CHAPTER 7

PROPERTY INSURANCE

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Habitational Insurance

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Habitational insurance works differently. Though a home can
take many different forms, there are some elements that are
constant to all. Most houses normally have bathrooms,

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kitchens, living rooms, and bedrooms of various sizes. Because

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houses share so many common features, the insurance industry
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created one type of policy to cover everyone, with the ability to
vary the rating and limits according to the risk (that is, the
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property).
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Evolution of Habitational Policies

The structure of the habitational policy was derived from, and
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is controlled by elements of, the Insurance Act. The original

policy, known as the Basic Fire Policy, provided property
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coverage for fire, lightning, and explosion of natural, coal, and

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manufactured gas.
The Basic Fire Policy evolved into the Named Perils Form (also
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known as the Specified Perils Form).

 COMPREHENSIVE POLICY FORMS
The Home Evaluation Calculator is an industry tool to ensure

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that the proper limits for every property policy are used in the
calculation of the premium. The square footage of the building

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and the class of construction, along with a list of other
components, dictate the replacement value of the structure.

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Conditions

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A condition requires the insured to do or not to do something.
There are two types of conditions found in these policies:
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• Statutory Conditions: These are conditions which are
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established by law and are legally binding to all parties of the

contract. They derive from the Insurance Act and are attached
to all insurance policies insuring the peril of fire. Since fire is not
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an excluded peril in these policies, this condition must be

included in the wording. For more on Statutory Conditions,
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refer back to Section 5.3: Part 2: Statutory Conditions.

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• Policy conditions: These are specifically developed by insurers

to deal with important coverage areas.
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 Exclusions
There are two types of exclusions: property excluded and perils

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excluded. These items are excluded due to the higher-than-
normal risk they present, and they are more properly insured

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on other policy forms.

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The following types of property are excluded:
• Evidence of debt or title.
• Securities.

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• Automobiles.
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• Watercraft.
• Aircraft.
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• Money.
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• Other motor vehicles.

• Books of account.
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• Vacant property (after more than 30 days).

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The following types of perils are excluded:

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• Earthquakes.
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• Floods.
• Smoke due to agricultural smudging or industrial operations.
• Wear and tear or gradual deterioration.
 • Rust and corrosion.
• War.

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• Nuclear incident.

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• Increased cost of repair or construction due to by-law
enforcement.

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• Sewer backup.

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Insurance policies contain exclusions because losses caused by
certain perils — like war or a nuclear incident — would be so
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catastrophic they would threaten the financial solvency of any
insurance company. Some of these perils would never be
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automatically covered under the policy form, while others —

such as floods, earthquakes, sewer backups, and repairs or
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construction due to by-laws — are available to clients at an

additional cost.
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Deductible
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A deductible represents the amount the insured is required to

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pay for each loss before receiving any payment from the
insurer.
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 Actual Cash Value Basis
Normally, claims are based on the actual cash value (ACV) of

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the property in question. ACV is defined as:
Replacement Cost minus Depreciation

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The use of depreciation in determining value is based on the

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principle of indemnity. When an insured uses an item they own
over a period of time, they will use up some of its ‘value,’ and
that amount should be deducted from the settlement.

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Replacement Cost Basis
When settling dwelling buildings and outbuildings on an RC
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basis, the conditions are that the repair or replacement must

be on the same site, made with similar materials, and within a
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reasonable time. The building occupancy must be the same as

prior to the loss, and the building must have been insured to at
least 80% of the RC prior to the loss.
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In the conditions above, improvements and betterments are

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applicable to tenants or condominium unit owners, and are

defined in the RIBO Homeowner Policy as follows:
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“If you repair or replace the damaged or destroyed unit or

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improvements or betterments you may choose as the basis of

loss payment either the ACV determined at the date of the
occurrence or the RC. Repair or replacement must be effected
with materials of like kind and quality within a reasonable time
 after the damage. Failure to comply with the conditions of the
RC will result in the claim being paid on the ACV.“

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Valued Basis

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When insureds have property that cannot be replaced (such as

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original art, family jewelry, 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

