of Construction Bonds

Bid Bond

When a contract involves a large project, the architect or engineer in charge will arrange for the calling of tenders or bids from interested parties.

 

Guarantee

When project owners receive a bid bond attached to a construction bid, they are assured that the contractor has been prequalified by the surety to bid on the project and that the contractor is bidding in good faith.

 

The surety guarantees the owner that the contractor will enter in to a contract to perform the work at the tendered price and to provide whatever security (usually a performance bond and/or a labor or material bond) is specified to ensure performance of the contract. When tenders are supported by a bid bond, their withdrawal prior to acceptance will generally not be permitted without forfeiting the bond. Contractors might default in a bod bond because of an error in judgement or mistakes in arithmetic.

 

Agreement to Bond (Also called a Surety's Consent)

Some tenders might request an "Agreement to Bond" in place or in addition to the bid bond. When the agreement to the bond is issued, the surety agrees to issue the required final bonds. In other words, the surety must issue the performance, labor and Material bonds if the principal (contractor) is awarded the contract.

 

Penalty

The amount of the penalty will be determined by the costs incurred to:

a) Compensate the owner for delay and additional costs should the project need to be retendered;

b) Pay the difference between the defaulting contractor's bid and the amount for which the work is subsequently contracted

 

The surety's liability is limited to the specified penalty of the bond, usually 10% of the contract price bid for a specified amount. For example, the amount of the bid bond on a tender of $500,000, based on a deposit of 10% would be $50,000.

 

Performance Bond

As a condition of the tender, the successful bidder is usually required to provide other additional bonds. The most common of these is a performance bond.

 

Guarantee: A performance bond guarantees:

I. The actual performance of the contract in accordance with its specified terms and conditions;

ii. That faulty work will be corrected and defective materials replaced for a period of one year after the completion of performance

 

Penalty: The bond limit or penalty is usually 50% or 100% of the contract price.

 

4. Labor and Material Payment bond

Guarantee: The labour and material payment bond guarantees that the subtrades and suppliers will be paid for the work and materials that enter in to the project.

Penalty: Normally, the labour and material payment bond is issued in conjunction with and for the same limits as the performance bond.

 

13. Miscellaneous Bonds

There are a number of miscellaneous surety bonds required for different reasons, including:

Fiduciary Bonds

A fiduciary is one who occupies a position of special trust or confidence in the handling or supervising of the affairs or funds of another. Persons appointed by the courts to serve as administrators, guardians, and trustees are deemed to be fiduciaries. Their duties essentially involve managing, controlling or disposing of the property of others.

 

Customs and Excise Bonds

All businesses are required to collect provincial and federal taxes on the goods and services sold by them. Certain products are subject to payment of a duty which must be collected at the time of sale and submitted to the Canadian government, for example customs warehouses and distillers.

Local, Provincial and Federal governments may require that bonds be filed with them guaranteeing the payment of those taxes and duties. These bonds fulfill that purpose.

 

License and Permit Bonds

Federal, provincial and municipal laws require that most businesses be licensed. All businesses must operate in accordance with statues, regulations or ordinances designed to ensure safety and general welfare of the public. Businesses which are the subject of special legislation and which require licenses include real estate brokerages. auctioneers, sewer tappers, plumbers, gas fitters, and electricians. 

 

14. Farm Coverages (Habitational and Business)

Dwelling Building and personal property

Most Insurers use habitational property forms such as Homeowners, Tenants or Mobile Homeowners forms for both urban and rural risks. If requested, Insurer's will generally provide farmers with the same optional coverages as are available to Insured's living in towns and cities. For example, the sewer back up endorsement and fine arts added to a farm policy will usually be the same as that sold in policies provided to insured who live in towns and cities.

 

The Liability Coverage provided by habitational package policies is removed and replaced with a liability wording which provides both the business and personal liability protection needed by farmers. Farm liability may also be extended to include Farmer's Limited Pollution Liability.

 

Major Farm Building and Contents

The coverages available for farm building and contents ranges from "Fire" to "All Risks"

 

Farm Buildings

Buildings insured under standard policy wordings include barns, workshops, granaries, and machinery storage buildings. Silos are excluded unless insured specifically.

 

Replacement Cost Coverage Available

Most Insurers will agree to provide coverage on a replacement cost basis subject to standard commercial replacement Cost endorsement.

 

Rebuilding Clause - Deferred Payment

The rebuilding clause was designed to avoid paying the full amount of Insurance purchased when outbuildings are not replaced after a loss. An initial payment of 50% of the amount payable at the time of the loss is made. The remaining 50% is payable if the building is repaired or replaced within nine months of the date of the loss and within 200 feet of, and used for the same purpose as the building which was destroyed.

 

Farm Contents

While blanket coverage is most common, specific items having high values such as welders, grinders, and lathes may be separately scheduled on the policy.

 

Farm Machinery and Equipment

Farm Machinery and equipment includes farm tools, machinery and implements usual to the operation of a farm except vehicles subject to registration under any government authority. Different Insurer's may provide coverage with certain conditions such as:

a) Scheduled or blanket basis

b) Named Perils or "All Risk"

c) Subject to Co-Insurance

d) Coverage for Newly acquired equipment and non-owned equipment

 

Custom Farming

"Custom Farming" is "the use of your farm machinery or equipment for others away from your farm premises, for compensation."

In addition to exclusions, you might expect for motorized equipment, farm machinery policies do not generally provide coverage for loss or damage:

a) Caused by Electrical Currents;

b) Mechanical Breakdown;

c) To property engaged in custom farming or while in transit in connection with custom farming unless permission for custom farming is stated in the declarations;

d) To tires and Tubes unless caused by certain perils

 

Farm Livestock

Livestock is usually insured for accidental death by a named peril as defined under the form, subject to the applicable co-Insurance. Some Insurers may provide theft coverage. An overall limit per animal may be included.

 

Farm Produce

Produce includes all farm produce listed on the declarations page and includes commercial feeds, fertilizers, herbicides and pesticides for crop use, milk and eggs, and anything that is an agricultural product of the soil. Coverage may be Named perils or "All Risk" and subject to Co-Insurance clause. Some of the more common clauses are:

a. Tobacco

b. Flax

c. Lumber

d. Unharvested Crops

 

There are a number of extensions available, including:

a. Unharvested Crops (Subject to a limit per acre)

b. Refrigerated Crops

c. Freezing, extremes in temperature

 

Other Farm Coverages

Certain Insurers who specialize in farm risks offer coverage for:

a) Farm Earnings (Business Interruption)

b) Game and Exotic Livestock

c) Embryo/Semen

 

Underwriting Considerations

Written Application required

Before a policy can be issued, a completed application must be provided to the Insurer. A diagram showing the distance between all the buildings, whether Insured or not, must accompany the application.

 

Photographs will usually be required for the following types of buildings:

** Open sided structures insured against wind and hail;

** Vacant Property

** Buildings over a certain age;

** Buildings being insured on a replacement cost basis.

 

Commercial Property - Named perils form

Words and phrases in quotation marks have special meaning as defined in clause 17

1. Indemnity agreement

In the event that any of the insured property is lost or damaged during the policy period by an insured peril, the insurer will indemnify the Insured against the direct loss or damage so caused to an amount not exceeding whichever is the least of:

a) the value of lost or damaged property as determined in clause 15;

b) the interest of the Insured in the property;

c) the amount of Insurance specified in the "Declarations page" for the lost or damaged property

The inclusion of more than one person or interest shall not increase the Insurer's liability.

 

2. Insured property

This form insures those of the following items for which an amount of Insurance is specified on the "Declarations page" and while only at the "premises"

"Building"

"Equipment"

"Stock"

"Contents"

"All Property"

 

3. Deductible

The Insurer is liable for the amount by which the loss or damage caused by an insured peril exceeds the amount of the deductible specified on the "Declarations page" in any one occurrence.

Should any occurrence give rise to the application of more than one deductible amount for any one "premises", only the highest deductible will be applied.

 

4. Co Insurance

This clause applies separately to each item for which a co-Insurance percentage is specified on the "Declarations page" and only where the amount of loss or damage exceeds the lesser of 2% of the applicable amount of Insurance or $5000.

The Insured shall maintain Insurance concurrent with this form on the insured property to the extent of at least the amount produced by multiplying the value of the property as determined in clause 15 by the "Co-Insurance" Percentage specified on the declarations page. If the Insured fails to do so, the insurer shall be entitled to recover only that portion of any loss that the amount of Insurance in force at the time of loss bears to the amount of Insurance required to be maintained by this clause.

 

5. Insured Perils

This form insures against direct physical loss of or damage to the insured property caused by the following perils:

a) Fire or lighting

b) Explosion: Except with respect to explosion of natural, coal or manufactured gas, there shall in no event be any liability hereunder for loss or damage caused by explosion, rupture or bursting in or of the following property owned, operated or controlled by the Insured:

i) a. the portions containing steam or water under steam pressure of all boilers generating steam, and piping or water under steam pressure;

b) Piping and apparatus or their parts normally containing steam or water under steam pressure from an external source and while under such pressure;

c) Combustion chambers of fire boxes of steam generating boilers of the chemical recovery type and the flues or passages which conduct the gases of combustion from them;

d) Smelt Dissolving tanks

 

ii) Other vessels and apparatus, and connected pipes, while under pressure, or while in use or operation, provided their maximum normal internal working pressure exceeds 103 kilopascals (15 pounds per square inch) above atmospheric pressure, except that liability is specifically assumed for loss or damage resulting from the explosion of manually portable gas cylinders;

iii) Moving or rotating parts of same when such loss or damage is caused by centrifugal force or mechanical breakdown;

iv) Any vessels and apparatus or connected pipes while undergoing pressure tests, but this exclusion shall not apply to other insured property that has been damaged by such explosion.

v) Gas Turbines

 

The following are not explosion within the intent or meaning of this section:

a) Electric Arcing or any coincident rupture of electrical equipment due to such arcing;

b) Bursting or rupture caused by hydrostatic pressure or freezing;

c) Bursting or rupture of any safety disc, rupture diaphragm or fusible plug.

 

C) Impact by aircraft, spacecraft or land vehicle: The terms Aircraft and Spacecraft include articles dropped from them.

There shall in no event be any liability for cumulative damage for any loss or damage:

i) Caused by land vehicles belonging to or under the control of the Insured or any of his employees;

ii) To Aircraft, Spacecraft or land vehicles causing the loss;

iii) Caused by any aircraft or spacecraft when being taxied or moved inside or outside of a "building"

 

D) Riot, Vandalism or Malicious ACTS: The term riot includes open assemblies of strikers inside or outside the "premises" who have quitted work and of "locked-out" employees.

There shall in no event be any liability for loss or damage:

i) Due to cessation of work or by interruption to process or business operations or by change(S) in temperature;

ii) Due to flood or release of water impounded by a Dam, or due to any explosion other than an explosion in respect of which there is Insurance under clause 5(B)

iii) Due to theft or attempted theft

 

E) Smoke: The term "Smoke" means smoke due to a sudden, unusual and faulty operation of any stationary furnace. There shall be in no event be any liability for any cumulative damage.

F) Leakage from "Fire protective Equipment": The term Leakage from "Fire protective Equipment" means:

i) The leakage or discharge of water or other substances from;

ii) the collapse of;

iii) the rupture due to freezing of;

"Fire Protective Equipment" for the "premises" or for adjoining structures

 

G) Windstorm or Hail: There shall in no event be any liability for loss or damage:

i) to the interior of the "building" or to "contents" unless damage occurs concurrently with and results from aperture caused by windstorm or hail;

ii) Directly or indirectly caused by any of the following, whether driven by wind or due to windstorm or not: snow-load, ice-load, tidal wave, high water, overflow, flood, water-borne objects, waves, ice, land subsidence, landslip

 

6. Exclusions

 

A. Excluded Property

This form does not insure loss or damage caused directly or indirectly:

a) Property at locations which, to the knowledge of the Insured, are vacant, unoccupied or shut down for more than 30 consecutive days;

b) Electrical devices, appliances or wiring caused by artificially generated electrical currents including arcing. This exclusion does not apply to loss or damage caused directly by resultant fire or explosion.

c) Growing plants, trees, shrubs or flowers, all while outside the "building", except as provided in clause 7 (D);

d) Money, "Cash cards", bullion, platinum and other precious metals and alloys, securities, stamps, tickets (Except lottery tickets) and tokens, or evidence of debt or title;

e) Automobiles, Watercraft, Amphibious or Air cushion vehicles held for sale, or to unlicensed automobiles or unlicensed trailers used in the business of Insured when on the "premises";

f) Property illegally acquired, kept, stored or transported; property seized or confiscated for the breach of any law or by order of any public authority;

g) Roadways, walkways, parking lots and other exterior paved surfaces. This exclusion does not apply to the first $10,000 of any loss otherwise insured;

h) "Equipment" or "Stock" occasioned by or happening through their undergoing any process involving the application of heat.

 

B. Excluded Perils

This form does not insure against loss or damage caused directly or indirectly:

a) in whole or in part by war, invasion, act of foreign enemy, hostilities (whether war is declared or not), civil war, rebellion, revolution, resurrection or military power.

This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or in any sequence to the occasioning of loss or damage.

 

b) i. By any nuclear incident (As defined in the nuclear liability act or any other nuclear liability act, law or statue, or any amending law or nuclear explosion, except for ensuing loss or damage which results directly from fire, lightning or explosion of natural, coal or manufactured gas;

C) Proximately or remotely, arising in consequence of or contributed to by the enforcement of any by-law regulation, ordinance or law makes it impossible to repair or reinstate the property as it was immediately prior to the loss;

d) In whole or in part, by illegal "drug operations" or by any activity or decision of a government agency or other entity to prevent, respond or terminate "drug operations" This exclusion applies or not there are one or more other causes or events (Whether covered or not) that contribute concurrently or in any sequence to the occasioning from the loss or damage.

 

C. Pollution Exclusion

This form does not insure against:

a) Loss or damage caused directly or indirectly by any actual or alleged spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of "pollutants", nor the cost or expense of any resulting "clean up". This exclusion does not apply:

i. If the spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of "pollutants", nor the cost or expense of any resulting "clean up". This exclusion does not apply:

ii. To loss or damage caused directly by a resultant insured peril;

b) Cost or expense for any testing, monitoring, evaluating or assessing of an actual, alleged, potential or threatened spill, discharge, emission or dispersal, seepage, leakage, migration, release or escape of "pollutants"

 

D. Data Exclusion:

1) This form does not insure data

2) This form does not insure loss or damage caused directly or indirectly by a data problem. This exclusion (2) does not apply to loss or damage caused directly by resultant fire, explosion, smoke, leakage, from fire protective equipment.

 

E. Terrorism Exclusion

This form does not insure loss or damage caused directly or indirectly, in whole or in part, by terrorism or by any activity or decision of government agency or other entity to prevent, respond or terminate terrorism. This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or any sequence to the occasioning of loss or damage. If any portion of this exclusion is found to be invalid, unenforceable or contrary to statue, the remainder shall remain in full force or effect.

 

F. Fungi and spores’ exclusion

This form does not insure:

A) Loss or damage consisting of or caused directly or indirectly, in whole or in part, by any “fungi” or spores. This exclusion does not apply:

I) If the fungi or spores are directly caused by insured peril s

II) Loss or damage caused directly by a resultant insured peril.

 

B) Cost or expense for any testing, monitoring, evaluating or assessing of fungi or spores.

 

7. Extensions of coverage

The following extensions of coverage shall not increase the amounts of insurance applying under this form and are subject to all conditions of this form. 

 

A. Removal: If any of the insured property is necessarily removed from the premises to prevent loss of or damage to or further damage to such property, that part of the insurance under this form that exceeds the amount of the insurer’s liability for any loss already incurred shall, for seven days only, or for the unexpired term of the policy if less than 7 days, insure the property removed  and any property remaining in the premises in the proportions in which the value of the property in each of the locations bears to the value of the property in them all.

B. I) Debris Removal: The Insurer will indemnify the Insured for expenses incurred in the removal from the premises of debris of the insured property., occasioned by loss or damage to such property, for which loss or damage insurance is afforded under this form.

The amount payable under this extension shall not exceed 25% of the sum of:

1. The total amount payable for the direct loss or damage to insured property; And

2) Amount Of applicable deductible

 

II) Removal Of windstorm debris:

The Insured will indemnify the Insured for expenses incurred in the removal of debris or other property which is not insured under this form but which has been blown by windstorm upon the premises.

Extensions of coverage b I) and b ii) do not apply to costs or expenses:

A) to “clean up” pollutants from land or water; or

B) For testing, monitoring, evaluating or assessing of an actual, alleged, potential or threatened spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of pollutants.

 

Debris removal expense shall not be considered in the calculation of the value as determined in Clause 15 for the purpose of applying co-Insurance.

C) Personal property of officers and employees:

At the option of the insured, “equipment” also includes personal property of officers and employees of the insured. The insurance on such property.

I) Shall not attach if it is insured by the owner, unless the insured is obliged to insure or it is liable for its loss or damage;

II) Is, in any event, limited to a maximum recovery of $250 in respect of any one officer or employee;

Iii) Shall apply only to loss or damage occurring at the premises.

 

D) Growing plants, Trees, shrubs and flowers outside the building: This form is extended to insure loss of for damage to growing plants, trees, shrubs or flowers outside the building caused directly by the insured perils other than loss of or damage by the perils of windstorm or hail as stated in Clause 5. This extension of coverage shall be limited to a maximum recovery, including debris removal expense, of:

I. $500 for each growing plant, trees, shrubs or flowers outside the building caused directly by the insured perils other than loss or damage by the perils of windstorm or hail as stated in Clause 5 (G).

II. $5000 for any one occurrence

 

8. Permission

Permission is granted:

A. For any other insurance concurrent with this form

B. To make additions, alterations or repair.

C. To do such work and to keep and use such articles, materials and supplies in such quantities as are usual or necessary to insureds business.

 

9. Breach of condition

If the insured does not comply with a condition of this insurance, any claim of subsequent loss or damage is not recoverable. The Insurer will not deny a claim for this reason if the insured proves that noncompliance neither caused or worsened the loss or damage. Coverage will not be affected if the insured fails to comply with a condition in part of the premises over which insured has no control.

10. Reinstatement

Loss under any item of this form shall not reduce the applicable amount of insurance.

11. Subrogation 

The Insurer, upon making any payment or assuming liability for payment under this form, shall be subrogated to all rights of recovery of the insured against the others and bring action to enforce such rights. All rights of subrogation are waived against any corporation, firm or individual or other interest to which insurance is provided by this policy. Where the net amount recovered, after deducting the costs of recovery, is not sufficient to provide complete indemnity for the loss or damage suffered, that amount shall be divided between the Insurer and Insured in the proportion in which the loss or damage has been borne by them respectively.

Any release from liability entered in to by the Insured prior to the loss shall not affect the right of the Insured to recover.

 

12. Property protection systems

It is a condition of this insurance, for the purpose of Clause 9, that the insured shall immediately notify the insurer of any interruption to, or flaw or defect, coming to the knowledge of Insured, in any:

A. Sprinkler or other fire extinguishing systems

B. Fire detection systems: or

C. Intrusion detection system; 

and shall also immediately notify the insurer of the cancellation or non-renewal of any contract which provides monitoring or maintenance services to any of these systems or of the notification of the suspension of police services in response to any of these systems.

 

13. Premium Adjustment

This Clause is applicable if a specific amount of insurance is shown on the “Declarations page” for “stock”.

If, within six months after the expiry or anniversary date of each policy period, the Insurer shall file with the Insurer a premium adjustment application form showing, for the policy period, the value of the” stock on the last day of each month for each “premises” for the average amount of the total values declared. If the premium paid by this insurance exceeds the actual premium thus calculated, the Insurer shall refund to the insured any excess paid, subject to the maximum refund of 50% of the premium paid. In the event of any monthly declared values being in excess of the amount of insurance, the amount of excess shall not be included in the premium adjustment calculations.

 

14. Verification of values

The insurer or its duly appointed representative shall be permitted at all reasonable times during the policy period, or within a year after termination or expiration, to inspect the insured property and to examine Insured’s books, records and such policies as relate to any insured property.  Such inspection or examination shall not waive nor in any manner affect any terms or conditions of this form.

 

15. Basis of valuation

The value of the insured property shall be determined as follows:

A) Unsold stock: the actual cash value of the property at the time and place of loss or damage, but in no event to exceed what it would cost to repair or replace like kind and quality;

B) sold stock: the selling price after allowances for discounts;

C) the property of others in custody or control of the insured for the purpose of performing work upon it: the amount for which the Insured is liable, but not exceeding the actual cash value at the time and place of loss or damage plus allowance for labor and materials expended to such time.

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D) Tenants’ improvements

I. If repaired or replaced with due diligence and dispatch, the amount actually and necessarily expended, but not exceeding the actual cash value of the tenant’s improvements at the time and place of loss or damage;

II. If not repaired or replaced with due diligence and dispatch, the amount actually and necessarily expended, but not exceeding the actual cash value of tenant’s improvements at the time and place of loss or damage plus allowance for labor and materials expended to such time;

 

e) Business records, including those which exist on electronic or magnetic media (other than prepackaged software programs);

I. the cost of blank materials for reproducing the records; and

ii. The costs of labor to transcribe or copy the records when there is a duplicate

 

f) All other Insured property under this form and for which no more specific conditions have been set out: the actual cash value at the time and place of loss or damage, but not exceeding what it would then cost to repair or replace with material of like kind and quality.

 

Actual Cash Value: Various factors shall be considered in the determination of actual cash value. The factors to be considered shall include, but not be limited to, replacement cost less any depreciation and market value. In determining depreciation, consideration shall be given to the condition of the property immediately before the damage, the resale value, the normal life expectancy of the property and obsolescence.

 

16. Property Of others

At the option of the Insurer, any loss may be paid to the Insured or adjusted with and paid to the customer or the owner of the property

 

17. Definitions

Wherever used in this form:

a) "All property" means building, stock and equipment

b) Building means:

the building(S) described on the declarations page and includes:

i) Fixed structures pertaining to the building(S) located on the "premises"

ii) Additions and Extensions communicating and in contact with the building(S);

iii) Permanent fittings and fixtures attached to and forming part of the building (S);

iv) Materials. Equipment and supplies on the "premises" for maintenance of, and normal repairs and minor alterations to the "building" or for building services;

v) Growing plants, trees, shrubs or flowers inside the building used for decorative purposes when Insured is the owner of the building.

 

c) Cash Cards means cards designed to store a cash value by electronic means as a mode of payment, without a personal identification number and without direct access to a bank or other account

d) Clean up: Means removal, containment, treatment, decontamination, detoxification, stabilization, neutralization or remediation of "pollutants", including testing which is integral to any of these processes.

e) Contents mean equipment and stock

f) Data means representations of information or concepts, in any form

g) Data Problem means:

i) Erasure, destruction, corruption, misappropriation, misinterpretation of data;

ii) Error in creating, amending, entering, deleting or using data; or

iii) Inability to receive, transmit or use data

 

h) "Declarations Page" means declarations page applicable to this form

i) "Drug Operations" means cultivating, harvesting, processing, manufacturing, distributing or selling of Any substance falling within the controlled Drugs and Substances act. This includes, but is not limited to cannabis.

j) "Equipment" means:

i. Generally all contents usual to Insured's business, including furniture, furnishings, Fittings, fixtures, machinery, tools, utensils and appliances, other than "building" or "Stock"

ii) Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable;

iii) Tenant's Improvements, which are defined as building improvements, alterations and betterments made at the expense of the Insured to a building occupied by the Insured and which are not otherwise insured, provided the insured is not the owner of such building. If the Insured purchased the use interest in tenant's improvements made by a predecessor tenant, this form applies as though such tenant's improvements had been made at the expense of the Insured.

 

k) "Fire Protective Equipment" includes tanks, watermains, hydrants, valves and other apparatus whether used solely for fire protection or jointly for fire protection and for other purposes, but does not include:

i. Branch piping from a joint system where such branches are used entirely for purposes other than fire protection;

ii. Any watermains or appurtenances located outside of the premises and forming a part of public water distribution system;

iii. Any pond or reservoir in which water is impounded by a dam.

 

l) Fungi includes, but is not limited to, any form or type of mould, yeast, mushroom or mildew whether or not allergenic, pathogenic or toxigenic, and any substance, vapour or gas produced by, emitted from or arising out of any "Fungi", spores or resultant mycotoxins, allergens or pathogens.

m) Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including odor, vapour, Fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

n) "Premises” means entire area within property lines and areas under adjoining sidewalks and driveways at each location described under the declaration page and in or on vehicles within 100 meters (328 feet) of such locations.

o) Spores includes, but is not limited to, one or more reproductive particles or microscopic fragments, produced by, emitted from or arising out of any fungi.

p) Stock means:

i. Merchandise of every description usual to the Insured's business;

ii. Packing, wrapping and Advertising materials; and

iii) Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable

 

p) Stock means

i. Merchandise of every description usual to Insured's business;

ii. Packing, wrapping and advertising materials; and

iii. Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable.

 

q) Terrorism: Means an ideologically motivated unlawful act or acts, including but not limited to the use of violence or force or threat of violence or force, committed by or on behalf on any group (S), organization (S) or government (s) for the purpose of influencing any government and/or instilling fear in the public or a section of the public.

 

Commercial Property - Broad Form                                                                                                  IBC 4037 09.06

Words and Phrases in quotation marks have special meaning as defined in clause 18

1. Indemnity Agreement

In the event that any of the Insured property is lost or damaged during the policy period by an insured peril, the insurer will indemnify the Insured against the direct loss or damage so caused to an amount not exceeding whichever is the least of:

a) The value of lost or damaged property as determined in clause 15;

b) The interest of the Insured in the property;

c) the amount of Insurance specified in the declarations page for the lost or damaged property

The inclusion of more than one person or interest shall not increase the Insurer's liability.

