CAIB 1 Chapter 4 Slides PDF

 Important Terms So Far Students take two minutes to write down one important term that has been discussed so far in the course, in the chat window. Remember the Forgetting Curve! Insurance Graphic Organizer  Explain the two parts of Insuring Owner’s Interest: 1) Personal Property...

 Important Terms So Far Students take two minutes to write down one important term that has been discussed so far in the course, in the chat window. Remember the Forgetting Curve! Insurance Graphic Organizer  Explain the two parts of Insuring Owner’s Interest: 1) Personal Property, 2) Other Essential Coverages. (10 points) The following slides contain the information needed to answer this question.  Insuring Owner’s Interest 1) Personal Property ○ Owners must insure contents of units ○ Condominium Unit Owners Comprehensive Form (IBC 1167) ○ Coverages are similar to Tenants Comprehensive Form (IBC 1163) ○ Condo unit owners can buy coverages under Condominium Unit Owners Basic Form (IBC 1165) ○ Covers Named Perils only  Insuring Owner’s Interest Cont’d 2) Other Essential Coverages Not to insure building values Condo unit owners have financial interest in building Condo buildings may be mis-managed. Add’l coverages: a) Coverage UI - Unit Improvements and Betterments ○ Covers: value of (original) carpeting/wall panelling/fixtures ○ Improvements by unit owners can increase unit’s value AND aren’t recoverable under Condo Corporation’s building policy ○ Insures unit improvements/betterments made/acquired by insured Any building/structure/swimming pool (on premises)  Insuring Owner’s Interest Cont’d 2) Other Essential Coverages b) Coverage U2 - Loss Assessment If Corporation’s policy isn’t enough to cover loss to collectively owned property: ○ Special assessment may be levied against each unit owner Special assessment may be due to ○ Under-insurance ○ Application of co-insurance penalty Ex. After applying for co-insurance clause, Corporation receives 75% of loss. Entitled to levy assessment on each unit to recover 25% shortfall. If $50k shortfall, unit owner with 10% ownership may be subject to $5k assessment.  Insuring Owner’s Interest Cont’d 2) Other Essential Coverages b) Coverage U2 - Loss Assessment Special assessment may be due to: ○ Cause of loss isn’t from insured peril OR is excluded under policy ○ Breach of policy condition No coverage: Assessment made due to large deductible on Condo Corporation’s insurance policy Covers only when assessment is due because of loss insured by owner’s policy Recent forms automatically insure: Limits equal to insurance amount under Section C - Personal Property Limits equal to multiple of insurance amount of Section C - Personal Property Standard limit is 2.5x limit of insurance  Insuring Owner’s Interest Cont’d 2) Other Essential Coverages c) Coverage U3 - Unit Additional Protection Covers insured’s unit Excludes damage to items U1 covers WHEN: ○ Condo Corporation doesn’t have insurance/is inadequate/isn’t effective  Insuring Owner’s Interest: 1) Personal Property, 2) Other Essential Coverages. (10 points) Answer  Chapter 4: Personal Liability Insurance Section 1: The Canadian Legal System Do not advise outside of your scope of expertise: ○ Clients with questions on law should be referred to qualified legal practitioner Two Legal Systems ○ Laws govern societies ○ When laws are violated, those responsible must account for their actions  Section 1: The Canadian Legal System 1) Criminal Law Wrongs against society Uses system of punishment to enforce rules (Statute in Criminal Code) Violators: prosecuted by prosecuting counsel (reps of authority) Penalties: fines, imprisonment, probation Rarely deals with compensating victims for wrongs suffered All Canadian provinces have same laws re:criminal wrongs  Section 1: The Canadian Legal System Cont’d 2) Civil Law ○ Settling disputes (individuals-other legal entities) in matters (not criminal acts) If dispute isn’t resolved via negotiation, proceeds to Civil Court which provides ruling(s) in line with legal principles Courts: involved when plaintiff (complainers) initiates action against defendant (wrongdoer) Goal: Seek compensation for financial loss/damage suffered  Section 1: The Canadian Legal System Cont’d 2) Civil Law Two systems of civil law reflect early French and English influences a) The Civil Code (Quebec) -used in France/modified for Quebec Matters producing disputes are codified into articles within the Civil Code Settling disputes via Civil Code Correct article is ascertained Decision made Theoretically: Court doesn’t HAVE to follow decision of a similar/previous case Practice: Court considers interpretation of article in similar/previous cases  Section 1: The Canadian Legal System Cont’d 2) Civil Law b) Civil Law (Common Law Provinces - Other than Quebec) ○ Legal responsibility (same as common law): Current court decisions should be in line with previous decisions (logical) whenever underlying circumstances are similar Purpose: Develop via successive judicial decision logical general principles that may later be used to compare to later cases NOT to develop body of written laws covering every subject (the Civil Code) OR THAT legal precedent in previous case last forever Circumstances change/precedent becomes invalid  Section 1: The Canadian Legal System Cont’d 2) Civil Law b) Civil Law (Common Law Provinces) Government Statutes ○ Statute Law Written law From bills introduced into parliament AND provincial legislative assemblies (for specific needs) ○ When passed: take priority over existing common law dealing with same matter ○ Statute Law Breach of some statutes (ex. Criminal Code) = a criminal act Many statutes focus on clarification of civil liability matters Ex. Purpose of Occupiers’ Liability Acts: to define responsibilities of occupiers for condition/use of premises  Courts of Law Courts have authority to interpret the law ○ Criminal Law: Dispensed by Criminal Courts ○ Civil Law: decided in Civil Courts ○ Three levels of Civil Courts: 1. Small Claims Court 2. County/District Courts 3. Supreme Court  Courts of Law Cont’d 1) Small Claims Court: Civil disputes (small amounts) ○ Ex. Small Claims Court in Saskatchewan