Fundamentals Chapter 10.pptx

 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!  CHAPTER 10 - LIABILITY INSURANCE POLICIES INSURING PERSONAL LIABILITY - HOMEOWNERS FORMS Most i...

 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!  CHAPTER 10 - LIABILITY INSURANCE POLICIES INSURING PERSONAL LIABILITY - HOMEOWNERS FORMS Most individuals and businesses can’t withstand the financial burden a judgement for damages would demand ○ Insurers agree → assume many exposures to financial loss ELIMINATES → need to purchase separate personal liability coverage ○ Homeowners Package Form ○ Tenants Package Form ○ Condominium Unit Owner FOrm ○ Mobile Homeowners FOrm COVERAGES ○ Coverage E - Personal Legal Liability ○ Coverage F - Voluntary Medical Payments ○ Coverage G - Voluntary Payment for Damage to Property ○ Coverage H - Voluntary Compensation for Residence Employees  Insuring Personal Liability - Homeowners Forms LIMITS OF INSURANCE Limits of the categories are on the Coverage Summary Page Insurers set their own MINIMUM limits for each coverage BUT CAN be increased (additional premium) Not (usually) subject to a deductible  Insuring Personal Liability - Homeowners Forms KEY DEFINITIONS i) Persons Insured Persons insured by Section 1 - Property Coverages also insured here ii) Premises Insured Coverage → insures all premises where Named Insured on Coverage Summary OR their spouse maintains residence INCLUDING seasonal or other residences, PROVIDED premises are SPECIFICALLY DESCRIBED on Coverage Summary page  Insuring Personal Liability - Homeowners Forms KEY DEFINITIONS ii) Premises Insured: Covers these locations that DO NOT NEED to be SPECIFICALLY DESCRIBED on the Coverage Summary page a) Premises where you reside temporarily OR you are using temporarily SO LONG AS YOU ARE NOT ○ Owner of the premises ○ Lessee or tenant of premises under any agreement that is longer than 90 consecutive days EXCEPT for student’s premises PREMISES IN CANADA... that are leased or rented in an agreement where a student (dependent on named insured OR spouse for support and maintenance) is temporarily residing while enrolled in AND ATTENDING school, college, university...IS DEFINED AS PREMISES and does not need to be specifically declared  Insuring Personal Liability - Homeowners Forms KEY DEFINITIONS ii) Premises Insured b) Premises in Canada TO BE OCCUPIED BY YOU as your principal residence from the date you acquire ownership (take possession) BUT NOT BEYOND the EARLIEST of: ○ 30 consecutive days ○ Date the policy expires OR is terminated ○ Date where specific liability insurance is arranged for these purposes ○ Insureds who buy another home to be occupied as principal residence are AUTOMATICALLY INSURED from the date they take possession of the home for LIMITED TIME ONLY Remaining time on policy When new insurance is purchased, old insurance stops Coverage will not exceed 30 consecutive days  Insuring Personal Liability - Homeowners Forms KEY DEFINITIONS ii) Premises Insured c) Individual or family cemetery plots or burial vaults d) Vacant land in Canada you own or rent other than farmland ○ Additional coverage only applies to VACANT land located WITHIN CANADA ○ NO COVERAGE for claims from vacant farmland e) Land in Canada where you OR independent contractor is building 1-, 2-, or 3-family residence TO BE OCCUPIED BY YOU ○ Does not extend to homes greater than 3-family home(s)  Coverage E - Personal Liability LIABILITY COVERAGES Insures the legal liability of insureds AS PRIVATE CITIZENS anywhere in the world Accidental injury/damage on insured’s premises OR caused by insured while on holidays, public meetings, shopping, fishing, golfing, playing baseball (private wrongs insured) Conditions of Insured’s Premises a Major Source of Liability Claims Condition of insured’s premises and activities conducted → major source of liability claims Types of losses covered ○ Injury to postal employee caused by insured’s dog ○ Drowning of neighbour’s child in insured’s swimming pool or hot tub ○ Injury to other children who use a skateboard ramp on insured’s driveway OR trampoline in insured’s yard ○ Fire damage to neighbouring property from sparks from an outdoor BBQ pit  Coverage E - Personal Liability EXCLUSIONS 1. Liability YOU assumed by contract UNLESS legal liability would be applied even if no contract had been in force BUT we do insure claims made against you for legal liability of OTHERS in relation to your premises that YOU HAVE ASSUMED under a written contract