 

2. Insured Property

A. This form insures those of the following items for which an amount of Insurance is specified on the "Declarations Page" and only while at the "premises";

"Building"

"Equipment"

"Stocks"

"Content"

"All Property"

 

B. This form also insures those of the following items for which an amount of Insurance is specified on the "Declarations page"

Temporary Locations: "Contents other than at a specified location, except while in transit or outside Canada. There shall be no liability under this item at any location owned, rented, or controlled in whole or in part by the Insured,

Building at newly acquired location: "Building at any newly acquired location within Canada. This coverage attaches at the time of the acquisition and extends to a period of 30 days, or to a date of endorsement of this form adding such location, or until the expiry date of the policy, whichever occurs first.

Property In Transit: "Contents in the course of transit within Canada or the continental United States of America until delivered

Sales Representative: "Contents", whether in transit or otherwise, within Canada or in the continental United states of America while in the custody of the sales representative of the Insured.

 

3. Deductibles

The Insurer is liable for the amount by which the loss or damage caused by an insured peril exceeds the amount deductible specified on the declarations page on any one occurrence. Should any occurrence give rise to the application of more than one deductible amount for any one premises, only the highest deductible will be applied.

 

4. Co Insurance

This clause applies separately to each item for which a co-Insurance percentage is specified on the "Declarations Page" and only where the amount of loss or damage exceeds the lesser of 2% of the applicable amount of Insurance or $5000.

 

5. Insured perils

This form, except as otherwise provided, insurers against all risks of direct physical loss of or damaged to the Insured property

 

6. Exclusions

A. Excluded property

This form does not insure loss of or damage to:

A. Sewers, drains and water mains located beyond the outside bearing walls or foundations of the building, outside communication towers, antennae (satellite receivers) and attached equipment, street clocks or exterior signs. This exclusion does not apply to loss or damage caused directly by named perils.

B. Property at locations which, to the knowledge of the Insured, are vacant, unoccupied or shut down for more than 30 consecutive days;

C. Electrical devices, appliances or wiring caused by artificially generated electrical currents, including arcing. This exclusion does not apply to loss or damage caused directly by resultant fire or explosion as described in Clause 18 m;

D. Growing plants, shrubs or flowers, all while outside the building except as provided in Clause 7 e.

E. Animals, fish or birds. This exclusion does not apply to loss or damage caused directly by named perils or by theft and attempted theft;

F. Money, cash cards, bullion, platinum, and other precious metals and alloys securities, stamps, tickets (except lottery tickets) and tokens, or evidence of debt or title;

G. Automobiles, watercraft, amphibious or air cushion vehicles, aircraft, spacecraft, trailers, motors or other accessories attached to or mounted on such property. This exclusion does not apply to watercraft or amphibious or air cushion vehicles held for sale, or to unlicensed automobiles or unlicensed trailers used in business of the insured when on the premises;

H. Furs, fur garments, jewels, jewellery, costume jewellery, watches, pearls, precious and semi precious stones. This exclusion does not apply to;

A. The first $1000 of any loss otherwise insured; or

B. Loss or damage caused directly by named perils;

 

I. Property insured under the terms of any marine insurance, and property while waterborne, except while on a regular ferry or railway car transfer in connection with land transportation;

F. Property from the time of leaving the insured’s custody if it is:

I. Loaned or rented or leased to others; or

j. Sold by the insured under conditional sale or instalment payment or other deferred payment plan.

This exclusion (j) does not apply while such property is in the custody of a carrier for hire for the purpose of delivery at the risk of the insured. Property in the custody of a sales representative outside the premises, unless the amount is shows on the declarations page for sales representative.

L. Property illegally acquired, kept or stored or transported; property seized or confiscated for the breach of any law or by order of any public authority.

M. I. Any pressure vessel having normal internal working pressure greater than 103 kilopascals (15 pounds per square inch) above atmospheric pressure;

II. Any boiler, including it’s connected piping and equipment, which contains steam or water under steam pressure (excepts tanks having internal diameter having 610 millimetres (24 inches) or less used for the storage of hot water for domestic use); caused directly by explosion.

caused directly or indirectly by explosion rupture, bursting, cracking, burning out or bulging of such property while connected ready for use.

This exclusion (m) does not apply to I. manually portable gas cylinders;

Ii. Explosion of natural, coal or manufactured gas;

N. Roadways, walkways, parking lots or other exterior paved surfaces. This exclusion does not apply to first $10000 of any loss otherwise insured;

O. Equipment or stock while actually being worked upon and directly resulting from such work or caused by repairing, adjusting or servicing of equipment or stock. This exclusion does not apply to loss or damage caused directly by resultant fire or explosion as described in Clause 18m.

P. Exterior glass or vitriolic and its lettering or ornamentation, except as provided in Clause 7d. This exclusion does not apply to loss or damage caused directly by named perils.

 

B. Excluded perils:

This form does not insure against loss or damage caused directly or indirectly:

A. In whole or in part by earthquake. This exclusion applies whether or not there are one or more causes or events that contribute concurrently or in sequence to the occasioning of loss or damage except loss or damage caused by resultant fire, explosion, smoke or leakage from fire protective equipment all as described in Clause 18 m. This exclusion does not apply to property in transit.

B. In whole or in part by flood, including surface water, waves, tides, tidal waves, tsunamis, or the breaking out or overflow of natural or artificial body of water. This exclusion applies whether or not there are one or more occasioning of loss or damage, except loss or damage caused directly by resultant fire, explosion, smoke, leakage from fire protective equipment all as described in Clause 18 m. This exclusion does not apply to property in transit or loss or damage caused directly from a water main;

C. By Seepage, leakage or influx of water from natural sources through basement walls, doors, windows or other openings, foundations, basement floors, sidewalk, sidewalk lights, unless concurrently and directly caused by a peril not otherwise excluded under this form;

Ii. By the backing up or overflow of water from sewer dumps, septic tanks or drains, wherever located, unless concurrently and directly caused by perils not otherwise excluded in this form;

Ii. By the backing up or overflow of water from sewers, sumps and septic tanks or drains, wherever located, unless concurrently and directly caused by peril not excluded in this form.

Iii. By the entrance of rain, sleet or snow through doors, windows, skylights or other similar walls or roof openings, unless through an aperture concurrently and directly caused by a peril not otherwise excluded in this form;

D. By centrifugal force, mechanical or electrical breakdown or derangement, in or on the premises. This exclusion does not apply to loss or damage caused directly by resultant fire;

 

E. I. By dampness or dryness of atmosphere;

II. By changes in or extremes of temperature, heating or freezing;

Iii. By total or partial interruption to the supply of electricity, water, gas or steam;

This exclusion does not apply to:

1. Loss or damage caused directly by rupture of pipes or breakage of apparatus not excluded in paragraph m of Clause 6 A;

2.  Damages to pipes caused directly by freezing unless such pipes are excluded in paragraph m of Clause 6 A.

3. Loss or damage to building and equipment caused directly by:

4. Loss or damage caused directly by an accident to a transporting conveyance.

 

f) i. By shrinkage, evaporation, loss of weight, leakage of contents, exposure to light, or change in colour or texture or finish;

ii. By contamination;

iii. By marring, scratching or crushing

 

This exclusion does not apply to loss or damage caused directly by:

1. Named Perils

2. Rupture of Pipes or breakage of apparatus not excluded in paragraph m of Clause 6. A;

3. Theft or attempted theft;

4. An accident to a transporting conveyance

 

g) By smoke from agricultural smudging or industrial operations

h) By insects, rodents or vermin. This exclusion does not apply to loss or damage caused directly by a peril not other wise excluded in this form;

i) By delay, loss of market, or loss of use of occupancy;

j) In whole or in part by war, Invasion, act of foreign enemy, hostilities (whether war is declared or not), civil war, rebellion, revolution, insurrection or Military power. This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or any sequence to the occasioning of loss or damage;

 

k) i. By any nuclear incident (as defined in the Nuclear Liability Act or any other nuclear liability law or statue or any other amending law) or nuclear explosion, except for ensuing loss or damage which results directly from fire, lighting or explosion of natural, coal or manufactured gas, all as described in Clause 18 (m);

ii) By contamination by radioactive material;

 

l)  By any dishonest or criminal act on part of the Insured, any other party of interest, agents of the Insured, or any person to whom the property may be entrusted (except bailees for hire) ;

or

ii) By theft or attempted theft by employees of the Insured;

 

m) By snowslide, landslide, subsidence or other earth movement. This exclusion does not apply to property in transit, or to loss or damage caused directly by resultant fire, explosion, smoke, leakage from "fire protective equipment" all as described in Clause 18 (m);

n) By explosion (except explosion of natural, coal, or manufactured gas) collapse, rupture, bursting, cracking, burning out or bulging of the following property owned, operated or controlled by the Insured:

i) The portions containing steam or water under steam pressure of all boilers generating system, and piping and other equipment connected to said boilers and containing steam or water under steam pressure;

ii. Piping and apparatus or their parts normally containing steam or water under steam pressure from an external source and while under such pressure;

iii. Other vessels and apparatus and their connected pipes while under pressure , or while in use or in operation, provided their maximum normal internal pressure exceeds 103 kilopascals (15 pounds per square inch) above atmospheric pressure, but this exclusion does not apply to loss or damage resulting directly from the explosion of manually portable gas cylinders or of tanks having an internal diameter of 610 millimeters (24 inches) or less used for heating and storage of hot water for domestic use;

iv. Moving or rotating machinery or it's parts;

v. Any vessels and apparatus and their connected pipes while undergoing pressure tests, but this exclusion does not apply to other Insured property that has been damaged by such explosion;

vi. Gas Turbines

This exclusion does not apply to loss or damage caused by resultant fire;

 

o) By settling, expansion, contraction, moving shifting or cracking. This exclusion does not apply to loss or damage caused directly and concurrently by a peril otherwise excluded in this form;

p) Proximately or remotely, arising in consequence of or contributed to by the enforcement of any by-law, regulation, ordinance or law regulating zoning or the demolition, repair or construction of buildings or structures, which by law, regulation, ordinance or law makes it impossible to repair or reinstate as it was immediately prior to the loss;

q) In whole or in part, by "illegal drug operations" or by any activity or decision of a government agency or other entity to prevent, respond or to terminate "drug operations". This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or in any sequence to the occasioning of the loss or damage;

 

C. Pollution Exclusion

This form does not Insure against:

a) Loss or damage caused directly or indirectly by any actual or alleged spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of pollutants, nor the cost or expense of any resulting "clean up" This exclusion does not apply:

i. If the spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of "pollutants" is directly caused by a peril otherwise not excluded in this form, or

ii. To loss or damage caused directly by a resultant peril not otherwise excluded in this form;

 

b) Cost or expense for any testing, monitoring, evaluating or assessing of an actual, alleged, potential or threatened spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of "pollutants"

 

D. Data Exclusion

1. This form does not Insure data

2. This form does not Insure loss or damage caused directly by resultant fire, explosion, smoke or leakage from "fire protective equipment", all as described in clause 18 m;

 

E. Terrorism Exclusion

This form does not Insure loss or damage caused directly or indirectly, in whole or in part, by "terrorism" or by any activity or decision of a government agency or other entity to prevent, respond to or terminate "terrorism" This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or to any sequence to the occasioning of loss or damage. If any portion of this exclusion is found to be invalid, unenforceable or contrary to statue, the remainder shall remain in full force and effect.

 

F. Fungi and Spores Exclusion

This form does not Insure:

a) Loss or damage consisting of or caused directly or indirectly, in whole or in part, by any "fungi" or "spores". This exclusion does not apply:

i. If the "fungi" or "spores" are directly caused by peril otherwise not excluded in this form,

ii. To loss or damage caused directly by a resultant peril not otherwise excluded in this form;

b) Cost or expense for any testing, monitoring, evaluating or assessing of "fungi", or "spores"

 

G. Other Excluded Losses:

 

This form does not Insure:

a) i. Wear and tear;

ii) Rust or Corrosion;

iii) Gradual deterioration, hidden or latent defect in property that causes it to damage or destroy itself. This exclusion (s) does not apply to loss or damage caused directly by a resultant peril not otherwise excluded in this form;

 

b) The cost of making good:

i. Faulty or Improper material;

ii. Faulty or Improper Workmanship;

iii. Faulty or Improper design

This exclusion (b) does not apply to loss or damage caused directly by a resultant peril not otherwise excluded in this form;

c) Mysterious Disappearance, or shortage of equipment or stock disclosed on taking inventory

 

7. Extensions of Coverage

The following extensions of coverage shall not increase the amounts of Insurance applying under this form and are subject to all the conditions of this form

 

a) Removal: If any of the Insured property is necessarily removed from the "premises" to prevent loss of or damage to or further loss of or damage to such property, that part of the Insurance under this form that exceeds the amount of the Insurer's liability for any loss already incurred shall, for 7 days only, or for the unexpired term of the policy if less than 7 days, insure the property removed and any property remaining at the premises in the proportions which the value of the property in each of the locations bears to the value of the property in them all

b) i. Debris Removal: The Insurer will indemnify the Insured for expenses incurred in the removal from the "premises" of debris of the Insured property, occasioned by loss of or damage to such property, for which loss or damage insurance is afforded under this form.

The amount of payable under this extension shall not exceed 25% of the sum of:

1. The total amount payable for the direct loss of or damage to Insured property; and

2. The Amount of applicable deductible

 

ii. Removal of windstorm debris: The Insurer will indemnify the Insured for expenses incurred in the removal of debris or other property which is not Insured by this form but has been blown by windstorm upon the "premises"

 

Extensions of coverage b(i) and b (ii) do not apply to costs or expenses:

a) To "clean up" pollutants from land or water; or

b) For testing, monitoring, evaluating or assessing of an actual, alleged, potential or threatened spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of pollutants.

Debris removal expense shall not be considered in the calculation of the value as determined in clause 15 for the purpose of applying Co-Insurance.

c) Personal Property of Officers and Employees: At the option of the Insured, "Equipment" also includes personal property of officers and employees of the Insured. The Insurance on such property:

a. Shall not attach if it is insured by the owner, unless the Insured is obliged to insure it or is liable for its loss or damage;

b. Is, in any event, limited to a maximum recovery of $250 in respect of any one officer or employee;

c. Shall apply only to loss or damage occurring at the premises

 

d) "Building" Damage by Theft: This form is extended to Insure damage (except by fire) to that part of the building occupied by the Insured directly resulting from theft or attempted theft and from vandalism or malicious acts committed on the same occasion, provided the Insured is not the owner of such building and is legally liable for such damage and the building is otherwise not Insured under this form. This extension of cover shall be limited to a maximum recovery of $2500 for any one occurrence.

e) Growing plants, Trees, Shrubs or flowers outside the building: This form is extended to insure loss of or damage to growing plants, trees, shrubs or flowers outside the building caused directly by named perils (with coverage shall be limited to a maximum recovery, including debris removal expense, of:

i. $500 for each growing plant, tree, shrub or flower; and

ii. $5000 for any one occurrence

 

8. Permission

Permission is granted:

a) For Other Insurance concurrent with this form;

b) To make additions, alterations or repairs;

c) To do such work and to keep and use articles, materials and supplies in such quantities as are usual or necessary to the Insured's business.

 

9. Breach of Condition

If the Insured does not comply with a condition of this Insurance, any claim for subsequent loss or damage is not recoverable. The Insurer will not deny claim for this reason if the Insured proves that the non-compliance neither caused nor worsened the loss or damage. Coverage will not be affected if the Insured fails to comply with a condition in part of the "premises" over which the Insured has no control.

 

10. Reinstatement

Loss under any item of this form shall not reduce the applicable amount of Insurance

 

11. Subrogation

The Insurer, upon making any payment or assuming liability for payment under this form, shall be subrogated to all rights of recovery of the Insured against others and may bring action to enforce such rights All rights of subrogation are waived against any corporation, firm, Individual or other Interest with respect to which Insurance is provided by this policy. Where the net amount recovered, after deducting the costs of recovery, is not sufficient to provide a complete indemnity for the loss or damage suffered, that amount shall be divided between the Insurer and the Insured in the proportion in which the loss or damage has been borne by them respectively. Any release from liability entered in to the by the Insured prior to loss shall not affect the right of the Insured to recover.

 

12. Property Protection Systems

It is a condition of this Insurance, for the purpose of Clause 9, that the Insured shall immediately notify the Insurer of any interruption to, or flaw or defect, coming to the knowledge of the Insured, in any:

a) Sprinkler or other fire extinguishing system; or

b) Fire detection system; or

c) Intrusion detection system;

and shall also immediately notify the Insurer of the cancellation or non-renewal of any contract which provides monitoring or maintenance services to any of these systems or of the notification of the suspension of police service in response to any of these systems.

 

13. Premium Adjustment

This clause is applicable if a specific amount of Insurance is shown on the "Declarations Page" for "stock"

If within six months after the expiry or anniversary date of each policy period, the Insured shall file with the Insurer a premium adjustment application form showing, for the policy period, the value of the stock on the last day of each month at each premises as commented upon by the Insured's accountant, the actual premium for the policy period shall then be calculated at the rate applying to each "premises" for the average amount of total values declared. If the premium paid by the Insured for such "stock" exceeds the actual premium thus calculated, the Insurer shall refund to the Insured any excess paid, subject to a maximum refund of 50% of the premium paid. In the event of any monthly values being in excess of the amount of Insurance, the amount of excess shall not be included in the premium adjustment calculations.

 

14. Verification of Values

The Insurer or its duly appointed representative shall be permitted at all reasonable times during the policy period, or within a year after termination or expiration, to inspect the Insured property and to examine the Insured's books, records and such policies as relate to any Insured property. Such inspection or examination shall not waive nor in any manner affect any of the terms or conditions of this form

 

15. Basis of Valuation

The value of the Insured property shall be determined as follows:

a) Unsold stock: the actual cash value of the property at the time and place of loss or damage, but in no event to exceed what it would cost to replace or repair with material of like kind and quality;

b) Sold Stock: The selling price after allowance for discounts;

c) the property of others in the custody and control of the Insured for the purpose of performing work upon it: the amount for which Insured is liable, but is not exceeding the actual cash value at the time and place of loss or damage plus allowance for labor and material expended to such time;

d) Tenant Improvements:

i. If repaired or replaced with due diligence and dispatch, the amount actually and necessarily expended, but not exceeding the actual cash value of the tenant's improvements at the time and place of loss or damage;

ii. If not repaired or replaced with due diligence and dispatch, the amount actually and necessarily expended, but not exceeding the actual cash value of tenant's improvements at the time and place of loss or damage;

e) Business Records, including those which exist on electronic or magnetic media (other than prepackaged software programs):

i. Cost of blank materials for reproducing the records; and

ii. The costs of labor to transcribe or copy the records when there is a duplicate

 

f) All other Insured property under this form and for which no more specific conditions have been set out: the actual cash value at the time and place of loss or damage, but not exceeding what it would then cost to repair or replace with material of like kind and quality.

 

Actual Cash value: Various factors shall be considered in the determination of actual cash value. The factors to be considered shall include, but not limited to, replacement cost less any depreciation and market value. In determining depreciation, consideration shall be given to the condition of the property immediately before the damage, the resale value, the normal life expectancy of the property and obsolescence.

 

16. Property of Others

At the option of the Insurer, any loss may be paid to the Insured or adjusted with and paid to the customer and owner of the property.

 

17. Locked Vehicle Warranty

This clause does not apply to a property which is under the control of a common carrier. Warranted by the Insured that any vehicle in which the insured property is carried is equipped with a fully enclosed body or compartment, and the Insurer shall be liable in case of loss by theft from an unattended vehicle only as a direct result of forcible entry (of which there shall be visible evidence) in to such body or compartment, the doors of which are securely locked and windows closed.

 

18. Definitions

Wherever used in this form:

a) All property means building, equipment and stock

b) Building means:

the building described on the declarations page and includes:

i. Fixed structures pertaining to the building(S) and located on the premises;

ii. Additions and extensions communicating and in contact with the building (s);

iii. Permanent fittings and fixtures attached to and forming part of the building (s);

iv. Materials, equipment and supplies on the premises for the maintenance of, and normal repairs and minor alterations to the building or for building services;

v. Growing plants, trees, shrubs or flowers inside the building used for decorative purposes when the Insured is the owner of the building.

 

c) Cash Cards means cards designed to store a cash value by electronic means as a mode of payment, without a personal identification number or without direct access to a bank or other account.

d) Clean up means the removal, containment, treatment, decontamination, detoxification, stabilization, neutralization or remediation of pollutants, including testing which is integral to any of these processes.

e) Contents means equipment and stock

f) Data means representations of information or concepts, in any form

g) Data Problem means:

i. Erasure, destruction, corruption, misappropriation, misinterpretation of data,

ii. Error in creating, amending, entering, deleting or using "data"; or

iii. Inability to receive, transmit or use data

 

h) "Declarations Page" means the declarations page applicable to this form

i) Drug operations: Means cultivating, harvesting, processing, manufacturing, distributing or selling of any substance falling within the Controlled Drugs and Substances Act. This includes, but not limited to cannabis.

j) "Equipment" means:

I) Generally, all contents usual to Insured's business, including furniture, furnishings, fittings, fixtures, machinery, tools, utensils and appliances, other than "building" or "Stock"

ii) Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable;

iii) Tenant's Improvements, which are defined as building improvements, alterations and betterments made at the expense of the Insured to a building occupied by the Insured and which are not otherwise Insured, provided the Insured is not the owner of such building. If insured purchased the use interest in tenant's improvements made by a predecessor tenant, this form applies as though such tenant's improvements had been made at the expense of the Insured.

 

k) "Fire Protective Equipment"

Includes Tanks, watermains, hydrants, valves and any other apparatus, whether used solely for fire protection or jointly for fire protection or for other purposes, but does not include:

i. Branch piping from a joint system where such branches are used entirely for purposes other than fire protection.

ii. Any watermains or appurtenances located outside of the premises and forming a part of the public distribution system;

iii. Any pond or reservoir in which the water is impounded by a dam.

 

l) Fungi includes, but is not limited to, any form or type of mould, yeast, mushroom, or mildew whether or not allergenic, pathogenic or toxigenic, and any substance, vapour or gas produced by, emitted from or arising out of any fungi or spores or resultant mycotoxins, allergens or pathogens.

 

m) Named Perils means:

 

a) Fire or Lighting

b) Explosion: Except with respect to the explosion of natural, coal or manufactured gas, there shall be in no event any liability for loss or damage caused by explosion, rupture or bursting in or of the following property owned, operated or controlled by the Insured:

i)a. The portions containing steam or water under steam pressure of all boilers generating steam and piping or other equipment connected to said boilers and containing steam or water under steam pressure;

b) Piping and apparatus or their parts normally containing steam or water under steam pressure from an external source and while under such pressure;

c) The combustion chambers or fire boxes of steam generating boilers of the chemical recovery type and the flues or passages which conduct the gases of combustion from them;

d) Smelt dissolving tanks;

ii. Other vessels and apparatus and connected pipes, while under pressure, or while in use or in operation, provided their maximum normal internal working pressure exceeds 103 kilopascals (15 pounds per square inch) above atmospheric pressure, except that liability is specifically assumed for the loss or damage resulting from the explosion of manually portable gas cylinders;

iii. Moving or rotating machinery or parts of same when such loss or damage is caused by centrifugal force or mechanical breakdown;

iv. Any vessels and apparatus and connected pipes while undergoing pressure tests, but this exclusion shall not apply to other insured property that has been damaged by such explosion;

v. Gas Turbines;

 

The following are not explosions within the intent or meaning of this section:

a) Electric Arcing or any coincident rupture of electrical equipment due to such arcing;

b) Bursting or rupture caused by hydrostatic pressure or freezing;

c) Bursting or rupture of any safety disc, rupture diaphragm or fusible plug

C. Impact by Aircraft, spacecraft or land vehicle: The terms Aircraft and Spacecraft include articles dropped from them.

There shall be in no event be any liability for cumulative damage or for loss or damage:

i. Caused by land vehicles belonging to or under the control of the Insured or any of his employees.

ii. To Aircraft, space craft or land vehicles causing the loss;

iii. Caused by any aircraft or space craft when being taxied or moved inside or outside of a building

 

D. Riot, Vandalism or Malicious Acts: The term riot includes open assemblies of strikers inside or outside the premises who have quitted work and locked out employees.

There shall be in no event be any liability for loss or damage:

i. Due to cessation of work or by interruption to process or business operations or by change(s) in temperature;

ii. Due to flood or release of water impounded by a dam, or due to any explosion other than an explosion in respect of which there is Insurance under clause 18 (m)(B);

iii. Due to theft or attempted theft

 

E. Smoke: The term smoke means smoke due to a sudden, unusual and faulty operation of any stationary furnace. There shall be in no event be any liability for cumulative damage:

F. Leakage from Fire protective Equipment: The term leakage from Fire protective equipment means:

I. Leakage or discharge of water or other substances from;

ii. Collapse of;

iii. Rupture due to freezing of;

"Fire protective equipment" for the premises" or for adjoining structures

 

G) Windstorm or hail: There shall be in no event any liability for loss or damage:

i. To the Interior of the building or to contents unless damage occurs concurrently with and results from an aperture caused by windstorm or hail;

ii. Directly or indirectly caused by any of the following, whether driven by wind or due to windstorm or not: snow-load, ice load, tidal wave, high water, over flow, flood, water borne objects, waves, ice, land subsidence, land slip.

 

n. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including odour, vapour, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

o. Premises means the entire area within the property lines and areas under adjoining sidewalks and driveways at:

i. Each location described on the "Declarations Page";

ii. Temporary locations and any newly acquired location, if covered by this form;

and in or on vehicles within 100 metres (328 feet) of such locations.