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settlement will be the value agreed to by the insured and
insurer. Insurers will normally require valuation by a qualified
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appraiser and the item(s) will be added to the policy by a
separate endorsement.
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Property in Pairs and Sets

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• Pairs and sets: Loss or damage to one item of a pair or set

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

• Parts: When there is loss to only one part of property which
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consists of several parts, the basis of settlement will be the

value of the lost or damaged part, including the cost of
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installation. In our example, only the carpet in the one room

where the damage occurred would be repaired or replaced —
not the entire three rooms of carpet.
 Standard Mortgage Clause
To purchase a home, most Canadians rely on loans from various

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different financial sources. The party issuing the mortgage (the
mortgagee) will insist that their interest be shown on the policy

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to protect their interest in the event of a loss. They will request
a certified copy of the policy and copies of subsequent

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renewals.
Mortgagees can include banks, credit unions, or individuals.

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The standard mortgage clause was developed so that these

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different types of mortgagees wouldn’t have to each use their
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own forms. This clause includes the following guarantees to the
mortgagee:
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• Guarantee of payment when the insured breaches a policy

condition. For example, if an insured committed arson or failed
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to disclose a material fact that could result in denial of a claim

payment to an insured, the mortgagee would still be entitled to
payment.
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• Guarantee that the insurer will not reduce coverage nor

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terminate the policy without due notice to the mortgagee.

When reducing coverage, the mortgagee must consent to the
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change. When terminating the policy, the mortgagee is entitled

to due notice.
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 Insured
“Insured” means the person(s) named in the coverage

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summary page and, while living in the same household,
• Their spouse. A spouse is defined as:

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○ Either a man or a woman who are married to each other or

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who have together entered into a marriage that is voidable or
void; or
○ Either of two persons who are living together in a conjugal

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relationship outside marriage and have so lived together
continuously for a period of three years. Or, if they are the
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natural or adoptive parents of a child, for a period of one year.
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• The relatives of either. (This can include children, parents, or

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grandparents; there is no age barrier.)

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• Any person under 21 in their care. (This can include foster

children or exchange students. However, roomers and boarders
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of any age are not included in this definition.)

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All persons included in the definition must live in the same

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household as the named insured. The definition has been

extended to include “a student who is enrolled in, and 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 on the coverage summary page.”
Whether the student is in residence or is living off campus, this

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policy will extend coverage to them for their possessions.

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Premises
In the case of a Homeowner Policy, “premises” means the
dwelling and the land contained within the lot lines on which

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the dwelling is situated. In the case of a Tenant or
Condominium Unit Owner Policy, it means the dwelling or unit
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and includes garages, outbuildings, and private approaches
reserved for the tenant’s use and occupancy only.
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All persons included in the definition must live in the same

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household as the named insured. The definition has been

extended to include “a student who is enrolled in, and actually
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attends a school, college, or university and who is dependent

on the named insured or his or her spouse for support and
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maintenance even if temporarily residing away from the

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principal residence stated on the coverage summary page.”

Whether the student is in residence or is living off campus, this
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policy will extend coverage to them for their possessions.

 7.5.1.2 Premises
In the case of a Homeowner Policy, “premises” means the

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dwelling and the land contained within the lot lines on which
the dwelling is situated. In the case of a Tenant or

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Condominium Unit Owner Policy, it means the dwelling or unit
and includes garages, outbuildings, and private approaches

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reserved for the tenant’s use and occupancy only.

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7.5.1.3 Vacancy
“Vacant” means:
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• Whether partially or fully furnished, the occupant(s) has/have
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moved out with no intent to return.

• A newly constructed dwelling is vacant after it is completed
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and before the occupants move in.

• The occupant has moved out and no new occupant has
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moved in.
Insureds make assumptions that policies will remain in force
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until expiry, no matter the circumstances of occupancy. As a

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broker, you’ll have to become familiar with these assumptions

and help your clients become better informed.
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Many new teardown or infill constructions have a gap period

between the time the contractor quits the construction and the
owner moves into the new building. In both of these situations,
 the broker must make sure the insured is aware that coverage
may not be in force when a claim occurs.

