Chapter 2 Flashcards
If an insurance company goes bankrupt who compensates the policy holders?
Property & casualty insurance compensation corporation
When an insurance policy is cancelled by the insurance company, refunds are processed on a pro-rate basis. Your client paid $2400 in premiums for an annual policy in January. At the end of June, their policy was cancelled by the insurance company. How much money will be refunded to your client?
$1200. I’ll break this one down
So it’s a rate of 2400/yr, or 2400/12 months. That’d be a rate of 200/m. June is 6 months into the year, so by then you’ve used $1200. 2400 - 1200 = 1200, so you can get $1200 refunded
What is the fiduciary responsibility of a broker?
To return any unearned commissions
According to the Insurance Act, what needs to be included on the declarations page?
Parties to the contract (Who’s on it), Policy period (Time frame), Loss payee(s) (The person getting paid in case of a loss), Coverage & amounts of insurance (Obvious I hope), Rates, and Subject matter of insurance
What is the statutory condition of “salvage” entail?
The insured must take reasonable steps to protect their property from further loss
What are the two types of fire loss, and which one is insurable?
Friendly fire, which is contained, and hostile fire, which isn’t and insurable
What are two types of misrepresentation?
False description of property to the prejudice of the insurer (lying about its state so it looks less risky), and Fraudulent omission of a material fact (leaving out important details that could impact their decision to insure you or not)
What is the Removal Clause?
“With an insurance policy, protection is usually only available while the property is on the stated premises but sometimes, it is necessary to move that property to an unnamed premises in order to protect it from further loss. In that case, insurers have agreed to offer coverage at a location that is not named on the policy”
That’s the direct quote (and confusing….) basically what it means is if you need to move property from the spot on the insurance company to prevent future loss it’s allowed
What are the two additional perils included in Fire insurance?
Lightning and Explosions
An insurer has different duties based on whether they want to repair or replace the insured’s damaged property. What are they responsible for in each case?
Payment: has to pay within 60 days of receiving proof of loss
Repairs and Replacement: has to provide written notice of them planning to do this within 30 days and has to actually start within 45