WHAT DOES THIS MEAN ○ Insureds can’t VOLUNTARILY assume liability of others and expect their insurer to pay TWO EXCEPTIONS ○ When insured would have been liable anyway ○ When liability assumed is related to insured’s premises 2. Damage to property you own Damage to owned property would be excluded Coverage is for legal liability and applies to third parties  Coverage E - Personal Liability EXCLUSIONS 3. Damage to property used, occupied, leased, rented by you OR in care, custody, control of insured EXCEPT FOR unintentional property damage to premises owned by others OR their contents THAT YOU ARE using, renting, have in your custody OR control CAUSED BY fire, explosion, water damage, OR smoke MEANING smoke due to sudden, unusual AND faulty operation of heating OR cooking unit in OR on premises BUT NOT smoke from fireplaces Water damage has same meaning as Section I NO COVERAGE FOR DAMAGE TO PROPERTY IN INSURED’S CARE, CUSTODY OR CONTROL ○ Property that may be damaged by insured while in their care, custody, OR control AND coverage is EXCLUDED 1. Rented or borrowed property 2. Property being stored for others  Coverage E - Personal Liability EXCLUSIONS 3. Damage to property used, occupied, leased, rented by you OR... EXCEPTION ○ Exclusion DOES NOT APPLY TO unintentional property damage to premises owned by others OR their contents which insured is using, renting, are otherwise in insured’s custody or control ○ Payment made only for THESE CAUSES - fire, explosion, water damage, smoke (excluding smoke from fireplace) 4. Damage to personal property OR fixtures A RESULT OF work done on them by you or anyone on your behalf NO COVERAGE for property damage out of work performed by insureds  Coverage E - Personal Liability EXCLUSIONS 5. Bodily Injury to you OR any person residing in your household OTHER THAN residence employee Law in some provinces may allow family members that live in the same household to sue each other for injuries CAUSED BY negligence of another member ○ Amount of judgement against the responsible party IS NOT INSURED by this policy ○ Exclusion ALSO APPLIES to claims made by roomers and boarders ○ Liability is third party coverage ○ Insured is a first party  Coverage E - Personal Liability EXCLUSIONS 5. Bodily Injury to you OR any person residing in your household OTHER THAN residence employee EXCEPTION Residence employees injured on the job due to insured’s negligence ARE ENTITLED to take legal action against insured for damages ○ Homeowner Form provides coverage Some provinces need residence employees to be insured under the provincial workers compensation plans; other provinces don’t have this requirement HABITATIONAL FORMS COVER LEGAL LIABILITY OF EMPLOYERS FOR INJURY TO RESIDENCE EMPLOYEES  Coverage E - Personal Liability EXCLUSIONS 6. Personal actions of Named Insured who doesn’t reside on premises on the Coverage Summary Page Exclusion doesn’t apply to named insured residing in a nursing home OR care facility  Coverage E - Personal Liability DEFENCE, SETTLEMENT, SUPPLEMENTARY PAYMENTS Insurer defends claims against insured EVEN IF THEY ARE groundless, false, fraudulent Insurer has the right to choose legal counsel, investigate, negotiate, settle any claim IF IT DECIDES the action is appropriate INSURER WILL PAY 1. All expenses incurred 2. All costs charged against insured for ANY suit insured under “Coverage E” 3. Any interest accruing after judgement on the part of judgement within the amount of insurance of “Coverage E” 4. Premiums for appeal bonds REQUIRED in any insured lawsuit that involves the insured and bonds to release any property held as security, up to the insurance amount BUT insurer ISN’T obligated to apply for OR provide these bonds  Coverage E - Personal Liability DEFENCE, SETTLEMENT, SUPPLEMENTARY PAYMENTS INSURER WILL PAY 5. Expenses that the insured incurs for emergency medical OR surgical treatment to others following an accident OR occurrence that is insured by the policy 6. Reasonable expenses (incl actual loss of income up to $100 per day), that an insured incurs at the insurer’s request  Coverage F - Voluntary Medical Payments The Insuring Agreement pays medical expenses incurred within one year of date of accident IF insured unintentionally injures another OR IF they are accidentally injured while on your “premises” Types of claims paid ○ Surgical, dental, hospital, nursing, ambulance service, funeral expenses ○ Insurer agrees to VOLUNTARILY make payments on insured’s behalf ○ No requirement