hears cases ($5,000 or less) 2) Country/District Courts ○ Deals with cases with higher amounts 3) Supreme Court (AKA Appeal Court) ○ Can challenge judgements of lower courts in Supreme Court ○ Federal Court: deals with cases with specific federal jurisdiction Federal Court of First Recourse AND Federal Appeal Court ○ Final Authority on matters: Hears appeals in Provincial Courts of Appeal AND Federal Courts of Appeal  Two Branches of Civil Law 1) Contract Law DEFN Contract Law: Legally enforceable agreement between 2(+) parties ○ A private bargain with terms expressing intentions of parties ○ Obligations exist/are created as a reflection of private intent Not because of law Civil Court requires proper performance of terms of contract (all parties) 2) Tort Law Principles of common law: People are responsible to neighbours/others for acts that result in injury to them/damage to property Ex. Auto operator has responsibility (in law) to people who may be injured if operator is negligent  Courts of Law Cont’d 2) Tort Law Three requirements to establish negligence (in every tort action) a) Legal Duty Owed ○ One party has right not to be harmed (unreasonably) ○ Other party has duty to refrain from causing harm ○ Non-contractual right (otherwise would be contract law) ○ Defendant owed plaintiff a LEGAL DUTY b) Duty Breached ○ Must be violation of right to be free from harm OR Breach of duty (do not harm) ○ Legal duty is breached due to defendant’s negligence  Courts of Law Cont’d 2) Tort Law Three requirements to establish negligence (every tort action) Cont’d c) Plaintiff suffers damages (proximate result of defendant’s negligence) ○ Must be injury/damage to person with right to be free from harm ○ Law holds those responsible for injury/damage that is the proximate result of their actions Defendants: responsible for damages directly from their actions NOT intervening causes ○ Ex. Woman slips on ice in shopping centre’s parking lot. Tried to walk to store for first aid and was struck by a car (ran a stop sign) and was injured. If court rules against shopping centre,  Classification of Torts a) Intentional Torts Requirements: ○ Intent to invade rights of victim: Battery = force is intentional against freedom from bodily harm ○ Intentional undertaking resulting in injury/damage High degree of moral blame against tortfeasor because of intention of act/deliberateness of injury/damage b) Unintentional Torts (Negligence) Careless invasion of someone’s rights Negligence = most common tort  Negligence Negligence (Carelessness) Negligence: if results of an act/omission are reasonably expected/foreseen ○ If person knew/should have known conduct involved unreasonable risk ○ Ex. Golfer should foresee harm of driving a ball before previous group has progressed 100 yards ○ Ex. Injury to parties 350 yards down fairway = not be normally foreseen Behaviour in situations that don’t follow what a careful/prudent person would do OR if failure to act as careful/prudent person would  Innocent Until Proven Guilty For BOTH criminal and civil law re: negligence: It is the plaintiff’s responsibility to prove the case Exceptions a) Liability in Statute Statutes = created by provincial/federal govt’s might impose strict liability ○ Ex. Highway Traffic Act: Vehicular accidents causing injury to pedestrians usually assume defendant is guilty until proven innocent  Innocent Until Proven Guilty Cont’d Exceptions b) Res Ipsa Loquitur (The thing speaks for itself) ID’s accidents couldn’t be accounted for unless there was negligence on part of defendant Ex.Vehicle parked near construction site (cement buckets are hoisted) may have paint damage (splatters of cement) ○ Damage due to contractor’s negligence ○ Contracting firm must prove it wasn’t negligent  Innocent Until Proven Guilty Cont’d Exceptions c) Strict Liability Legislation or common law determine: some activities create liability without regard to fault Activities giving rise to strict liability: ○ Usually when harm to others is due to mishap/accident Person undertaking activities = usually someone better able to understand potential dangers involved ○ Reasonable to hold party accountable if someone is harmed ○ Laws imposing STRICT LIABILITY: “Person is guilty until proven innocent.” Activities imposing strict liability ○ Performance of reasonable activity in unreasonable setting  Innocent Until Proven Guilty Cont’d Exceptions c) Strict Liability Activities imposing strict liability ○ Allows spread of intentional fire ○ Keeps potentially dangerous things on premises Ex. Water in reservoir on premises escapes: injures/damages result Occupier of premises is strictly liable (Rylands V. Fletcher, 1868) ○ Keeps presumed/dangerous/presumed animals ○ Exposes employees to injury/disease ○ Damages: people/property on ground while operating aircraft  Create a “How” question Students take two minutes to create a “How” question based on the concepts covered so far, in the chat window. No question is too simple! Remember the Forgetting Curve!  Transferring Financial Responsibility for Losses Legal action may result in financial hardship: ○ Cost of penalties/fines = substantial ○ Civil action: goal is compensation for injury/damage Judgement against plaintiff could result in large loss of money Insurance companies: may assume financial responsibility of others WHEN ○ Fail to comply with some of society’s laws Criminal Acts Not Insured/Covered ○ Financial consequences due to insured’s criminal acts  Civil Liabilities Insurable Insurance companies may take on financial responsibilities of people/legal entities for torts ○ Associations/corporations/governments Most policies insure some tort liabilities: ○ Assumed by insureds Under separate agreement/contract  Features Common to Liability Policies 1) Insure Bodily Injury, Property Damage and/or other direct financial loss Liability policies: deal with certain activities, NOT to insure all exposures ○ Usually separate policy = needed for each of insured’s personal, business, professional, auto liability exposures ○ Liability exposure connected to autos must be insured under own policy Tort action: losses insured depend on type of policy: ○ a) Bodily Injury (Actions resulting