 

p. Spores includes, but is not limited to, one or more reproductive particles or microscopic fragments produced by, emitted from or arising out of any fungi

q. Stock means:

i. Merchandise of every description usual to Insured's business;

ii. Packing, Wrapping and advertising materials; and

iii. Similar property belonging to others which the Insured is under obligation to keep Insured or for which he is legally liable

 

r. Surface water means water or natural precipitation temporarily diffused over the surface of the ground

s. Terrorism means an ideologically motivated unlawful act or acts, including but not limited to the use of violence or force or threat of violence or force, committed by or on behalf of any group(S), organization (S) or government (S) for the purpose of influencing any government and/or instilling fear in the public or section of a public

 

a) stock

b) Patterns, dies, Moulds

c) Paintings, etchings, pictures and tapestries, statuary, Marbles, antique furniture, rare books, antique silver, porcelain, rare glassware, bric-a-brac or other articles of art, rarity or antiquity;

d) Business records including those which exist on electronic or magnetic media (other than prepackaged software programs);

e) Any increase in the cost of replacement occasioned by a restriction or prohibition in any by-law, regulation, ordinance or law.

 

4. Definitions

a) Replacement includes repair, construction or re-construction with new property of like kind and quality; and

b) Replacement Cost means whichever is the least of cost of replacing, repairing, constructing or reconstructing the property on the same site with new property for like kind and quality and for like occupancy without deduction for depreciation.

All other terms and conditions of the policy to which this endorsement applies remains unchanged.

 

Standard Mortgage clause - approved by the Insurance Beaurau of Canada

It is hereby provided and agreed that:

Breach of conditions by Mortgagor, owner or occupant

1. This Insurance and every documented renewal thereof -- as to the interest of the mortgagee only therein - is and shall be in force notwithstanding any act, neglect, omission or misrepresentation attributable to the mortgagor, owner or occupant of the property Insured, including transfer of interest, any vacancy or non-occupancy, or the occupation of the property for purposes more hazardous than specified in the description of the risk;

Breach of conditions by Mortgagor, owner or occupant

1. This Insurance and every documented renewal thereof -- as to the interest of the mortgagee only therein - is and shall be in force notwithstanding any act, neglect, omission or misrepresentation attributable to the mortgagor, owner or occupant of the property Insured, including transfer of interest, any vacancy or non-occupancy, or the occupation of the property for purposes more hazardous than specified in the description of the risk;

Provided always that the Mortgagee shall notify forthwith the Insurer (if known) of any vacancy or non-occupancy extending beyond thirty consecutive days, or any transfer of interest or increased hazard that shall come to his knowledge; and that every increase of hazard (not permitted by the policy) shall be paid for by the mortgagee on reasonable demand from the date such hazard existed, according to the established scale of rate for acceptance of such increased hazard during the continuance of this Insurance.

 

2. Whenever the Insurer pays the Mortgagee any loss award under this policy and claims that - as to the Mortgagor or owner - no liability therefore existed, it shall be subrogated to all rights of the Mortgagee against the Insured; but any subrogation shall be limited to the amount of such loss payment and shall be subordinate and subject to the basic right of the Mortgagee to recover the full amount of its mortgage equity in priority to the Insurer; or the Insurer may at its option pay the mortgagee all amounts due or become due under the mortgagor on the security thereof, and shall thereupon receive a full assignment and transfer the mortgage together with all securities held as collateral to the mortgage debt.

3. Other Insurance: If there be other valid and collectible Insurance upon the property with loss payable to the Mortgagee - at law or in equity - then any amount payable thereunder shall be taken in to account in determining the amount payable to the Mortgagee

4. In the absence of the Insured, or the inability, refusal, or neglect of the Insured to give notice of loss or deliver the required proof of loss under the policy, then the mortgagee may give notice upon becoming aware of the loss and deliver as soon as practicable the proof of loss.

5. Termination: The term of this mortgage clause coincides with the term of the policy;

Provided always that the Insurer reserves the right to cancel the policy as provided by statutory provision but agrees that Insurer will neither terminate nor alter the policy to the prejudice of the mortgagee without the notice stipulated in such statutory provision.

6. Should the title or ownership to said property become vested in the Mortgagee and/or assigns as owner or purchase under foreclosure or otherwise, this Insurance shall continue until expiry or cancellation for the benefit of the said Mortgagee and/or assigns.

 

Subject to the terms of this Mortgage clause (and these shall supersede any policy provisions in conflict therewith BUT only as to the interest of the Mortgagee), loss under this policy is made payable to the Mortgagee.

 

Chapter 6 - Personal Property Insurance

Canadians spend over $3 billion dollars annually to Insure their habitational properties. Whether they live on a single-family owner-occupied house, a condominium unit, an apartment or a mobile home, coverage is available for their unique exposures. As most consumers own habitational property, brokers need to understand the policies and forms used to Insure them.

 

RIBO COMPREHENSIVE HOMEOWNER, TENANT< CONDOMINIUM UNIT OWNER PACKAGE POLICY

The RIBO comprehensive homeowner, Tenant, Condominium Unit owner package policy was developed to insure the dwelling (s) and personal property including any condominium or apartment "betterments and improvements" made, which are discussed in this chapter.

 

This package policy also has provision to include coverage for a secondary or rented dwelling, seasonal residence, scheduled personal articles, watercraft, fine arts and other coverages which will also be discussed in this chapter.

 

THE RIBO FORM - characteristics

Clear Language Approach

This form was modified a number of years ago to remove much of the legal jargon and phrases of earlier policies. This plan language approach made it easier for the insureds to read and understand their insurance policies.

 

Common Format or Structure

A common structure is maintained through out. As a result, brokers are able to quickly locate answers to a client's questions.

 

Policy definitions Uniform - RIBO pg. 1

Definitions are provided for certain terms used in this form. These include:

RIBO comprehensive homeowner, Tenant, Condominium unit owner package policy

 

i. You or Your

One of the most important definitions is that identifying who is insured by the policy. The person (s) insured is referred to as the insured or you or your. Persons insured under section I - Property coverages include "the persons named as Insured on the coverage summary page and or in the Declarations and, while living in the same household.

 

a) His or her husband or wife

Many Insurance policies are issued in one name only. In such instances, the person who is the spouse of the named insured is entitled to make a claim. However, before making payment, the Insurer will require evidence that such person was married to the named Insured.

 

Insured includes husband or wife

Bert and Betty were married 12 years ago in a civil ceremony in Burlington, Ontario. They have lived in the same home in Your town for all of their marriage. Bert purchased their home two years before marrying betty. At that time, his name was the only one on the policy. Once married, he never thought of adding Betty's name to the policy and she never asked that it be done. Last month, her entire collection of dinner bells valued at $6000 was stolen from their home. Betty will be entitled to payment if she is able to prove that she is legally married to Bert. A legal marriage is defined as "the legal union of one man and one woman as husband or wife"

 

Marriages recognized in law are those involving a religious or civil ceremony.

It appears that more people are entering in to common law relationships than are marrying. Recognizing this trend, RIBO has extended the definition of spouse to include partners of such relationships. However, when not named on the policy, partners in these common law relationships will be entitled to coverage only when they are able to prove that:

a) They are living with the named insured continuously for a period of three years;

In some provinces, people living together as spouses have certain property rights when they have been together for as little as three months. However, under this form, no payment will be made for property of a common law partner who is not named on the policy and who has not lived with the named Insured continuously for at least three years;

or,

** If they are the natural or adoptive parents of a child, they had been living with the Named Insured for a period of one year.

 

Common Law relationships - How to avoid coverage Gap

It is important to establish the relationship of persons occupying the dwelling with the named Insured. It is clear that the definition of husband or wife does not extend to include the Named Insured's common law partner, except the situations previously mentioned. It is the responsibility of the broker to ensure that proper coverage is put in to place. This could involve adding the name of the Named Insured's partner to the existing policy or providing that person with their own separate policy.

 

b) The relatives of either

People qualifying as relatives include the children, parents, grand parents or other family members who live with the Insureds. It should be noted that the policy has no limitations on relatives. In such instances, it may be necessary for the broker to increase the coverage limits on personal property.

 

c) Any person under 21 in their care

People not related to the Insured(s) are covered by this form so long as they are under the age of 21 and are in the actual care of the insured(s). This could include foster children and exchange students staying with them. Boarders and roomers are not considered to be in the care of the insured(S) and are not "insureds" under the policy. Boarders and roomers who are not related to the named Insured should be encouraged to purchase their own tenant policy to provide needed Insurance coverages.

Any person who is not a named Insured must have been living in the same household at the time of loss or damage to their property. This could include foster children and exchange students staying with them. Boarders and roomers are not considered to be in the care of the insured (s) and are not insured under the policy. Boarders and roomers who are not related to the named insured should be encouraged to purchase their own tenant's policy to provide the needed Insurance coverages.

Any person who is not a Named Insured must have been living in the same household at the time of the loss or damage to their property.

 

All persons Insured must live in the same household as named Insured.

Four months ago, marital problems caused Gomer and Griselda Goober, friends of the butler's, to agree to a trial separation. Griselda went to live with her parents, taking only some clothes and a few other personal effects with her. Last week, Gomer called to inform Griselda that their home had burnt to the ground. The insurance policy on the home was issued in Gomer's name only. The insurer is not obligated to provide payment for Griselda’s property when it is clear that she was not living in the same household as Gomer at the time of loss.

 

The definition of "Insured" is extended to include "a student who is enrolled in, and is actually attends a school, college, or university and who is dependent on the named insured or his or her spouse for support and maintenance even if temporarily residing away from the principal residence stated ion the coverage summary page.

 

Coverage is provided for students attending any educational institution, whether it be a boarding school, community college or University.

ii) Dwelling - RIBO pg. 1

"Dwelling means the building or portion of the building or unit described in the declarations occupied by you as a private residence."

The insured dwelling must be used for habitational and not for business purposes. A business means any continuous or regular pursuit undertaken for financial gain, including trade, profession or occupation.

 

iii) Premises - RIBO pg. 2

In the case of a homeowner, premises means the dwelling and the land contained within the lot lines on which the dwelling is situated. In the case of a tenant or condominium unit owner, premises means the dwelling or unit and includes garages, outbuildings and private approaches reserved for your use or occupancy only. As certain coverages provided by this form do not extend beyond the insured's premises, it is important to be familiar with this definition.

 

iv) Vacant - RIBO pg. 2

Vacant means, whether partially or fully furnished, the occupant has/have moved out with no intent to return; a newly constructed dwelling is vacant after it is completed and before the occupants move in; the occupant has moved out and no new occupant moved in

 

Insure the Same exposure to Loss

The form contains two coverage sections:

Section I - Property coverages

The following standard coverage codes are used to identify the coverages provided by this section.

Coverage A - Dwelling Building - (Applicable to Home owner's only)

Coverage A1 - Condominium Unit

Coverage A2 - Loss assessment (Applicable to a condominium Unit owner only)

Coverage A3 - Unit Improvements and betterments - Applicable to a Condominium Unit owner only

Coverage B - Detached Private structures (applicable to home owners only)

Coverage C - Personal property (applicable to all), including improvements and betterments made by the Insured if a tenant

Coverage D - Additional Living expenses (applicable to all)

 

Section II -- Liability Coverage

Liability coverage is automatically included on the comprehensive home owner, Tenant's Condominium Unit owner package policy and is the same for each insured. Standard coverage codes are also used to identify the liability coverages provided. They are:

Coverage E - Personal Liability

Coverage F - Voluntary Medical payments

Coverage G - Voluntary payment for damage to property

Coverage H - Voluntary compensation for residence Employees

Coverage I - Loss Assessment - (applicable to condo unit owner)

 

Note: Liability coverage is discussed in chapter 10

Extensions of Coverage - RIBO pg. 8-10

The following additional coverages are provided to all under the comprehensive homeowners, tenant's Condominium Unit owner's package policy.

 

1. Debris removal

This coverage is available when loss or damage is caused by an insured peril. If the amount payable for loss, including expense for debris removal, is greater than the amount of Insurance, an additional 5% of Coverage A limit (Coverage C if you are a Condominium Unit owner or tenant) will be available to cover debris removal expenses. 

 

2. Property Removed

Property which has been removed to protect it from loss or damage is insured for 30 days or until the expiry of the policy, whichever occurs first. The amount of Insurance will be divided in the proportion that the value of property removed bears to the value of all the property at the time of the loss. What this means is that the value of the Insured's property will be considered both at the named Insured's location and at the location the property is placed to protect it from further loss for the purpose of loss settlement and the application of the policy limit.

 

3. 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 Insured(s) as their principal dwelling. Coverage is restricted to Canada and is provided for 30 consecutive days only, or until the policy expires, or is terminated, whichever is sooner.

 

4) Damage to dwelling - applicable to tenant

$500 to the amount of coverage C can be applied to pay for the damage caused to the portion of the dwelling you occupy caused by theft or attempted theft or to the Interior portion caused by vandalism or malicious acts. Coverage is also provided for impact by a vehicle operated by you.

 

5) Fire department expenses

Most Municipalities do not charge property owners for firefighting services. However, when a neighbouring fire department is called to combat a serious fire, it will normally bill the insured for its services. This form will provide up to $1000 (without deductible) for fire department charges.

 

6) Freezer Food

Coverage is provided for up to $2000 (without deductible) for food contained in the freezer located on the Insured's premises when the loss or damage is due to:

 

* Mechanical breakdown

Coverage is provided for damage to a food freezer when it is due to food spoilage covered by this extension. Also, the insurer agrees to pay reasonable expenses incurred to save and preserve food while their freezer is being repaired.

 

Freezer food covered loss when loss due to Mechanical breakdown

Bert and Betty have an extra food freezer in their detached garage. Bert is an avid hunter and the freezer is usually three quarters full of wild meat. The freezer motor quit working over the last July long weekend and it was approximately on week later when betty discovered that all of her freezer contents were spoiled. The next day she made an insurance claim for $900. The Fortress Insurance Company would pay this claim.

 

Outside power Interruption

Coverage is provided when there is an accidental interruption of electrical power outside the Insured's premises. Coverage is not provided for spoilage of food due to:

a) The accidental or intentional disconnection of the power supply in the building containing the freezer. The disruption of power when the freezer's electrical cord is disconnected by a family pet or is accidentally or deliberately disconnected during vacuuming can, if undetected for even a short period of time, result in a spoilage loss.

b) Natural spoilage or natural change

 

7) Credit cards or debit cards, Forgery and Counterfeit money

Theft of credit and debit cards can result in financial loss to Insureds. Theft and other losses directly attributable to forgery and receipt of the counterfeit money are insured by the policy when caused by someone other than an insured. Coverage is limited to $200 in anyone transaction for counterfeit Canadian or US paper currency. This extension has a total limit of $2000 during the term of the policy. This coverage is not subject to the deductible.

The Insured must comply with all terms and conditions under which the card was insured

Bert recently had his debit card stolen and the thief took $1000 from Bert's account. The fortress Insurance company did not honour Bert's claim as he used his date of birth as his PIN number. According to the terms and conditions under which the card was issued, he was not permitted to use his date of birth as his PIN number. Insured should be aware of the conditions upon which their bank cards are issued.

 

8) Change of temperature

Coverage is included for loss or damage to personal property due to a change of temperature resulting from physical damage to the dwelling or equipment from an insured peril. An example of such a loss would include loss to house plants which froze after building glass was broken by vandals.

In this instance, the loss to the insured's houseplants was not caused directly by vandalism, but arose as a consequence of it. As property policies do not insure indirect losses, there would be no coverage for the above loss without this extension.

 

Before coverage will be provided under the policy, it must be shown that:

There was actual physical damage to the building or its equipment from an insured peril;

 

It is important that insureds understand there must be actual physical damage to the dwelling or its equipment before payment will be made. For example, the policy will not respond for the freezing of household plants due to malfunctioning of a furnace or if the window was left open.

The RIBO, comprehensive home owner, tenant, Condominium unit owner package policy was developed to insure the dwelling(s) and personal property including any condominium or apartment "betterments and improvements made", which are discussed in this chapter.  This package policy also has provision to include coverage for a secondary or rented dwelling, seasonal residence, scheduled personal articles, watercraft, fine arts and other coverages which will also be discussed in this chapter.

** The property being claimed was in the dwelling at the time of its loss.

 

9) Lock replacement

Many homeowner forms provide up to $500 (without deductible) to replace or rekey the locks on the insured's principal dwelling. This coverage is available only when the insured's keys have been stolen during a burglary or stolen in conjunction with theft of other property and loss reported to authorities. The decision to replace lost keys or to re-key existing locks will be made by the Insurer.

 

10) Tear out

Coverage is provided for repair of walls, ceilings or other parts of the buildings which must be torn apart before water damage from plumbing, heating, air conditioning, sprinkler ro domestic appliances can be repaired.

 

11) Arson and Burglary Conviction Reward

The insurer agrees to pay up to $1000 (without deductible) in all for information that leads to conviction for arson or burglary in connection with a loss to the property insured. This amount is in addition to the other limits provided by the policy and is not subject to a deductible.

 

12) Inflation Protection

When there is a loss during the policy period, the insurer will automatically increase the amount of insurance provided under section I by amounts which are solely attributable to the inflation. This would be important when inflation rates are high enough to result in under-insurance in the event of a total loss.

 

Section 1: Property Coverages

Coverage A - Dwelling Building (Applicable to Homeowner only)

The amount of Insurance indicated in the declarations for Coverage A - Dwelling building includes the value of:

1. "Your dwelling and attached structures"

In addition to the dwelling itself, the value of an attached garage, greenhouse or sun deck which is attached to the dwelling would be insured within the limit of Insurance purchased for the dwelling building.

 

Dwelling Building includes Dwelling and attached structures

The limit of Insurance purchased by Bert and Betty for the dwelling building is $200,000. Their home has a large sun deck which is attached to the west side of the dwelling. Along the east side is an attached greenhouse which betty had constructed two years ago. The value of these attached structures is included within the limit of Insurance indicated for dwelling building on the Coverage Summary Page.

 

2) Outdoor swimming pool and attached equipment on the premises

Dwelling building includes swimming pool and attached equipment

Bert and Betty are considering purchasing a swimming pool for their backyard. Betty favours an inground pool while Bert is leaning towards an above ground pool. Whatever their decision, the value of the swimming pool and attached equipment would be insured within the limit of Insurance purchased on the dwelling building.

 

3) Permanently installed outdoor equipment on the premises

The limit of Insurance provided for dwelling building includes the value of permanently installed outdoor equipment. Such items can include, when embedded in concrete or affixed to the land in some other way, children swings, slides, teeter totters and monkey bars. Lawn sprinkler systems and satellite dishes would also fall within this description of the Insured property.

 

Dwelling Building includes permanently installed outdoor equipment on the premises.

Bert and Betty enjoy outdoors and during the summer they host numerous barbeques. Last summer, Bert built a brick barbeque in their backyard. It is situated on a large concrete slab to which Bert has also secured two picnic tables and two benches. Four years ago, Bert constructed a backyard play area for the Butler's children, Benjie and Barbie. This area contains monkey bars, a slide and swings, all of which are embedded in concrete. The value of all permanently outdoor equipment is included within the limit of Insurance provided for the "dwelling building"

 

The limit of Insurance for dwelling building also includes:

1. Materials and supplies located on or adjacent to the premises intended for use in the construction, alteration or repair of your dwelling or private structures on the premises.

 

This form can be used to insure dwellings in the course of construction. In these cases, coverage is needed for the materials and supplies to be used in the project. Coverage is also provided for insureds doing dwelling renovations or who are constructing a fence or detached private structure on their premises. Coverage is provided for insured's doing dwelling renovations or who are constructing a fence or detached private structure on their premises.

Coverage is provided for building materials and supplies which are located "on or adjacent to the premises" and only when they are intended to be used on the Insured's premises. For example, lumber purchased to build an addition at the Insured's summer cottage would not be covered by the policy.

 

Note: When used to insure a dwelling in the course of construction, there is no coverage for theft of construction materials during the period of construction until the dwelling is completed and ready to be occupied.

 

Dwelling Building includes materials and supplies situated on or adjacent to the premises when intended for use on Insured's premises.

Bert recently inherited a 1958 Studebaker car from an elderly uncle. The car is in mint condition and Bert believes that if he can keep it for another 20 years, it will be extremely valuable. Last week, Bert decided that an addition to the Butler's garage was necessary if the car was to be stored on the premises. When the lumber he ordered arrived, Bert had just completed the concrete work for the addition and had cordones off the entire driveway.

 

Bert directed the driver to unload the materials on the roadway adjacent to the Butler's premises. The value of all materials and supplies to be used in this project are automatically insured within the limit of Insurance purchased from the "dwelling building" when situated on or adjacent to the Insured's premises. There would be no coverage for such property while located on the vacant lot at the far corner of the street or while at a friend's place in another part of the town.

 

2. Building Fixtures and fittings temporarily removed

Building fixtures and fittings may sometimes be removed from the premises for repair or seasonal storage. Examples include:

** Windows shutters and doors damaged by windstorm or hail being repaired at another location;

** Storm doors and windows stored away from the Insured's premises when they are not in use.

** Swimming pool pump removed for repairs to the motor

 

The Insured can opt to apply as much as 10% of the amount of insurance on the "dwelling building" to building fittings and fixtures temporarily removed from the premises for repair and seasonal storage.

Note: Coverage is provided for such property only when it is temporarily away from the premises. For example, there would be no coverage for storm doors and windows which are no longer being used by the Insured and which have been stored away from the premises for many years.

 

3. Outdoor Trees, shrubs, plants and lawns

The Insured can opt to apply as much as 5% of the amount of the Insurance on the dwelling building to outdoor trees, shrubs, plants and lawns on the premises. There is a maximum limit of $500 for any one tree, plant or shrub including debris removal expenses.

The coverage provided is limited to:

a) Fire;

b) Lighting;

c) Explosion;

d) Impact by aircraft or land vehicles;

e) Riot

f) Vandalism or malicious acts

It is important to note that there is no coverage for windstorm or hail, or theft losses. There is no coverage for trees, plants or shrubs which are being grown for resale.

 

Condominium

A condominium is a "system regulated by statue to allow clear and full ownership of a specific unit within a building and a shared interest and responsibility in the common elements (known as common property).

 

The ownership of the condominium building is in the name of the condominium corporation and, once established, it enacts its own bylaws to govern and direct its action. Individuals may own one or more units and have proportionately divided interest in its common elements which include:

a) Parking area

b) Walkways;

c) Landscaping;

d) recreational areas;

e) Swimming pools, saunas.

It is the responsibility of the condominium corporation to insure value of the building and all common elements. Owners are responsible for insuring the contents of their units.

 

Coverage is provided under the form as follows:

Coverage A1 (Applicable to Condominium Unit owner only) - RIBO pg. 3-4

The Unit

$100,000 is provided on the Insured's unit (excluding improvements and betterments) if:

a) No insurance is carried by the condominium corporation; or

b) The Insurance carried by the corporation is inadequate or not effective

c) The limit can be increased

Coverage is also provided under this section for building fixtures and fittings, frescoes, plate glass, other glass and permanently installed outdoor equipment while located anywhere on the property administered by the condominium corporation. Coverage does not apply to pay any portion of any deductible under the condominium

 

Coverage does not apply to pay any portion of any deductible under the Condominium Corporation policy

 

Coverage A2 - (Applicable to a Condominium Unit Owner only) - RIBO pg. 4

Loss Assessment

If coverage on the corporation's policy is inadequate to cover a loss to collectively owned property, a special assessment will be levied against each unit owner. This could occur because of:

a) Under Insurance

b) large deductible

c) Application of a Co-Insurance penalty;

 

For example, if, after the application of the co-Insurance clause in the policy, the corporation receives only 75% of its loss, it is entitled to levy an assessment on each unit owner to recover the 25% short fall. In the event of a $50,000, shortfall, a unit owner having a 10% ownership proportion would be subject to an assessment of $5000.

 

d. Cause of loss is not an insured peril or is specifically excluded under the corporation's policy;

e. Breach of policy condition

 

This form provides the unit owner with loss assessment coverage in the amount of $10,000. This form will respond only when the assessment is due to a loss insured by the owner's policy.

 

Coverage does not apply to pay any portion of any deductible under the condominium corporation's policy.

The RIBO policy form and others may agree to increase the $10,000 when requested. Many insurers automatically provide increased limits under their policies at no additional charge. Some policies today automatically insure:

Limits equal to the amount of Insurance provided under section C - Personal property; or

Limits equal to the percentage of the amount of Insurance provided under section C - personal property. For example, an amount equivalent to 250% of the personal property insurance limits is not uncommon.

 

(Liability loss assessments are discussed in Chapter 10)

 

Coverage A3 - (applicable to Condominium Unit owner only) - RIBO page 4

Unit Improvements & Betterments

The value of the original carpeting, wall paneling, and other fixtures are covered within the amount of Insurance provided by the corporation's building policy. However, Improvements made by a unit owner will generally increase the value of the unit. These increases in value are not recoverable under the condominium corporation's building policy. The RIBO form provides a maximum of 100% of the limit of Insurance of Coverage A1 for unit improvements or betterments made or acquired by the Insured, including:

a) Any building, structure or swimming pool on the premises

b) Materials and supplies on the premises for use in such improvements or betterments

The limits for improvements and betterments can usually be increased upon request. Some insurers may state the amount of Insurance as a percentage of the limit provided for coverage C - Personal property. For example, an amount equivalent to 25% of personal property insurance limit is common.

 

Coverage B - Detached Private Structures - Applicable to Homeowner only - RIBO pg. 4

Coverage is provided for detached private structures on the insured's premises. A detached private structure includes any structure or building separated from the dwelling by a clear space and not included under coverage A. 

The home owner policy does not prorate the limit if there is more than one detached private structure. The student should know that this differs from the coverage available for detached private structures under the secondary and seasonal dwelling policies.

 

Cover+A2352:A2378age C - Personal Property

This section of the coverage can be studied by where the property is located.

On Premises Coverage

The Insuring agreement includes personal property

** you own, wear or use, while on your premises, which is usual to the ownership or maintenance of a dwelling

 The definition of personal property is extremely broad. It includes all dwelling contents, clothing and other personal items, and any other property owned or used on the premises.

 

If the Insured wishes, this coverage can be extended to include uninsured personal property of others while it is in the portion of the dwelling occupied by the Insured

Exception: The property of roomers or boarders not related to the Insured is not covered under this form. These people will normally purchase the required coverages under their own policy.