for insured to be legally liable for injury ○ When payment is made IT WILL BE Limited amount Limit of insurance is indicated on the Coverage Summary page Varying amounts; $5,000 is common Limited to one year from accident date  Coverage F - Voluntary Medical Payments There is NO PAYMENT if injured party is covered by Workers Compensation Plan, a hospitalization plan or other private insurance MEDICAL PAYMENT PROVIDED WITHOUT REGARD TO FAULT Medical expenses incurred by others unintentionally hurt by insured OR who are accidentally injured on their premises are insured by the policy WHETHER insureds are liable or not  Coverage G - Voluntary Payment for Damage to Property INSURER AGREES → make a VOLUNTARY payment for property damage THAT Has been unintentionally caused AND the insured WOULD NOT be legally liable for ○ Insuring Agreement pays for unintentional direct damage caused by insureds to property of others EVEN THOUGH wouldn’t be legally liable LIMIT usually no more than $1,000 Has been INTENTIONALLY CAUSED by insured 12 years old OR UNDER MOST insurance policies DO NOT pay claims for deliberate loss/damage BUT if children are involved, there is an exception  Coverage G - Voluntary Payment for Damage to Property EXCLUSIONS 1. Damage to property owned OR rented by insured OR insured’s tenant No coverage for property owned OR rented by one insured which is damaged by another insured 2. Damage to property insured under Section 1 ALL Homeowners Forms give LIMITED coverage under Section 1 - Property Coverages FOR ○ Personal property that belongs to others IF loss of property is from an insured peril (under Section 1) it can’t be claimed here 3. Claims that RESULT FROM loss of use, disappearance OR theft of property of others. Coverage H - Voluntary Compensation for Residence Employees Provides all occasional residence employees with LIMITED benefits if they are accidentally injured or die while working for insured EVEN THOUGH insured may not be liable ○ Perm residence employees ONLY INSURED when specified on the Coverage Summary page Amounts are in a separate schedule of benefits and pay for: ○ Loss of life (INCL. funeral expenses) ○ Temporary total disability ○ Permanent total disability ○ Injury benefits (weekly indemnity) ○ Medical expenses  Coverage H - Voluntary Compensation for Residence Employees Payments are voluntary If a residence employee or person acting on his/her behalf ○ DOES NOT accept the benefits OR sues insured, THEN insurer might withdraw the offer BUT DOES NOT AFFECT THE LIABILITY INSURANCE ○ DOES accept the benefits must sign a release that gives up any right to sue the insured Insurer has right to recover from ANYONE OTHER THAN INSURED responsible for residence employee’s injury or death  SPECIAL LIMITATIONS 1. Watercraft and Motorized Vehicles You Own Automatic Coverage for BI/PD due to the ownership, use, OR operation of these watercraft and motorized vehicles: 1. Watercraft (INCL. attachments) equipped with outboard motor or motors of not more than 12kW (16 H.P.) in total when used with OR on a single watercraft 2. Watercraft (INCL. attachments), equipped with any other type of motor of NOT MORE THAN 38kW (50HP.)  SPECIAL LIMITATIONS 1. Watercraft and Motorized Vehicles You Own Automatic Coverage for BI/PD due to the ownership, use, OR operation of these watercraft and motorized vehicles: 3. Non-motorized watercraft (INCL. attachments) not more than 8 meters (26 feet) in length ○ IF THESE ARE EXCEEDED, separate coverage is available ○ To ensure NO GAPS in coverage and to give insureds time to put appropriate coverage in place, newly acquired watercraft that exceed Special Limitations are automatically covered for 30 days from purchase date If coverage is required after the 30 days, the policy has to be endorsed appropriately  SPECIAL LIMITATIONS 1. Watercraft and Motorized Vehicles You Own 4. Self-propelled lawn mowers, snowblowers, garden type tractors NOT MORE THAN 19kW (25 H.P.) 5. Motorized golf carts while in use on a golf course ○ Coverage for injury/damage due to the use of owned golf carts is LIMITED TO accidents occurring on a golf course 6. Motorized wheelchairs, including motorized scooters with more than two wheels AND are specifically designed for carriage of a party who has a physical disability ○ Most insurers agree to covering other types of self-propelled motorized vehicles like dirt bikes, ATVs, and snowmobiles for an additional premium  SPECIAL LIMITATIONS 2. Watercraft and Motorized Vehicles You