in sickness/disease/death) ○ b) Personal injury (mental anguish/shock/humiliation) Parties wrongfully detained by store detective (suspicion of shoplifting) or victims of slander/libel = right to sue  Features Common to Liability Policies Cont’d 1) Insure Bodily Injury, Property Damage and/or other direct financial loss ○ Tort action: losses insured depend on type of policy: CONT’D d) Direct financial loss People depend on others for advice, advice turns out to be incorrect, may lead to a direct financial loss ○ Accountant/lawyer/insurance broker giving incorrect advice may be liable for resulting financial loss Most policies cover insured’s legal liability Bodily injury/property damage to 3rd parties) Coverage (under specialized liability policy) for other financial loss types (caused to others)  Features Common to Liability Policies Cont’d 2) Coverage provided for third party claims only Property insurance policies pay owner of property lost/damaged ○ Liability policies: indemnify insured for payments insured is legally liable for 3) Payment of damages limited to what is required for 3rd party loss compensation Initiate civil action against insured: plaintiff must file formal docs with court claiming damages ○ Courts may award damages (example of tortfeasors/punishment) Only damages paid by liability policies: Compensation for 3rd party’s financial loss, known as compensatory damages Usually assessed in terms of money  Definitions DEFN Third Party Person not party to agreement/transaction but may have rights DEFN Compensatory Damages ○ Damages paid by policies = awarded (compensation) for amount of third party’s (financial) loss DEFN Trespasser ○ Party on another’s premises for own purpose Without express/implied permission ○ Presence = no value to occupier ○ Party has (temporarily) appropriated property for own use DEFN Licensee: ○ Party entering premises for own purpose WITH occupier’s consent ○ Ex. postal workers, hunters, snowmobilers, etc.  Damages Awarded For Bodily Injury Common damages awarded for bodily injury in civil action include: a) Special Damages ○ Purpose: reimburse plaintiff for out of pocket expenses Ex. medical, hospital, nursing fees, loss of earnings from date of accident → date of settlement b) General Damages ○ Damages that can’t be quantified in monetary terms Reflect amount court believes will compensate fairly Ex. pain, suffering, loss of limbs, loss of future earnings capacity, damage to reputation, mental anguish, shock  Damages Awarded For Bodily Injury Cont’d Damages Awarded for Property Damage ○ Measured by loss amount occasioned by plaintiff ○ Amount determination: Value difference of tangible property before/after damage Actual losses from tangible property loss of use  Section 2 - The Law - Establishing Liability In Tort 6 legal precedents relating to personal liability exposures (most common) 1) Ownership of Property Responsible for maintenance of premises/activities on premises a) Persons Entering onto Premises ○ Common Law: Standard of duty of care to those entering premises is determined by WHY person is on premises ○ Standard of duty of care Not always the same for all persons entering property ○ Parties entering premises is usually a: Trespasser, Licensee, Invitee  6 Legal Precedents Relating to Personal Liability 1) Ownership Exposures of Property a) Persons Entering onto Premises i) Trespasser: ○ Legal Duty Owed No legal duty on occupier of premises for: safety of trespasser EXCEPT: Can’t set traps Can’t intentionally harm thief/vandal entering premises (trespasser) If use baseball bats/guns/weapons to harm trespassers = breach standard of duty of care (common law) Courts may hold occupier liable for damages to trespasser  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 1) Ownership of Property a) Persons Entering onto Premises i) Trespasser ○ Legal Duty Owed: Children Not usually deemed to be trespassers Warning signs doesn’t discharge of duty owed to children Children lack mature judgement to avoid risk Investigate/interfere with objects adults would not Common law: Owner must show every reasonable precaution was taken to safeguard objects that could cause injury to a child Object of attractive nuisance: construction machinery, swimming pools, trampolines, skateboard ramps  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 1) Ownership of Property a) Persons Entering onto Premises ii) Licensee ○ Licensee: Party entering premises for own purpose with occupier’s consent EXTENDED to parties entering land of another with express/implied invitation to transact business with owner/occupant OR Do act to his advantage or mutual advantage of both licensee and owner/occupant Ex. salespersons, milkmen, direct sellers of (other) products Social guests = licensees  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 1) Ownership of Property a) Persons Entering onto Premises ii) Licensee ○ Legal Duty Owed: Occupier of premises has no legal duty to make it safe for licensee’s use AND licensees must take premises as found Occupier had duty to warn licensees of hazard introduced to premises If hazard wouldn’t be normally expected If occupier knows hazard to be dangerous  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 1) Ownership of Property a) Persons Entering onto Premises iii) Invitee ○ DEFN Invitee (Invitee on land of another) 1) Enters via invitation (express/implied) 2) Entry is in connection with owner’s business OR activity owner conducts/permits entry 3) Mutual benefit OR benefit to owner ○ Generally customers of business are invitees BUT economic benefit isn’t required Ex. Persons using municipal parks, playgrounds, libraries, attending free lectures  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 1) Ownership of Property a) Persons Entering onto Premises iii) Invitee ○ Must have an element of invitation ○ Legal Duty Owed: Occupier has duty to protect invitee against: Dangers known and dangers discovered with reasonable care Provinces (BC, AB, ON, NS) have enacted Occupiers’ Liability Acts ○ Have amended common law terms “licensee/invitee” to “visitors.” ○ Replaces “common law duty” with “common duty.” Takes responsible care to ensure all visitors are