 

Option available to Insured to include uninsured property of others

Last fall, XYZ borrowed a hunting rifle from YZZ who simply did not believe in Insurance. As the Butler's luck would have it, the rifle was destroyed in a small fire which broke out in the furnace room. In this instance, XYZ can exercise the option to include the value of the rifle in the amount of the Insurance claim.

 

Off premises Coverage

The form insures personal property belonging to the insured when it is temporarily away from the Insured's premises, anywhere in the world.

Likewise, the insured can include uninsured personal property of others in his/her possession or belongings for residence employees travelling for them.

 

Personal Property Temporarily removed Insured

The Butlers are planning a six-week European vacation next summer and, between them expect to take twelve suitcases filled with personal belongings. The personal property they plan to take with them is insured anywhere in the world.

 

Personal property in Storage

Coverage is provided when personal property is stored in a controlled access storage facility for no longer than 30 days. If requested in writing, the Insurer may continue coverage beyond the 30 days but for the peril of theft only.

 

Property of Students

Coverage is provided for property of students who are temporarily living away from home while attending a school, college or university. This coverage is subject to a special limit.

 

Applicable to tenant

Improvements and betterments that you make or acquire to the dwelling you rent is insured under personal property

 

Property Not Insured - RIBO pg. 5

As broad as the coverage provided by this Insuring agreement for personal property is, there is no coverage for the following items:

a) Motorized vehicles or their equipment

Motorized vehicles include automobiles, all terrain vehicles, snowmobiles, carts and motorcycles. Separate coverage is available from most Insurers.

However, coverage is provided for motorized vehicles which are owned by Insureds and which are necessary to properly maintain their premises, such as motorized lawnmowers, other gardening equipment, snow blowers and remote-controlled caddies. Coverage is also provided for motorized wheelchairs or scooters having more than two wheels and specifically designed for the carriage of a person who has a physical disability and watercraft.

 

** Camper Units, truck caps, trailers, or their equipment

Separate coverage must be purchased for these items

 

** Aircraft or their equipment

This exclusion applies to all type of aircraft, including those undergoing refurbishing or refinishing on the Insured's premises.

 

As noted, there is no coverage for equipment used for the above items. For example, there is no coverage for items such as radar detectors. Equipment is defined to include "audio, visual recording or transmitting equipment powered by the electrical system of a motor vehicle or aircraft. By the terms of this definition, there is no coverage for items such as:

As noted, there is no coverage for equipment used for the above items. For example, there is no coverage for items such as radar detectors. Equipment is defined to include "audio, visual recording or transmitting equipment powered by the electrical system of a motor vehicle or aircraft. By the terms of this definition, there is no coverage for items such as: radar detectors. Equipment is defined to include "audio, visual, recording or transmitting equipment powered by electrical system of a motor vehicle or aircraft." By the terms of this definition, there is no coverage for items such as:

i. Tape decks and compact disc players;

ii. Television sets;

iii. Recording and transmitting equipment

when required to be connected to the electrical system of the automobile or aircraft before they are operable.

Note: Spare automobile parts such as fan belts, hub caps and wheels are not equipment and are insured

 

** Personal property normally kept on any other location you own, rent or occupy

Only personal property that is temporarily removed is insured. Property which is normally kept at any other location owned, rented or occupied by the Insured is not covered by the policy. If, for example, the Insured owns a summer cottage, separate coverage must be purchased for personal property normally kept there.

 

Outdoor trees, shrubs, plants, lawns, or items grown for commercial purposes.

This limitation is stated already in the applicable section A coverage.

 

Special Limits of Insurance - RIBO pg. 5

The form contains "Special Limits of Insurance" for certain Personal property Items

 

Special Limits of Insurance - The Rationale

The personal property owned by different insureds can vary significantly. For example, while some will own expensive items such as jewellery, furs and watercraft, others will not. For this reason, it would be unfair to charge everyone the same premium for their policies. At the same time, Insurers do not want to create gaps in their insured's coverage for such items. People having higher values of such property should purchase increased coverage.

 

The Special Limits of Insurance provided can be divided in to two separate categories:

 

i) Those which apply to specified property items, regardless of the cause of the Insured loss;

The Special limits of Insurance apply to the following items, regardless of the cause of the Insured loss:

a) Business Property - Up to $2000 in all

This is the total amount available for all books, tools and instruments pertaining to a business, profession or occupation. Coverage is provided for such property only while it is actually on the Insured's premises.

 

Business Property subject to special limit of Insurance

The butlers maintain a small business office in the basement of their home. The value of office furnishings, laptop computer, and paper supplies is approximately $10,000. The coverage for these items is limited to $2000 in all. Last week, Betty attended a furniture dealer's convention in Toronto. She took her laptop computer with her, hoping to find time on the flight to work on accounts receivable records.

 

On the second day of the convention, thieves broke in to betty's hotel room. The business laptop computer was the only thing stolen. She estimates the value of the computer to be $3000 and hopes to recover this amount under their homeowner's policy.

 

The Fortress Insurance Company would be entitled to deny the entire claim. Business property is insured only while it is actually on Insured's premises, and then only for a maximum of $2000. Some Insurers may require items having a business use to be insured under a commercial property Insurance policy. However, the rapid growth of home-based business has resulted in many insurers agreeing to provide necessary coverages by the way of a rider to the habitational form.

NOTE: A discussion of Home-based business endorsement follows at the end of this chapter

 

Securities: - up to $2000 in all

Stock, bonds and other securities are insured up to $2000 in all. Insured's having such documents on their premises should be encouraged to store them in a safety deposit box at a financial institution. Students should note additional coverage may still be required by their clients as banks are not responsible for the contents of a safety deposit box.

 

Money, Cash cards or Bullion - up to $500 in all

People normally do not keep large amounts of money, gold or silver on the premises. Limiting the amount of Insurance coverage for money and bullion to $500 encourages people to use financial institution for safe keeping. This limitation also exists for cash cards, Dexit and the like, which carry a cash value without any required PIN number or contact with a financial institution. Modern Gift certificates are usually plastic credit card format with credit built in. The $500 limitation would apply to these, inclusive of any cash and/or bullion also claimed for the same loss.

 

** Garden type tractors, including attachments and accessories - up to $5000 in all

** Watercraft - up to $1000 in all

The limit of $1000 represents the total amount available for watercraft, their furnishings, equipment, accessories and motors. All these items are insured for specified perils plus theft or attempted theft.

** Computer Software - Up to $2500 in all

It is important that insureds understand this limitation applies only to computer software and not to computer hardware. With the increase of home computers, the demand for sophisticated software programs will continue to grow. The costs of computer games, home management and personal financial programs can easily amount to thousands of dollars. Only the programs themselves are covered. Information files within the programs or on the computer itself is not insured, and the time it would take to reconstitute the information id excluded.

 

Computer software subject to special limit of Insurance

Bert and Betty have been buying computer games for over three years. They estimate the value of these games to be in excess of $4000. Last weekend, the Butler's attended a wedding in thunder bay, Ontario. When they returned, they discovered that thieves had broken in to their home. The computer, including all of their games, had been stolen. The next day, betty advised their broker of the loss and submitted the following estimate of the value of the computer and related software:

a) $7500 - computer, including printer

b) $3500 - software, including games

 

Computer software is subject to a special limit of Insurance of $2500. In this instance, $1000 of the Butler's loss to software will be uninsured. Special limits of Insurance do not apply to computer hardware and the loss to such property will be paid in full, less any applicable deductible.

It is important that insured understand this limitation applies only to computer software and not to computer hardware. With the increase of home computers, the demand for sophisticated software programs will continue to grow. The costs of computer games, home management and personal financial programs will continue to grow. The costs of computer games, home management and personal financial programs can easily amount to thousands of dollars. Only the programs themselves are covered. Information files within the programs or on the computer itself is not insured, and the time it would take to reconstitute the information is excluded.

 

Computer software subject to special limit of Insurance

Bert and Betty have been buying computer games for over three years. They estimate the value of these games in excess of $4000. Last weekend, the Butlers attended a wedding in Thunder Bay, Ontario. When they returned, they discovered that thieves had broken in to their home. The computer including all of their games had been stolen. The next day, Betty advised their broker of the loss and submitted the following estimate of the value of the computer and related software.

$7500 - Computer, including printer

$3500 - software including games

 

Computer software is subject to a special limit of Insurance of $2500. In this instance, $1000 of the Butler's loss to software will be uninsured.

Special limits of Insurance do not apply to computer hardware and the loss to such property will be paid in full, less any applicable deductible.

 

Animals, Birds or fish - $500

Coverage is provided only if the loss or damage is caused by a specified peril other than impact by Aircraft and land vehicle (RIBO. Pg. 5)

 

Spare Automobile Parts - $1000 in all

Additional Insurance can be purchased for all of the above items, if needed.

 

HOW DEDUCTIBLE APPLIED WHEN LOSS TO PERSONAL PROPERTY SUBJECT TO A SPECIAL LIMIT OF INSURANCE

On any claim, involving personal property on which a special limit of Insurance applies, the limitation applies only to losses exceeding the deductible amount.

 

Example: Fire Loss to Garden tractor - $8000

Deductible selected by Butlers - $500

Amount of net loss after deductible applied - $7500

Maximum Payable- $5000

 

Special Limits of Insurance - RIBO pg. 6

ii) Loss to those items, other than by specified perils insured by the policy.

Types of property affected by this limitation include:

a) Numismatic Property (such as coin collections) up to $500 in all;

b) Jewellery, Watches, Gems, Fur Garments and Garments trimmed with FUR up to $2000 in all.

c) Manuscripts, stamps and philatelic property such as stamp collections up to $1000 in all;

d) Bicycles, their equipment and accessories, up to $500 in all for each bicycle;

e) Collectible Cards (Such as sports personality cards) up to $1000 in all;

f) Personal property used by any student Insured by the policy who is temporarily living away from home up to $2500.

 

The Special Limits of Insurance for these items do not apply to losses caused by certain specified perils. For example, jewellery valued at $25000 would be insured for it's full value when the loss is caused by fire or any other specified perils stated in the policy. (RIBO pg. 6)

These limits apply to the total values of each of the above classes of property owned by the Insured. For example, payment for theft of the Insured's jewellery, watches, gems and Furs and would be limited in total to $2000 and not to the amount for each item. Additional Insurance can be purchased if needed.

 

Coverage limited to certain personal property items when loss due to theft or other broad perils.

Sometimes brokers provide the wrong information to the Insureds when discussing Special limits of Insurance. For example, it would not be unusual if Betty was to be told there is $2000 limitation to any claim for loss to her Fur Coat. This is not true. There is a $2000 limitation when loss is caused by other "specified perils" stated in the policy.

 

Coverage D - Additional Living Expense

Insuring agreement provides two coverages namely:

a) Additional Living expense;

b) Fair Rental Value

 

1. Additional Living expense:

This coverage applies when:

a) The dwelling is damaged by an Insured peril; and

b) The damage is sufficient to make the dwelling unfit for occupancy, or requires that the Insured move out while the repairs are being made.

 

Basis of claim payment

a) Pays additional Living expenses only

Generally, people will incur additional living expense when forced to live away from their homes. It will usually cost more to live and eat at a hotel than it would at home. Other costs which might be incurred after a loss which were not present before it includes:

a) Cost to place a family pet in a kennel

b) Taxi fare to take children to and from school

c) Costs to move personal effects to new temporary location.

 

The Insurer is obligated to additional living expenses only. In other words, payment is limited to those costs "over and above" what it would have normally have cost the insureds to live had the loss not occurred.

 

Example: Additional Living expense - Determining how payment is made

Last Fall, the Butler's were forced to find temporary accommodations when a fire caused extensive damage to their home. They stayed at a slug and hug motel for one month before being able to return home. During that time, they incurred the following expenses:

a) $1800 - restaurants

b) $2200 - Accommodations

c) $240 - Kennel

d) $400 - taxi fare

e) $100 - Moving

 

The Insurer is obligated to pay additional living expenses only. In other words, payment is limited to those costs over and above what it normally costs the Butlers to live had the loss not occurred. It normally costs the Butlers $600/month for food. As the following calculation shows, the amount will be deducted from the total amount incurred or food while away from home.

Cost of Food (After Loss) - $1800

Cost of Food (Prior to Loss) - $600

Amount payable is $1200

In this example, all kennel costs, taxi fares and moving expenses would be paid in full. As they never existed before the loss, their full amounts qualify as additional living expenses. The amount payable for accommodations will normally by paid in full.

Payment is limited to those expenses which were necessarily incurred in order for the Insureds to maintain their normal standards of living.

The insureds cannot use a loss to their dwelling as an opportunity to improve their standard of living. For example, if they own an 800 square feet bungalow, there is no requirement upon the Insurer to pay all the additional accommodation costs should they rent a $1600 square feet bungalow.

 

Payment is made only for:

a) The reasonable time that is required to repair or rebuild the dwelling; or

b) The reasonable time required to settle elsewhere, if the Insured decides to permanently relocate.

 

2. Fair Rental Value

People who rent a portion of the dwelling or detached private structure such as garage will lose rental income when loss from an Insured peril makes them unfit for occupancy.

The loss of fair rental value is insured for the reasonable time that is required to repair or rebuild the dwelling or detached private structure.

 

Prohibited Access - RIBO pg. 7

The Insurer agrees to pay additional living expense and fair rental value for a period not exceeding two weeks when;

a) Access to Insured's property is prohibited by order of civil authority;

For example, a riot in the area may result in the Insured's being denied access to the dwelling. The order restricting for such access would be made by civil authority such as the chief of police or other local government official. In such cases, the Insured may incur additional living expenses. Also, the Insureds may lose the rent for the number of days the tenant is unable to access the dwelling.

 

b) By order for Mass Evacuation as a direct result of a sudden and accidental event within Canada and the United States.

Coverage for Mass Evacuation included in Coverage D is limited to a period not exceeding two weeks. Coverage for a longer period of time for Mass evacuation can be added as shown in optional coverages - Section III on page 57.

 

Students should note the six excluded perils for either of these coverages: Flood, Earthquake, war, terrorism, any nuclear incident and/or contamination by radioactive materials.

 

1. Buildings or structures used in whole or in part for business or farming purposes

The use of the dwelling for other habitational and business purposes often increases the potential for loss. When these conditions exist, coverage is excluded by the policy unless the Insurer consents to such use. When consent is obtained, the description of the commercial use of dwelling is included in the declarations.

 

2. Property at any fairground, exhibition or exposition for the purpose of exhibition

Members of hobby clubs often display their work or property in a public place. Items that can include cards or memorabilia, antique dolls, ceramics and other crafts, guns, stamps and coins. Insureds are mainly concerned that the supervision or protection of the property may not be adequate when the Insured is away from it. This is of particular concern when the property remains at that location overnight or for extended periods of time.

 

3. "Loss of or damage to any property illegally acquired or kept, stored or transported, or property subject to forfeiture"

People who have possession of the property which is stolen are prevented from claiming any loss or damage to it under the policy. For example, insured's who steal a computer or purchase one which they know is stolen, cannot recover under the policy in the event it is damaged or stolen from them. Similarly, Insured's who keep guns or other weapons contrary to law are not Insured under the policy in the event of loss or damage to them.

 

4. Evidences of debt or title

5. Sporting Equipment where loss or damage is due to its use

There is no coverage for items such as sporting equipment, skis which will break while they are actually being used. However, coverage will be provided when sporting equipment is damaged in an accident, fire, or from other perils insured by this form.

6. "Animals, Birds or Fish unless the loss or damage is caused by a specified peril other than impact by aircraft and land vehicle."

7. "Any property lawfully seized or confiscated unless such property is destroyed to prevent the spread of fire"

8. Scratching, Abrasion or chipping of any personal property or breakage of any fragile or brittle articles unless caused by a specified peril, accident to a land vehicle, watercraft or aircraft, or theft or attempted theft.

9. "To Outdoor Radio and TV antennae (Including satellite receivers) and their attachments caused by windstorm or hail, weight of ice, snow or sleet, or collapse"

10. "Wear and tear, deterioration, defect or mechanical breakdown"

Insurance is intended to pay for losses that are accidental and not those which are inevitable or which arise naturally out of the ordinary and reasonable use and ownership of the property. Frayed carpets, worn upholstery, and sagging chesterfields are examples of wear and tear not covered under the policy.

11. Defect or mechanical breakdown

** A defect or mechanical breakdown to property is more of a matter of warranty or maintenance than of Insurance. For example, when items such as dishwashers, garage door openers or kitchen garburators cease to function or function improperly, the claim is seen to lie with the Insured or the manufacturer of the product or not with the Insurer.

12. "Settling, expansion, contraction, moving, bulging, buckling or cracking except resulting damage to building glass"

This exclusion is designed to eliminate coverage for maintenance type of losses which result from the natural and expected movement of the ground, including cracks in basement walls, foundation walls, walls or ceiling plaster.

 

Note: This exclusion does not apply to breakage of building glass as all accidental breakage to building glass is insured

 

Accidental Glass Breakage - Coverage Analysis

Building

Bert and Betty well remember the time that Benji put a hockey puck through the picture window of their living room. It was the coldest day of the year! They also recall the time when a large crack suddenly appeared in their front window. The representative from the glass company suggested that the ground had probably settled or shifted slightly, causing the window to crack.

In both cases, the Fortress Insurance Company paid the claim. This form provides coverage for accidental breakage to glass which forms part of any Insured building.

 

Personal Property

Betty will never forget the day when her brother, Todd, and his sons, Andrew and Matthew. Last came to visit. In the span of just two hours, the children broker the glass door in Betty's China cabinet, knocked an antique lamp to the floor, and cracked the glass top on the kitchen table. In all, the boys caused $750 damage. The Fortress Insurance company denied Betty's claim. The only coverage provided for accidental glass breakage is to glass that forms part of the building insured by the policy.

 

13. "Occurring after your dwelling has, to your knowledge, been vacant for more than 30 consecutive days."

Insureds moving out of their homes often believe their policy will continue to provide coverage. When the dwelling has been left vacant for more than 30 consecutive days, coverage automatically ceases.

 

No coverage when dwelling is vacant

Rick O'Shea, the Butler's Neighbour, was recently transferred by his employer to Montreal. The job transfer happened suddenly and O'Shea's move to Montreal before they were able to sell their home. All of their furnishings are still in the home and no arrangements have yet been made to transport them to Montreal. For the purposes of this form, the O'Shea's dwelling is vacant.

 

"Caused directly or indirectly by any nuclear incident as defined in the Nuclear Liability Act or any other Nuclear Liability Act, law or statue, or any law a mandatory thereof or which results directly from fire, lightning or explosion of natural, coal or manufactured gas"

 

15. Caused by contamination by radioactive material

16. "Cause by war, invasion, or civil war, insurrection, rebellion, revolution, military power, hostilities or act of foreign enemy."

17. "Resulting from any intentional or criminal act or failure to act by:

a) Any person insured by this policy; or

b) Any other person at the direction of any other person insured by this policy

 

18. "To personal property undergoing any process or while being worked on, where the damage results from such process or work, but resulting damage to other property is insured"

Personal property Items may be subjected to many different kinds of processes, any of which could result in damage or destruction to them. It should be noted that only the damage to other property is insured"

Personal property Items may be subjected to many different kinds of processes, any of which could result in damage or destruction to them> It should be noted that only the damage to property actually worked upon is excluded.

 

19. "Caused by water unless the loss or damage resulted from:

a) The sudden and accidental escape of water from a water main;

A break in a public watermain can result in to significant loss to Insured property, especially to basements and personal property they might contain.

 

b) The sudden and accidental escape of water or steam from within a plumbing, heating, sprinkler or air conditioning system or domestic appliance, which is located inside an Insured building;

"plumbing system means water supply, distribution and disposal piping on the premises, including appliances and equipment attached thereto, between their connection points to a public or private system; it does not include sewers, sumps, sump systems, septic tanks, eavestroughs or downspouts

 

Examples of loss or damage insured by this form would include those due to:

a) Escape of water from a waterline which was ruptured;

Rupture - A Claims Example

Last June, Bert and Betty won a three-day trip for two to the queen charlotte islands. They arranged to leave barbie and benjie with betty's mother. On second day of their holiday, Betty received a call from her mother indicating that a water pipe had burst and that there was "water all over the place"

The $2500 to repair the damage caused was insured under this form.

** Accidental discharge of automatic sprinkler system in the dwelling;

** Accidental discharge and overflow of water from domestic water containers such as tubs, sinks and dishwashers, clothes washers, hot water heaters, water softeners and humidifiers

 

Definitions - RIBO pg. 1

A domestic water container is defined as "Device or apparatus for personal use on the premises for containing, heating, chilling or dispensing water"

 

Escape of water from Domestic appliance - A claims example

Two weeks ago, Barbie forgot to turn off water in the bathroom sink before going to school. She was last person to leave home that day. When she returned home at 4:00 pm, the floor was covered with water and linoleum in the bathroom, hallways and kitchen area had begun to lift, Also, all the ceiling tiles in the basement were completely saturated. The cost to repair damage is estimated at $12000. The Fortress Insurance company agreed to pay the claim under the water escape coverages provided by the policy.

 

c. The sudden and accidental escape of water from a domestic water container located outside your "dwelling”, but such damage is not insured when the escape of water is caused by freezing, or insured;

Sources of such losses would include a hot tub or swimming pool on the premises.

 

d. Water which enters through an opening which has been created suddenly and accidentally by a specified peril other than water damage. For example, damage to the interior of the dwelling would be insured when it was shown that an opening had been created in the roof of a dwelling during a heavy rain storm.

In summary, A.B.C. and d identify the only types of water losses that are covered

 

Water losses excluded

There is no coverage for loss or damage:

a) Caused by freezing during the usual heating season

** Within a heated portion of your dwelling if the Insured has been away from the premises for more than 4 consecutive days but you will still be insured if you have taken either of the following precautions;

The water damage caused when waterlines freeze is a major concern for many home owners. If the Insured is away for more than four consecutive days during the usual heating season, there is no coverage unless the Insured is able to show that:

a) Arrangements had been made for a competent person to enter the dwelling daily to ensure that heating was being maintained; or

b) The water supply had been shut off and all pipes and appliances drained.

There is no requirement upon the Insureds to inform the Insurer that they will be away for more than 4 consecutive days permitted under the policy. In the event of a claim for damage caused by freezing, they need only establish that either of the above two things were done to qualify themselves for coverage under the policy.

 

Freezing - A claims example

Last Winter, Bert and Betty won a 10-day vacation in Bermuda as the grand prize in a sales content. They decided to take the trip in early February and left the children with betty's mother. On the third day of their holiday, betty received a call from her mother indicating that the furnace had failed sometime during the previous two or three days. As a result, the waterlines in their home had frozen and ruptured. This form provides coverage for damage due to freezing which occurs during the usual heating season, provided the Insured's have not been away from their premises for more than four consecutive days. The Fortress Insurance company agreed to pay the Butler's the claim

This form provides coverage for damage due to freezing which occurs during the usual heating season, provided the Insureds have not been away from their premises or more than four consecutive days. The Fortress Insurance company agreed to pay the Butler's claim.

 

When Insureds are away for a longer period, coverage will be provided only when they are able to show that:

a) Arrangement had been made for a competent person to enter the dwelling daily to ensure that heating was being maintained;

Before departing for Bermuda, Bert arranged with his brother Barry to check the heating daily in their home. On the 10th day of their vacation, Barry advised Bert that water pipes had frozen and there was six inches of water in the basement. The Fortress Insurance Company agreed to pay the claim.

or,

b) The Butlers had shut off the water supply and had drained all the pipes and appliances.

Obviously, such actions by the Butlers would reduce the chances of a freezing loss.

b. "Caused by continuous or repeated seepage or leakage of water"

This exclusion is designed to avoid paying for losses which can generally be detected by Insureds and which, therefore, are able to be prevented by proper maintenance. Examples of water losses not insured under this peril are those caused by:

a) Leaking waterlines;

b) Leaking of water from around hoses connected to household appliances.

c) "Caused by the backing up or escape of water from a sewer, sump or septic tank.

Sewer back-up can cause substantial losses to Insured property. For example, in July, 9183, rainstorms in regina and Saskatoon, Saskatchewan, caused sewer back up losses of nearly $40 million.

Note: Sewer backup coverage may be offered by an Insurer as an optional coverage.

d) "Caused by ground water or rising of the water table"

Definitions - RIBO pg. 2

Ground water means "water in the soil beneath the surface of the ground, including but not limited to water in the wells and in underground streams, and percolating waters"

 

e. Caused by surface waters, unless the water escapes from a water main or from a domestic water container located outside your dwelling"

Definitions - RIBO pg. 2

Surface water means "water on the surface of the ground where water does not usually accumulate in ordinary ground water courses, lakes or ponds"

For example, there would be no coverage for damage caused by water which collects on the ground after a heavy rain or which enters or seeps in to the dwelling through basement walls, floors or planned openings. This exclusion does not apply when loss is due to sudden and accidental escape of water from a watermain.

 

f. "Caused by shoreline ice build-up or by water-borne ice or other objects, all driven by wind or not"

g. "To a watermain"

h. "To a domestic water container from which the water escaped"

i. "Occurring while the building is under construction or vacant even if the Insurer has given permission for construction or vacancy"

The increased potential for a water damage loss in such circumstances is obvious. Even though the Insurer may provide permission for construction or vacancy, there is not coverage for water damage occurring during these times.

 

20. "Caused by Birds, Vermin, rodents or insects or raccoons, except loss ro damage to building glass."

There is no coverage for loss or damage caused by:

a) Birds;

Birds can cause considerable damage to building siding, roofing, electrical wiring and Insulation. These and any other losses caused by birds are excluded.

 

b) Vermin;

There is one standard definition of vermin. As a result, Insurers do not apply this exclusion in a consistent manner. For example, while one insurer might consider skunks to be vermin, another may not. In such case, one insurer might provide coverage for damage caused by a skunk while another might not.

