Chapter 1 Claims and Law Flashcards

1
Q

Misrepresentation is best demonstrated by what?

a. Policyholder falsely describing the risk when purchasing the policy

b. Insurer not mitigating its loss when a claim occurred

c. Insurer making a promise and then later revoking it

d. Changes to the risk throughout the policy period

A

a. Policyholder falsely describing the risk when purchasing the policy

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2
Q

Which statement is the best example of misrepresentation?

a. The applicant gives an erroneous description of the risk when taking out the insurance.

b. The insurer did not limit the damage when a loss occurred.

c. The insurer makes a promise that it then retracts.

d. The risk changed during the insurance period.

A

a. The applicant gives an erroneous description of the risk when taking out the insurance.

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3
Q

What is an example of an affirmative warranty?

a. The insured warrants that the sprinkler system is and will be maintained in operating condition.

b. The insured warrants that a watchdog is and will be used to guard the premises.

c. The insured warrants that the anti-theft camera surveillance system is and will be in operation at all times.

d. The insured has never had a loss.

A

d. The insured has never had a loss.

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4
Q

What occupation is excluded from being an adjuster?

a. Public adjuster acting on behalf of the policyholder

b. Field adjuster employed directly by the insurance company

c. Person who acts as an adjuster of marine losses only

d. Independent adjuster hired by the insurer to handle a specific claim

A

c. Person who acts as an adjuster of marine losses only

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5
Q

What is a void contract?

a. One that will be judged never to have existed and to have had no effect from the beginning

b. One where the injured party can choose to proceed or declare the contract void

c. A policy that has expired

d. One where the contract was canceled by the insured

A

a. One that will be judged never to have existed and to have had no effect from the beginning

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6
Q

Under what rights does the insured become subrogated as soon as he pays a loss?

a. The insurer’s commitment rights

b. Replacement Value Fees

c. Rights relating to value on the day of loss

d. Rights of subrogation

A

d. Rights of subrogation

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7
Q

A blank proof of loss form must be provided to a policyholder within how many days of the notice of loss as set out in the insurance acts of the common law provinces and territories?

a. 30

b. 90

c. 60

d. 120

A

c. 60

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8
Q

What is a void contract?

a. A contract that is deemed never to have existed and never to have produced effects

b. A contract that allows the aggrieved party to declare the contract valid or void

c. An insurance contract that has ended

d. A contract that the insured has terminated

A

a. A contract that is deemed never to have existed and never to have produced effects

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9
Q

In evaluating whether an insured has an insurable interest in an object, what must a loss adjuster determine?

a. Actual cash value of the object

b. Amount the insured paid for it and its replacement cost

c. Whether the object is the subject matter of the policy

d. Whether the object was a gift and the contractual element of consideration was met

A

c. Whether the object is the subject matter of the policy

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10
Q

Which statement best describes the legal concept of a contractual relationship?

a. It limits the scope of influence of the contract to the parties to the contract.

b. It ensures the confidentiality of the information exchanged between the third party and the insurer.

c. It allows the assignment of an insurance contract to a party outside the contract.

d. It gives the insured the possibility to transfer the indemnity to any other person.

A

a. It limits the scope of influence of the contract to the parties to the contract.

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11
Q

What is the task of independent adjusters?

a. Engage the liability of the insurer when the responsibility clearly lies with the insured

b. Investigate and report on claims entrusted to them

c. Pay claims and submit invoices to insurers for reimbursement

d. Take shortcuts to reduce costs when the outcome of the claim is predictable

A

b. Investigate and report on claims entrusted to them

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12
Q

What is an example of an express warranty?

a. The insured warrants that the sprinkler installation is working properly and will be maintained in good working order.

b. The insured guarantees that a guard dog ensures the protection of the premises and that this form of protection will be maintained.

c. The insured warrants that an anti-theft system with surveillance cameras is and will continue to be in service at all times.

d. The insured has never suffered a loss.

A

d. The insured has never suffered a loss.

