Chapter 3

Question 1

someone who handles other people’s money

Answer 1

Fidicuary

Question 2

are both fiduciaries and must ensure that the trust places in them is not abused.

Answer 2

Insurers and Brokers

Question 3

expect the premium they pay will be forwarded by the broker to the insurance company. In addition, they expect that insurers will retain a portion of all premiums collected to pay, or that they will provide refund if policy is cancelled mid-term

Answer 3

Consumers

Question 4

4 levels of insurance regulation

Oversees terms and conditions of the policy.
Created the Insurance Act
Created the Statutory Conditions

Answer 4

Fair Practices (Provincial)

Question 5

4 levels of insurance regulation

Both federal and provincial superintendents monitor the financial strength of insurer

Answer 5

Solvency

Question 6

4 levels of insurance regulation

Authorizes the insurers to do the business in the provinces

Answer 6

Insurer Licensing (Provincial)

Question 7

4 levels of insurance regulation

Oversees broker testing, licensing, and discipline.
Created the Registered Insurance Brokers Act.

Answer 7

Broker Licensing

Question 8

Office of the Superintendent of Financial Institutions

supervises Canadian insurance companies incorporated under the Insurance Companies Act as well as foreign insurers who are licensed to sell insurance products in Canada.

main role is to review an monitor all federally licensed insurers to determine their financial soundness.

Answer 8

OSFI

Question 9

Property and Casualty Insurance Compensation Corporation

they are to protect policyholders and claimants for company failures

Answer 9

PACICC

Question 10

They regulates insurer operating in Ontario and enforces the provincial Insurance Act and the Compulsory Automobile Insurance

Answer 10

FSRA

Question 11

Financial Services Regulatory Authority of Ontario

Answer 11

FSRA

Question 12

They are responsible for

Licensing of both and life and general insurance and agents

Monitor insurer solvency

Ensuring fair marketing practices

Approving automobile insurance coverage and rates

Answer 12

FSRA

Question 13

Five Elements of Contracts in General

Answer 13

Agreement
Consideration
Legality of the object
Legal capacity of the parties to the contract
Genuine Intention

Question 14

The offer made, and an unconditional acceptance of the terms that offer.

Answer 14

Agreement

Question 15

Is evidence the two parties intend to be bound by the contract

in insurance contract, the consideration given is the payment of the policy premium

Answer 15

Consideration

Question 16

refers to whether the object of the contract has a legal basis.

Answer 16

Legality of the Object

Question 17

following are the legal entities who can enter into contracts

And individual is a legal person who can enter into contracts, sue, or be sued.

Business registered, as sole proprietorship, partnerships, or corporations are also legal entities and have the same right to contract as individuals

If an unincorporated business uses a trade name for marketing purposes, the contract must be issued in the name of the individual(s) who own the business and not the trade name.

Answer 17

Legal Capacity

Question 18

Law says the parties to a contract must be competent and have the legal capacity to enter into a contract.

Answer 18

Legally Incompetent Persons

Question 19

They are persons of the law considers incompetent with regard to contracts

Answer 19

Persons who are mentally incapable
Persons who are under the influence (drugs and alcohol at the time a contract is entered into)
Minor: In Ontario, a minor is defined as being under the age of 18.

Question 20

both parties shown intention to enter into a contract

Answer 20

Genuine Intention

Question 21

under Genuine Intention parties are in the agreement was not affected by one or more of the following otherwise contract may be voided.

Answer 21

Fraud (trickery)
Duress (use or threat of force or illegal imprisonment)
Concealment ( misrepresentation of pertinent facts)
Mistake (a legal document signed in error or by mistake)

Question 22

The three elements of Insurance Contract

Answer 22

Insurable Interest
Utmost good faith
Indemnity

Question 23

Individuals and other legal entities have this when they can show they would suffer financially from a loss.

Answer 23

Insurable interest

Question 24

Examples of parties who can demonstrate an insurable interest

Answer 24

Owners of property
Mortgage holder (mortgagees)
Bailees to whom property is entrusted for repair, service, or safekeeping (ex. dry cleaners, computer repair shops, garages, storage facilities)
Any person or entity who may be legally liable to a third party for injury or damage (ex. since people are responsible for their negligent actions, they have an insurable interest in a liability insurance policy)

Question 25

Must manage the pool of premiums paid by policyholders so there is sufficient money to pay valid claims

Must pay claims according to the terms of the policy and not try to “get out” of paying valid claims just to save money

Answer 25

Utmost Good faith

The requirement of the insurance company

Question 26

They must be truthful when making statements about their risk, details of previous claims, policy cancellations and refusal of Imsurance

must exercise honesty as the the extent of their loss, in the event that their property is lost or damaged.

Answer 26

Utmost good Faith

The requrement Insured

Question 27

The complete honesty of the parties to legally enforceable insurance contract

Answer 27

Utmost Good Faith

Question 28

Is one which is considered never to have existed

Answer 28

Void Contract

Question 29

is one that may be rendered void or unenforceable.

Answer 29

Voidable contract

Question 30

is a defined a written or oral agreement giving temporary insurance protection to the insured, pending issue of the policy by the insurance company.

Answer 30

Binder