 

c) Racoons;

d) Rodents or Insects

Rodents and insects can cause considerable damage to electrical wiring, building Insulation, upholstery, and food items. These and other losses can generally be controlled by the Insured and, as such, are not covered by Insurance. This exclusion does not apply to damage caused to building glass. For example, glass breakage caused by birds or by a raccoon or fox when entering or leaving the building would be insured under the policy.

 

21. Caused by smoke from agricultural smudging or industrial operations

 

Smoke Coverage Limited

When Bert was watching the Stanley Cups finals last year, the basement furnace malfunctioned, causing smoke to spew out of the heat ducts through the house. It cost over $6000 to have the dwelling and personal property items professionally cleaned. The Insurer will agree to pay all claims for smoke damage due to the sudden, unusual and faulty operation of any heating or cooking unit in or on the premises, including smoke damage resulting from the escape of smoke from a fireplace.

 

Bert and Betty live close to a farm. When the Butler's first purchased the home five years ago, the farm was predominantly a dairy farm, with the majority of the farmer's revenue being generated by milk products he produced. Last year, the farmer moved his cattle to a different pasture and decided to grow wheat in the field which had traditionally been grazing for the cattle. After his first harvest, the farmer set the stubble in the field alight to clear it for the following year. The blaze was controlled, but the smoke it caused damaged to the Stucco exterior of the Butler's home. The fortress Insurance company refused to pay this claim on the basis that the smoke damage was due to agricultural smudging.

 

22. "Caused by snowslide, earthquake, landslide or any other earth movement, except for ensuing loss or damage which results from fire or explosion."

The major exclusion is that for earthquake. As not everyone has the same potential for loss from earthquake, it is impossible for the Insurer to price the coverage fairly for all Insureds. This additional coverage can usually be purchased from the Insurer.

 

23. "Caused by theft or attempted theft"

a. Which happens at any other location which you own, rent or occupy, except while you are temporarily living there or if a student's residence;

 

As coverage is provided for personal property anywhere in the world, it is important that the Insurer specifically exclude coverage from locations it does not wish to insure. For example, the form will not provide theft coverage for personal property left at another dwelling, such as cottage or ski condominium, which is owned, rented or occupied by insureds over varying periods of time. However, coverage will be provided for personal property insureds bring with them while they are temporarily living there.

 

b. From the part of the dwelling rented to others, caused by theft or attempted theft by a tenant, tenant's employee, or member of a tenant's household.

 

If the portion of the dwelling normally occupied by the Insured is rented to others, the theft of the property from that portion of the dwelling is excluded when caused by the following persons:

i) The Tenant;

ii) Tenant's Employees;

iii) Members of tenant's household

This exclusion places the onus on insureds to pre-qualify the people to whom they rent their dwelling.

 

c. "To property in or from a dwelling under construction or of materials and supplies for use in the construction until the dwelling is completed and ready to be occupied"

When this form is being used to insure a dwelling in the course of construction, there is no coverage for the theft of materials and supplies to be used in the project.

 

24. "Caused by vandalism or malicious acts or glass breakage occurring while the building is under construction until the dwelling is completed and ready be occupied"

When this form is being used to insure a dwelling in the course of construction, there is no coverage for the theft of materials and supplies to be used in the project.

 

25. "Caused directly or indirectly, proximately or remotely, arising in consequence of or contributed to by the enforcement of any bylaw, regulation, ordinance or law regulating zoning or the demolition, repair or construction of building or structures, which by-law, regulation, ordinance or law regulating zoning, or the demolition, repair or construction of building or structures makes it impossible to repair or reinstate the property  as it was immediately prior to the loss, irrespective of any replacement cost provisions elsewhere in this policy."

 

26. Caused by rust or corrosion, wet or dry rot or by fungi or spores."

See Definitions- Fungi and spores - RIBO pg. 1 and 2

 

27. "Resulting from release, discharge or dispersal of fuel oil"

28. Resulting from a change in ownership of property that is agreed to even if that change is brough about by trickery or fraud.

For example, an insured who agrees to sell Insured property and who later discovers that the cheque accepted as payment was issued on a non-existent account, or on an account lacking sufficient funds, is not entitled to coverage under this peril.

 

29. Caused directly or indirectly, in whole or in part, by Terrorism or by any activity or decision of a government agency or other entity to prevent, respond to or terminate terrorism. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss or damage"

See Definitions - Terrorism - RIBO pg. 2

 

30. Data Exclusion: This policy does not Insure

a. Data

b. Loss or damage caused directly or indirectly by data problem. However, if loss or damage caused by data problem results in the occurrence of further loss of or damage to property insured that is directly caused by fire, explosion, smoke, water damage, all as described "Specified perils", this exclusion (2) shall not apply to such resulting loss or damage;

 

See Definitions - Data and Data problem - RIBO pg. 1

 

31. "TO Buildings or structures or personal property contained in them, used in whole or in part for the cultivation, harvesting, processing, manufacture, distribution or sale of marijuana or any product derived from or containing marijuana or any other substance falling within Schedule (Section 2) of the controlled Drugs and Substances Act Narcotic Control Regulations"

 

32. "Loss or damage relating to or arising from any actual or alleged liability, for any legal remedy of any kind whatsoever in respect of actual or threatened loss, damage cost or expense, directly or indirectly caused by, resulting from, in consequence of or in any way involving, asbestos or any materials containing asbestos in whatever form or quantity. This exclusion applies whether or not there are one or more other causes (whether covered or not) that contributed concurrently or in any sequence to the occasioning of the loss, damage, cost or expense"

 

Basis of Claim Payment

RIBO pg. 13

Deductible

A deductible applies to all property losses. When a loss involves different types of property, only one deductible will be applied to the total amount of the claim.

 

Dwelling Building and Detached Private structures

When there is loss or damage to the Insured building, the Insured may choose as the basis of loss settlement either: (this is generally referred to, in the Insurance industry, as the optional loss settlement clause)

 

a. Actual Cash Value - See Chapter 5 for a discussion on Actual Cash value

b. Replacement Cost means the cost of repairs or replacement (whichever is less) without deduction for depreciation. However, such repair or replacement is required to be completed:

**within a reasonable time;

** On the same location with similar material

** For the same occupancy;

** Payment will be in proportion that the applicable amount of Insurance bears to 80% of the replacement cost of the damaged building

 

RIBO pg. 14.

c. Guaranteed replacement cost (If specified in declarations) means the actual cost of repairs or replacement even if it is more than the amount of Insurance purchased for the dwelling building, provided:

a) Dwelling building is insured for 100% of replacement cost at policy inception;

b) Amount of Insurance is not reduced during policy term;

c. Repair or replacement is completed within a reasonable time on the same location, for the same occupancy, with similar materials;

d. The Insured tells the Insurer of any extensions or improvements within 30 days that increase the value by $5000 or more

If the Insured fails to comply with the conditions of b and c above, the basis of loss settlement is actual cash value

 

Improvements and Betterments (Applicable to tenant or a condominium Unit owner)

When there is a loss to the unit or unit improvements and betterments, the insured may choose the basis of loss settlement as either:

a) Actual Cash Value; (As described earlier)

b) Replacement Cost (As described earlier), and if replacement is not affected, settlement will be on ACV

 

Bylaws Excluded - RIBO pg. 14

 

Note: When settling the loss, the Insurer will not pay any "increased costs of repairs or replacement due to the operation of any law regulating the zoning, demolition, repair or construction of buildings and their related services."

 

Personal Property - RIBO pg. 15

Electronic Media and books of account are subject to a special basis of settlement. For all other personal property, the basis of settlement may be either the:

a. Actual Cash value basis, or

b. Replacement Cost Basis (If specified in the declarations) Note: In order to be paid on replacement cost basis, the lost or damaged property must be replaced

 

Replacement cost is not available on:

A) Articles that cannot be replaced with new articles because of their inherent nature, including antiques, fine arts, paintings and statuary;

b) Articles for which their age or history substantially contributes to their value, such as memorabilia, souvenirs, and collector's items;

c) Property that has not been maintained in good or workable condition;

d) Property that is no longer used for its original purpose. This provision is aimed at eliminating coverage for items which are no longer being used and which have been allowed to accumulate. Such items include:

i. Clothing items no longer in fashion;

ii. Electrical Appliances which have been replaced but not discarded

 

Commercial Property Defined

Commercial Property is any property owned or used in conjunction with a business. For most businesses, this property includes:

a. Building

b. Stock

c. Equipment

The information in this chapter focuses on policies issued for retail businesses.

 

Common Policy Forms

Named Perils Form

The Named perils form (IBC 4036) names the perils it insures. This form insures losses caused by:

a) Fire

b) Lighting, including loss or damage to electrical devices;

c) Explosion (Limited);

d) Impact by Aircraft, space craft or land vehicle;

e) Riot, Vandalism or malicious acts

f) Smoke due to sudden, unusual and faulty operation of any stationary furnace;

g) Leakage from fire equipment

h) Windstorm or hail

 

A copy of the named perils form (IBC 4036) is provided at the end of this chapter

 

Broad Form

The broad form (IBC 4037) insures against "all risks of direct physical loss or damage" subject to policy conditions and exclusions. In other words, the loss is insured unless a specific exclusion in the policy says it is not. A copy of this form is provided at the end of this chapter

There are many coverage advantages to insured's who purchase this form, including:

i. Vehicle Impact damage to Insured's buildings, even when caused by insureds or their employees;

This coverage will be important for garages and other businesses where vehicles are used on the premises.

ii. All sources of smoke damage, excluding agricultural smudging or industrial operations;

Smudging involves lighting of smoke pots to reduce the potential of frost damage to growing fruits or plants. When the smoke is of high density or is moved by wind, smoke damage may result. This represents as an exposure which is viewed as a trade risk for which insured's will be held solely responsible. The same logic applies to the exclusion for smoke damage due to industrial operations.

 

iii. Winter damage due to freezing or rupture of waterlines;

Broad Form - Limited Coverage for water damage

One evening last winter, the overhead waterline in the Butler's store froze. When Bert and Betty arrived the next morning, water was ankle deep in some parts of the store. The furniture stock owned by the Butlers sustained nearly 180,000 in water damage. The broad form would respond to pay this loss.

 

Types of water losses specifically excluded are those due to:

a) Flooding

b) Overflow of any body of water;

c) Seepage through basement walls and floors;

d) Sewer Backup

 

iv) Theft

Broad form insures theft of stock and equipment

The Butlers have a variety of stock items, many of which are attractive to thieves. These include microwave ovens, Tv's and CD players. As well, they have significant investment in automated office equipment, including a new computer and photocopier. Last Wednesday evening, thieves broke and stole and estimated $60,000 in stock and equipment items.

The broad form insures the theft of property covered by the policy.

 

v) Collapse;

This coverage will be important where large amounts of snow can accumulate over a short period.

The policy specifically excludes;

a) Earthquakes

b) The cost of making good faulty or improper material, workmanship or design

 

vi) All other perils not specifically excluded

The Insuring Agreement on the Broad form is extremely broad. Losses no specifically excluded are covered by the policy.

 

Insurance premiums directly related to coverages provided

Insured's will pay a higher premium for the superior coverages provided by the broad form. To arrive at the premium to be charged, the Insurer will first determine the basic fire rate. This is the rate the insurer believes is needed to insure the perils covered under the named perils form. The basic fire rate is calculated on the basis of cost per $100 of Insurance. For example, a basic fire rate of 0.70 means that the Insurer is charging $0.70 for every $100 of Insurance purchased to insure against loss by fire.

 

Example - Calculation of Premium on $500,000 Building

Assuming a basic fire rate of 0.70/$100, the premium charged is calculated as follows:

$0.70*$500,000 = $3500

When doing this calculation, it will be necessary to remember that the rate charged is based on each $100 of Insurance.

 

When determining the basic fire rate to be charged, the Insurer will consider all of the following factors:

1. Construction

A building constructed entirely of masonry products will have a lower fire rate than one constructed of wood.

 

2. Protection

The availability and type of fire protection will affect the fire rate charged. The insurer will require information regarding:

a) Public protection

Public protection refers to the protection provided to Insured property from outside sources

The level of fire protection can vary considerably between communities. Those that spend more on fire protection are given a lower rate than those who do not. Factors which help to reduce fire rate include:

** Proximity to fire hall and fire hydrants;

** Established fire department with full time paid staff;

** Sufficient water supply;

** Year-round accessibility to water supply

 

Private Protection

Private protection refers to the things an applicant has done internally to prevent or reduce loss. A lower fire rate will normally be charged when the following devices or systems are installed:

a) Fire Extinguishers;

b) Fire detection systems - Smoke & Heat Alarms

c) Automatic Sprinkler system

 

3. Occupancy

The occupancy of the building by both the Insured and others will affect the fire rate charged.

The things that people do affect the potential for a fire loss. Garages, Restaurants and night clubs will pay a higher fire rate than would a retail book or clothing store. Also, a book or clothing store will pay a higher fire rate when operating out of a building containing businesses having a higher risk of fire associated with them than it would if it were the only occupant.

 

4. Location

The location of the property will affect the fire rate charged. Factors considered include:

a) Distance from other buildings;

b) Construction and Occupancy of other nearby buildings;

c) Character of the neighborhood

 

5. Claims History

The Insurer will review the claims history of similar businesses over an extended period of time, usually five years. Those categories of businesses having the greatest number and severity of fire losses will be charged a higher fire rate.

Once the basic fire rate has been established by the Insurer, a loading is applied to pay for the additional perils insured by the broad form policy. For example, the Insurer might charge an additional loading of $0.05/$100 to insure all the other perils covered by the broad form. In such case and using the fire rate above, the final rate charged to the applicant would be $0.75/$100 (basic fire rate including loading)

 

Clauses Common to Commercial property Insurance Forms

1.. Description of the property Insured

The named perils form and broad form insure the building(S), stock and equipment of a business. Applicants can choose to purchase insurance on any or all of these property items. The Declarations page of the policy indicates those items for which a limit of Insurance is provided. 

Buildings, stock and equipment are specifically described in the policy. Knowing these definitions will ensure that needed limits of Insurance and coverages are not forgotten or ignored. For example, when a claim is made, the adjuster will determine whether the item lost was insured by the policy. To ensure there are no gaps in the limit of Insurance and coverages, brokers must have a through understanding of the definitions of the property insured by the policy. Also, when insured's make changes to the policy during the year, it will be important that the items added or deleted are placed in the proper category. Failure to do so will result in inadequate insurance in the event of a loss.

 

1. Building

"Building" means:

The building described on the "Declarations page" and includes:

i. Fixed structures pertaining to the building(S) and located on the premises;

ii. Additions and extensions communicating and in contact with the building(S);

iii. Permanent fittings and fixtures attached to and forming part of the building(S);

iv. Materials, Equipment and supplies on the "premises" for maintenance of, and normal repairs and minor alterations to the "building" or for building services;

v) Growing plants, trees, shrubs or flowers inside the building used for decorative purposes when the Insured is the owner of the building used for decorative purposes when the Insured is the owner of the building.

 

Owners of malls and larger stores can include the value of growing plants, trees, shrubs or flowers within the limit of Insurance selected for building. These items are covered only when they are:

a) Inside the building; and

b) Used for decorative purposes only

 

Certain plants included within definition of building

In the last five years, Bert and Betty have had the following losses. Indicate whether these losses would be insured within the limit of Insurance provided for the building. The answers are provided below.

i. Loss to silk flowers in Betty's office

ii. Loss to $15000 palm tree in main show room;

iii. Wind damage to pyramid cedar trees in front of the store;

iv. Loss of tomato plants being grown in the back of the store. When they are mature, the Butler's children will sell them to raise money for school supplies.

 

Applicants must ensure that the limit of insurance they select is adequate to include the value of all items falling

 

2. Stock:

Stock means:

i) Merchandise of every description usual to the Insured's business;

ii. Packing, wrapping and advertising materials; and

iii) Similar property belonging to others which the Insured is under obligation to keep or for which he is legally liable.

 

Stock means:

i. Merchandise of every description usual to the Insured's business;

The type of business in which the Insured is engaged will usually be indicated on the declarations page. When the stock insurance is purchased, coverage is provided for all merchandise or things sold which are usual to that business. For example, stock Insurance provided for a book store would not include coverage for bicycles also being sold by the business. There is a reason why Insurers limit stock coverage in this way. Different stock items are more susceptible to certain losses than are others. As such, different rates will apply. The Insurer who provides coverage on a retail book store should not be obligated to insure, for the same premium, bicycles being sold by the business.

 

ii) Packing, wrapping, and advertising materials

Packing, Wrapping and Advertising Material included in the definition of the stock

Last fall, Betty designed a unique bedroom lamp in the shape of pink flamingo with outspread wings. The design of the lamps makes them susceptible to breakage and special packing is required before they leave the store. Yesterday, 5000 brochures she ordered to promote the sale of these unique lamps arrived. While they cost $25000 to produce, Bert and Betty are both convinced that the expense will be more than offset by increased sales. The definition of stock includes all packing, wrapping and advertising materials used to distribute this, and any other merchandise sold by the Butlers.

 

iii) Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable.

 

The definition of stock includes similar property belonging to others. Such property is insured only if:

a) The Insured was under an obligation to keep such property insured;

Suppliers will often agree to extend credit to businesses buying their products. In these cases, sellers continue to have an insurable interest in that stock until it is paid for. The buyer will usually be obligated to purchase insurance covering the seller’s insurable interest in such stock.

 

b) The Insured is legally liable for it

The law places certain responsibilities on businesses having the property of others in their possession. Also, business owners might agree to accept additional responsibilities for such property under a separate contract.

 

Property of Others included in the definition of stock

There are two situations when the Insurance provided for stock under the Butler's policy can be used to insure similar property of others. These situations include:

a) When the Butlers are under an obligation to keep such property insured;

Bert and Betty have made arrangements with their major suppliers to pay all accounts within 90 days. These suppliers insist that an adequate limit of Insurance be purchased by the Butlers covering such stock until payment has been made.

 

When Butlers are legally liable for it

The Butlers have a separate building which is used exclusively for upholstering customer's used furniture. Yesterday, an employee in the building accidentally ignited cleaning fluids being used on the fabric of the old chair. The building was totally destroyed. The customer's furniture lost in the blaze is valued at $75000. The law normally holds employers legally liable for damage caused by employees to the property of others. The definition of the stock includes similar property belonging to others which the Butler's are under an obligation to keep insured or for which they are legally liable.

 

Applicants must ensure that the limit of Insurance being selected is adequate to include the value of all items falling within the definition of the stock.

 

3. Equipment

Equipment means:

i. Generally all contents usual to the Insured's business, including furniture, furnishings, fittings and fixtures, machinery, tools, utensils and appliances other than building or stock as herein defined;

ii. Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable;

iii. Tenant Improvements which are defined as building improvements, alterations and betterments made at the expense of the insured to a building occupied by the Insured and which are not otherwise insured provided the insured is not the owner of such "building". If the Insured purchased the use interest in tenant's improvements made by a predecessor tenant, this form applies as though such tenant's improvements have been made at the expense of the Insured."

 

Equipment means:

i. Generally all contents usual to the Insured's business including furniture, furnishings, fittings, fixtures, machinery, tools, utensils and appliances other than building or stock as herein defined;"

 

Generally, items not falling within the definition of building or stock would be insured as equipment. Examples of equipment items insured by commercial property policies include:

a) Office Furniture

b) Staff Room Furnishings

c) Portable shelving units and display cases;

d) Photocopiers, phones, computers, fax machines and other similar items;

e) Forklift and Tractor

 

ii. Similar property belonging to others which the insureds are under an obligation to keep insured or for which they are legally liable

iii. Similar property belonging to others which the insureds are under an obligation to keep insured or for which they are legally liable;"

The definition of equipment includes property of others. Coverage is subject to the same conditions as are applied to property of others insured as stock.

 

Property Of others included in definition of equipment

In their business, the Butlers lease equipment including a photocopier, postage meter, coffee maker and telephone system. The total value of this equipment is $41800. When equipment is rented to a business, the supplier will usually require that a lease or rental agreement be signed. Under such agreement, the Butler's would normally be obligated to insure such property while it is in their possession. When there is no lease or rental agreement, the law may still hold the Butlers liable for loss to such property. The definition of equipment allows the Butlers the opportunity to include the value of equipment of others in the limit of Insurance purchased for equipment.

 

iii. Tenant's improvements which are defined as building improvements, alterations and betterments made at the expense of the insured to a "building" occupied by the Insured and which are not otherwise insured, provided the insured is not the owner of such building. If the Insured purchased the use interest in tenant's improvements made by a predecessor tenant, this form applies though such tenant's improvements had been made at the expense of the Insured"

 

The value of the building improvements, alterations and betterments made or purchased by tenants are covered within the limit of Insurance purchased for equipment.

 

Not all Insureds operate out of buildings owned by them. Normally, the space rented to the tenant is unfinished and requires substantial improvements and betterments prior to opening for business. Installing wall to wall carpeting, lighting fixtures, and wall panelling are examples of the kinds of improvements and betterments tenants will normally make to premises they rent. In the above example, were the Insureds to own, rather than rent the premises, the value of such betterments and improvements would have been insured as building. Because tenants do not own or have an insurable interest in the building, they are not entitled to place Insurance on it. Instead, all improvements and betterments made by tenants must be insured as equipment

 

Applicants must ensure that the limit of Insurance they select is adequate to include the value of all items falling within the definition of equipment.

 

2. Co-Insurance Clause

"This clause applies separately to each item for which a co-insurance percentage is specified on the "Declarations page" and only where the total loss exceeds the lesser of 2% of the applicable amount of Insurance or $5000.

The Insured shall maintain Insurance concurrent with this form on the property insured to the extent of at least the co-insurance percentage specified on the "Declarations page" of the actual cash value thereof, and failing to do so, shall be entitled to recover that portion of a loss that the amount of insurance in force at the time of loss bears to the amount of insurance required to be maintained by this clause.

 

The provisions of the co-insurance clause apply to partial losses only. A partial loss is one in which all property has not been destroyed. For example, a fire which is extinguished before it totally destroys the building, stock and equipment is a partial loss.

 

Why Co-Insurance clause?

The majority of losses are partial ones. Knowing this, people will sometimes deliberately underinsure in an attempt to save money. In these cases, they are really gambling on suffering a partial loss. In other instances, people are caught without adequate Insurance limits simply because they were not aware of the value of their property.

Prior to the introduction of the co-insurance clause, insureds could collect the total amount of a partial loss by simply showing they had enough Insurance to cover the loss.

 

How partial losses paid prior to introduction of Co-Insurance clause

The applicant owned the following property items:

a) Building - $300,000

b) Stock - $100,000

c) Equipment - $50,000

 

The amount of Insurance purchased was for 50% of these values. The Insurer would have fully paid any loss up to:

a) Building: $150,000

b) Stock - $50,000

c) Equipment - $25000

 

Insurers believed that paying all partial losses fully in such instances as referred to above was not fair to:

i. Insurers;

Insurers often found that they were paying fully for losses for which they were collecting only a portion of the premium.

Also, as most losses are partial, the insurer was taking majority of the risk.

 

ii. Insureds

When people don't buy adequate Insurance, rates have to be increased to pay losses. Passing these rate increases on to insureds who were already purchasing adequate limits of Insurance would not be fair.

 

The solution

The co-insurance clause was designed to apply a penalty for all partial losses when Insureds purchased less insurance than specified by the Insurer. The minimum limit of Insurance required to be purchased is usually set by the Insurer at no less than 80% of the ACV of the property Insured.

 

Determining Limit(S) of Insurance required to be purchased

The fortress insurance company requires that the limit(S) of Insurance purchased represent, as a minimum, 80% of the ACV of all property being insured. Using the above example, the following limits of Insurance must be purchased by the butlers to avoid a penalty in the event of a partial loss:

a) Building - $300,000 * 80% = $240,000

b) Stock - $100,000 * 80% = $80,000

c) Equipment - $50,000 * 80% = $40,000

Insureds are encouraged to purchase insurance equivalent to the value of their property. This will insure they are fully indemnified in the event of a total loss.

When they fail to meet the percentage, requirement specified by the Insurer, Insureds will be paid less than the amount of their loss.

 

Determining the amount of settlement for a partial loss

When there is a partial loss, the adjuster will always attempt to determine if the Insurer has purchased sufficient Insurance to comply with the co-Insurance percentage specified by the Insurer. Insureds who fail to do so will receive less than the amount of their loss.

 

The following formula is applied to all partial losses:

Did/Should * Amount of Loss = Settlement

Did = Amount of Insurance purchased

Should = Percentage of Insurance required (usually 80% of ACV) *ACV

 

Continuing with the earlier example, and assuming a $30,000 building loss only, the following information emerges:

Did = $150,000

Should = $240,000 ($300,000*80% = $240,000)

Amount of Loss = $30,000

 

Calculation

D/S * L = Settlement

$150000/$240,000*$30000 = $18750

 

The Butlers would receive $18750 from the fortress Insurance company. As their loss was $30,000, the penalty they paid for being underinsured was $11250. This represents the amount of loss to be borne by the Butlers. When Insureds share in the loss, they become "co-Insurers"

 

Waiver of Co-Insurance

The Introductory statement contained within the Co-Insurance clause states as follows:

This clause applies separately to each item to which a co-insurance percentage is specified on the "Declarations Page" and only where the total loss exceeds the lesser of 2% of the applicable amount of Insurance, or $5000.

If a loss occurs involving building, stock and equipment and a co-Insurance requirement applies to each, the specified co-Insurance percentage will be applied to building, stock and equipment limits separately and not to the aggregate or total values insured. 

The last part of this clause states that the provisions of the Co-Insurance clause will be applied only where the amount of loss exceeds either of i) 2% of the applicable amount of Insurance or ii) $5000. This is called waiver of coinsurance and it is used to facilitate adjustment of small losses. 

 

Example: The Butler's Insurance policy provides insurance for $150,000 of furniture stock. The actual cash value of the stock is $300,000. A small fire results in a total loss of a display chesterfield valued at $3000.

