Chapter 3 Flashcards
Define proximate cause
A cause that in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened
Define concealment
As applied to insurance, the intentional withholding from insurance company of information pertaining to a risk
What are the elements of policy analysis
- Loss allocation: correct policy
- Correct policy not always obvious: adjuster needs to investigate
- Understand various policies: risk, property covered/excluded
- Apply contract elements: common law
- Apply Unique Contract Elements
- Breach- misrepresentation, non-disclosure, material change?
What questions should be asked when assessing insurable interest?
What property was damaged by an insured peril?
Is the property the subject matter of the insurance?
What is the insureds relationship to the property in law?
Explain concurrent cause
-Past: one cause excluded; another concurrent cause covered = courts generally excluded entire loss from coverage
-Recent: when loss occurs concurrently, courts hold coverage applies to that part of the loss caused by the covered cause
-Exception: policy clearly states intention totaly excluded coverage
-Concurrent causation refers to identifying a loss results from multiple causes
Define manuscript policies
Policies composed of unique wordings drafted to accommodate the needs of a particular risk
Define declarations
Statements included policy that are agreed to by the insured and form the basis of the contract of insurance
Define insuring agreement
Describes the intent of the policy, just what insurance coverage is provided by the policy and in what limit
What details are usually listed on the declarations page?
Who is insured
Amount of insurance purchased
Line of coverage
Policy period
Description of insured property
Loss payee
Identification information specific to risk
Explain exclusions
What is not covered under a policy- events/perils, property
Limitations, exclusions, stated separately in this section
Explain policy conditions
In additional to the statutory conditions
Notice of authorities: insured must report criminal act- arson, theft
Quebec: General conditions- contain similar requirements
What rules are used to interpret insurance contracts in the common law provinces and territories?
Contra proferentem
Coverage provisions construed broadly
Exclusions clauses constructed narrowly
Reasonable expectations and intent of the contracting parties
Define contra proferentem
A legal term that provides that any ambiguity in a contract must be interpreted against the person who drew the contract because that person had the opportunity to make it clear
“Against the offeror”
Define contract of adhesion
A type of contract that is effectively non- negotiable because one party drafts the policy wordings or offers a standardized contract wordings
What are the rules of contract interpretation in Quebec?
1425: common intention of the parties is given precedence over the literal meaning of the language
1426: nature, formation, usage, and prior interpretation of a contract must be considered
1427: contract is a whole
1428: clause is given a meaning that gives it some effect rather than one that gives it no effect
1429: words susceptible of two meanings shall be given the meaning that best conforms
1430: specific application doesn’t restrict general terms
1431: covers only that which parties intended
1432: doubt= contra proferentem
1436: illegible/ incomprehensible= null at injured party discretion
1437: abusive clause- detrimental to adhering party
What is the coverage quick analysis guide (Property)?
Does the loss fall within the policy period?
Has insurable interest in the property been confirmed?
What is the proximate cause of loss?
Does the loss fall within the insuring agreement?
Do any exclusions of limiting clauses/sub-limits apply?
Have all policy conditions been met?
Does the policy offer any extension of coverage or do any endorsements apply?
Is there a deductible to be applied?
What type of policy forms are liability policies written on?
Occurrence basis: which the policy responds to a claim for a covered incident that occurs during the policy period regardless of when the claim is made
Claims-made basis: covers only claims made during the term of the contract
What is the coverage quick analysis guide (liability)?
Does the occurrence fall within the policy period?
Does the loss fall within the insuring agreement?
Are there any exclusions that apply?
Are there limitations or conditions that affect the claim?
Does the insurer have a duty to defend? Indemnify?
Is there a deductible to be applied?