DO NOT Own You are insured against claims arising out of use/operation OF 1. Non-owned watercraft 2. Non-owned, self-propelled land vehicle, amphibious vehicle OR air cushion vehicle PROVIDED the vehicle is NOT subject to motor vehicle registration AND IS DESIGNATED for use off public roads This broad coverage is for insureds owning their own watercraft Insureds who have certain boats should know they have an increased liability exposure and should act to put coverage in place TO ENSURE NO GAPS, insurer agrees to cover the insured’s liability for injury or damage out of all non-owned watercraft REGARDLESS OF TYPE OR SIZE OF MOTORS  SPECIAL LIMITATIONS Personal liability extends to non-owned watercraft Personal liability pays for injury/damage resulting from the use or operation of ALL non-owned watercraft BUT loss/damage to watercraft ITSELF is NOT covered and is the responsibility of the insured WATERCRAFT AND MOTORIZED VEHICLE USES WE DO NOT INSURE No coverage for injury/damage from use/operation of ANY watercraft OR motorized vehicle that is owned by insured or WHILE IT IS: ○ Carrying passengers for compensation ○ Being used for business purposes ○ Being used in a race or speed test (unless a sailboat) ○ Being rented to others ○ Being used/operated without owner’s consent (if you are not the owner)  SPECIAL LIMITATIONS 3. TRAILERS Covers injury/damage from ownership, use, operation of any trailer or its equipment PROVIDED the trailer is NOT ATTACHED TO, CARRIED ON OR BEING TOWED BY a motorized vehicle subject to motor vehicle registration ○ A camper trailer rolling off site at local campground IS COVERED ○ If trailer is disconnected while attached to towing vehicle, then resulting injury/damage IS NOT COVERED  Business and Business Property DEFINITION OF BUSINESS ○ ANY continuous/regular pursuit undertaken for financial gain INCLUDING trade, profession, occupation Insured’s business activities → not usually insured under personal liability policy and are insured under a commercial general liability policy (CGL) EXCEPTIONS ○ The Habitational Policy Covers injury/damage due to: 1. YOUR personal actions during the course of YOUR trade, profession, an occupation that is not directly related to your trade, profession, occupation ○ Insureds causing injury to persons when golfing during a company tournament MAY BE NAMED IN LEGAL ACTION ○ Coverage for personal liability IS COVERED  Business and Business Property EXCEPTIONS The Habitational Policy Covers injury/damage due to: ○ 2. Occasional rental to others of portion of dwelling usually occupied BY YOU as a PRIVATE RESIDENCE For insureds who sometimes rent their dwelling to others ○ 3. Rental to others of part of your two/three-family dwelling USUALLY OCCUPIED in part BY YOU as a private residence provided NO FAMILY UNIT includes more than 2 roomers or boarders Covers when insureds rent a part of their dwelling to others long-term BUT there is NO coverage for claims out of rental when there are MORE than two roomers/boarders in ANY family unit ○ 4. Rental of space in YOUR RESIDENCE to others for incidental office, school, or studio occupancy  Business and Business Property EXCEPTIONS The Habitational Policy Covers injury/damage due to: ○ 5. Rental to others OR holding for rent NOT MORE THAN 3 car spaces/stalls in garages/stables ○ 6. Temp or part-time business pursuits of an insured person under the age of 21 EXAMPLE policy insures injury/damage from activities like babysitting, delivering newspapers, other temp/part-time employment of insured persons  Business and Business Property GENERAL EXCLUSIONS TO PERSONAL LIABILITY COVERAGE - SECTION II: There is NO COVERAGE if claims arise from: Business pursuits OR any business use of premises UNLESS specifically included ○ NOTE: Insurer MAY agree to give insurance for other business activities → type of business is on the Coverage Summary Page SOMETIMES insureds might have to insure business liability exposures under CGL or Professional Liability Policy Rendering OR failure to render ANY professional service BI or PD caused by 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 person insured by policy  Business and Business Property GENERAL EXCLUSIONS TO PERSONAL LIABILITY COVERAGE - SECTION II: There is NO COVERAGE if claims arise from: POLICY EXCLUDES COVERAGE FOR INJURY TO THIRD PARTY DUE TO ○ a. Sexual, physical, psychological, emotional abuse, molestation or harassment, INCL corporal punishment by/at direction of, with knowledge of any