Ch2: Regulations Flashcards
Who handles Federal Regulations
Office of the Superintendent of Financial Institutions
Describe the duties of the Office of the Superintendent of Financial Institutions
- to license insurance companies that operate in multiple provinces
- monitor and set strict financial standards to ensure stability
Who handles Provincial Regulations In B.C.
BC Superintendent of Financial Institutions
Describe the 4 responsibilities of the provincial regulator
- Regulate and approve insurance policy terms/wordings
- Licenses insurers, brokers, and adjusters
- Monitors financial stability of BC insurers
- Administers the Insurance Act
Define “Solvency”
ability to meet financial obligations
What stands for “PACICC?”
Property And Casualty Insurance Compensation Cooperation
What does PACICC do?
covers policyholders even when the insurer goes bankrupt
up to $250,000 per claim, refund premiums 70% or $700
Define “Fiduciary”
someone who handles other peoples money
What is a Brokers responsibility?
hold commissions in trust and return unearned commissions
What is a Insurers responsibility
return unearned premiums
What are the 6 Contents of a Insurance Policy
- Parties of a contract
- Loss Payable or Payee
- Policy Period starts at 12:01AM Standard Time @ address of name of insured
- Coverage and Amount of Insurance
- Subject Matter of Insurance
- Rates and Premiums
When does the policy period start?
12:01AM Standard Time @ address of name of insured
Define “Fire”
ignition that causes “destructive burning”
Define “Friendly Fire”
deliberate and contained for beneficial purposes (not insurable)
Define “Hostile Fire”
not contained & destructive affects (insurable)
What are the 4 Basic Fire Policy Coverages?
- Friendly Fire
- Hostile Fire
- Lightning
- Explosion of Coal, Natural or Manufactured Gas
Name the 5 Fire policy exclusions
- Application of heat
- Radioactive Contamination
- Other electrical currents
- Lightning damage to electrical devices
- Riot, Insurrection, Civil Commotion, War, Act of a Foreign Enemy or Military deliberate act of violence with a large loss
Define “Statutory Conditions”
rights and responsibilities of the parties - no changes
Name the 3 types of Misrepresentation
- False description of property
i.e. Making it look better than it is - Misrepresentation of a “Material Fact”
i.e. give a true account - Fraudulent omission of a “Material Fact”
i.e. applicant deliberately withholds material information
Define “Material Fact”
something that would change the insurers decision if known
Name the 8 requirements upon loss
- Notice of Loss
- Proof of Loss
- Inventory of Damaged Property
- How the Loss Occurred
- Location
- Other Insurance
- Interest of the Insured & Others
- Changes in Property
Who are the 3 people who can give notice for proof of loss?
- the insured
- the agent if justifiable
- those with insurable interest - even if insured refuses
Termination responsibilities of the Insured
must notify insurer (termination=immediate)
In Writing: to the provincial head office of insurer
Premium Refund = on short rate basis to cover admin costs
Termination responsibilities of the Insurer
In writing: to the last known address of the insured.
Registered Mail: 15 days’ notice
Hand Delivered: 5 days’ notice
Refund = Pro Rata & accompanies the notice
Define “Property of Others”
No coverage unless you’re insured by the policy
Define “Change of Interest”
If insured no longer has insurable interest in the property, coverage is NOT automatically extended to the new owner
What are the Exemptions to the “Change of Interest”
transfers under the bankruptcy act, succession, death or other
“legally-mandated” title change.
Describe “Rights After Loss” (ACE)
Part of statutory conditions
Abandonment: Insured cannot abandon property to insurer.
Control: Insurer cannot take control of the property after loss.
Entry: Insurer can enter immediately after loss to investigate.
Define Appraisal
Part of Statutory conditions. Outlines the procedures for claims disputes.
When are losses payable?
Within 60 days of receiving proof of loss (unless the contract states otherwise)
Define “Replacement”
Part of Statutory conditions, When the insurer decides to repair or replace instead of paying cash they must give written notice with 30 days and start replacement within 45 days.
Define “Action”
Part of Statutory conditions. Legal action must be taken with one year of date of loss. No legal action can be taken within the Losses Payable period.
Describe the function of the “Limitation of Liability Clause”
Any terms that may reduce the amount of payment in red ink.
Define “Delivery of Policy”
If the policy is has been delivered, the insurer must pay for losses even when the premium has not been paid.
Define “Subrogation”
To stand in the shoes of another and assume their legal rights
Insurer can sue in place of the insured after paying a claim to recover the loss.
What is the Waiver of Terms/Conditions
Only the insurer can change policy terms and conditions.
MUST BE: Written and signed by authorized person.
What is the “Removal Clause”
Coverage for property for up to 7 days if moved to a new location NOT stated on the policy to prevent further losses
