Chapter 2 Study Guide and Checkpoints Flashcards
identify the five mounting losses of liability insurers of the 1980s
I.D.E.A.L
- Disproportionately high court awards in the united states
- Environmental disasters
- Aviation disasters
- Inadequate assessment of potentially dangerous risks
- Latent bodily injury claims
identify the five sections of the IBC 2100
- Coverages
- Who is an insured
- Limits of Insurance
- CGL Conditions
- Definitions
Identify the four coverages of section 1 of the IBC 2100
A Bodily injury and property damage liability
B personal injury and advertising injury liability
C medical payments
D tenants legal liability
identify the eight key features of Insuring Agreement I
- coverage provided for bodily injury and property damage only
- payment made only for those sums that the insured becomes legally obligated to pay
- Insurer liable for payments of compensatory damages only
- coverage is provided only for losses which occurred during the policy period.
- Injury or damage must be caused by an occurrence
- loss or damage must take place in the coverage territory
- insurer’s right and duty to defend any action
- insurer reserves the right to investigate any claim and settle any claims or action at its discretion
identify the three terms containing the definition of bodily injury
- bodily injury
- sickness
- death
briefly explain the two key coverages included under the definition of PROPERTY DAMAGE
- Physical injury to tangible property, including all resulting loss of use of that property
- Loss of use of tangible property that is not physically injured
Who decides those sums that the insured becomes legally obligated to pay?
Only the courts
identify the three types of liability that may be faced by business owners
- tort liability
- certain contractual liabilities
- statutory liability
Briefly explain what is meant by COMPENSATORY DAMAGES
These damages are intended to attach, as nearly as possible, a dollar value to the injury or damage for which the insured is legally obligated.
identify which policy would respond to a claim for bodily injury that occurred 10 years ago.
would it be the current policy or the policy that was in effect 10 years ago
The policy that would respond would be the one in effect at that time.
define OCCURENCE
Occurrence means an accident including continuous or repeated exposure to substantially the same general harmful conditions
identify the coverage territory of the IBC 2100
- Canada
- USA
- USA territories and possessions
identify where suit for any product liability claims must be brought
Canada or the USA
insurer must defend an action for which coverage is provided by the policy even if the allegations are groundless false or fraudulent. true or false
TRUE - Duty to Defend
the insurers right and duty to defend ends when the coverage limits have been expended to pay the claim. .true or false
TRUE - gotta watch out for those limits
Insurer can settle any claim or action at its discretion. true or false
TRUE
“Bodily injury” or “property damage” expected or intended from the insureds standpoint is excluded except in a very specific instance. identify the specific instance where intentionally caused injury or damage would be covered.
Use of REASONABLE FORCE to PROTECT PERSONS or PROPERTY
Although there is generally no coverage under the policy for damages assumed by the insured under contractor agreements, there are however certain types of day-to-day business contracts that are incidental to the affairs of an insurer,and consequently are covered.
Identify any five such contracts automatically insured
- A lease of Premises
- A sidetrack Agreement
- An elevator maintenance agreement
- An easement or license agreement re: private railroad crossings at grade
- indemnification of municipality as required by ordinance
are these contracts required to be in writing?
They are NOT but usually will be.
will the policy respond to pay any premiums that the insured fails to pay for workers compensation plans or similar?
No. The policy won’t respond if the insured doesn’t pay their workers comp or CPP.
will the policy generally respond to pay for injuries to employees were injured in the course of their employment?
No. That is for workers compensation.
there are instances when workers compensation will not respond for injured employees identify when the policy will provide contingent employers liability coverage
- When Liability is assumed under an INSURED CONTRACT
- employees on whose behalf contributions are made by or required to be made by the insured under the provisions of any workers compensation law
identify the two possible solutions for employers whose employees do not automatically fall under the workers compensation act
- Purchase EMPLOYERS LIABILITY COVERAGE
(this is like Voluntary Compensation Endorsement) - Enroll all employees under the provincial workers compensation plan
define automobile
A land motor vehicle, trailer, or semi trailer that is required by law to be insured under a contract evidence by a motor vehicle liability policy, or any vehicle insured under such a contract including any attachments scenery or equipment
identify two instances when they would be coverage for watercraft under the ibc 2100
- Any watercraft while ashore on owned or rented premises
- non-owned watercraft that is less than 8 metres long and which is not being used to carry persons or property for a charge
Does Personal and Advertising Injury Liability respond to claims alleging bodily injury?