reasonable safe while using premises  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 1) Ownership of Property b) Persons Outside Premises Neighbours/passers-by can be injured/damaged due to condition of premises/activities conducted Legal Duty Owed: ○ Common Law: owners/occupiers of property are responsible and must keep property free of defective structures/for property’s intended use ○ Occupiers must maintain buildings/land to avoid escape of water/sewage/ other that may cause loss/damage/injury ○ Occupiers may bring dangerous things onto premises for their own purposes that aren’t there by nature Occupiers = strictly liable if things escapes/causes injury/damage  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 2) Domestic Animals Claims can be from horses/cows but mostly from domesticated animals (dogs) Legal Duty Owed ○ Precedent before 1981: Owner isn’t liable for injuries cause if owner did not know of vicious nature/propensities of their dog 1981 Ontario ruling and now holds: no first free bite ○ Some Canadian towns/cities/municipalities have declared some dog breeds are dangerous Owners must have control over dogs and if have specific breeds: must buy specific limit of liability insurance for injuries ○ Wild Animals  6 Legal Precedents Relating to Personal Liability Exposures Cont’d The slides for “6 Legal Precedents Relating to Personal Liability Exposures - 3) Children - Legal Duty Owed,” have been moved to the CAIB 1 Chapter 4 Insurance Graphic Organizer (IGO) which can be accessed through your student portal. You can submit your IGO activity to your facilitator or ask questions in class. For an explanation of the slide information and an answer to the activity, please check out the “IGO Answers” videos in your student portal. Please ask questions if you need to!  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 4) Landlords (Apartments/Rental Dwellings) If rented premises injures occupier – No recourse for damages against landlord – Rented premises: apartments, private dwellings, summer cottages Legal Duty Owed Common Law: Landlords = not responsible to make sure a building/land rented to others is fit for its rented purpose UNLESS ○ Specifically warrant fitness for a purpose OR conceal adverse conditions  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 4) Landlords (Apartments/Rental Dwellings) Exceptions a) Landlord rents furnished premises: ○ ASSUMED that premises is fit for its purpose from the beginning of tenancy b) Landlord contracts to keep premises and fails: ○ Any injury/damage to tenant’s property is responsibility of landlord Buildings with multiple tenancies: ○ Landlord must maintain common areas (roof, stairways, parking areas, lobbies) Tenant’s guests AREN’T entitled to damages (against landlord) ○ Must recover under common law or Occupiers’ Liability Act  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 5) Joint Liability Injury/damage from more than one person Ex. Injury/damage when neighbours work together to construct common fence/remove tree growing between properties When 2+ people work together and cause injury/damage: AKA “joint tortfeasers” Legal Duty Owed (more than one person responsible for loss) Onus is the same regardless if parties are working together or independently ○ Use reasonable care to avoid injury/damage  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 5) Joint Liability Legal Duty Owed (more than one person is responsible for loss) Each insurer tries to minimize liability of insured ○ After judgement is reached, usually a dispute over apportionment of liability: if debated through negotiation/separate trial, may cause delay ○ Law says “each party will be liable for entire damage” Ensures payment to plaintiff isn’t delayed after judgement regardless of legitimately but DOESN’T MEAN entire amount is paid by each insurer Rule is to ensure plaintiff is not waiting a long time for settlement Ex. Dispute between two insurers: each  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 6) Independent Contractors Parties who hire contractors are usually named in legal action if work results in injury/damage Legal Duty Owed Status of party contracted to work on premises determines extent of owner/tenant’s liability in case of injury/damage Common Law ○ Owners/tenants not usually liable for negligence of independent contractor ○ Independent contractors are left to own devices (no supervision/control over their work) to complete task  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 6) Independent Contractors Exceptions Person hiring contractor shares in liability WHEN: ○ a) Work is (inherently) dangerous (remove tree stumps with explosives) ○ b) Work creates public nuisance (still water on premises breeds mosquitos) ○ c) Breach of statutory obligation Owner/tenant asks work to be done contrary to statutes established: Ex. Contractor/insured share in payment of loss/damage from use of materials not approved under provincial building codes ○ d) Injury/damage due to defective equipment/plant from owner/tenant ○ e) They control how work is done  6 Legal Precedents Relating to Personal Liability Exposures Cont’d 6) Independent Contractors Exceptions Common Law: ○ Employers usually responsible for torts of employees while performing their duties ○ NOT an independent contractor: Owner/tenant hires/pays/fires staff, provides tools/equipment/on-site direction, law classifies this is employer-employee relationship  Section 3: Insuring Personal Liability Most insurance companies provide liability coverages in habitational property insurance policies, THUS: Eliminating homeowners/tenants to buy a separate policy for liability exposures Liability coverages under IBC’s homeowners forms are used with Tenants Package Form Mobile Homeowners Form Coverage is same for all forms ○ Condo unit owners = liability coverages under Form (IBC 1168)  Four Coverages 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 Limits are on Coverage Summary page Insurers set own min limits for each coverage Insureds can’t buy less than limit Homeowners forms provide these limits: ○ Coverage E: Personal Liability - 1 million Limit can be increased for added premium ○ Coverage