person insured by the policy OR ○ b. Failure of any person insured by policy to take steps to prevent sexual, physical, psychological OR emotional abuse, molestation OR harassment OR corporal punishment CLAIMS AGAINST INDIVIDUALS BY FOSTER CHILDREN/OTHER WARDS OF STATE for physical, sexual, other abuse from care-providers (also babysitters) NO COVERAGE by this policy  Business and Business Property GENERAL EXCLUSIONS TO PERSONAL LIABILITY COVERAGE - SECTION II: There is NO COVERAGE if claims arise from: Transmission Of communicable OR sexually transmitted disease INCLUDING Acquired Immune Deficiency Syndrome, BY any person insured by policy ○ Growing concern among insurers on the transmission of serious diseases like AIDS Ownership, use OR operation OF ○ a) ANY aircraft ○ b) Premises used AS → airport, OR landing facility ○ AND ALL activities related to a), or b) above  Liability LIABILITY INSURANCE FOR BUSINESS Personal and business liability exposures are usually similar → Claims for injury/damage against a business can ALSO be due to: i) CONDITION OF PREMISES ○ Injury/damage resulting because insureds do not take reasonable steps to ensure the safety of their premises ii) BUSINESS OPERATIONS ○ Businesses can cause injury/damage when performing work On their premises and/or on the premises of others  Liability LIABILITY INSURANCE FOR BUSINESS iii) Medical Payments ○ Businesses have exposure to persons injured on premises iv) Tenants’ Legal Liability ○ Businesses may operate from a rented premises ○ Tenants are legally obligated to landlord for damage they cause to the part of the building they occupy ○ Businesses have liability exposures v) Products Liability ○ Usually “a product” is anything sold by insured ○ Consumers right → expect goods they buy are safe and if use of the goods ends in injury or damage, legal action may be taken against the person who is liable  Liability vi) Completed Operations Liability ○ IF injury/damage results from using completed use for its intended purpose, THEN party responsible for work might be sued for damages ○ EXAMPLES Appliance repair shops, plumbing, heating, electrical contractors vii) Personal Injury Liability ○ DEFINITION PERSONAL INJURY Injury (other than bodily injury) from the business’s activities ○ PROTECTS INSURED AGAINST Libel, slander, malicious prosecution, wrongful entry OR eviction, discrimination ○ COMMERCIAL GENERAL LIABILITY POLICY covers commercial business operations like retail, wholesale, manufacturing, offices  SPECIAL LIABILITY POLICIES Liability Insurance for Professionals Two major classes of professionals i) Professionals administering health care ○ EXAMPLE: doctors, dentists, druggists → usually buy Malpractice Insurance to cover liability from the rendering or failure to render professional services ○ Health professionals need malpractice insurance ii) Professionals giving advice or counselling ○ EXAMPLE: accountants, lawyers, architects, insurance brokers → experts in their professional and clients depend on their advice ○ Above should buy Errors and Omissions Insurance to cover liability due to rendering OR failure to render professional services  SPECIAL LIABILITY POLICIES Garage Liability Insurance CGL excludes covering injury/damage to others due to “the ownership, use, or operation” of any automobile Can get coverage from S.P.F. No. 4 Standard Garage Automobile Policy (COVERAGES BELOW) ○ Section A - Third Party Liability - injury/damage to others from both owned and non-owned automobiles ○ Section E - Legal Liability for damage to a customer’s automobile while in the care, custody, or control of insured - for physical damage to customer’s automobiles while insured is legally liable for the damage  SPECIAL LIABILITY POLICIES Umbrella Liability Policy ELIGIBILITY ○ Insureds have to give insurer evidence that they already have liability policies Used to extend coverage for known exposures like automobile, watercraft, aviation, business operations OR residences (CALLED PRIMARY POLICIES) WHEN THERE’S A CLAIM - Umbrella Policy pays ONLY WHEN ○ There’s not enough insurance under the primary policy ○ There’s no coverage under the primary policy With a COMMERCIAL EXPOSURE, there is a high deductible AKA Self-Insured Retention (SIR) ○ Deductible applies when Umbrella Liability Policy pays claims excluded under the PRIMARY POLICY ○ Example: $10,000-$25,000 ○ EXAMPLE: SIR on Personal Umbrella Liability Policies $500- $1,000  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!