Calculation: $3000/$150,000 = 2%

In this situation, the amount of the loss neither exceeds 2% of the amount of Insurance nor $5000. The Insurer would not apply the provisions of the Co-Insurance Clause. Even though the Butlers are vastly underinsured.

 

A final word on co-Insurance: Insured should realize that in the event of any loss under the policy, the Insurer will pay the least of:

a) The amount calculated using the co-Insurance formula

b) The Limit of Insurance

c) The amount of the loss

 

Stated Amount of Co-Insurance clause

The Co-Insurance clause can be deleted by attaching the stated Amount  Co-Insurance Endorsement. The insured must file a statement of values with the Insurer and if accepted, the insured must maintain these values during the term of the policy. Should the limit be reduced during the term of the policy, the coverage will either return to the original insurance percentage or in some clauses, the co Insurance would become a 100% Co-Insurance clause. To maintain the coverage on a stated account basis, a new statement of values must be completed and signed by the insured each year.

 

Co Insurance and a Deductible Clause

When the loss is subject to a co-Insurance penalty, the amount of the loss is calculated first, followed by the amount of the deductible.

 

For example:

A) Building: $100,000

b) Co-Insurance: 80%

c) Policy Limit: $60,000

d) Loss: $20,000

e) Deductible: $500

 

Co-Insurance: Did/Should* Loss

$60,000/$80,000 *20,000 = $15000

Apply Deductible: Loss - $15000 - $500 = $14500

 

3. Debris Removal

"The Insurer will indemnify the Insured for expenses incurred in the removal of debris of the property Insured, occasioned by loss or damage to such property, for which loss or damage insurance is afforded under this form. The insurer will indemnify the insured for expenses incurred in the removal of debris or other property which is not insured by this form but which has been blown by windstorm upon a location specified on the "Declarations Page"

 

Debris removal expense shall not be considered in the determination of actual cash value for the purpose of applying Co-Insurance.

 

Insurance is intended to repair, rebuild or replace property after a loss. However, when there is a significant loss, insureds will also incur additional expense in removing the debris from the premises. If the limits of Insurance have not been fully used to pay for damage insured by the policy, the insurer agrees to allow insureds to use any remaining amounts to pay for debris removal.

 

Debris removal coverage provided when limits of Insurance not fully used

Last month, the Butler's had a serious fire in the back of their store. Damage was established as follows:

a) Building- $70,000

b) Stock - $25000

c) Equipment - $10,000

 

Their insurance policy provided coverage for the following limits:

a) Building- $600,000

b) Stock - $200,000

c) Equipment - $100,000

 

The Butlers spent $8000 to remove the debris from their premises. As there was sufficient insurance remaining for each of building, stock and equipment, the full cost of debris removal was paid by the Insurer.

 

Note: This coverage is not provided when all limits have been used to pay claims. For example, if stock and equipment were totally destroyed in the fire and the total limits of Insurance of $300,000 were paid to settle the claim, there would be no payment for the removal of debris consisting of stock and equipment. However, if the building was only partially damaged, all amounts of Insurance remaining for the building could have been used to pay for the removal of debris consisting of building.

 

Coverage is also provided for the expense incurred by insureds in removing debris of other property which was not insured by the policy but which was blown on to the premises by windstorm.

 

Additional limits of Insurance for debris removal expense can be purchased from most Insurers.

 

4. Reinstatement Clause

"Loss under any items of this form shall not reduce the applicable amount of Insurance>"

 

In contract law, the Insurer's financial obligation to the Insured is over when the limits of Insurance have been fully used to pay claims. However, the unique nature of Insurance contracts has resulted in Insurers including the reinstatement clause in commercial and other property Insurance policies.

By the terms of this clause, Insured shall have as much Insurance on property after an insured loss as they had immediately prior to it. Said another way, the limits of Insurance provided by this policy remain unchanged for the entire policy period regardless of the number and amounts of claims paid.

 

Automatic Reinstatement of policy limits after a loss

The Butlers Insured their stock for $300,000, $200,000 of which was destroyed in a fire two months later. Even after the claim was paid, the stock limits on their policy remained at $300,000. The reinstatement clause provides that insured shall have as much Insurance after a loss as they did before it.

 

5. Subrogation Clause

"The Insurer, upon making any payment or assuming liability therefore under this form, shall be subrogated to all rights of recovery of the insured against the others and may bring action to enforce such rights. Notwithstanding the foregoing, all rights of subrogation are hereby waived against any corporation, firm, individual, or other interest with respect to which Insurance is provided by this policy.

Where the net amount is recovered, after deducting the costs of recovery, is not sufficient to provide a complete indemnity for the loss or damage suffered, that amount shall be divided between the insured and insurer in the proportion in which loss or damage has been borne by them respectively.

Any release from liability entered in to by the Insured prior to loss shall not affect the right of the insured to recover."

 

When the insurer pays a claim for damage caused to the insured property by others, it is entitled to seek recovery from the responsible party. Exercising this legal right against certain people would be unfair. For example, there would be little sense in having Insurance if a business partner responsible for the loss had to reimburse the insurer for the amounts paid. For this reason, the insurer agrees not to exercise the right of subrogation against any party having an insurable interest in the property insured. Included in the list of those whom the Insurer agrees not to subrogate against are payees, business partners and subsidiary firms.

 

Subrogation - Certain Parties protected and cannot be subrogated against

The Butlers had a difficult time raising the necessary capital to purchase their furniture business. Betty was able to persuade her brother, Ralph, to lend them $100,000 and he is named as a payee on the Butler's Insurance policy. Ralph is also an electrician. He spent five days prior to the opening of the store upgrading electrical wiring and installing new lighting fixtures. Two weeks, after the store opened, a serious fire occurred. The fire Marshall determined the cause of the fire to be faulty electrical wiring installed by Ralph. The Fortress Insurance company paid the claim under the Butler's policy. As Ralph had an insurable interest in the property, the insurer made no attempt to recover the amount paid from him. The Insurer agrees not to subrogate against any party having an insurable interest in property insured.

 

6. Property Protection Systems

"It is agreed that the insured shall notify forthwith the insurer of any interruption to, or flaw or defect, coming to the knowledge of the insured, in any:

a) Sprinkler or other fire extinguishing system; or

b) Fire detection System; or

c) Intrusion Detection system;

 

And shall also notify forthwith the insurer of the cancellation or non-renewal of any contract which provides monitoring or maintenance services to any of these systems or of the notification of the suspension of police service in response to any of these systems."

 

The purpose of property protection systems is to prevent losses or to reduce their severity.

Rate credits provided by Insurer encourage businesses to install property protection systems. In some cases, insurers will not provide Insurance coverage until certain types of systems are installed. For example, a restaurant will not normally qualify for insurance until evidence is provided that a fire extinguishing system has been installed in its kitchen. Jewellery stores, furriers and other electronics stores may qualify for Insurance only when they protect their premises with burglar alarms which are monitored off premises when the business is closed. The efficient operation of property protection systems is of great concern to insurers. These systems are of little value if they do not operate because of improper maintenance or when their ability to prevent or reduce loss is otherwise compromised. Insureds having property protection systems on their premises must notify the insurer immediately:

a) When they know there is an interruption to, or flaw or defect in such system;

b) When any contract providing monitoring or maintenance services to such systems has been cancelled or not renewed;

c) When they have been provided with notification of the suspension of police service in response to any such system

 

Note: This is different from expenses to reduce loss coverage discussed earlier because there is no requirement under this form to prove that such expenditures reduced the amount of the claim before they will be paid.

 

Property protection systems - Obligations Imposed upon Insureds

The Butler's furniture store contains a sprinkler and burglar alarm system.

 

Commercial property insurance policies impose three obligations on insureds who install property protection systems on their premises;

1. The Butlers must advise the fortress Insurance company of any interruption to, or flaw or defect within their knowledge, to any such system. Insureds can hardly be expected to advise the Insurer about things they do not know about. For example, Insurance coverage would not be denied when the sprinkler system failed t operate because the pipes were blocked with debris contained in the watermain leading to the Butler's premises.

2. When the sprinkler and burglar alarm systems were installed, the Butlers purchased the following additional services:

a) Sprinkler system - Maintenance contract for a monthly maintenance fee of $25;

b) Burglar Alarm system - monitoring contract for a monthly maintenance fee of $35

 

Six months later, sales were extremely slow and the Butler's cancelled both services in an effort to reduce business expenses. The Insurer is entitled to immediate notification when Insured's cancel, or fail to renew, any contract providing maintenance or monitoring services.

3. Defective alarms are a source of nuisance and expense for police departments. When too many false alarms are received from a premise, police may suspend service to those premises. When that happens, the insurer is entitled to immediate notification.

 

Options of Insurers when condition breached

When any of the above situation exist, the Insurer may:

a) Reduce coverages;

Insureds with defective burglar alarms, for example, may lose all coverage for theft

b) Charge an additional premium

c) Cancel the policy

 

Other Commercial property Insurance coverages or forms

All property Insurance policies contain exclusions of two types, namely:

a) property excluded

b) Perils Excluded

 

Insurers normally will provide the additional coverages needed to insure property and perils excluded by the named perils form and the broad form.

The following are examples of additional coverages which need to be purchased separately.

1. Property Away from the Insured Premises

The coverages provided by commercial property Insurance policies apply only when the property is at the location(S) described on the declarations page. Coverage can be extended to off premises locations for an additional premium. Two common off premises coverage include:

i. Property in transit;

This coverage is readily available from Insurers and can be added at the time the property policy is purchased. Coverage is provided by the Insured property being transported by vehicles owned by the Insureds or others. Insurance coverage begins when property starts on it journey and continues until it arrives at its destination, including all incidental stops in between.

 

Locked Vehicle Warranty

When the Insurer agrees to provide coverage for the peril of theft from an automobile, it will usually insist upon including the locked vehicle warranty. "This clause does not apply to property which is under the control of a common carrier. Warranted by the Insured that any vehicle in which the property insured is carried is equipped with a fully enclosed body or compartment, and the Insurer shall be liable in case of loss by theft from an unattended vehicle only as a direct result of forcible entry (of which there shall be visible evidence) in to such body or compartment the doors and windows of which have been securely locked."

This warranty applies when the vehicle is on or away from the Insured's premises. By the terms of this warranty, insureds agree to lock the vehicle when they are away from it. There is no coverage when they fail to do so and the loss occurs. Also, when property is taken from a locked vehicle, coverage is provided only if Insured is able to prove that:

a) Force was used to gain entry in to the vehicle; and

b) There are visible signs of the use of force on the vehicle.

 

ii) Temporary Locations

A temporary location is one which is not owned, rented or controlled by the Insured. Insureds will normally add this coverage at the time the property policy is purchased. Examples of Insured property which is at a temporary location include:

a) At another premises for repair or storage;

 

Property At temporary location when at other location for repair or performance of work.

The Butlers use the services of Jack Fir, a local wood worker who is particularly good at restoring the decorative wood trim used on antique furnishings. Last week, Jack had a serious fire on his premises. Betty estimates they had approximately $4500 in antiques in Jack's shop at the time of the loss. This claim will be paid under the temporary locations coverage provided by the Butler's own policy.

 

At the premises of a trucking or bus company awaiting pick up

Coverage for property in transit and property at temporary locations is available in Broad Form only.

 

2. Glass Insurance

Commercial property Insurance policies provide limited coverage for exterior glass. Even the best policies exclude breakage:

a) Accidentally caused by Insureds or others;

b) Due to Earth Movement;

c) Caused by thieves

 

The Insuring agreement for glass Insurance is extremely broad. Many Insurers provide as few as three exclusions, namely:

i) Fire;

ii) War;

iii) Nuclear Energy hazard;

 

3. Valuable Papers and Records Insurance

Valuable papers mean "printed, written or otherwise inscribed documents and records, including books, maps, films, drawings, abstracts, deeds, mortgages, and manuscripts but does not mean money or securities"

The coverage provided by commercial property insurance policies restricts payment for records to their blank value only. When valuable papers and records insurance is purchased, coverage is provided for all costs of reproducing lost or damaged documents. Insurance brokers, lawyers, architects, doctors and schools will often need to restore documents or records after a loss. For example, when an in-progress project at an architect's office is destroyed, the work done to that point will need to be redone. Schools that lose student records will incur additional costs to recreate needed information relating to student grades. When the premises are closed, the records or documents must be stored in the receptacle specified on the coverage form.

 

4. Accounts Receivable

Many Insureds extend credit to many of their customers. If a fire or other insured peril was to destroy their accounts receivable records, they would have great difficulty in "remembering" who owned them money and who did not. This form insures loss to such records from "all risks" of physical loss, subject to policy conditions and exclusions. The Accounts receivable policy will pay the costs of reconstructing accounts receivable records, abnormal expenses incurred in collecting sums due to them, and interest charges on loans needed to offset uncollected amounts. In the event, monies owed to the Insured are deemed uncollectible as a direct result of an insured loss or damage to accounts receivable records, this form will respond to provide coverage.

 

5. Electronic Data Processing

Considerable damage can be done to data processing equipment (hardware) and its data or media (software) from a number of perils not covered on commercial property policies. An Electronic Data processing policy (EDP) can be purchased to insure these other perils. Coverage is generally provided on an "All Risks" basis for loss to hardware and software, including "extra expenses" to rent data processing time from outside sources.

 

6. Office Equipment Floater

Some retail operations maintain an 'office only', for example accountants, lawyers, real estate agents, Insurance brokers and others. These offices generally do not contain stock like other retail businesses. These office exposures can be insured on an office equipment floater policy which generally is an "All Risks" basis. The policy can also be used to insure the offices of doctors, dentists and surveyors but special attention has to be made for the particular equipment and instruments of their occupations.

 

7. Jeweller's Block and Furrier's Block policies

Some retailers/wholesalers specialize in high value items that are very attractive to thieves. The coverage provided by the standard property policies are inadequate to insure these specialized risks because of limitations found in them. Because of the nature of these businesses, not all insurers will provide a policy and those that do will require a very detailed application. Coverage and premiums would be determined on the type and value of stock, location, burglar alarm, vaults, safes and previous losses. The policy will cover the Insured's own goods and those of their customers.

 

 

8. Crime Insurance

Commercial property Insurance policies usually provide coverage for certain criminal acts, including:

a) Vandalism and malicious acts;

b) Riot.

 

When Insurance is provided on the broad form, theft coverage is provided for stock and equipment. However, even the broadest property policies exclude money, securities, jewellery, Furs and other valuable property when loss is due to any criminal act. Insured's wanting broader crime coverages can usually add them at the time the policy is purchased. Available crime Insurance include:

i. Burglary Insurance

Policies providing burglary Insurance will pay only when there is evidence that force was used to take Insured property. There are two main types of burglary Insurance sold to business owners, including:

a) Mercantile Stock Burglary

Policies providing burglary Insurance will pay only when there is evidence that force was used to take Insured property.

There are two main types of burglary Insurance sold to business owners, including:

A) Mercantile stock Burglary

Under this Insurance, a claim will be successful only if the Insured is able to prove all of the following:

a) That the Insured property was unlawfully taken from within the premises;

b) That the premises were unlawfully entered or exited;

c) That there were visible signs of the use of force at the point of entry or exit.

 

b) Safe Burglary

Under this Insurance, the Insured must provide the Insurer with evidence that force was used to gain access to the safe. Coverage will also be provided when the entire safe is removed from the premises.

 

ii) Robbery Insurance

Robbery Insurance is usually purchased to cover loss of money, securities and other valuable property.

Policies providing robbery Insurance will pay when:

a) Actual or threatened force is used to take Insured property from a person having control over it;

b) Insured property is taken from a custodian who is killed or rendered unconscious;

For example, if a passerby was to take the Insured's deposit from an employee who was killed or rendered unconscious in an accident while on the way to the bank, the policy would pay.

 

The Custodian witnessed the taking of Insured property by a person not authorized to have it.

For example, the taking of money from a cash register by a customer which was witnessed by the store manager would constitute a robbery. Both on and off premises robbery exposures can be Insured by the Inside/Outside robbery rider.

 

Both on/off premises robbery exposures can be insured by the Inside/outside Robbery rider

 

iii. Theft

Theft is the broadest crime coverage available to insureds. It insures property taken without the owner's consent. Due to the broad definition of theft, insured's who purchase theft coverage do not need to purchase burglary or robbery coverages for the same property. To qualify for coverage, Insured's need only show that Insured property was taken without their consent.  Examples, of policies insuring theft include:

a) Broad Form (IBC 4037)

Stock and equipment items are Insured whenever they are unlawfully taken by the outsiders. There is no requirement to prove that force was used to take the property from the Insured's premises or people authorized to have control over it.

 

b) Money & Securities

Property policies do not insure any loss to money and securities. Therefore, even Insured's who purchase the broad form need to buy this coverage when broad coverages are needed for that property.

 

This is the broadest form of money and securities coverage available to Insureds. It insures:

a) Actual Destruction: The improper use of cutting torches to gain access to a safe can result in the destruction of money and securities by fire.

b) Disappearance:  When money or securities are not in the location in which they were left and there are no signs pointing to theft, they are considered to have disappeared.

c) Illegal Removal: This refers to any wrongful taking of money and securities. Coverages provided would include safe, Burglary, robbery and theft.

 

iv) Employee Theft and Fidelity Coverages

Insured fraud is a major cause of loss for business owners, amounting to millions of dollars each year. Increasingly long-time trusted employees and senior executives are the source of some of the larger employee dishonesty losses. It is precisely these people who are familiar enough with the business to have the knowledge of its vulnerable areas. Employees also have the added opportunity to cover their tracks so the act can be repeated. Anything that can be taken by outsiders can be taken even more easily by insiders.

 

v) Comprehensive Dishonesty, Disappearance and destruction Policy

The Comprehensive dishonesty, Disappearance and Destruction Policy (3-D Policy) provides a comprehensive package of crime Insurance coverage under s single policy form. The 3-D policy contains a total of five insuring agreements. There are also 48 approved endorsements to the 3D policy to amend the coverage to fit a particular risk. The Insured can select any, or all, of the coverages provided under this policy and the policy is issued on a continuous until cancelled basis.

 

Agreement I - Employee Dishonesty (Form A or Form B)

Agreement II - Loss Inside the premises

Agreement III - Loss Outside the premises

Agreement IV - Money Orders and Counterfeit paper currency

Agreement V - Depositor's Forgery

 

9. Boiler and Machinery Policy

Commercial Property Insurance policies contain the following exclusions:

i. Loss or damage to buildings resulting from the explosion of the following objects owned, operated or controlled by the Insured

a. Boilers

b. Pressure Vessels operating in excess of 15 pounds/sq inch

The Boiler and Machinery policy can be purchased to provide this important coverage

 

ii) Electrical or mechanical Breakdown

The Boiler and machinery policy provides this coverage for objects such as:

a) Boilers and pressure vessels;

b) Air conditioning Units;

c) Miscellaneous Electrical Apparatus (Including Electrical Panel and switch gear);

d) Electric Motors;

e) Compressors and Pumps

 

Not all insurers provide Boulder and Machinery Insurance. Those that do will generally arrange to do an inspection of the objects being insured. This inspection may be done before the policy is issued or at a later time during the policy period. When the inspector judges an insured object to be in a dangerous condition, coverage can be suspended immediately and without notification to the mortgagee.

 

10. Contractor's Insurance

1. Builder's Risk - Broad Form (IBC 4042)

Commercial Property Insurance policies do not insure buildings in the course of construction. A separate Builder risk form is required to insure this exposure. The Builder's risk - Broad form (IBC 4042) provides the best coverage. It can be purchased by the future owner of the building or by the contractor. The terms of the contract between them will usually indicate whose responsibility it is to purchase Insurance. The following information about this form will be important to Insureds:

 

i) Property Insured/Excluded;

The policy Insures the value of all materials owned by the Insured or others which will enter in to and form a part of the completed project. The value of landscaping, temporary buildings, forms, hoardings and scaffolding can be included if the Insured so wishes. There is no coverage under this form for: 

a) Contractor's Tools and Equipment;

b) The cost of making good faulty or improper material, workmanship or design, except for resultant damage to other completed work. Coverage can be added for materials a) In transit; or b) At any other location

 

iii. Limit of Insurance

Even though it may be some months before the project is completed, insureds are required to purchase an amount of Insurance which is equivalent to its completed value. This helps to avoid the endless flow of paper which would occur if Insureds were able to request changes in Insurance amounts through out the duration of the project. The rate charged by the Insurer reflects the gradual INCREASE IN VALUE DURING THE PERIOD OF construction.

 

2. Contractor's Equipment Floater

This floater insures all types of moveable equipment owned, rented or leased by contractors. Examples include road construction, logging and excavating equipment. Miscellaneous contractor's tools can also be insured by this floater.

 

3. Installation Floater

This floater is designed for contractors who specialize in the installation of machinery and equipment. Examples of those needing this coverage include plumbing, heating and air conditioning contractors.

Property is insured:

i. While in transit to the job site;

ii. While awaiting installation at the job site;

iii. During installation until accepted, or the interest of the insured ceases, whichever first occurs.

 

11. Business Interruption Insurance

Commercial property Insurance policies insure only the direct damage caused to building, stock and equipment. When there is significant loss to property, two other things can happen:

a) The business may be forced to close for a lengthy period;

While closing for even a few days will reduce a business's income, a lengthy closure can be disastrous.

 

The business is able to resume partial operations only at the Insured or other location.

When a business is interrupted in these ways, owners would experience a significant loss of income. This exposure can be insured by adding a business Interruption Insurance Endorsement to the Insured's property policy.

 

What a Business Interruption Insurance Does

i. A contract of Indemnity:

Business interruption Insurance is designed to restore lost income after a loss to the level it would have been had the loss not occurred. Income earned by business does two things, namely:

a) Pays Expenses;

All business have ongoing expenses which must be paid out of Income. These include salaries of key management people, taxes and mortgage payments.

 

b) Pays a profit

The purpose of business is to create a profit. Whatever remains after expenses have been paid is profit. Business Interruption Insurance pays for i. Expenses which continue after a loss; and ii) Lost profit

 

ii. Insures Same perils as Property policy

Before payment will be made, it must be shown that actual damage was caused to Insured property by a peril covered by the business's commercial property Insurance policy.

 

No coverage when business interrupted by peril not insured by property policy.

 

Friends of the Butlers have a furniture store in Vancouver. Last May, an earthquake measuring 6.5 caused structural damage to their building. The store was closed for five weeks to repair the damage. They estimate they lost $150,000 in income during that period. There was no coverage under their friend's policy for earthquake.

The Insurer was not obligated to pay the claim. There is no coverage for loss of income when the peril causing the loss is not covered by the Insured's commercial property Insurance policy.

 

Exception: A business can lose income even when there is no physical damage to Insured property. For example, when there is a serious fire or riot in the immediate area, customers may be denied access to Insured's business by people in a position of civil authority such as police or fire department officials. The resulting loss of income is covered when the Insured is able to show that the peril responsible for restricting customer's access to their premises is insured under their commercial property Insurance policy.

 

iii. Coverage not limited to policy period

Business Interruption Insurance coverages start on the day of the loss to property and can continue for a specified period, usually 12 months. Payment will continue to be made even if the Insured's commercial property Insurance policy expires during the period of Interruption.

 

iv. Pay expenses when they reduce Amount of loss

After a loss, insureds will often take steps to resume operations as quickly as possible. This may involve expenditures to speed up repairs or to rent alternate premises. These expenses will be paid when it can be shown that they actually reduced the amount of the loss the Insurer would have otherwise had to pay.

 

Types of Business Interruption Insurance

1. Gross Earnings Form/ Profits Form

The Earnings Form (IBC 4029) and Profits form (IBC 4030) are the most common types of business Interruption Insurance used by businesses. The main difference between these forms is the period of indemnity or the length of time the Insurer will continue to pay after a loss.

 

2. Gross Earnings Form

Coverage Commences at the time of the loss and continues until the property is rebuilt, repaired or replaced

 

Gross Earnings Form - Coverage Ceases when property is rebuilt, repaired or replaced

Last May1, the Butler's store burnt to the ground. Contractors finished rebuilding the store October 15th. Loss of Income coverage was provided by the Earnings form. The gross Earnings form would pay for the loss of income occurring between May 1st  - October 15.

The Gross Earning's form would pay for the loss of income occurring between May 1st - October 15th.

 

3. Profits Form

Coverage Commences at the time of the loss and ceases when the income is restored to the level it would have been had the loss not occurred.

 

Profit's Form - Coverage Ceases when income restored to expected level.

If the Butler's would have purchased the profit's form, they would have continued to receive payment for as long as it was required to restore the income of the business to the level it would have been had the loss not occurred.

The profits form is recommended when it is likely to take a long time to win back customers after a lengthy interruption.

 

Profit form recommended when potential for lost customers

Prior to the fire loss to their store last May 1st, the butler's supplied a local hospital with all of its linen needs. After the fire, the hospital made arrangements to purchase those items from another supplier. When the store reopened in October, Bert and Betty were disappointed to learn that the hospital intended to continue dealing with the other supplier. The profits Form recognizes that customers may change their buying patterns when a business is closed for a long time. The reduction in income which results when a business reopens after a lengthy interruption is insured by this form.

 

Both of these forms normally insured loss of income for a 12-month period. This can be increased for an additional premium.

 

2. Extra Expense Insurance

The Extra Expense Insurance Endorsement Form (IBC 4027) insures all necessary extra expenses incurred by Insured's continuing normal business operations after a loss. Businesses purchasing this coverage would include those which could (or need to) be back in business after a short interruption, such as insurance brokers, travel agents, newspapers and banks. Coverage is limited to those expenses which are over and above those which normally would have been incurred by the Insured had the loss not occurred. Examples of extra costs include those:

a) To rent temporary premises;

b) To rent temporary equipment;

c) To install Telephones;

d) To pay overtime salaries;

e) To pay bonuses for quick service

 

Note: This is different from expenses to reduce loss coverage discussed earlier because there is no requirement under this form to prove that such expenditures reduced the amount of the claim before they will be paid.

