Chapter 1

Question 1

Define Property Insurance

Answer 1

First party insurance that indemnifies the owner or user of property for its loss, or the loss of its income producing ability; when the loss or damage is caused by a covered cause of loss, such as fire or explosion.

Question 2

Describe the evolution of property insurance

Answer 2

Property insurance has evolved significantly over the years. Where at one time coverage was available for losses arising from only a few types of perils whereas insurance policies today cover a wide variety of perils. Historically speaking, fire was the major peril and so the first type of property insurance was fire insurance.

Question 3

Explain Who or what is covered in property insurance:

Answer 3

Who is covered: named insured, spouse, business, relatives of either named insured or spouse, any person under 21 years old in insureds care. Mortgagee also has coverage provided by the policy. What is covered: This is the subject matter of the insurance, in which the insured has interest and which they will be indemnified in a covered loss. This includes first party insurance - which is the insured, as well as 3rd party insurance coverage which is liability purchased by the insured to compensate another party for loss or damage for which the insured is legally liable.

Question 4

Discuss the different Types of Property Insurance

Answer 4

There are different kinds of property insurance including persona lines (insurance for individuals and families such as home owners or private passenger automobile insurance). These policies can provide coverage for things like the dwelling itself, personal belongings, and can extend to endorsements such as jewellery or furs where is often a limitation for these coverages on the base policy. There is also commercial lines (insurance for business such as property or liability). Commercial lines property coverage could include coverage for building, equipment, stock, boiler and machinery among many others.

Typically, business insurance coverage is not covered under the insureds homeowners policy, however extensions can be added should the type of exposure and risk be acceptable to the insurer. Typically a fee is charged for this extension of coverage.

Question 5

In what sense is insurance intangible? How is the intent of the parties made tangible?

Answer 5

Basically, insurance is intangible, as its based on the exchange of a promise. The insured promises to pay a certain premium in exchange for the insurer to assume the risk of loss. It becomes tangible a contract between the 2 is formed for the purposes of insurance. The contract must contain certain elements including
an agreement
between legally capable parties
for a consideration (insurance is premium)
demonstrating intent
To do something that is legal

Question 6

What is the principal of indemnity

Answer 6

Indemnity is a contract, expressed or implied to repay in the event of a loss. The insured neither gains or loses in this situation. They are placed in the same position as they were immediately prior to the loss.

Question 7

What is a fortuitous event

Answer 7

this is an event which is a chance event as far as the insured is concerned. The insured cannot have known or planned the loss to happen to have it be covered by the insurance policy.

Question 8

How is insurance a contract

Answer 8

With insurance, the 2 parties agree to do or not do something by the other party. The offer and acceptance of the items may be either expressed or implied for it to be enforceable. The contract must contain an agreement between capable parties for a consideration , that are demonstrating intent and they are doing something that is legal.

Question 9

What are the 5 elements that make up a Contract in Canada common law

Answer 9

The 5 elements are

1. An agreement
2. Between legally capable policies
3. For a consideration
4. demonstrating intent
5. To do something that is legal

Question 10

Contract under Civil Code of Quebec

Answer 10

an agreement of wills by which one or several persons obligate themselves to one or several other persons to perform a presentation (duty, payment of money or a service)

Question 11

How do insurance contracts differ from other contracts

Answer 11

Insurable interest and indemnity differentiate the contracts from others. As well, as Uberrimae Fidei or utmost good faith is considered here which requires the insured to act with a high standard of honesty and disclose facts that a reasonable person ought to know

Question 12

What does uberrimae Fidei stand for?

Answer 12

utmost good faith which requires the insured to act within a high standard of honesty and disclose facts that a reasonable person ought to know is material.

Question 13

Why is utmost good faith essential for a binding insurance contract?

Answer 13

It requires the insured to act with a high standard of honesty and disclose facts that a reasonable person ought to know were material.

Question 14

What is the purpose of an insurance contract?

Answer 14

The purpose of the insurance contract is the promise between 2 or more persons that is intended to be legally enforceable. They promise to do or abstain from doing something.

Question 15

What role does the insurer play in insurance?

Answer 15

The insurer sells, issues the policy and collects premium and pays out claims that are covered under the terms and conditions of the policy.

Question 16

What is a habitational insurance?

Answer 16

These include homeowners policies that cover damage or destruction to the insureds dwelling, detached private structures, contents. Other policies cover tenants or condominiums.

Question 17

What is commercial insurance?

Answer 17

commercial insurance cover property such as building, stock and equipment among other items.

Question 18

What is covered under an aviation policy?

Answer 18

Aviation insurance provides coverage for the aircraft itself.

Question 19

What is covered under a boiler insurance policy.

Answer 19

A boiler insurance policy also known as boiler and machinery or equipment breakdown insurance covers accidental physical damage to equipment such as boilers and pressure vessels, pressurized equipment, which are excluded under a conventional property policy.

Question 20

What is covered under a builders risk insurance policy ?

Answer 20

Builders risk policies provide coverage for physical loss or damage to property while its under construction. The coverage applies to material, fixtures and equipment used in the construction or renovation of a building or structure.

Question 21

List the key elements of a property insurance policy

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Answer 21

Name of Insured
Name of Insurer
Name of the persons whom they insurance money is payable
The amount, method of determining the amount, of premium for the insurance policy.
Subject Matter of Insurance
Indemnity for which the insurer may become liable
Event on the happening of which liability is to accrue
effective date of the insurance
expiry date or method by which it is to be fixed.

Question 22

What is the purpose of a deductible?

Answer 22

The purpose of a deductible is the insureds portion of the loss. Small frequent losses are expensive in terms of handling for insurers. To avoid these expenses and reduce premium for insureds, the deductible is applied to each loss.