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7.5.2.1 Coverage A: Dwelling Building (Homeowner Applicable

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Only)

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• The dwelling and attached structures: Structures such as an
attached or built-in garage, a carport, a deck, or a sunroom
would be insured under this limit and should be included when

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determining the building value.
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• Permanently installed outdoor equipment on the premises:
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This includes items permanently embedded in concrete or

otherwise fixed to the land, such as swings, slides, and lawn
sprinkler systems.
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• Outdoor swimming pool and attached equipment: Both

above- and in-ground pools are covered in this section. They
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should be noted in the Home Evaluation Calculator, which

would determine their value — this takes away the guesswork
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of trying to determine ages of pools or landscaping costs.

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• Certain construction materials and supplies: Material and

supplies located on or adjacent to the premises intended for
use in the construction, alteration, or repair of the dwelling or
 private structures on the premises. This applies for both houses
under construction and for dwelling renovations.

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Note: If theft is excluded from coverage while a dwelling is

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being constructed, then this coverage will apply only when the

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dwelling is completed and ready to be occupied.

• Building fixtures and fittings temporarily removed: Storm

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doors, windows, and shutters temporarily removed for repair
or storage are covered up to 10% of the building value. These
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items must be currently used; the coverage is not intended to
cover items rendered obsolete by retrofitting with new, energy-
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efficient windows and doors. Obsolete items stored in a shed

that subsequently burns down are not covered.
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• Outdoor trees, shrubs, plants, and lawns: The insured can opt
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to apply up to 5% of the value of Coverage A: Dwelling Building

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to outdoor trees, shrubs, plants, and lawns. There is a

maximum of $500 for any one of these perils including debris
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removal, and the coverage is limited to:

○ Fire.
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○ Lightning.
○ Explosion.
○ Impact by aircraft or land vehicles.
 ○ Riot and vandalism.
○ Malicious acts.

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Coverage A1, A2, and A3 (Condominium Unit Owner
Applicable Only)

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A condominium is defined as
“a system regulated by statute to allow clear and full ownership

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of a specific unit with a building and a shared interest and

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responsibility in the Common elements (known as common
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property).”
Individuals may own one or more units and will have a
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proportionately divided interest in the condominium’s common

elements, which include:
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• Parking areas.
• Walkways.
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• Landscaping.
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• Recreational areas.
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• Pools.
• Saunas.
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It is the responsibility of the condominium corporation to

insure the value of the building and all its common elements
under a master policy. Individual owners of the units are
responsible for insuring the contents of their units.
 COVERAGE A1: THE UNIT

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For Coverage A1, $100,000 is provided as the minimum amount
on the unit itself, excluding any improvements and betterments

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if no insurance is carried by the corporation, or that insurance

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limit is inadequate or ineffective.

COVERAGE A2: LOSS ASSESSMENT

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If coverage under the corporation master policy is inadequate
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to cover losses to collectively owned property, a special
assessment may be levied against each unit owner.
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This form provides the unit owner with loss assessment

coverage in the amount of $10,000, which can be increased by
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payment of additional premium.

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COVERAGE A3: UNIT IMPROVEMENTS AND BETTERMENTS

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Any betterments or improvements made to a condo unit made

by the condo owner will increase the replacement value of the
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unit. Such increases are not recoverable under the

condominium corporation’s master building insurance policy.
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Coverage B: Detached Private Structures (Homeowner

Applicable Only)
 The policy insures structures or buildings on the premises
separated from the dwelling by a clear space and not included
under Coverage A: Dwelling Building. Even if they are

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connected by a fence, utility line, or a similar connection, they

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will be considered detached. The normal limit is 10% of
Coverage A.

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Coverage C: Contents (Applicable to All)

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Under this section, residential contents are covered at three
different locations: on-premises coverage, off-premises
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coverage, and student coverage.
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ON-PREMISES COVERAGE
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This insuring agreement includes “all personal property you

own, wear or use while on your premises, which is usual to the
ownership or maintenance of a dwelling.” This definition of
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personal property is extremely broad. It includes all dwelling

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contents, clothing, and other personal items, and any other

property owned or used on the premises.
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 OFF-PREMISES COVERAGE
Property in storage, in a controlled access location, is covered

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on an all-risks basis for only 30 days. If requested in writing,
coverage may be extended beyond that date, but only for the

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peril of theft.