 

12. Surety Bonds

The concept of surety is thousands of years old. In the beginning, when strangers began to trade and barter, it was common for people who had promised to fulfill some obligation to ask their family or friends to guarantee them to a third party. This arrangement usually meant that such guarantors would honour the promise in the event the debtor defaulted. Guarantors often lost their personal wealth in honoring such obligations. In spite of this, personal suretyship is still practised in the private affairs of individuals. However, because personal sureties often for not have the funds to satisfy claims, corporate suretyship has replaced most personal suretyships.

 

Surety Like Banking

In many respects, suretyships involve the same processes used by bankers in making a loan. In effect, each is being asked to lend their credit to another. Banks do not lend money to those who do not meet their eligibility requirements. Similarly, surety do not bond people who cannot perform obligations.

 

Characteristics of Surety Bonds

Although there are many different kinds of surety bonds, they share a number of characteristics, including:

 

1. Three party contract

There are three parties to any surety agreement:

 

i. Principal

The principal is "the person primarily liable". Black's Law Dictionary. For example, the contractor who builds a house for another is the principal.

 

ii. Obligee

The obligee is "the party to whom some one else is obligated under a contract". In the above example, the owner of the dwelling is the obligee. The obligee is the party to whom some one else is obligated under a contract. In the above example, the owner of the dwelling is the obligee. The obligee is the party to whom the bond is given.

 

iii. Surety

A surety is "one who undertakes to pay money or to do any other act in the event that his principal fails therein", for example the bonding company.

 

2. No losses Expected

Surety is based on the extension of credit without risk. Theoretically, the surety expects no losses to occur.

 

3. Principal Liable to surety

When the principal fails in its obligation to the obligee, the surety must fulfill the promise. The principal is then obligated to the surety for amounts it paid.

 

4. Bond Premium

Although the word premium is commonly used, it is a misnomer. As surety underwriting does not contemplate losses occurring, the sum charged for prequalification and other company expenses is more appropriately described as a service fee than a premium.

 

5. Bond Limit (Penalty)

This limit represents the amount of penalty which the surety is prepared to pay in the event the principal should default. The penalty of the bond remains unchanged through out the period of the contract and does not reduce during the performance of the obligation.

 

6. Of Indeterminate Length and non-cancellable

Some types of surety bonds are non=-cancellable and terminate only when the principal's obligations have been fulfilled.

 

7. Written Contract

A surety contract must be provided in writing and executed under seal of the surety and the principal. Oral contracts are not binding on the surety.

 

Not Insurance

Contracts of suretyship are not insurance contracts. Indeed, the difference between them are substantial. Unlike bonds, Insurance policies:

a) Are two party agreements;

b) Anticipate Losses occurring;

c) Payment of losses is made directly to the Insured and the Insurer is not required to be reimbursed by the Insured;

d) The premium charged is based on current underwriting costs and future claims expenses;

e) Additional limits of Insurance can routinely be added by the payment of an additional premium;

f) Are Issued for specific periods of time and are cancellable by the Insurer during the policy period;

g) An oral agreement is just as binding on the parties to the contract as is a written agreement.

 

Types of Construction Bonds

 

Bid Bond

When a contract involves a large project, the architect or engineer in charge will arrange for the calling of tenders or bids from interested parties.

 

Guarantee

When the project owners receive a bid bond attached to a construction bid, they are assured that the contractor has been pre-qualified by the surety to bid on the project and that the contractor is bidding in good faith.

 

 

When tenders are supported by a bid bond, their withdrawal prior to acceptance will generally not be permitted without forfeiting the bond. Contractors might default under a bid bond because of an error in judgement or mistakes in arithmetic.

 

Agreement to Bond (Also called a surety's consent)

Some tenders might request an "Agreement to Bond" in place or in addition to the Bid bond. When an agreement to Bond is issued, the surety agrees to issue the required final bonds. In other words, the surety must issue the performance and labour & material Bonds if the principal (Contractor) is awarded by the contract.

 

Penalty: The amount of penalty will be determined by the costs incurred to:

a) Compensate the owner for delay and additional costs should the project need to be re-tendered;

b) Pay the difference between the defaulting contractor's bid and the amount for which work is subsequently contracted.

 

The surety's liability is limited to the specified penalty of the bond, usually 10% of the contract price bid or for a specified amount. For example, the amount of bid bond on a tender of $500,000, based on a deposit of 10% would be $50,000.

 

Performance Bond

As a condition of the tender, the successful bidder is usually required to provide other additional bonds. The most common of these is a performance bond.

 

Guarantee:

A performance Bond guarantees:

i. The actual performance of the contract in accordance with its specified terms and conditions;

ii. That Faulty work will be corrected and defective materials replaced for a period of one year after completion of performance.

 

Penalty: The bond limit or penalty is usually 50% or 100% of the contract price.

 

4. Labor and Material payment bond

a) Guarantee: The labour and material payment bond guarantees that the sub-trades and suppliers will be paid for the work and materials that enter in to the project.

b) Penalty: Normally, the labour and material payment bond is issued in conjunction with and for the same limits as the performance bond.

 

13. Miscellaneous Bonds

There are a number of miscellaneous surety bonds required for different reasons, including:

a) Fiduciary Bonds:

A fiduciary is one who occupies a position of special trust or confidence in handling or supervising the affairs or funds of another. Persons appointed by the courts to serve as administrators, guardians, and trustees are deemed to be fiduciaries. Their duties involve managing, controlling or disposing the property of others.

 

b) Customs & Excise Bonds

All businesses are required to collect federal and provincial taxes on the goods or services sold by them. Certain products are subject to payment of a duty which must be collected at the time of sale and submitted to the Canadian government, for example, custom warehouses and distillers. Local, provincial and federal governments may require that bonds be filed with them guaranteeing the payment of those taxes and duties. These bonds fulfill that purpose.

 

License and Permit Bonds

Federal, Provincial and Municipal laws require that most businesses be licensed. All businesses must operate in accordance with statues, regulations or ordinances designed to ensure safety and general welfare of the public. Businesses which are the subject of special legislation and which require licenses include real estate brokerages, auctioneers, sewer tappers, plumbers, gas fitters and electricians.

 

14. Farm Coverages  (Habitational and Business)

Dwelling Building and Personal Property

Most Insurers use habitational property forms such as home owners, tenants or mobile home owners’ forms for both urban and rural risks. If requested, insurers will generally provide farmers with the same optional coverages as are available to Insured's living in towns and cities. For example, the sewer back up endorsement and fine arts added to a farm policy will usually be the same as that sold on policies provided to insured who live in towns and cities. The liability Coverage provided by habitational package policies is removed and replaced with a liability wording which provides both the business and personal liability protection needed by farmers.

Farm Liability may also be extended to include Farmer's limited Pollution Liability.

 

Major Farm Buildings and Contents

The coverage available for farm buildings and contents ranges from Fire to "All Risks".

 

Farm Buildings

Buildings insured under standard policy wordings include barns, workshops, granaries and machinery storage buildings. Silos are excluded unless insured specifically.

 

Replacement Cost Coverage available

Most Insurers will agree to provide coverage on a replacement cost basis subject to a standard Commercial Replacement Cost endorsement.

 

Rebuilding Clause - Deferred Payment

The rebuilding clause was designed to avoid paying the full amount of Insurance purchased when the out-buildings are not replaced after a loss. An initial payment of 50% of the amount payable at the time of the loss is made. The remaining 50% is payable if the building is repaired or replaced within nine months of the date of loss and within 200 feet of, and used for the same purpose as the building which was destroyed.

 

Farm Contents

While blanket coverage is most common, specific items having high values such as welders, grinders, and lathes may be separately scheduled on this policy.

 

Farm Machinery and Equipment

Farm Machinery and Equipment includes farm tools, machinery and implements usual to the operation of a farm except vehicles subject to registration under any government authority. Different Insurers may provide coverage with certain conditions such as:

a) Scheduled or Banket Basis

b) Named Perils or "All Risks"

c) Subject to Co-Insurance

d) Coverage for Newly acquired equipment and non-owned equipment.

 

Custom Farming

"Custom farming" is "the use of your farm machinery or equipment for others away from your farm premises, for compensation."

In addition to exclusions, you might expect for motorized equipment, farm machinery policies generally do not provide coverage for loss or damage:

a) Caused by Electrical Currents

b) Mechanical Break down;

c) To property engages in custom farming or while in transit in connection with custom farming unless permission for custom farming is stated in the declarations;

d) To Tires and Tubes unless caused by certain perils.

 

Farm Live stock

Livestock is usually insured for accidental death by a named peril as defined under the form, subject to the applicable co-Insurance. Some Insurer may provide theft coverage. An overall limit per animal may be included.

 

Farm Produce

Produce includes all farm produce listed on the declarations page and includes commercial feeds, fertilizers, herbicides and pesticides for crop use, milk and eggs, and anything that is an agricultural product of the soil. Coverage may be named perils or "All Risk" and subject to Co-Insurance clause. Some of the more common exclusions are:

a) Flax

b) Lumber

c) Unharvested Crops

 

There are a number of extensions available, including:

a) Unharvested Crops (Subject to a limit per acre)

b) Refrigerated Crops

c) Freezing, Extremes in Temperature

 

Other Farm Coverages

Certain Insurers who specialize in farm risks offer coverage for:

a) Farm Earnings (Business Interruption)

b) Game and Exotic Livestock

c) Embryo/Semen

 

Underwriting Considerations

 

Written Application Required

Before a policy can be issued, a completed application must be provided to the Insurer. A diagram showing the distance between all buildings, whether Insured or not, must accompany the application. Photographs will usually be required for the following types of buildings:

a) Open Sided structures Insured against wind or hail

b) Vacant Property

c) Buildings over a certain Age

d) Buildings being Insured on a replacement Cost basis

 

 

Commercial Property - Named Perils Form - IBC 4036

Words and Phrases in quotation marks have special meaning as defined in Clause 17

1. Indemnity Agreement:

In the event that any of the Insured property is lost or damaged during the policy period by an Insured peril, the Insurer will indemnify the Insured against the indirect loss or damage so caused to an amount not exceeding whichever is the least of:

a) The value of the lost or damaged property as determined in Clause 15;

b) The Interest of the Insured in the property;

c) The amount of Insurance specified on the "Declarations Page" for the lost or damaged property

 

The inclusion of more than one person or interest shall not increase the Insurer's liability.

 

2. Insured property

This form insures those of the following items for which an amount of Insurance is specified on the "Declarations Page" and only while at the "premises":

"Building"

"Equipment"

"Stock"

"Contents"

"All Property"

 

3. Deductible

The Insurer is liable for the amount by which the loss or damage caused by an insured peril exceeds the amount of deductible specified on the "Declarations Page" in any one occurrence.

Should any occurrence give rise to the application of more than one deductible amount for any one property, only the highest deductible will be applied.

 

4. Co-Insurance

This clause applies separately to each item for which a co-Insurance percentage is specified on the "Declarations Page" and produced by multiplying the value of the property as determined in Clause 15 by the Insurance percentage specified on the Declarations “If the Insured fails to do so, the Insured shall be entitled to recover only that portion of any loss that the amount of Insurance in force at the time of loss bears to the amount of Insurance required to be maintained by this clause.

 

5. Insured Perils

This form insures against direct physical loss of or damage to the Insured property caused by the following perils:

a) Fire or lightning

b) Explosion: Except with respect to explosion of natural, coal or manufactured gas, there shall be in no event be any liability hereunder for loss or damage caused by the explosion, rupture or bursting in or of the following property owned, operated or controlled by the Insured:

i. a) The portions containing steam or water under steam pressure of all boilers generating steam, and piping or other equipment connected to said boilers and containing steam or water under steam pressure;

b) piping and apparatus or their parts normally containing steam or water under steam pressure from an external source and while under such pressure;

c) The combustion chambers or fire boxes of steam generating boilers of the chemical recovery type and the flues or passages which conduct the gases of combustion from them;

d) Smelt Dissolving Tanks;

 

ii. Other vessels and apparatus, and connected pipes, while under pressure, or while in use or in operation, provided their maximum normal internal pressure exceeds 103 kilopascals (15 pounds per square inch) above atmospheric pressure, except that liability is specifically assumed for loss or damage resulting from the explosion of manually portable gas cylinders;

iii. Moving or rotating machinery parts of same when such loss or damage is caused by centrifugal force or mechanical breakdown;

iv. Any vessels and apparatus and connected pipes while undergoing pressure tests, but this exclusion shall not apply to other insured property that has been damaged by such explosion;

v. Gas Turbines

 

The following are not explosions within the intent or meaning of this section:

a) Electric Arcing or any coincident rupture of electrical equipment due to such arcing;

b) Bursting or rupture caused by hydrostatic pressure or freezing;

c) Bursting or rupture of any safety disc, rupture diaphragm or fusible plug.

 

c) Impact by aircraft, spacecraft or Land Vehicle: The terms Aircraft and spacecraft include articles dropped from them.

There shall be in no event be any liability for cumulative damage or loss or damage:

i. Caused by land vehicles belonging to or under the control of the Insured or any of his employees;

ii. To Aircraft, spacecraft or land vehicles causing the loss;

iii. Caused by any Aircraft or spacecraft when being taxied or moved inside or outside of the building.

 

d) Riot, Vandalism or Malicious Acts: The term Riot includes open assemblies of strikers inside or outside the "premises" who have quitted work and of locked out employees.

There shall in no event be any liability for loss or damage:

i. Due to cessation of work or by interruption to process or business interruption or by change (S) in temperature;

ii. Due to flood or release of water impounded by a dam, or due to any explosion other than an explosion in respect of which there is Insurance under clause 5(B);

iii. Due to theft or attempted theft

 

e) Smoke: The term "Smoke" means smoke due to a sudden, unusual and faulty operation of any stationary furnace. There shall be ion no event any liability for any cumulative damage.

f) Leakage from Fire protective equipment: The term leakage from fire protective equipment means:

i. The leakage or discharge of water or other substances from;

ii. The collapse of;

iii. The rupture due to freezing of;

"Fire protective Equipment" for the "premises" or for adjoining structures

 

g) Windstorm or hail: There shall in no event be any liability for loss or damage:

i. To the Interior of the "building" or to "contents" unless damage occurs concurrently with and results from an aperture caused by windstorm or hail;

ii. Directly or indirectly caused by any of the following, whether driven by wind or due to windstorm or not: snow-load, ice-load, tidal wave, high water, overflow, flood, waterborne objects, waves, ice, land subsidence, land slip

 

6. Exclusions

A. Excluded Property

This form does not insure loss of or damage to:

a) Property at locations which, to the knowledge of the Insured, are vacant, unoccupied or shut down for more than 30 consecutive days;

b) Electrical Devices, appliances or wiring caused by artificially generated electrical currents, including arcing. This exclusion does not apply to loss or damage caused directly by resultant fire or explosion;

c) Growing plants, trees, shrubs or flowers, all while outside the "building", except as provided in Clause 7(D);

d) Money, "Cash Cards", Bullion, platinum and other precious metals and alloys, securities, stamps, tickets (except lottery tickets), and tokens, or evidence of debt or title;

e) Automobiles, watercraft, amphibious or air cushion vehicles, Aircraft, space craft, trailers, motors or other accessories attached to or mounted on such property. This exclusion does not apply to watercraft, or amphibious or air cushion vehicles held for sale, or to unlicensed automobiles or unlicensed trailers used in the business of the Insured when on the "premises";

f) Property illegally acquired, kept, stored or transported; property seized or confiscated for breach of any law or by order of any public authority;

g) Roadways, walkways, parking lots or other exterior paved surfaces. This exclusion does not apply to the first $10,000 of any loss otherwise insured;

h) "Equipment" or "Stock" occasioned by or happening through their undergoing any process involving the application of heat.

 

B. Excluded Perils

This form does not insure against loss or damage caused directly or indirectly:

a) In whole or in part by war, Invasion, Act of foreign enemy, Hostilities (whether war is declared or not), civil war, rebellion, revolution, Insurrection or military power. This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or in any sequence to the occasioning of the loss or damage.

b) i. By any nuclear incident (as defined in the Nuclear Liability Act or any other nuclear liability act, law or statue, or any amending law) or nuclear explosion, except for ensuing loss or damage which results directly from fire, lightning or explosion of natural, coal or manufactured gas;

ii. By contamination by radioactive material;

c) Proximately or remotely, arising in consequence of or contributed to by the enforcement of any-by law, regulation, ordinance or law regulating zoning or the demolition, repair or construction of buildings or structures, which by-law, regulation, ordinance or law makes it impossible to repair or reinstate the property as it was immediately prior to the loss;

d) In whole or in part, by illegal "Drug operations" or by any activity or decision of a government agency or other entity to prevent, respond to or terminate "Drug Operations". This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or in any sequence to the occasioning of loss or damage.

 

C. Pollution Exclusion

This form does not Insure against:

a) Loss or damage caused directly or indirectly by any actual or alleged spill. Discharge, emission, dispersal, seepage, leakage, migration, release or escape of "pollutants", nor the cost or expense of any resultant "clean up". This exclusion does not apply:

i. If the spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of pollutants is directly caused by an Insured peril, or

ii. To loss or damage caused directly by a resultant Insured peril

 

b) Cost or expense for any testing, monitoring, evaluating or assessing of an actual, alleged, potential, or threatened spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of "pollutants".

 

D. Data Exclusion

1. This form does not Insure data

2) This form does not Insure loss or damage caused directly or indirectly by a "data problem"

This exclusion (2) does not apply to loss or damage caused directly by resultant fire, explosion, smoke or leakage from fire protective equipment.

 

E. Terrorism Exclusion

This form does not Insure loss or damage caused directly or indirectly by a a "data problem"

This exclusion does not apply to loss or damage caused directly by resultant fire, explosion, smoke or leakage from "fire protective equipment"

 

E. Terrorism Exclusion

This form does not insure loss or damage caused directly or indirectly, in whole or in part, by terrorism or by any activity or decision of a government agency or other entity to prevent, to respond or to terminate "terrorism". This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or in any sequence to the occasioning of loss or damage. If any portion of this exclusion is found to be invalid, unenforceable or contrary to statue, the remainder shall remain in full force and effect.

 

F. Fungi and spores Exclusion

This form does not Insure:

a) Loss or damage consisting of or caused directly or indirectly, in whole or in part, by any fungi or spores. This exclusion does not apply:

i. If the fungi or spores are directly caused by the Insured peril, or

ii. To loss or damage caused directly by resultant Insured peril;

 

b) The cost or expense for any testing, monitoring, evaluating or assessing of "fungi", or "spores"

 

7. Extensions of Coverage

The following extensions of coverage shall not increase the amounts of Insurance applying under this form and are subject to all the conditions of this form.

 

a) Removal: If any of the Insured property is necessarily removed from the "premises" to prevent loss of or damage to or further loss of or damage to such property, that part of the Insurance under this form that exceeds the amount of the Insurer's liability for any loss already incurred shall, for 7 days only, or for the unexpired term of the policy if less than 7 days, insure the property removed and any property remaining at the premises in the proportions which the value of the property in each of the locations bears to the value of the property in them all.

b) i. Debris Removal: The Insurer will indemnify the Insured for expenses incurred in the removal from the "premises" of debris of the Insured property, occasioned by loss of or damage to such property, for which loss or damage Insurance is afforded under this form.

The amount payable under this extension shall not exceed 25% of the sum of:

1. The total amount payable for the direct loss of or damage to Insured property; and

2) The amount of applicable deductible

 

ii) Removal of Windstorm Debris: The Insurer will indemnify the Insured for expenses incurred in the removal of debris or other property which is not insured by this form but which has been blown by windstorm upon the premises.

Extensions of coverage b (i.) and b (ii) do not apply to costs or expenses:

a) To clean up pollutants from land or water; or

b) For testing, monitoring, evaluating or assessing of an actual, alleged, potential, or threatened spill, discharge, emission, dispersal, seepage, leakage migration, release or escape of pollutants.

 

Debris Removal expense shall not be considered in the calculation of the value as determined in clause 15 for the purpose of applying Co-Insurance.

 

c) Personal Property of Officers and Employees: At the option of the Insured, "equipment" also includes personal property of officers and employees of the Insured. The Insurance on such property:

i. Shall not attach if it is insured by the owner, unless the insured is obliged to insure it or is liable for its loss or damage;

ii. Is, in any event, limited to maximum recovery of $250 in respect of any one officer or employee;

iii. Shall apply only to loss or damage occurring at the "premises"

 

d) Growing plants, Trees, Shrubs or flowers outside the building: This form is extended to insure loss of or damage to growing plants, trees, shrubs or flowers outside the building caused directly by the Insured perils other than loss of or damage by the perils of windstorm or hail as stated in clause 5 (G). This extension of coverage shall be limited to a maximum recovery, including debris removal expense, of:

i. $500 for each growing plant, tree, shrub or flower; and

ii. $5000 for any one occurrence

 

8. Permission

Permission is granted:

a) For other Insurance concurrent with this form;

b) To make additions, alterations or repairs;

c) To do such work and to keep and use such articles, materials and supplies in such quantities as are usual or necessary to the Insured's business.

 

9. Breach of Condition

If the Insured does not comply with a condition of this insurance, any claim for subsequent loss or damage is not recoverable. The Insurer will not deny a claim for this reason if the Insured proves that the non-compliance neither caused nor worsened the loss or damage. Coverage will not be affected if the Insured fails to comply with a condition in part of the "premises" over which Insured has no control.

 

10. Reinstatement

Loss under any item of this form shall not reduce the applicable amount of Insurance

 

11. Subrogation

The Insurer, upon making any payment or assuming liability for payment under this form, shall be subrogated to all rights of recovery of the Insured against others and may bring action to enforce such rights. All rights of subrogation are waived against any corporation, firm, individual or other interest with respect to which Insurance is provided by this policy.

Where the net amount recovered, after deducting the costs of recovery, is not sufficient to provide a complete indemnity for the loss or damage suffered, that amount shall be divided between the Insurer and the Insured in the proportion in which the loss or damage has been borne by them respectively. Any release from liability entered in to by the Insured prior to the loss shall not affect the right of the Insured to recover.

 

12. Property Protection Systems

It is a condition of this Insurance, for the purpose of Clause 9, that the Insured shall immediately notify the Insurer of any interruption to, or flaw or defect, coming to the knowledge of the Insured, in any:

a) Sprinkler or other fire extinguishing system; or

b) Fire detection system; or

c) Intrusion detection system;

and shall also immediately notify the Insurer of the cancellation or non-renewal of any contract which provides monitoring or maintenance services to any of these systems or of the notification of suspension of police service in response to any of these systems.

 

13. Premium Adjustment

This clause is applicable if a specific amount of Insurance is shown on the "Declarations Page" for "stock"

If, within six months after the expiry or anniversary date of each policy period, the Insured shall file with the Insurer a premium adjustment Application form showing, for the policy period, the value of the "stock" the value of the stock on the last day of each month at each "premises"  as commented upon by the Insured's accountant, the actual premium for the policy period shall then be calculated at the…… applying to each "premises" for the average amount of the total values declared. If the premium paid by the Insured for such stock exceeds the actual premium thus calculated, the Insurer shall refund to the Insured any excess paid, subject to a maximum refund of 50% of the premium paid. In the event of any monthly declared values being in excess of the amount of Insurance, the amount of excess shall not be included in the premium adjustment calculations.

 

14. Verification of Values

The Insurer or its duly appointed representative shall be permitted at all reasonable times during the policy period, or within a year after termination or expiration, to inspect the Insured property and to examine the Insured's books, records and such policies as relate to any Insured property. Such inspection or examination shall not waive nor in any manner affect any of the terms or conditions of this form

 

15. Basis of valuation

The Value of Insured property shall be determined as follows:

a) Unsold stock: the actual cash value of the property at the time and place of loss or damage, but in no event to exceed what it would cost to repair and replace with material of like kind and quality;

b) Sold "Stock": the selling price after allowance for discounts;

c) The property of others in the custody of the Insured for the purpose of performing work upon it: the amount for which the Insured is liable.

d) Tenant's Improvement:

i) If repaired or replaced with due diligence and dispatch, the amount actually and necessarily expended, but not exceeding the actual cash value of the tenant's improvements at the time and place of loss or damage;

ii) If not repaired or replaced with due diligence and dispatch, the portion of the original cost of the lost or damaged tenant's improvements which the unexpired term of the lease at the time of loss or damage bears to the period(s) from the date(s) such tenant’s improvements were made to the expiration date of the lease;

e) Business records, including those which exist on electronic or magnetic media (other than pre-packaged software programs):

i. The cost of blank materials for reproducing the records; and

ii. The costs of labour to transcribe or copy the record when there is a duplicate.

f) All other Insured property under this form and for which no specific conditions have been set out: the actual cash value at the time and place of loss or damage, but not exceeding what it would then cost to repair or replace with material of like kind and quality

 

Actual Cash Value: Various factors shall be considered in the determination of the actual cash value. The factors to be considered shall include, but not be limited to, replacement cost less any depreciation and market value. In determining depreciation, consideration shall be given to the condition of the property immediately after the damage, the resale value, the normal life expectancy of the property and obsolescence.

This insurance is intended to cover the project only while it is actually in the course of construction. For that reason, many brokers refer to this as COC policy. Coverage automatically ceases when the building becomes occupied.

 

16. Property of Others

At the option of the Insurer, any loss may be paid to the Insured or adjusted with and paid to the customer or the owner of the property.

 

17. Definitions

Whenever used in this form:

a) All property means building, equipment and stock

b) Building means:

the building(S) described on the "Declarations Page" and includes:

i. Fixed structures pertaining to the building (S) and located on the "premises";

ii. Additions and extensions communicating and in contact with the building (S)

iii. Permanent Fittings and fixtures attached to and forming part of the building (S);

iv. Materials, Equipment and supplies on the premises for maintenance of, and normal repairs and minor alterations to the building or for building services;

v) Growing plants, trees, shrubs or flowers inside the building used for decorative purposes when the Insured is the owner of the building.