F: Voluntary Medical Payments - $5,000 ○ Coverage G: Voluntary Payment for Damage to property - $1,000 ○ Coverage H: Voluntary Compensation for Residence Employees - Per schedule No deductible BUT deductible may be inserted (property damage losses) if a history of frequent claims is evident  Key Definitions 1) Persons Insured Persons insured by Section 1 - Property Coverages = also insured here Coverage can extend to include: a) Person/organization = legally liable for damages from watercraft/animal owned by insured (and insurance applies to) ○ Doesn’t cover parties using/custody of watercraft/animal during course of business OR without owner’s permission COVERED: Walking/caring for insured’s dog COVERED: Watercraft belonging to insured COVERED: Anyone using watercraft ○ NO COVERAGE: Parties using/custody of watercraft/animal In course of business  Key Definitions: 1) Persons Insured Cont’d 1) Persons Insured Coverage can extend to include: b) Residence employee performing duties connected to ownership/use/operation of motorized vehicles/trailers (that are covered) ○ Protects residence employees from claim for bodily injury/property damage from using motorized equipment (Lawn mower/garden tractor/snowblower/trailers) ○ Limited: Only some types/sizes of motorized vehicles = covered c) Legal reps with temporary custody of insured premises ○ If you die while insured ○ Legal liability from premises arises (from premises)  Key Definitions: 1) Persons Insured Cont’d 1) Persons Insured Coverage can extend to include: d) Person insured by form at time of your death and continues living on insured’s premises ○ Ex. Named Insured dies, insurer agrees to continue policy in name of son/daughter, no coverage for spouse not legally married to Named Insured Insurer will include these parties until policy expires to ensure they aren’t without coverage Coverage as long as parties live on premises insured by policy  Key Definitions: 2) Premises Insured 2) Premises Insured Covers all premises where Named Insured/spouse on coverage summary page keeps residence (seasonal/other) provided is on Coverage Summary Page. Also covers: a) Premises you temporarily live in as long as you aren’t: ○ Owner (of premises) ○ Lessee/tenant under agreement over 90 consecutive days ○ EXTENDS: Includes liability from premises owned by others/used by/occupied by insureds for habitational purposes ○ Using neighbour’s yard/garage to store property/staying at hotel/friend’s cottage (don’t have to buy add’l coverage) ○ EXCLUDES: rental/lease agreement  Key Definitions: 2) Premises Insured Cont’d 2) Premises Insured b) Premises (in Canada) occupied by you (principal residence) from date of ownership/possession BUT NOT BEYOND (earliest) of: 30 consecutive days Date policy expires/terminated Date where specific liability insurance is arranged Insured buys another home to be occupied (principal residence) ○ Automatically insured (date of possession) ○ Limited period Example: Insured’s policy expires in 5 days ○ No coverage in dwelling more than 5 days ○ If arranged for new insurance, policy’s  Key Definitions: 2) Premises Insured Cont’d 2) Premises Insured c) Individual/family cemetery plots/burial vaults Must be included in premises definition d) Vacant land (Canada) you own/rent (other than farm land) Vacant land bought as future dwelling site/investment purposes/other presents risk when people go onto land ○ Ex. Snowmobilers crossing land injured by tree stumps/rocks/fences Add’l coverage applies only to vacant land in Canada ○ Anywhere else, will have to buy add’l coverage No coverage for claims from vacant farm land  Liability Coverages: Coverage E: Personal Liability Purpose: insures legal liability of insureds as private citizens world-wide Accidental injury/damage (by insureds) on holidays/public meetings/shopping/fishing/golfing/playing ball ○ Private wrongs insured Covers injury/damage from ownership/use/occupancy of ALL premises insured. Claims from premises conditions/activities conducted on premises Condition of Insured’s Premises = major source of liability claims ○ Types of losses covered: Neighbour’s child who has drowned in insured’s swimming pool/hot tub  Coverage E: Personal Liability Cont’d Covers injury/damage from ownership/use/occupancy of ALL premises insured. Claims: injuries/death from residence employee ○ Don’t have to enrol in provincial workers’ compensation plan: On-the-job injuries: employees are entitled to compensation (from insured) if can show insured was legally liable for injuries Employer’s liability exposure = covered  Coverage E: Personal Liability Cont’d Exclusions 1) Liability (assumed by contract UNLESS legal liability would have applied even if no contract) insures claims against for legal liability of others relating to premises not assumed under written contract Insureds can’t (voluntarily) take liability of others and expect insurer to pay EXCEPTIONS: ○ 1. Insured would have been liable anyway ○ 2. Liability assumed is related to business INSURER COVERS: Insured hires contractor to build a fence and agrees (written) to assume liability of contractor for unintentional injury to passers-by OR neighbouring property 2) Damage to insured’s property (Insured under Section 1)  Coverage E: Personal Liability Cont’d Exclusions 3) Damage to property used/occupied/leased/rented by/in case/custody/control of insured EXCEPT unintentional property damage to premises/contents (you are using/renting/have in custody/control) due to fire/explosion/water damage/smoke. Includes smoke (Sudden/unusual/faulty operation of heating/cooking unit) Excludes smoke from fireplaces. Water damage: same meaning as Section I ○ Ex. No overage if damage to lawn mower/watercraft/all-terrain vehicle owned/borrowed/occupied/leased by insured (separate policy) No Coverage: damage to property of others in insured’s care/custody/control  Coverage E: Personal Liability Cont’d Exclusions 4) Damage to personal property/fixtures from work by you/those on your behalf Purpose: ○ Removes insurer’s responsibility to pay for damage from activities/avoidable losses in insured’s control When damage is caused by those who were trusted to do the work Ex. Insured agrees to sand