CIC Personal Lines cheat sheet

The CIP (Chartered Insurance Professional) program is administered by the Insurance Institute of Canada; Personal Lines is one of its core disciplines and addresses home, auto, and personal liability coverages for individuals and families.

Every personal lines policy consists of a declarations page (named insured, address, term, limits, deductibles, premium), insuring agreements, conditions, exclusions, and definitions; the definitions section governs how terms are interpreted throughout the contract.

Indemnity is the governing principle: the insured is restored to approximately the pre-loss financial position, never better off. Actual cash value (ACV) = replacement cost minus depreciation; replacement cost (RC) pays to repair or replace with new property of like kind and quality without depreciation deduction.

Utmost good faith (uberrimae fidei) requires both parties to disclose material facts. A material fact is one that would influence an insurer's decision to accept, decline, or rate the risk; misrepresentation or non-disclosure can allow the insurer to void the contract.

Insurable interest must exist at the time of loss: the insured must suffer financial detriment from the loss of the property. Ownership, mortgage, leasehold, and legal liability all create insurable interest.

Subrogation transfers the insured's right of recovery against a negligent third party to the insurer after it pays the claim, preventing double recovery and shifting the loss to the responsible party.

A deductible is the amount the insured absorbs on each claim before the insurer pays; it reduces premium but also reduces the claim payment. A franchise deductible pays the full loss once the loss exceeds the franchise amount.

Co-insurance (in property insurance) is a contractual penalty clause: if the insured carries less than the required percentage of value (commonly 80%), the claim is reduced by the ratio of carried limit to required limit, subject to the policy limit.

Policy conditions include notice of loss (prompt written notice), proof of loss, cooperation, appraisal/dispute resolution, and the insurer's right to inspect and salvage. Breach of a condition can prejudice coverage.

The Homeowners policy (IBC form) covers the dwelling, detached private structures, personal property, and additional living expenses (ALE), plus personal liability and voluntary medical payments/voluntary property damage.

Coverage A (Dwelling) is the main structure and attached structures; Coverage B (Detached Private Structures) is typically 10% of Coverage A; Coverage C (Personal Property) is typically 50% of Coverage A; Coverage D (ALE) is typically 20% of Coverage A. These percentages vary by form and must be verified in the declarations.

Coverage C personal property is insured on a worldwide basis (subject to limits), while Coverage A and B apply only at the described premises. Property removed from the premises for repair, storage, or seasonal use is covered for a limited period (commonly 30 days).

Special limits apply to specific categories such as money, securities, jewellery, furs, silverware, bicycles, business property, and watercraft. Items above the limit require a scheduled floater or endorsement.

Named perils forms (Basic, Broad) cover only the perils listed; the Comprehensive/All Risks form covers all risks of direct physical loss except those excluded. Exclusions typically include wear and tear, deterioration, inherent vice, insects/vermin, and faulty workmanship.

Sewer backup, overland water, and earthquake are commonly excluded or restricted and require specific endorsements; flood and earthquake coverage must be separately purchased in most Canadian markets.

The Dwelling policy (IBC 115) insures the dwelling and personal property of the owner-occupant or a tenant on a named-perils basis; it does not include personal liability unless added by endorsement, and is often used for rental dwellings and seasonal homes.

Replacement cost on dwelling and personal property requires insurance to at least 80% of replacement cost; if underinsured, the claim is settled on an actual cash value basis or reduced by the co-insurance ratio. Guaranteed replacement cost endorsements are available on some forms.

The Additional Living Expenses coverage pays for increased costs of living (temporary accommodation, meals, moving) and loss of fair rental value when the dwelling is uninhabitable due to an insured peril, subject to a time limit and the Coverage D limit.

Canadian auto insurance is governed by provincial legislation and the provincial auto policy (e.g., Ontario's OAP 1, Alberta's SPF 1). The policy includes third-party liability, accident benefits, uninsured automobile, and direct compensation for property damage where applicable.

Third-party liability covers the insured's legal liability for bodily injury and property damage to others arising from the ownership, use, or operation of the automobile. Minimum limits are set by provincial law; higher limits are recommended and available.

Accident benefits (SABS) provide no-fault benefits to the insured and occupants regardless of fault: medical, rehabilitation, attendant care, income replacement, death, and funeral benefits, subject to provincial limits and deductibles.

Direct Compensation for Property Damage (DCPD) is a no-fault system in several provinces: the insured's own insurer pays for damage to the insured vehicle and its contents when the other driver is at fault, and the insured does not pay a deductible when not at fault.

The Uninsured Automobile coverage responds when the insured is injured or the vehicle damaged by an identified or unidentified uninsured or hit-and-run driver, up to the policy limits.

Collision coverage pays for damage to the insured vehicle from collision or upset (rollover); Comprehensive coverage pays for other perils such as fire, theft, vandalism, and weather. Both are subject to the deductible selected.

The Ontario Automobile Policy (OAP 1) is a standard form; optional endorsements include OPCF 27 (Liability for Damage to Non-Owned Automobiles), OPCF 20 (Coverage for Snowmobiles), OPCF 44R (Family Protection Coverage), and OPCF 43 (Removing Depreciation Deduction).

Rating factors include driver age and experience, driving record (at-fault accidents and convictions), vehicle make and model, territory, annual kilometres driven, and claims history. A conviction for a major offence can result in non-renewal or a facility-market placement.

A vehicle is considered a total loss when repair cost approaches or exceeds the actual cash value; settlement is on ACV unless a waiver of depreciation (OPCF 43) endorsement is purchased, which provides replacement cost for a specified period.

Personal liability coverage in the homeowners policy covers the insured's legal liability for bodily injury or property damage to third parties arising from personal activities, and includes defence costs in addition to the limit.

The liability limit is typically $1,000,000 or $2,000,000 and applies per occurrence; defence costs are paid in addition to the limit. Intentional acts, business activities, and the ownership of aircraft or watercraft are commonly excluded.

Voluntary medical payments and voluntary property damage coverages pay small claims regardless of legal liability, avoiding litigation and preserving goodwill; limits are low (e.g., $5,000).

A personal umbrella liability policy provides excess liability above the underlying homeowners and auto liability limits, and may also fill gaps for exposures not covered by the underlying policies. Insurers typically require minimum underlying limits (e.g., $300,000 auto, $1,000,000 home).

Umbrella policies commonly require the insured to maintain the underlying insurance and may be excess over a self-insured retention for exposures not covered by the underlying policies.

Watercraft and snowmobile liability requires specific endorsements or separate policies; the homeowners policy typically excludes liability arising from the ownership or operation of watercraft powered above a specified horsepower and of aircraft.

Business activity exclusions in personal policies mean that home-based businesses, rental income from more than a specified number of rooms, and farm operations require commercial or specialty coverage.

Tenant/condominium owners need contents, betterments and improvements, loss assessment, and personal liability coverage; the condominium corporation's policy covers the common elements and the building, not the unit owner's contents.

A personal articles floater (inland marine) schedules valuable items such as jewellery, fine art, and musical instruments on a worldwide, all-risk basis without a deductible, and requires an appraisal or bill of sale for high-value items.