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APPLICABLE TO TENANTS
In addition to the three types of contents coverages above,

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there is one more component: applicable to tenants. This is
coverage provided for improvements or betterments that
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insureds make or acquire to the dwelling that they rent. They
are included under personal property.
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CONTENTS EXCLUDED FROM COVERAGE

The following items are not insured:
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• Motorized vehicles or their equipment (except for watercraft,

lawn mowers, other gardening equipment, snow blowers,
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remote-controlled caddies, wheelchairs, or scooters having

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more than two wheels and that are specifically designed for the
carriage of a person who has a physical disability).
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• Camper units, truck caps, trailers, or their equipment.

• Aircraft or their equipment, including audio, visual, recording,
or transmitting equipment powered by the electrical system of
 a motor vehicle or aircraft. Equipment does not include spare
automobile parts.

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• Personal property normally kept at any other location owned,
rented, or occupied by the insured.

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• Outdoor trees, shrubs, plants, lawns, or other items grown for

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commercial purposes.

Special Limits A

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• Business property: Up to $2,000 in all. This is the total
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amount available for all books, tools, and instruments
pertaining to a business, profession, or occupation. Coverage is
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provided for such property only while it is physically on the

insured’s premises. Other property used for business purposes
including samples and goods held for sale are not insured.
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• Securities: Stocks, bonds, and other securities are insured up

to $2,000 in all. Insureds having such documents on their
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premises should be encouraged to store them in a safety

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deposit box at a financial institution.

• Personal property used by any student insured by the policy
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and who is temporarily living away from home: Up to $2,500 in

all. This limit will likely be inadequate when items such as
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household furnishings, personal computers, and sporting

equipment are insured.
 • Money including cash, cards, or bullion: Up to $200 in all.
People normally do not keep large amounts of money, gold, or
silver on their premises. Limiting the amount of insurance

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coverage for money and bullion to $200 encourages people to

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use financial institutions for safekeeping.
• Garden type tractors, including attachments and accessories:

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Up to $5,000 in all.
• Watercraft: Up to $1,000 in all. The limit of $1,000 represents

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the total amount available for watercraft, their furnishings,

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equipment, accessories, and motors.
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• Computer software: Up to $2,500 in all. It is important that
insureds understand this limitation applies only to computer
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software and not to computer hardware. Because homes now

often have more than one computer, the demand for
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sophisticated software will continue to grow. The costs of

computer games, “smart home” audio/device management,
and personal financial programs can easily amount to
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thousands of dollars.
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• Spare automobile parts: Up to $1,000 in all. Coverage is

provided for automobile parts such as fan belts, hub caps,
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wheels, spark plugs, and starters.

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 Special Limits B
The limits below apply to specified property items that have

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been stolen. Types of property affected by this limitation
include:

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• Up to $200 in all:

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○ Numismatic property (such as coin collections).

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• Up to $500 in all:

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○ Each bicycle, its equipment, and accessories.
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• Up to $1,000 in all:
○ Manuscripts.
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○ Stamps.
○ Philatelic property (such as stamp collections).
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○ Collectible cards (such as sports personality cards).

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• Up to $2,000 in all:
○ Jewellery.
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○ Watches.
○ Gems.
○ Fur garments and garments trimmed with fur.
 For example, payment for theft of the insured’s jewellery,

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watches, gems, and furs would be limited in total to $2,000; the
insured would not receive that amount for each item.

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Additional insurance can be purchased, if needed.

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While the special limits above apply to losses caused by theft,
insureds can also purchase coverage for unlimited losses
caused by specified perils. For example, jewellery valued at

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$25,000 would be insured for its full value when the loss is

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caused by any of the following specified perils:
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• Fire.
• Lightning.
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• Explosion.
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• Smoke due to a sudden, unusual, and faulty operation of any

heating or cooking unit in or on the premises.
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• Falling object that strikes the exterior of a building.