antique table and causes irreparable damage  Coverage E: Personal Liability Cont’d Exclusions 5) Bodily injury to you/person residing in household - excluding residence employee Law in some provinces allow family members (residing in same house) to sue each other for injuries due to negligence ○ Amount against guilty isn’t insured Applies to claims made by roomers/boarders Covers: Insured’s legal liability for injuries to residence employees 6) Named Insured’s personal actions (not residing on premises) on Coverage Summary Page  Coverage E: Personal Liability Cont’d Defence, Settlement, Supplementary Payments Insurance limit bought by insureds ○ Reserved to pay judgement against them Can’t be used for anything else ○ Defence, Settlement, Supplementary Payments amounts are over/above Insuring Agreement limit Insurer will defend ANY civil action wanting compensatory damages against insured when is apparent that Coverage E - Personal Liability would pay Even if action is groundless/false/fraudulent  Coverage E: Personal Liability Cont’d Defence, Settlement, Supplementary Payments Insurer has right to... ○ Investigate/negotiate/settle claim/suit (if appropriate) ○ Ex. investigation by insurer results in belief that plaintiff would be successful in legal action against insured then insurer may try to settle ○ Right exists regardless of insured claiming they aren’t responsible  Coverage E: Personal Liability Cont’d Defence, Settlement, Supplementary Payments Insurer will pay add’l costs (from civil action) against insured: 1) All expenses incurred Paying costs to prepare/conduct defence to legal action is worth premium for liability insurance for insured (Cost of defence can be $10K+) May end up defending fraudulent action 2) All costs (any suit) insured under Coverage C Court charges for time to hear/rule Costs usually charged to one/both of parties to action  Coverage E: Personal Liability Cont’d Defence, Settlement, Supplementary Payments 3) Interest accrued after judgement on part of judgement within insurance amount of Coverage E Before proceeding to court, insurer assesses chances of winning: if not good, plaintiff is offered settlement outside of court If action goes to court, decisions against insured are reviewed by insurer to decide chances of successful appeal Delays to pay damages ends in loss of interest income to plaintiff - insurer will pay interest costs ○ If award exceeds insurance limits, interest = calculated on policy limit ○ Ex. Award to Plaintiff $2,000,000, Limit of insurance $1,000,000, Interest payment on  Coverage E: Personal Liability Cont’d Defence, Settlement, Supplementary Payments 4) Appeal bond premiums (required in any insured lawsuit that involves you and bonds to release property held as security) up to the insurance amount BUT we are NOT obligated to apply/provide bonds Courts may order seizure of defendant’s assets to make sure that judgement against defendant is paid ○ Order made at/after start of main action ○ Defendants wanting access to assets until a decision is made must post bond(s) with court ○ If defendant loses/appeals decision, appeal bond may be necessary to guarantee payment of all court costs during appeal Insurer will pay for bonds but has no  Coverage E: Personal Liability Cont’d Defence, Settlement, Supplementary Payments 5) Expenses for emergency medical/surgical treatment to others after accident/occurrence Immediate medical aid administered to accident victims results in lowering long term disability/death ○ Damages assessed by court (any subsequent action) against insured might be a lot less than if not treated Voluntary payment of other costs connected to claim are viewed by court as admission of guilt (not insured)  Coverage E: Personal Liability Cont’d Defence, Settlement, Supplementary Payments 6) Reasonable expenses incl. loss of income (up to 100$/day) incurred at our request Conditions of liability policies: ○ Insured has to cooperate with insurer (investigation/defence of any claim) ○ Reasonable costs paid by insurer ONLY expenses at request of insurer are paid ○ Not costs incurred by private consultations with lawyers/accountants/etc Insurer agrees to pay up to $100/day for actual loss of income ○ Insureds getting full wages/salary AND haven’t suffered loss of income aren’t entitled to payment  Coverage E: Personal Liability Cont’d Obligations of Insureds When Accident or Occurrence Notice of Accident or Occurrence Prompt written notice must be provided when an accident/occurrence happens: ○ a) Date, time, place, circumstances of accident/occurrence ○ b) Names/addresses of witness/potential claimants Prompt notification ○ Allows insurer to assess whether action against insured would be successful ○ Insurer may request a written report ○ A way to collect facts when accident is fresh in insured’s mind ○ Inspection of site reveals facts to remove/reduce responsibility for loss ○ Insurer must be able to interview  Coverage E: Personal Liability Cont’d Obligations of Insureds When Accident or Occurrence (acc/occ) Co-Operation: You must… a) Co-operate with any legal action if requested: ○ Ex. including getting witnesses, info, evidence about accident/occurrence b) Immediately send legal docs/written communications about acc/occ Coverage condition: insured must fully cooperate to prepare a defence Copies of demands/notices/summonses/legal papers must be forwarded (immediately) to insurer to file objection to claim with court If court isn’t advised, plaintiff action is contested/may result in default judgement against insured: ○ THEN responsibility of paying damages  Coverage E: Personal Liability Cont’d Obligations of Insureds When Accident or Occurrence Unauthorized Settlements - Coverage E Shall not (unless at your cost) volunteer payment/assume obligations/incur expenses (other than first aid) at time of accident Insurer has right to investigate/defend/settle claims ○ Payment made/promised to plaintiff by insured = infringement of right to investigate (prohibited!) ○ The only financial obligation passed to insurer without its consent are: Necessary first aid/surgical treatment after accident/occurrence (insured by policy)  Coverage E: Personal Liability Cont’d Obligations of Insureds When Accident or Occurrence Action Against Us - Coverage E No suit may be brought against us... ○ a)...Until all coverage terms are complied with OR until obligation amount to pay is determined Via judgement against or agreement - which has our consent ○ b)...More than 1 year after agreement date (has our consent) OR Final determination of action against you (including appeals)  Three Big Things Students have three minutes to write down three of the biggest or most important concepts we have gone over so far in class, in the chat window. Remember the Forgetting Curve!  