 

c) Cash Cards means cards designed to store a cash value by electronic means as a mode of payment, without a personal identification number and without direct access to a bank or other account

d) Clean up means the removal, containment, treatment, decontamination, detoxification, stabilization, neutralization and remediation of "pollutants", including testing which is integral to any of these processes.

e) Contents means "equipment and Stock"

f) Data means representations of information or concepts , in any form

g) Data problem means

i. Erasure, destruction, corruption, misappropriation, missing

ii. Error in cleaning, amending, entering, deleting or using data"; or

iii. Inability to transmit, receive or use data

 

h) Declarations Page means the declarations page applicable to this form

i) Drug operations means cultivating, harvesting, processing, distributing or selling of any substance falling within the controlled Drugs and Substances act. This includes, but is not limited to Cannabis.

 

j) "Equipment" means:

i. Generally all contents usual to Insured's business, including furniture, furnishings, Fittings, fixtures, machinery, tools, utensils and appliances, other than "building" or "Stock"

ii) Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable;

iii) Tenant's Improvements, which are defined as building improvements, alterations and betterments made at the expense of the Insured to a building occupied by the Insured and which are not otherwise insured, provided the insured is not the owner of such building. If the Insured purchased the use interest in tenant's improvements made by a predecessor tenant, this form applies as though such tenant's improvements had been made at the expense of the Insured.

 

k) "Fire Protective Equipment" includes tanks, watermains, hydrants, valves and other apparatus whether used solely for fire protection or jointly for fire protection and for other purposes, but does not include:

i. Branch piping from a joint system where such branches are used entirely for purposes other than fire protection;

ii. Any watermains or appurtenances located outside of the premises and forming a part of public water distribution system;

iii. Any pond or reservoir in which water is impounded by a dam.

 

l) Fungi includes, but is not limited to, any form or type of mould, yeast, mushroom or mildew whether or not allergenic, pathogenic or toxigenic, and any substance, vapour or gas produced by, emitted from or arising out of any "Fungi", spores or resultant mycotoxins, allergens or pathogens.

m) Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including odor, vapour, Fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

n) "Premises” means entire area within property lines and areas under adjoining sidewalks and driveways at each location described under the declaration page and in or on vehicles within 100 meters (328 feet) of such locations.

o) Spores includes, but is not limited to, one or more reproductive particles or microscopic fragments, produced by, emitted from or arising out of any fungi.

p) Stock means:

i. Merchandise of every description usual to the Insured's business;

ii. Packing, wrapping and Advertising materials; and

iii) Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable

 

p) Stock means

i. Merchandise of every description usual to Insured's business;

ii. Packing, wrapping and advertising materials; and

iii. Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable.

 

q) Terrorism: Means an ideologically motivated unlawful act or acts, including but not limited to the use of violence or force or threat of violence or force, committed by or on behalf on any group (S), organization (S) or government (s) for the purpose of influencing any government and/or instilling fear in the public or a section of the public.

 

Commercial Property - Broad Form                                                                                                  IBC 4037 09.06

Words and Phrases in quotation marks have special meaning as defined in clause 18

1. Indemnity Agreement

In the event that any of the Insured property is lost or damaged during the policy period by an insured peril, the insurer will indemnify the Insured against the direct loss or damage so caused to an amount not exceeding whichever is the least of:

a) The value of lost or damaged property as determined in clause 15;

b) The interest of the Insured in the property;

c) the amount of Insurance specified in the declarations page for the lost or damaged property

The inclusion of more than one person or interest shall not increase the Insurer's liability.

 

2. Insured Property

A. This form insures those of the following items for which an amount of Insurance is specified on the "Declarations Page" and only while at the "premises";

"Building"

"Equipment"

"Stocks"

"Content"

"All Property"

 

B. This form also insures those of the following items for which an amount of Insurance is specified on the "Declarations page"

Temporary Locations: "Contents other than at a specified location, except while in transit or outside Canada. There shall be no liability under this item at any location owned, rented, or controlled in whole or in part by the Insured,

Building at newly acquired location: "Building at any newly acquired location within Canada. This coverage attaches at the time of the acquisition and extends to a period of 30 days, or to a date of endorsement of this form adding such location, or until the expiry date of the policy, whichever occurs first.

Property In Transit: "Contents in the course of transit within Canada or the continental United States of America until delivered

Sales Representative: "Contents", whether in transit or otherwise, within Canada or in the continental United states of America while in the custody of the sales representative of the Insured.

 

3. Deductibles

The Insurer is liable for the amount by which the loss or damage caused by an insured peril exceeds the amount deductible specified on the declarations page on any one occurrence. Should any occurrence give rise to the application of more than one deductible amount for any one premises, only the highest deductible will be applied.

 

4. Co Insurance

This clause applies separately to each item for which a co-Insurance percentage is specified on the "Declarations Page" and only where the amount of loss or damage exceeds the lesser of 2% of the applicable amount of Insurance or $5000.

 

5. Insured perils

This form, except as otherwise provided, insurers against all risks of direct physical loss of or damaged to the Insured property

 

6. Exclusions

A. Excluded property

This form does not insure loss of or damage to:

A. Sewers, drains and water mains located beyond the outside bearing walls or foundations of the building, outside communication towers, antennae (satellite receivers) and attached equipment, street clocks or exterior signs. This exclusion does not apply to loss or damage caused directly by named perils.

B. Property at locations which, to the knowledge of the Insured, are vacant, unoccupied or shut down for more than 30 consecutive days;

C. Electrical devices, appliances or wiring caused by artificially generated electrical currents, including arcing. This exclusion does not apply to loss or damage caused directly by resultant fire or explosion as described in Clause 18 m;

D. Growing plants, shrubs or flowers, all while outside the building except as provided in Clause 7 e.

E. Animals, fish or birds. This exclusion does not apply to loss or damage caused directly by named perils or by theft and attempted theft;

F. Money, cash cards, bullion, platinum, and other precious metals and alloys securities, stamps, tickets (except lottery tickets) and tokens, or evidence of debt or title;

G. Automobiles, watercraft, amphibious or air cushion vehicles, aircraft, spacecraft, trailers, motors or other accessories attached to or mounted on such property. This exclusion does not apply to watercraft or amphibious or air cushion vehicles held for sale, or to unlicensed automobiles or unlicensed trailers used in business of the insured when on the premises;

H. Furs, fur garments, jewels, jewellery, costume jewellery, watches, pearls, precious and semi precious stones. This exclusion does not apply to;

A. The first $1000 of any loss otherwise insured; or

B. Loss or damage caused directly by named perils;

 

I. Property insured under the terms of any marine insurance, and property while waterborne, except while on a regular ferry or railway car transfer in connection with land transportation;

F. Property from the time of leaving the insured’s custody if it is:

I. Loaned or rented or leased to others; or

Ii. Sold by the insured under conditional sale or instalment payment or other deferred payment plan.

This exclusion (j) does not apply while such property is in the custody of a carrier for hire for the purpose of delivery at the risk of the insured. Property in the custody of a sales representative outside the premises, unless the amount is shows on the declarations page for sales representative.

L. Property illegally acquired, kept or stored or transported; property seized or confiscated for the breach of any law or by order of any public authority.

M. I. Any pressure vessel having normal internal working pressure greater than 103 kilopascals (15 pounds per square inch) above atmospheric pressure;

Ii. Any boiler, including it’s connected piping and equipment, which contains steam or water under steam pressure (excepts tanks having internal diameter having 610 millimetres (24 inches) or less used for the storage of hot water for domestic use); caused directly by explosion.

caused directly or indirectly by explosion rupture, bursting, cracking, burning out or bulging of such property while connected ready for use.

This exclusion (m) does not apply to I. manually portable gas cylinders;

Ii. Explosion of natural, coal or manufactured gas;

N. Roadways, walkways, parking lots or other exterior paved surfaces. This exclusion does not apply to first $10000 of any loss otherwise insured;

O. Equipment or stock while actually being worked upon and directly resulting from such work or caused by repairing, adjusting or servicing of equipment or stock. This exclusion does not apply to loss or damage caused directly by resultant fire or explosion as described in Clause 18m.

P. Exterior glass or vitriolic and its lettering or ornamentation, except as provided in Clause 7d. This exclusion does not apply to loss or damage caused directly by named perils.

B. Excluded perils:

This form does not insure against loss or damage caused directly or indirectly:

A. In whole or in part by earthquake. This exclusion applies whether or not there are one or more causes or events that contribute concurrently or in sequence to the occasioning of loss or damage except loss or damage caused by resultant fire, explosion, smoke or leakage from fire protective equipment all as described in Clause 18 m. This exclusion does not apply to property in transit.

B. In whole or in part by flood, including surface water, waves, tides, tidal waves, tsunamis, or the breaking out or overflow of natural or artificial body of water. This exclusion applies whether or not there are one or more occasioning of loss or damage, except loss or damage caused directly by resultant fire, explosion, smoke, leakage from fire protective equipment all as described in Clause 18 m. This exclusion does not apply to property in transit or loss or damage caused directly from a water main;

C. By Seepage, leakage or influx of water from natural sources through basement walls, doors, windows or other openings, foundations, basement floors, sidewalk, sidewalk lights, unless concurrently and directly caused by a peril not otherwise excluded under this form;

Ii. By the backing up or overflow of water from sewer dumps, septic tanks or drains, wherever located, unless concurrently and directly caused by perils not otherwise excluded in this form;

Ii. By the backing up or overflow of water from sewers, sumps and septic tanks or drains, wherever located, unless concurrently and directly caused by peril not excluded in this form.

Iii. By the entrance of rain, sleet or snow through doors, windows, skylights or other similar walls or roof openings, unless through an aperture concurrently and directly caused by a peril not otherwise excluded in this form;

D. By centrifugal force, mechanical or electrical breakdown or derangement, in or on the premises. This exclusion does not apply to loss or damage caused directly by resultant fire;

 

E. I. By dampness or dryness of atmosphere;

Ii. By changes in or extremes of temperature, heating or freezing;

Iii. By total or partial interruption to the supply of electricity, water, gas or steam;

This exclusion does not apply to:

1. Loss or damage caused directly by rupture of pipes or breakage of apparatus not excluded in paragraph m of Clause 6 A;

2.  Damages to pipes caused directly by freezing unless such pipes are excluded in paragraph m of Clause 6 A.

3. Loss or damage to building and equipment caused directly by:

4

F. I. By shrinkage, evaporation, loss of weight, leakage of contents, exposure to light, change in Color, texture or finish;

Ii. By contamination;

Iii. By marring, scratching or crushing

This exclusion (f) does not apply to loss or damage directly caused by named perils, theft or attempted theft;

This exclusion does not apply to loss or damage caused directly by:

A. Named Perils

B. Rupture of pipes or breakage of apparatus not excluded in paragraph m of Clause 6 A

C. Theft or attempted theft

D. Accident to a transporting conveyance

 

G. By smoke from agricultural smudging or industrial operations.

H. By rodents, insects or vermin. This exclusion does not apply to loss or damage caused directly by a peril not otherwise excluded by this form.

I. By delay, loss of market, or loss of use or occupancy

j. In whole or in part by war, invasion, act of foreign enemy, hostilities (whether war was declared or not), civil war, rebellion, revolution, Insurrection or military power. This exclusion applies whether or not there are one or more other causes or events (whether covered or not) that contribute concurrently or any sequence to the occasioning of the loss or damage;

k. i) By any nuclear incident (as defined in the Nuclear Liability Act or any other Nuclear Liability Act, law or statue, or any amending law) or nuclear explosion, except for ensuing loss or damage which results from fire, lightning or explosion of natural, coal or manufactured gas, as all described in clause 18 (m);

m. By contamination of radioactive material;

 

l. i) By any dishonest or criminal act on the part of the Insured, any other party of Interest, agents of the Insured, any person to whom the property may be entrusted (except bailees for hire);

ii) By theft or attempted theft by employees of the Insured;

 

m) By snowslide, landslide, subsidence or other earth movement. This exclusion does not apply to property in transit or to loss or damage caused directly by resultant

 

 

 

7. Extensions of coverage

The following extensions of coverage shall not increase the amount of insurance applying under this form and are subject to all conditions of this form.

A. Removal: if any of the insured property is necessarily removed from the premises to prevent loss of or damage to or further loss or damage to such property, the part of insurance that exceeds the amount of insurers liability for any loss already incurred shall, for seven days only, or for the unexpired term of the policy if less than seven days insure the property remaining on the premises in the proportions in which the value of property in each of the locations bears to the value of the property in them all.

B. I. Debris Removal: The Insurer will indemnify the insured for expenses incurred in the removal from the premises of debris of the insured property, occasioned by loss or damage to such property for which loss or damage insurance is afforded under this form.

The amount payable shall not exceed 25% of the sum of:

1. The total amount payable for direct loss or damage to insured property;

2. The amount of applicable deductible

 

II. Removal of windstorm debris: The insurer will indemnify the insured for the expenses incurred in the removal of debris or other property which is not insured by this form but has been blown by windstorm upon the premises.

 

Extensions of coverage B I) and b II) does not apply to cost or expenses:

A. To clean up pollutants from land or water; or

B. For Testing, monitoring, evaluating or assessing of an actual, alleged, potential or threatened spill, discharge, emission, dispersal, seepage, leakage, migration, release or escape of pollutants.

 

Debris removal expense shall not be considered in the calculation of the value as determined in clause 15 for the purpose of applying co insurance.

 

C. Personal property of Officers and Employees: At the option of the Insured,” Equipment” also includes personal property of officers and employees of the Insured.

I. Shall not attach if it is insured by the owner, unless the Insured is obliged to insure it or is liable for it's loss or damage;

II. Is, in any event, limited to a maximum recovery of $250 in respect of any one officer or employee.

Iii. Shall apply only to loss or damage occurring at the premises.

 

D. Building Damage by theft: This form extended to insure damage (except by fire) to that part of the building occupied by the Insured directly resulting from theft or attempted theft and from vandalism or malicious acts committed on the same occasion, provided the insured is not the owner of such building and is legally liable for such damage and the building is not otherwise insured under this form. This extension is limited to a maximum recovery of $2500 for any one occurrence.

E. Growing plants, trees, shrubs or flowers outside the building: This form is extended to insure loss of or damage to growing plants, trees, shrubs or flowers outside the building caused by name perils. (With the exception of windstorm or hail as described in clause 18 m for theft or attempted theft. This extension of coverage shall be limited to maximum recovery, including debris removal expense, of;

I. $500 for each plant, tree, shrub or flower

I'm. $5000 for any one occurrence

 

8. Permission

Permission is granted:

A. For other insurance concurrent with this form

B. To make additions, alterations or repairs

C. To do such work and to keep and use such articles, materials, supplies in such quantities as are usual or necessary to Insured’s business.

 

9. Breach of condition

If the insured does not comply with the conditions of this insurance, any claim for subsequent loss or damage is not recoverable.

The Insurer will not deny a claim for this reason if the insured proves that none-compliance neither caused or worsened the loss or damage. Coverage will not be affected if the insured fails to comply with a condition in part of premises over which Insured has no control.

 

10. Reinstatement:

Loss under any item of this form does not reduce the applicable amount of insurance.

 

11. Subrogation

The Insurer, upon making any payment or assuming liability for payment shall be subrogated to all rights of recovery of Insured against others and may bring action to enforce such rights of recovery of the insured against others to enforce such rights. All rights of subrogation are waived against firm or individual or other interest with respect to which insurance is provided by this policy.

Where the net amount recovered, after deducting the costs of recovery, is not sufficient to provide a complete indemnity for the loss or damage suffered, the amount shall be divided between the insurer and the Insured in the proportion in which the loss or damage has been borne by them respectively.

Any release from liability entered in to by the insured prior to loss shall not affect the right of the insured to recover.

At the option of the Insurer, any loss may be paid to the Insured or adjusted with and paid to the customer and the owner of the property.

 

12. Property Protection Systems

It is a condition of this Insurance, for the purpose of clause 9, that the Insured shall immediately notify the Insurer of any interruption to, or flaw or defect, coming to the knowledge of the Insured, in any:

a) Sprinkler or other fire extinguishing system; or

b) Fire Detection System;

c) Intrusion Detection system;

and shall also immediately notify the Insurer of the cancellation or non-renewal of any contract which provides monitoring or maintenance services to any of these systems or of the notification of the suspension of police services in response to any of these systems.

 

 

13. Premium Adjustments

This clause is applicable if a specific amount of Insurance is shown on the declarations page for stock. If, within six months after the expiry or anniversary date of each policy period, the Insured shall file with the Insurer a premium Adjustment Application form showing, for the policy period, the value of the stock on the last day of each month at each premises as commented upon by the Insured's accountant, the actual premium for the policy period shall then be calculated at the rate applying to each premises for the average amount of total values declared. If the premium paid by the Insured for such stock exceeds the actual premium thus calculated, the Insurer shall refund to the Insured any excess paid, subject to a maximum refund of 50% of the premium paid. In the event of any monthly declared values being in excess of the amount of the Insurance, the amount of excess shall not be included in the premium adjustment calculations.

 

14. Verification of values

The Insurer or its duly appointed representative shall be permitted at all reasonable times during the policy period, or within a year after termination or expiration, to inspect the Insured property and to examine the Insured's books, records and such policies as relate to any Insured property. Such Inspection or examination shall not waive nor in any manner affect the terms or conditions of this form.

 

15. Basis of Valuation

The value of the Insured property shall be determined as follows:

a) Unsold stock: the actual cash value of the property at the time and place of loss or damage, but in no event to exceed what it would cost to replace or repair with material of like kind and quality;

b) Sold Stock: The selling price after allowance for discounts;

c) the property of others in the custody and control of the Insured for the purpose of performing work upon it: the amount for which Insured is liable, but is not exceeding the actual cash value at the time and place of loss or damage plus allowance for labor and material expended to such time;

d) Tenant Improvements:

i. If repaired or replaced with due diligence and dispatch, the amount actually and necessarily expended, but not exceeding the actual cash value of the tenant's improvements at the time and place of loss or damage;

ii. If not repaired or replaced with due diligence and dispatch, the amount actually and necessarily expended, but not exceeding the actual cash value of tenant's improvements at the time and place of loss or damage;

e) Business Records, including those which exist on electronic or magnetic media (other than prepackaged software programs):

i. Cost of blank materials for reproducing the records; and

ii. The costs of labor to transcribe or copy the records when there is a duplicate

 

f) All other Insured property under this form and for which no more specific conditions have been set out: the actual cash value at the time and place of loss or damage, but not exceeding what it would then cost to repair or replace with material of like kind and quality.

 

Actual Cash value: Various factors shall be considered in the determination of actual cash value. The factors to be considered shall include, but not limited to, replacement cost less any depreciation and market value. In determining depreciation, consideration shall be given to the condition of the property immediately before the damage, the resale value, the normal life expectancy of the property and obsolescence.

 

16. Property Of Others

At the option of the Insurer, any loss may be paid to the Insured or adjusted with and paid to the customer and owner of the property.

 

17. Locked Vehicle Warranty

This clause does not apply to a property which is under the control of a common carrier. Warranted by the Insured that any vehicle in which the insured property is carried is equipped with a fully enclosed body or compartment, and the Insurer shall be liable in case of loss by theft from an unattended vehicle only as a direct result of forcible entry (of which there shall be visible evidence) in to such body or compartment, the doors of which are securely locked and windows closed.

 

18. Definitions

Wherever used in this form:

a) All property means building, equipment and stock

b) Building means:

the building described on the declarations page and includes:

i. Fixed structures pertaining to the building(S) and located on the premises;

ii. Additions and extensions communicating and in contact with the building (s);

iii. Permanent fittings and fixtures attached to and forming part of the building (s);

iv. Materials, equipment and supplies on the premises for the maintenance of, and normal repairs and minor alterations to the building or for building services;

v. Growing plants, trees, shrubs or flowers inside the building used for decorative purposes when the Insured is the owner of the building.

 

c) Cash Cards means cards designed to store a cash value by electronic means as a mode of payment, without a personal identification number or without direct access to a bank or other account.

d) Clean up means the removal, containment, treatment, decontamination, detoxification, stabilization, neutralization or remediation of pollutants, including testing which is integral to any of these processes.

e) Contents means equipment and stock

f) Data means representations of information or concepts, in any form

g) Data Problem means:

i. Erasure, destruction, corruption, misappropriation, misinterpretation of data,

ii. Error in creating, amending, entering, deleting or using "data"; or

iii. Inability to receive, transmit or use data

 

h) "Declarations Page" means the declarations page applicable to this form

i) Drug operations: Means cultivating, harvesting, processing, manufacturing, distributing or selling of any substance falling within the Controlled Drugs and Substances Act. This includes, but not limited to cannabis.

j) "Equipment" means:

i) Generally, all contents usual to Insured's business, including furniture, furnishings, fittings, fixtures, machinery, tools, utensils and appliances, other than "building" or "Stock"

ii) Similar property belonging to others which the Insured is under obligation to keep insured or for which he is legally liable;

iii) Tenant's Improvements, which are defined as building improvements, alterations and betterments made at the expense of the Insured to a building occupied by the Insured and which are not otherwise Insured, provided the Insured is not the owner of such building. If insured purchased the use interest in tenant's improvements made by a predecessor tenant, this form applies as though such tenant's improvements had been made at the expense of the Insured.

 

k) "Fire Protective Equipment"

Includes Tanks, watermains, hydrants, valves and any other apparatus, whether used solely for fire protection or jointly for fire protection or for other purposes, but does not include:

i. Branch piping from a joint system where such branches are used entirely for purposes other than fire protection.

ii. Any watermains or appurtenances located outside of the premises and forming a part of the public distribution system;

iii. Any pond or reservoir in which the water is impounded by a dam.

 

l) Fungi includes, but is not limited to, any form or type of mould, yeast, mushroom, or mildew whether or not allergenic, pathogenic or toxigenic, and any substance, vapour or gas produced by, emitted from or arising out of any fungi or spores or resultant mycotoxins, allergens or pathogens.

 

m) Named Perils means:

 

a) Fire or Lighting

b) Explosion: Except with respect to the explosion of natural, coal or manufactured gas, there shall be in no event any liability for loss or damage caused by explosion, rupture or bursting in or of the following property owned, operated or controlled by the Insured:

i)a. The portions containing steam or water under steam pressure of all boilers generating steam and piping or other equipment connected to said boilers and containing steam or water under steam pressure;

b) Piping and apparatus or their parts normally containing steam or water under steam pressure from an external source and while under such pressure;

c) The combustion chambers or fire boxes of steam generating boilers of the chemical recovery type and the flues or passages which conduct the gases of combustion from them;

d) Smelt dissolving tanks;

ii. Other vessels and apparatus and connected pipes, while under pressure, or while in use or in operation, provided their maximum normal internal working pressure exceeds 103 kilopascals (15 pounds per square inch) above atmospheric pressure, except that liability is specifically assumed for the loss or damage resulting from the explosion of manually portable gas cyclinders;

iii. Moving or rotating machinery or parts of same when such loss or damage is caused by centrifugal force or mechanical breakdown;

iv. Any vessels and apparatus and connected pipes while undergoing pressure tests, but this exclusion shall not apply to other insured property that has been damaged by such explosion;

v. Gas Turbines;

 

The following are not explosions within the intent or meaning of this section:

a) Electric Arcing or any coincident rupture of electrical equipment due to such arcing;

b) Bursting or rupture caused by hydrostatic pressure or freezing;

c) Bursting or rupture of any safety disc, rupture diaphragm or fusible plug

C. Impact by Aircraft, spacecraft or land vehicle: The terms Aircraft and Spacecraft include articles dropped from them.

There shall be in no event be any liability for cumulative damage or for loss or damage:

i. Caused by land vehicles belonging to or under the control of the Insured or any of his employees.

ii. To Aircraft, space craft or land vehicles causing the loss;

iii. Caused by any aircraft or space craft when being taxied or moved inside or outside of a building

 

D. Riot, Vandalism or Malicious Acts: The term riot includes open assemblies of strikers inside or outside the premises who have quitted work and locked out employees.

There shall be in no event be any liability for loss or damage:

i. Due to cessation of work or by interruption to process or business operations or by change(s) in temperature;

ii. Due to flood or release of water impounded by a dam, or due to any explosion other than an explosion in respect of which there is Insurance under clause 18 (m)(B);

iii. Due to theft or attempted theft

 

E. Smoke: The term smoke means smoke due to a sudden, unusual and faulty operation of any stationary furnace. There shall be in no event be any liability for cumulative damage:

F. Leakage From Fire protective Equipment: The term leakage from Fire protective equipment means:

i. Leakage or discharge of water or other substances from;

ii. Collapse of;

iii. Rupture due to freezing of;

"Fire protective equipment" for the premises" or for adjoining structures

 

G) Windstorm or hail: There shall be in no event any liability for loss or damage:

i. To the Interior of the building or to contents unless damage occurs concurrently with and results from an aperture caused by windstorm or hail;

ii. Directly or indirectly caused by any of the following, whether driven by wind or due to windstorm or not: snow-load, ice load, tidal wave, high water, over flow, flood, water borne objects, waves, ice, land subsidence, land slip.

 

n. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including odour, vapour, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.

o. Premises means the entire area within the property lines and areas under adjoining sidewalks and driveways at:

i. Each location described on the "Declarations Page";

ii. Temporary locations and any newly acquired location, if covered by this form;

and in or on vehicles within 100 metres (328 feet) of such locations.

 

p. Spores includes, but is not limited to, one or more reproductive particles or microscopic fragments produced by, emitted from or arising out of any fungi

q. Stock means:

i. Merchandise of every description usual to Insured's business;

ii. Packing, Wrapping and advertising materials; and

iii. Similar property belonging to others which the Insured is under obligation to keep Insured or for which he is legally liable

 

r. Surface water means water or natural precipitation temporarily diffused over the surface of the ground

s. Terrorism means an ideologically motivated unlawful act or acts, including but not limited to the use of violence or force or threat of violence or force, committed by or on behalf of any group(S), organization (S) or government (S) for the purpose of influencing any government and/or instilling fear in the public or section of a public... (RIBO)

f. Auto Insurance