• Impact by aircraft or land vehicle.
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• Riot.
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• Vandalism or malicious act, not including loss or damage

caused by theft or attempted theft.
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• Water damage
 Coverage D: Additional Living Expense (Applicable to All)
This insuring agreement provides two coverages: additional

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living expense and fair rental value. Let’s look at these briefly.

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ADDITIONAL LIVING EXPENSE

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Additional living expense coverage applies when:
• The dwelling is damaged by an insured peril; and

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• The damage is sufficient to make the dwelling unfit for
occupancy or requires that the insured(s) move out while
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repairs are being made.
Payment for additional living expense is made only for:
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• The reasonable time that is required to repair or rebuild the

dwelling; or
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• If the insured decides to permanently relocate, the

reasonable time required to settle elsewhere.
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FAIR RENTAL VALUE

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People who rent out a portion of their dwelling or detached

private structure (for example, a garage) will lose rental income
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when loss from an insured peril makes the structure unfit for
occupancy. The loss of fair rental value is insured under the
Homeowner Policy forms for the reasonable time that is
 required to repair or rebuild the dwelling or detached private
structure.

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In the following situations, the insurer pays additional living
expense and fair rental value for a period not exceeding two

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weeks:

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• When access to the insured’s property is prohibited by order
of civil authority.
• When the peril that caused the order to be given is insured

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under the insured’s own policy.
For example, when the order to evacuate the area is the result
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of an earthquake, there is no coverage for additional living
expense or fair rental value (unless earthquakes are covered
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under the insured’s policy).

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Extensions of Coverage
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The following additional coverages are provided to all insureds

under the RIBO Homeowner Policy forms:
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• Debris removal: This coverage is available when loss or

damage is caused by an insured peril. If the amount payable for
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loss (including expense for debris removal) is greater than the

amount of insurance, an additional 5% of that amount will be
available to cover debris removal.
 • Property removed: Coverage is provided for property that has
been removed to protect it from loss or damage. This property
is insured for 30 days or until the expiry of the policy,

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whichever occurs first.

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• Moving to another home: Coverage is automatically extended
to insure property while in transit to and at another location
that is to be occupied by the insureds as their principal

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residence. Coverage is restricted to Canada and is provided for

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30 consecutive days only, or until the policy expires or is
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terminated, whichever is sooner.
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• Damage to dwelling (applicable to tenant): A tenant may

apply up to $500 of the amount of Coverage C: Contents to pay
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for damage caused to the portion of the dwelling they occupy

(if the damage was caused by theft or attempted theft) or to
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the interior portion (if the damage was caused by vandalism or

malicious acts).
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• Fire department expenses: Up to $1,000 for fire department

charges is provided. The deductible is not applied to this
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coverage.
 Extensions of Coverage
The following additional coverages are provided to all insureds

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under the RIBO Homeowner Policy forms:

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• Debris removal: This coverage is available when loss or

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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 that amount will be

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available to cover debris removal.
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• Property removed: Coverage is provided for property that has
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been removed to protect it from loss or damage. This property

is insured for 30 days or until the expiry of the policy,
whichever occurs first.
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• Moving to another home: Coverage is automatically extended

to insure property while in transit to and at another location
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that is to be occupied by the insureds as their principal

residence. Coverage is restricted to Canada and is provided for
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30 consecutive days only, or until the policy expires or is

terminated, whichever is sooner.
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• Damage to dwelling (applicable to tenant): A tenant may

apply up to $500 of the amount of Coverage C: Contents to pay
 for damage caused to the portion of the dwelling they occupy
(if the damage was caused by theft or attempted theft) or to
the interior portion (if the damage was caused by vandalism or

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malicious acts). Coverage is also provided for the impact of a

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vehicle operated by the insured.

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• Fire department expenses: Up to $1,000 for fire department
charges is provided. The deductible is not applied to this

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coverage.

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• Freezer food: The Homeowner Policy forms provide up to
$2,000 for food contained in a freezer located on the insured’s
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premises when the loss or damage is due to power failure. In

power failure situations, coverage is provided when there is an
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accidental interruption of electrical power on or off the

insured’s premises. For example, there is no coverage when the
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power supply is interrupted due to the failure of the insured to

pay for electrical services or because of a planned outage by
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the electrical utility company. Coverage is specifically excluded

for spoilage of food due to the following:
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○ The operation of circuit breakers or fuses.