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13
Q

Who is not considered an adjuster?

a. An adjuster acting on behalf of the policyholder

b. An external adjuster who works directly for the insurance company

c. A person who acts only as a dispatcher in the event of maritime disasters

d. An independent adjuster hired by the insurer to handle a particular claim

A

c. A person who acts only as a dispatcher in the event of maritime disasters

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14
Q

What statutory requirement applies to insurance contracts?

a. Surety

b. Oral evidence

c. Utmost good faith

d. Negotiation

A

c. Utmost good faith

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15
Q

What best describes the legal concept of privity of contract?

a. Limiting the scope of influence of a contract to the parties to the contract

b. The information between the third party and insurer will remain confidential

c. Allowing the assignment of a policy to a party outside of the contract

d. Freedom of the insured to assign the claim payment to anyone

A

a. Limiting the scope of influence of a contract to the parties to the contract

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16
Q

An insurance claims adjuster representing an insured on a fee basis in a claims settlement.

A

What is a public adjuster

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17
Q

A claims person involved in any aspect of the claims adjusting process. May work for brokers, agents, or insurers. Can perform any duty in the adjusting process including taking the initial report of a loss, adjusting the loss, or handling the salvage or subrogation aspects of claims.

A

What is claims handler

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18
Q

An employee of an insurance company who directs the investigations of staff adjusters and independent adjusters, reviews their reports, and approves claim settlements.

A

What is a Claims examiner

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19
Q

A contract that can be affirmed or rejected at the option of the aggrieved party.

A

what is voidable contract

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20
Q

An illegal contract. In the law, a contract that was never made or never existed. For example, one cannot enter into a contract to commit an illegal act like theft and have it stand up in court. Such a contract is considered a void contract.

A

What is a void contract

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21
Q

A statement or conduct made to influence an insurer to decide on a risk. The decision includes declining or accepting the risk and deciding the rate and premium to be charged. In insurance, these statements are said to be “material to the risk” and are enough to void a policy ab initio (Latin term meaning “from the beginning”).

A

what is representation

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22
Q

A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material facts that are necessary to underwrite a policy. If the applicant does not disclose all these facts, the applicant is guilty of non-disclosure and may risk having coverage voided from inception.

A

What is non-disclosure

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23
Q

Statement or stipulation or promise in an insurance contract, the breach of which may nullify the contract.

A

What is warranty

24
Q

A promise not only that a fact is presently true but that it will continue to be true during the policy period.

A

promissory warranty

25
Q

Failure to meet the conditions or warranties contained in a specific policy of insurance.

A

breach

26
Q

Liability associated with very dangerous actions. Often found in cases involving explosives and in many automobile laws. Negligence does not have to be proven.

A

absolute liability

27
Q

The loss of a right as a result of the non-performance of some obligation or condition.

A

forfeiture

28
Q

The principle that cases be considered in the spirit of fairness and justness, as well as the strictly formulated rules of precedent.

A

principle of equity

29
Q

The principle that the insurer’s obligations under a policy terminate at a stated point in time.

A

termination of obligations

30
Q

The intentional and voluntary relinquishment of a known right. A waiver under a policy is required to be clearly expressed and in writing.

A

waiver

31
Q

The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. Actual cash value (ACV) is usually calculated in one of three ways: (1) cost to repair or replace less depreciation; (2) fair market value; or (3) consideration of all relevant evidence of the value of the damaged property.

A

actual cash value (ACV)

32
Q

Briefly describe the role of a loss adjuster

A

An adjuster investigates the loss, makes recommendations regarding payments, and negotiates and settles claims or losses based on the policy contract.
Evaluate damages and determine if the loss is covered under an insurable peril in the policy
Check for exclusions and Endorsements and apply the terms of the contract
Assess and evaluate the amount of damage
Communicate with the insured to negotiate a settlement or deny the claim if not covered
Sets up loss reserves based on an average or individual claim
Try to detect fraud when it exists
Settle and pay claims

The different types of adjusters are a salaried adjuster who works for one company on a salary basis, a public adjuster who works on a fee basis for the insured and an independent adjuster who may work for several insurance companies.

33
Q

Under Common Law list the 5 elements of any contract and the three that are specific to insurance

A

Agreement
Genuine intent
Legality of object
Consideration
Capacity to contract

Insurable Interest
Utmost good faith
Principle Indemnity

34
Q

Explain the principle of indemnity that applies to insurance contracts.