Sort of. Covers PERSONAL INJURY which includes consequential bodily injury
identify the five coverage is provided under the personal and advertising injury
- False arrest, detention or imprisonment
- Malicious prosecution
- Wrongful entry into or eviction of a person from a room dwelling a premises that the person occupies
- Defamation/libel/slander
- Oral or written publication of material that violates a person’s right of privacy
define FALSE IMPRISONMENT
holding someone without lawful justification in a place against their will
define false arrest
False arrest includes a false imprisonment but contains the additional feature of detaining the victims with the INTENTION that they may be turned over to the POLICE for prosecution
identify the two conditions to be present in malicious prosecution
- the complainant was arrested and later released and
- evidence provided reveal the person making the complaint did not have an honest belief that a crime has been committed but was guided by other improper motive such as a desire to harass or humiliate the victim
Who would be a prospect who may be charged with wrongful entry or eviction
A landlord
define defamation
statement that causes unjustified injury to the reputation of another person and which results in the loss to that person of the esteem confidence respect and goodwill of a considerable part of the community.
There must be a PUBLICATION
slander
SPOKEN defamation
Libel
WRITTEN defamation
identify four activities that constitute an advertising liability exposure and are not covered under this section of the policy
- Publishing material KNOWN to be false is not insured
- Publication which occurred prior to the policy period
- Results in deliberate breaking of the law
- When the liability is ASSUMED
five types of expenses that would be paid under coverage C
- immediate first aid
- ambulance charges
- funeral expenses
- dental services
- x-rays
3 reasons other than goodwill to include no-fault medical payments in the ibc 2100
- reduced chance of permanent disability
- potential for claims alleging negligence is reduced
- A legal confrontation with the victim over such expenses is avoided
give me four persons excluded under coverage C
- The insured(s)
- The insureds EMPLOYEES
- other persons working on behalf of the insured or tenant of the insured
- any person who is practicing, instructing, or participating in athletics
two ways in which tenants legal liability to the owner can be established
- Tort Liability ( if the tenants negligence results in loss or damage to rented property there is a legal obligation to compensate the owner for the loss)
- Contractual Liability
- tenants agree to assume liabilities and contract would not otherwise be imposed upon them by law
how to calculate the minimum limit of tenants legal liability of tenant should purchase
it should have as a minimum be no less than the value of the building or portion of the building occupied by the insured
6 exclusions to section A, C and D
- Asbestos
- Fungi or Spores
- Nuclear Energy Liability
- Pollution Liability
- Terrorism
- War Risks
Four instances where pollution damage is excluded
- on the insured’s premises
- at any waste disposal site used for, or by the insured or others
- while being transported or disposed as waste by or for an insured under the policy
- at any work site when brought onto the site by the insured
Four additional types of claims related expenses that are addressed under supplementary payments
- Insurers Costs (reconstruct the accident)
- The cost of bonds to release attachments
- Reasonable Expenses Incurred
- all costs tax against the insured in any interest accruing after entry of judgment upon that part of the judgment which is within the applicable in its of insurance (court costs / interest on amount of judgement)
two kinds of costs addressed under “costs taxed against the insured”
- Court Costs
2. Interest on amount of the judgement
when the interest on the amount of judgment is calculated
Commencing from the date of the judgement until the insurer has paid, offered to pay, or deposited in court the part of the judgement that is within the limit of insurance.
when the interest on the amount of judgment any restriction as to amount
Restricted to “that part of the judgment which is within the applicable limit of insurance”
are supplementary payments included or in addition to the limit of the policy?
In addition to other coverage limits provided by the policy
factors calculating premium for premises and operations liability exposure. 4 of them
- Square footage of the building or occupied by the insured.