 ○ The accidental or intentional disconnection of the power
supply in the building containing the freezer.

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○ The disruption of power when the freezer’s electrical cord is

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disconnected by a family pet or is accidentally or deliberately

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disconnected during vacuuming.

Losses originating from these causes are not insured:

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• Mechanical breakdown: Coverage is provided for damage to a
food freezer when it is due to food spoilage covered by this
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extension.
• Lock replacement: Up to $500 is provided to replace or re-key
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the locks on the insured’s principal dwelling. This coverage is

available only when the insured’s keys have been stolen and
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the loss has been reported to authorities.

• Tear out: This is coverage for the repairs of walls, ceilings, or
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other parts of insured buildings that must be torn apart before

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water damage from pipes or a domestic water container can be

repaired.
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• Arson and burglary conviction reward: The insurer agrees to

pay up to $1,000 in all for information which leads to a
conviction for arson or burglary in connection with a loss to
property insured.
 • Credit 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

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receipt of counterfeit money, are insured by the policy.

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Coverage is limited to $1,000 in total during the policy period.
This coverage is not subject to a deductible.

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• Inflation protection: When there is a loss during the policy
period, the insurer will automatically increase the amount of
insurance.

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All-Risks Coverage
The greatest advantage to insureds purchasing this form is that
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all property owned by the insured is covered on an all-risks

basis. As stated in an All-Risks policy, “insures against all risks of
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direct physical loss or damage subject to policy conditions and

exclusions”. In simple terms, all losses to property are insured
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unless they are specifically excluded.

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ALL-RISKS EXCLUSIONS
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Policies providing all-risks coverage specifically identify which

perils are excluded by the policy. It is important to have a good
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understanding of these exclusions and be aware of the impact

they could have on an insured’s property and possessions.
Some exclusions (such as sewer backup and earthquake) can be
removed by endorsement.
 OTHER POLICY FORMS: SECONDARY AND SEASONAL
RESIDENCES

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Insurance companies prefer risks that meet the standard of
being owner-occupied year-round, with both fire hydrant and

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fire hall protection. When the location doesn’t meet these
standards, as in the case of secondary and seasonal residences,

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the risk for the insurer increases.

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Secondary Residence Form: Fire and Extended Coverage
This form is designed for individuals who own an additional
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dwelling that is usually rented in part or totally to others, and
that would not qualify for the coverages available to single-
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family, owner-occupied dwellings. Insurers normally reserve

their best coverage forms for owner-occupied dwellings. As
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such, dwellings that are owned by the insured but occupied by

others are normally subject to restricted coverage.
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When clients place insurance for their secondary residence, this

additional location is added to the primary policy as Location 2.
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EXTENSIONS OF COVERAGE
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The insured may apply up to 10% of the amount of insurance

on the dwelling to insure each of the following:
• Building fixtures and fittings temporarily removed from the
premises for repair or seasonal storage.
 • Detached private structures on the premises. If there is more
than one detached private structure, the amount of insurance
will be divided in the proportions that the value of each

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detached structure has to the value of all such structures at the

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time of loss.

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Coverage C: Personal Property
This section is designed to insure the owner’s personal property

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at the secondary residence. It does not provide any coverage to
the tenant. Coverage is provided for:
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• Personal property the insured owns, wears, or uses while on
their premises which are usual to the ownership or
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maintenance of the dwelling.

• Motorized wheelchairs and scooters having more than two
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wheels and that are specifically designed for the carriage of a

person who has a physical disability, remote controlled caddies,
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watercraft, motorized lawn mowers, other gardening

equipment, and snow blowers while on the insured’s premises.
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Basis of Claim Payment

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For the building and private structures, the insured can choose
between the two basis of claim options below, subject to the
applicable amount of insurance shown in the declarations and
their financial interest in the policy:
 1) The ACV of the damage at the date of the occurrence.
2) The RC, subject to the same conditions as the

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Comprehensive Policy Form. Failure to comply means that the
claim will be settled on an ACV basis.