Coverage F: Voluntary Medical Payments Pays reasonable medical expenses when insured unintentionally insures another OR if accidentally injured while in insured’s premises Types of claims covered ○ Surgical ○ Dental ○ Hospital ○ Nursing ○ Ambulance service ○ Funeral expenses Insurer agrees... ○ To (voluntarily) pay (on insured’s behalf) ○ No requirement that insured is legally liable for injury before making payment  Coverage F: Voluntary Medical Payments Cont’d When payment is made IT WILL BE: Limited to insurance amount on Coverage Summary page (varies) Limited to 1 year from accident date: ○ No payment if insured party is covered by provincial workers’ compensation plan/hospital plan/private insurance Obligations of insured when an accident/occurrence are stated in policy  Coverage G: Voluntary Payment For Damage to Property Insurer agrees to voluntarily pay for property damage: Unintentionally caused/insured = not be legally liable ○ Pay for property damage of others even if insured isn’t legally liable ○ Ex. Helping neighbour move a refrigerator, kitchen floor is torn, neighbour says is insured’s fault: it is unlikely that insured is legally liable for damage, but insurer agrees to pay Intentionally caused by insured 12+ year old ○ Most policies don’t cover deliberate loss/damage ○ Exception: Children (liability coverages via homeowners forms) ○ Coverage restricted: intentional damage  Coverage G: Voluntary Payment For Damage to Property Insurer agrees to voluntarily pay for property damage: CONT’D Many (brokers) see coverage as providing social/insurance function ○ There is logic to keep good will between neighbours vs. denying minor claims (loss payments help keep relationships) ○ Alert/co-operative neighbor reduces potential losses (burglary/vandalism) - saves insurer from paying other claims  Coverage G: Voluntary Payment For Damage to Property Cont’d Exclusions 1) Damage to property owned/rented by insured/insured’s tenant No coverage: property owned by one insured/is damaged by another insured Applies to rented property ○ Yard/garden equipment, movie videos, recreational equipment: bikes/watercraft Applies regardless if property is owned/rented by insured or tenants  Coverage G: Voluntary Payment For Damage to Property Cont’d Exclusions 2) Damage to property Insured under Section 1 - Property Coverage ○ (Personal property belonging to others) If property loss is from peril under Section 1, it CANNOT be claimed under another (insuring) agreement 3) From loss of use/disappearance/theft of property If property of others is damaged/disappears/stolen, may incur add’l expenses when owner rents a temporary replacement ○ No payment  Coverage H: Voluntary Compensation for Residence Employees Coverage E - Personal Liability Covers: Insured’s legal liability for injury/death to residence employee No coverage: when employees are injured/killed (not fault of insured) Coverage H - Voluntary Compensation for Residence Employees: Provides residence employees with (limited) benefits  Coverage H: Voluntary Compensation for Residence Employees Cont’d Amounts (Insuring Agreement) are in a separate schedule of benefits and pay for: Loss of life and funeral expenses Temporary total disability Permanent total disability Injury benefits (weekly indemnity) Medical expenses Limits payable/duration of payments vary (category) Payments = voluntary: No obligation on insurer pay IF: Residence employee (or rep) refuses to accept benefits Residence employee sues insured Obligations of insured after accident are in policy  Special Limitations 1. a) Watercraft and Motorized Vehicles You Own Automatically covers bodily injury/property damage from ownership/use/operation of these vehicles 1) Watercraft (incl. attachments) equipped with outboard motor OR motors not more than 12 kW (16 H.P.) (total) when used with/on single watercraft 2) Watercraft (incl. attachments) equipped with other motor type not more than 28 kW (50 H.P.) 3) Non-motorized watercraft (incl attachments) not more than 8m (26ft) length ○ Insureds owning watercraft should be advised of coverage limits: When above are exceeded, must buy add’l coverage Type/size of watercraft/motors are on  Special Limitations Cont’d 1. a) Watercraft and Motorized Vehicles You Own 4) Self-propelled lawn mowers/snowblowers/garden-type tractors (not exceeding 19 kW (25 h.p.) Motorized, self-propelled (or capable of moving on own) yard equipment ○ Ex. Push-type lawn mowers/snowblowers = not affected Covers injury/damage from others by self-propelled lawn mower/snowblower/ garden-type tractor = only when vehicle doesn’t exceed 25 h.p. If insured’s own maintenance equipment exceeds specifications: ○ Add’l coverage must be bought (can be added to existing policy) ○ Details on Coverage Summary page  Special Limitations Cont’d 1. a) Watercraft and Motorized Vehicles You Own 5) Motorized golf carts (during use on golf course) Limited: accidents on golf course No coverage: If golf carts are used on insured’s premises/roads/walkways/other location that isn’t a golf course 6) Motorized wheelchairs (incl motorized scooters) with more than two wheels Designed to carry parties with a physical disability  Special Limitations Cont’d 1. b) Watercraft/Motorized Vehicles You DON’T Own Insured against claims from use/operation of: 1) Any watercraft type 2) Any self-propelled land vehicle/amphibious vehicle/air cushion vehicle (not subject to motor vehicle registration/designated for off public road use) PROVIDED: motorized vehicle/watercraft isn’t owned by person insured by the policy DEFN Non-owned watercraft/motorized vehicle: ○ Isn’t owned by any party insured by policy Ex. Watercraft owned by 15 year old’s parents isn’t a non-owned watercraft when child operating watercraft Covers injury/damage from use/operation of ALL non-owned watercraft  Special Limitations Cont’d 1. b) Watercraft/Motorized Vehicles You DON’T Own Insured against claims from use/operation of: 2) ANY self-propelled land vehicle/amphibious...CONT’D Broader coverage than insureds owning their own watercraft ○ If own your boat = increased liability exposure ○ Parties using non-owned watercraft aren’t assumed to know of increased liability exposure ○ No gaps: insurer agrees to cover insured’s liability for injury/damage from all non-owned watercraft regardless of type/motor size Ex. Non-owned motorized vehicles: Dirt bikes, all-terrain vehicles, snowmobiles  Special Limitations Cont’d 1. b) Watercraft/Motorized Vehicles You DON’T Own Watercraft/Motorized Vehicle - Uses Not Insured No Coverage: injury/damage from use/operation of watercraft/motorized vehicle (regardless if owned by insured or not) WHILE: ○ 1) Carrying passengers for compensation ○ 2) For business purposes Ex. Liability (bodily injury/property damage) from use of non-owned snowmobile to haul freight into remote mining camp = not insured ○ 3) In a race/speed test ○ 4) Rented to others ○ 5) Used/operated without owner’s consent (if not the owner)  Special Limitations Cont’d 1. c) Trailers Covers injury/damage from ownership/use/operation of trailer or equipment AS LONG AS ○ Trailer isn’t attached/carried on/towed by motorized vehicle subject to motor vehicle registration ○ Covered: Injury/damage from camper trailer rolling off campground site ○ Not covered: Injury/damage due to trailer disconnected while attached to towing vehicle DEFN Business ○ Continuous/regular pursuits for financial gain Includes trade/profession/occupation  Special Limitations Cont’d 2. Business and Business Property Exceptions: Insurer COVERS injury/damage from these business activities: 1) Personal actions during course of trade/profession/occupation not related directly to trade/profession/occupation ○ Ex. insured causes injury to others golfing in company tourney may be named in legal action ○ Covers personal liability 2) Occasional rental of part of dwelling usually occupied by insured as private residence ○ Ex. Insured travels to Florida for 2-3 months have continued coverage for claims from their dwelling premises  Special Limitations Cont’d 2. Business and Business Property Exceptions 3) Renting a part of a 2-3 family dwelling that insured usually occupies a part of as private residence PROVIDED no family unit is more than 2 roomers/boarders ○ Covers long-term insureds renting part of dwelling ○ No coverage: Rental has more than 2 roomers/boarders in the family unit 4) Rental space of residence for incidental office/school/studio occupancy ○ Rental for purposes of above do not affect coverages  Special Limitations Cont’d 2. Business and Business Property Exceptions: 5) Rental/holding for rent of NOT MORE than 3 car spaces/stalls in garages/stables 6) Temporary/part-time business pursuits of insured under 21 years old ○ Insures injury/damage from activities Babysitting/delivering newspapers/summer/temporary/part-t ime employment under 21 years  Exclusions - Section II Business pursuits/business use of premises except provided under “business/business property” in Section II Claims from business pursuits/use of premises (other than what is given permission for) is not insured ○ Insurer might agree to cover business activities: Business type must be on Coverage Summary page ○ Sometimes insures may insure business liability exposures Commercial General Liability Policy OR Professional Liability Policy Rendering/failure to render professional service Professionals have specialized skill/knowledge (recognized in law) SO:  Exclusions - Section II Cont’d Bodily injury/property damage caused by intentional/criminal act/failure to act: a) Anyone insured by policy b) Anyone at direction of someone insured by policy No coverage: ○ Intentional losses due to criminal activities of insureds Insureds deliberately assaulting/set fire to others/property ○ When insureds direct another to damage property/cause injuries to others  Exclusions - Section II Cont’d Bodily injury/property damage caused by intentional/criminal act/failure to act: a) Sexual/physical/psychological/emotional abuse, molestation/harassment, corporal punishment directed by/knowledge of person insured by policy b) Failure (of insured) to take preventative steps against sexual/physical/psychological/emotional abuse, molestation/harassment, corporal punishment ○ No coverage: Claims against people by foster children/wards of state for physical/sexual/other abuse suffered (from care providers)  Exclusions - Section II Cont’d Transmitting communicable disease by insured (Ex. AIDS) Ownership/use/operation of a) ANY aircraft b) Premises used as airport/landing facility All activities related ○ Specialized liability exposure: must buy separate coverage  Personal Umbrella Liability Policy Eligibility Provide insurer evidence of having primary insurance policies for known exposures (auto/watercraft/aviation/residences) Covers: 1. Not enough insurance under primary policy Insurers may limit insurance amount: Ex. may not issue policy exceeding $2,000,000 to insured Purchasing the Umbrella Liability Policy gives excess limits that insured thinks is needed If there is a claim: ○ Primary policy pays first ○ If not enough, Umbrella Liability Policy pays excess  Personal Umbrella Liability Policy Cont’d Covers: 2. No coverage under primary policy When no coverage by primary policy, Umbrella Liability Policy “drops down” to pay IF does not have the same exclusions as the primary policy Self-Insured Retention (SIR) Applicable to all losses that Umbrella Liability Policy covers Not insured by primary policies Functions as a deductible (amount varies)  Gap Exercise Students have one minute to think of a concept they find they do not clearly understand. Take time this week to do some extra studying on that concept, and bring any questions to the next class! Believe it or not, this is a reviewing exercise!