- Occupancy (type of business conducted)
- Payroll (more employees = more exposure)
- Location (geo location a facotr)
factors calculating premium for products liability exposure
- Type of product sold
- Sales volume
- Territory where they are sold
factors calculating premium for completed operations exposure
- Type of work performed
2. Gross Receipts - directly related to the amount of work performed
factors calculating premium for personal injury exposure
Sames as coverage A
Factor calculating premium medical payments exposure
None
factor calculating premium for tenants legal liability exposure
35% of the building rate
what are the three names a Commercial General Liability policy can be issued
- individuals
- partnerships limited liability partnerships and joint ventures or limited liability companies
- organizations, other than partnerships or joint ventures
who are the five persons engaged in the business were also insurance under the policy
- owners partners spouses directors & officers
- employees and volunteer workers
- a non-employee or organization acting as the insured’s real estate manager
- those having temporary custody of property after the death of the insured
- upon the death of the insured the legal representative appointed to assume control of the business
identify when a newly-formed or acquired business would be automatically covered under the existing IBC 2100
The named insured purchases all or a majority interest in an existing corporation or forms in new one during the policy. Coverage is automatically provided unless a separate policy already exists
one type of newly-formed business that would not automatically be covered unless specifically st unless specifically statedated in the declarations
A seperate policy already exists for it
identify for those newly-formed businesses that are covered the length of time for automatic coverage
- 90 days
or - Until expiry of the policy, whatever is sooner
define aggregate limit
the most of the policy will pay during the policy. for all claims for which insurance is provided
define occurrence limit
this limit represents the maximum to be paid by the insurer and any of one occurrence
if an insured goes bankrupt the insurer can avoid its liability under the policy true or false
False
all claims will be paid in canadian currency true or false
TRUE
verbal changes to the policy are acceptable true or false
FALSE
the insurer has no right to the insureds RECORDS. true or false
FALSE
legal action against the insurer is allowed
TRUE - “Legal Action against us”
premiums may be subject to adjustment true or false
TRUE
3 items contained in definition of PRODUCTS
- Any goods or products
- Containers of the products
- Warranties or representations made respecting the fitness, quality, durability, performance or use of such products, including their containers.
4 items contained in definition of WORK
- work or operations by you or on your behalf
- materials parts or equipment furnished in connection with such work
- work actually done
- work performed on behalf the of insured
five factors for the insurer to consider when deciding how much insurance is enough
- the extent previous words made by the courts for similar types of businesses
- inflation
- existence of insurance
- territory of operations
- ability of the business to absorb certain losses
what could happen to a business OWNER if they do not carry adequate limits of insurance to satisfy any damages awarded by the court
they may find their salaries garnished and physical property seized
many liability claims against insureds may be fraudulent. two advantages of carrying liability insurance
- you are provided with the services of professional adjusters who are trained to detect fraudulent claims
- defense costs are included
what are the three theories of determining when an occurrence has occurred
- exposure theory (injury occurs when person was in physical contact with the harmful substance
- exposure in residence theory - assumption is made that the disease or other bodily injury continues after the exposure to the hazardous substance has ceased
- MANIFESTATION THEORY - the injury is assumed to have occurred only when recognized or diagnosed
three features of the CLAIMS MADE POLICY in the IBC 2200
- coverage triggered when claim for damages is made
- coverage limited by retroactive date (this date will be stated on the policy)
- reporting period can be extended for an additional premium (this fills in the gap from the retroactive date feature)
three instances when the extended reporting. endorsement could be added to the ibc 2200 form
- going out of business
- changing from a claims-made to an occurrence form policy
- replacing a claims-made policy with another insurer
two categories of professionals
- those who administer healthcare or other professional medical services
- those who give advice and counselling
are PROFESSIONAL LIABILITY policies written on occurrence basis or claims-made basis
Claims-Made Basis
although the first duty, in common law, by a board of directors is to the company as a whole, identify any three others they also owe a duty to, as established by federal and provincial governments
- shareholders
- creditors
- employees and the public
two problems with underlying insurance policies that would encourage a business owner to purchase an umbrella policy
- inadequate limits
2. inadequate coverage
two purposes achieved by the self-insured retention that is found an umbrella policy. The SIR
- serves as a deductible for losses not anticipated by the insurer
- encourages the insured to purchase coverage against obvious liability exposures excluded under the primary policy.