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The Home Evaluation Calculator is used to determine the
replacement value of the house (Coverage A: Dwelling
Building). The contents limit (Coverage C: Personal Property)

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does not follow from Coverage A: Dwelling Building — it has to
be determined by the insured.
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Seasonal Residence Form: Fire and Extended Coverage

This form is designed to provide coverage on a seasonal
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residence owned by the insured. Again, the definition of

insured property, the perils covered, the extensions, and the
exclusions are similar to that under the secondary residence
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coverage.
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Seasonal residences can range from condominiums on ski hills

to Muskoka mansions to a simple bungalow on the edge of a
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lake. Let’s use a simple bungalow with a boathouse outbuilding

(below picture) as our example.
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 ENDORSEMENTS
For some insureds, the coverages and limits of insurance

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offered under the standard habitational forms are not
adequate. Insurers have responded by offering endorsements

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that address these coverage limitations.

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An endorsement is an extra sheet(s) of paper attached to the
policy indicating that the insurer and the insured have agreed
to a change in the terms of the insurance contract. An

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endorsement can do several things: provide coverage for

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excluded property or perils, increase limits for property that is
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subject to the special limits, broaden coverages, decrease
deductibles, or remove coverages.
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Though IBC has developed a number of endorsement forms to

be used with habitational policies, these forms are often
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modified by individual insurance companies to suit their own

underwriting priorities. It is important to be aware of the
variance in forms.
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We will discuss some of these endorsement forms and give a

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general overview of their intent. These coverages and

endorsements are all subject to the Statutory Conditions, and
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other conditions, of the policy.

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 Personal Articles Coverage
This provides coverage for certain types of high-valued personal

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property for an amount listed in the declarations, on an all-risk
basis except as excluded, while located anywhere in the world.

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Examples of property covered include, but are not limited to:

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• Cameras and accessories.
• Firearms.

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• Furs.

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• Jewellery, precious stones, and watches.
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• Stamp and coin collections.
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• Musical instruments.
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Watercraft, Outboard Motor, Trailer, and Miscellaneous

Equipment Coverage
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Coverage is provided only for the items described on the

coverage summary page, including:
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• The boat, including permanently attached equipment.

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• The motor(s).
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• The boat trailer.

• Boat equipment not included in the items above.
Most policies allow for coverage on an all-risks basis, except as
excluded. Transportation losses and collision with underwater
 rocks and other objects, including objects floating on the water,
are examples of such exclusions.

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Coverage is normally restricted to Canada and the continental
United States. Insureds must insure to 100% of the value of the

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property, and a $100 deductible applies.

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Fine Arts Coverage
This coverage provides insurance on an all-risks basis for

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objects regarded as fine arts for the amounts as listed on the
declarations page. Examples of fine art objects are paintings,
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pictures, etchings, tapestries, rare books, antique furniture, and
porcelains.
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Earthquake Coverage
Damage caused by an earthquake is excluded under all
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habitational forms; however, insureds can purchase earthquake

coverage.
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Earthquake coverage can be applied to a condominium on an

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all-risks basis, which would provide coverage for personal

property, additional living expense, unit improvement and
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benefits, loss assessment, and additional unit protection.

 Mass Evacuation Coverage
This endorsement will pay for all necessary and reasonable

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increases in living expenses if a civil authority proclaims an
order for mass evacuation as a direct result of a sudden and

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accidental event in Canada or the continental United States.
The amount of mass evacuation coverage will not be limited, up

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to a maximum of two weeks.
Exclusions to mass evacuation coverage are:

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• Flood.
• Earthquake.
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• War.
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• Nuclear incident.
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Additional Conditions
• Sue and labour: The insured must take all reasonable steps to
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recover lost property. The insurer agrees to contribute pro rata

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towards any reasonable and proper expenses in connection

with such efforts.
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• Basis of settlement: ACV, unless otherwise stated.