A

Claim payments restore the insured to the same financial position they were prior to the loss
This principle operated to minimize moral hazards, without this principle an insured may intentionally cause a loss for financial gain.
If the insured has more than one policy they can only recover up to the amount of loss collectively from all insurers.
In Quebec, under the civil code of Quebec, the insured will only be paid up to the amount of insurance.

35
Q

In what provinces are adjusters required to be licensed?

A

Quebec, NB, PEI, NFL and Labrador.

36
Q

An injured person can recover from any one of the liable parties

A

Joint and Several Liability

37
Q

What is the intent of punitive damages?

A

to punish those who take advantage of policyholders
to deter similar behavior in the future
to publicly condemn the behavior

38
Q

A fact is true when the insurance policy is purchased. such as the Insured has never had a claim or the insured was in good health when the policy was purchased.

A

Affirmative Warranty

39
Q

Courts may grant relief to a policyholder who files to preform or oblige in a set time.

A

Relief from perfect compliance

40
Q

We can forgo a formal sworn POL when what conditions excist

A

The amount is less than the specified threshold
There is no suspicion of fraud
No possibility of subrogation
No threat of litigation

41
Q

Knowledge and skills of an adjuster

A

Legal knowledge
knowledge of company protocol
Skills and characteristics
Professionalism
High standards of conduct

42
Q

What is the task of an adjuster

A

One who investigates insurance claims makes recommendations regarding the payment of benefits from insurance policies, and negotiates payments and settlements.

43
Q

What type of adjuster works for the insured?

a. Public Adjuster
b. Claims handler
c. Staff adjuster
d. independent Adjuster

A

a. Public Adjuster

44
Q

What are the two civil law systems in Canada

A

Civil code Quebec
Common Law all other provinces

45
Q

contrast the difference between Civil code of Quebec and Common Law

A

law of

46
Q

What are the 5 elements of a common law contract?

A

agreement
capacity to contract
Consideration
Genuine Intention
Legality of Object

47
Q

What are the Elements of a contact under the Quebec civil code

A

Consent
Capacity to contract
Cause of Contract
Object of contracts

48
Q

What influences the term given to loss adjusters?

A

Usage in the corporate environment
Local usage
Legislation
Specific licensing regulations

49
Q

What provinces must loss adjusters be certified?

A

Quebec, New Brunswick, Newfoundland, PEI

50
Q

What are the five essential elements of a contract?

A

GLACC

Agreement
Capacity to contract
Consideration
Genuine intention
Legality of object

51
Q

What are the four elements of a contract in Quebec?

A

CCCO

Consents
Capacity to contract
Cause of contracts
Object of contracts

52
Q

Who are some parties with insurable interest?

A

Owner of property
Mortgagee as a lender
Lessee who takes possession of leases property
Bailee who accepts custody of property
Consignee who has purchased goods that are in transit
Anyone else in a position to lose should the property be lost or damaged

53
Q

What are the three conditions to qualify for insurable interest

A

Physical object destroyed by a peril
Physical object must be the subject matter of insurance
Insured must have relationship to property recognized by law

54
Q

Define promissory warranty

A

Promise that a fact is true and will continue to be true

55
Q

What is the criteria when a proof of loss does not need to be formally signed?

A

Amount of the loss is under a specified threshold
There is no suspicion of fraud surrounding the claim
There is no possibility of subrogation
There is no threat of litigation by the insured

56
Q

Briefly describe the role of a loss adjuster.

A

An adjuster is one who solicits the right to negotiate the settlement of or to investigate a loss or claim under a contract or under fidelity, surety, or guaranty bond issued by an insurer or directly or indirectly negotiates, investigates, adjusts, or settles such loss or claim.
One who investigates insurance claims, makes recommendations regarding the payment of benefits from insurance policies, and negotiates payments and settlements.
Some loss adjusters operate as salaried employees of an insurance company, while others operate as independent adjusters, typically for independent adjusting firms that pursue contracts with licensed insurers to manage all or part of a claim.
The adjuster represents the insurance company with respect to a claim on a policy.
Loss adjusters must assess and evaluate the amount of damage and then apply the terms of the insurance policy—interpret the policy wording—to determine whether a loss is covered.