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• Subrogation: When the insurer pays a claim for damage

caused to the insured’s property by others, it is entitled to seek
recovery from the responsible party. The insurer agrees not to
 exercise the right of subrogation against any party having an
insurable interest in the property insured.

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GLOSSARY

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• Endorsement: A document issued by the insurer indicating in

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writing that there has been a change in the terms or conditions
of the insured’s policy.
• Mortgagee: The one taking or receiving a mortgage. It can be

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a bank or individual giving money and then taking title on the
property. (See Section 7.4.8: Standard Mortgage Clause.)
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• Mortgagor: The party to a mortgage who, to secure a
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mortgage loan, gives legal title or a lien to the mortgagee.

Generally, the homeowner.
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 REVIEW QUIZ

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1) Which of the following best describes a Comprehensive
Tenant Policy?

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a) It covers theft only.

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b) It covers theft only, provided there are visible signs of
breaking in.

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c) It is the same as a Homeowner Policy, but it does not cover
buildings or outbuildings.
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d) It covers the insured’s building, summer cottage, and the
contents of both.
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2) A Condominium Unit Owner Policy covers:

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a) The entire building and the unit owner’s contents and

outbuildings.
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b) The contents of the unit and the improvements and

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betterments.
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c) The unit, the entire building, and improvements and

betterments.
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d) Only the contents of the unit.

 3) An all-risks policy covers:
a) Any kind of loss.

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b) Fire, extended coverage, and earthquake.

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c) Specified perils, including earthquake and sewer backup.
d) Any kind of loss, subject to exclusions.

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4) Which of the following best describes the fire and extended

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coverage Secondary and Seasonal Residence Forms?
a) They are identical.
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b) The Secondary Residence Form covers more perils.
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c) The Seasonal Residence Form covers more perils.

d) Both automatically include burglary coverage.
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 5) Which of the following losses are not covered under a
Comprehensive Homeowner Policy?

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a) Collapse of the roof due to snow load at the seasonal
dwelling.

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b) Additional expenses resulting from a temporary stay in a

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hotel following bad storm damage to the roof.
c) Smoke damage to a light-coloured chesterfield following a
kitchen fire.

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d) Damage caused by a tree falling into the swimming pool and
destroying the liner.
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6) Under the Comprehensive Homeowner Policy, which of the

following statements is correct?
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a) House guests’ property is automatically covered for the perils

of the policy.
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b) House guests’ property can never be covered under the

policy.
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c) Only the property of the named insured is covered under the

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policy.
d) None of the above.
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 7) The Kumar family has rented the same seasonal dwelling for
20 years, for two months each year. They bring all their clothes,
bedding, and supplies (worth $4,000). Unfortunately, a fire

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destroyed the building in the first week and all was lost. They

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have a $50,000 Comprehensive Tenant Policy. How much
would this policy pay above the $500 deductible?

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a) Nothing.
b) $1,800.

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c) $3,500.
d) $4,000.
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8) Shaun plans to renovate his bungalow, which means he has

to vacate his home for six months. His coverage for additional
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living expense will:

a) Not provide any coverage.
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b) Provide coverage for a maximum of two weeks.

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c) Pay all extra expense incurred during the six-month period.

d) Provide coverage only if a loss occurs in those six months.
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 9) Jelena is selling her house and moving to a low-rise
condominium. She asks you, her broker, what she should do
with her current Homeowner Policy. What would you advise

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her to do?

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a) Endorse the current policy to the new address, but delete
the building and liability coverages because they will be

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covered under the master policy of the condominium.
b) All the building coverages for the new condominium are

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covered by the master policy, so she needs only a Tenant Policy

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in her name.
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c) Make no change, as the Homeowner Policy is just as good as
a Condominium Unit Owner Policy. She just needs to change
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the address.
d) The Homeowner Policy must be replaced by a Condominium
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Unit Owner Policy, which gives certain extra coverages she will
need as a unit owner.
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10) Is loss or damage caused by an earthquake insurable?

a) Yes — it is one of the insured perils usually covered in a
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property insurance policy.

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b) No — it is not available under a property policy.

c) No — being an “act of god,” it is never insurable.
d) Yes — it can be added to a property policy for an additional
premium.