Chapter 4 Flashcards
List 3 things that form the key elements of an insurance policy
Declarations,
policy wording,
endorsements/floaters
What is the difference between a shelf property policy and a manuscript property policy? When might each type be preferred by the insurer?
Shelf property wording is minimal modify wording
Manuscript property wording to be better reflect their own marketing and underwriting philosophies
List seven things listed in the declarations or coverage summary
Named of the insured Mailing address Locations of property Coverage provided Limits insured Deductibles Names and addresses of mortgagees and loss payees
List eight things covered in the wordings policy for a non Quebec policy
Policy wordings: Preamble describing the general agreements between the insured and insurer Definitions of terms found in the policy Coverages Extensions of coverage Exclusions Basis of claim settlement Additional conditions Statutory conditions General conditions
Why are endorsements and or floaters added to a policy?
Additional insurance provided for items that maybe limited in coverage, not covered, or excluded from coverage in the policy contract
Plain language advantages and disadvantages
Advantages: average layperson can read the policy and generally understand what it means
Disadvantages: the wording isn’t as precise as legal definitions
List 5 types of personal property insurance policies
Package policies Subscription policies Non package policies Multiple limit policies Single limit policies
Explain how and why personal property insurance policies evolved from basic fire coverage to package policies?
Insurers responded to consumer need and competitive pressure by adding perils to the few perils insured against under basic fire policy and then still more perils to those covered under the basic fire policy and extended coverage endorsement. Further coverage enhancements were made via the named perils and all risks policy forms. Insurers began to combine policy forms covering various classes or business in policies covering package policies.
Explain how personal property coverage is calculated for most home owners?
In a home owners policy, the limit for personal property is generally a percentage of the dwelling limit. The percentage varies depending on the insurer
Define adverse selection
Adverse selection- occurs when those with higher risks purchases insurance in greater amounts than those with lower risks. Much of insurance law and practice is designed to control adverse selection
List 2 ways the package approach lowers premiums
- By reducing the risk adverse selection
2. By issuing uniform contracts, which simplifies policy issuing and claims adjustments
Give 3 examples of situations where the residential basic form would be preferable to a package policy
- Simpler and more modest
- Habitational
- Serves those who are ineligible for an insurers package policy
Define subscription policy
Subscription policy; a single policy covering a risk that is divided among a number of insurers the policy is issued to the lead company and signed by all participating companies
Define single limit policy
single limit policy semicolon a type of habitational policy where one Insurance amount is shown in composing the building and personal property
Is a multi-limit policy or a single limit policy stronger and or more expensive?
Single limit policy is more expensive and stronger coverage
List three IBC homeowners forms and compare them how are they similar how are they different?
Homeowners basic form, named perils, including theft, glass breakage, and transportation
Homeowners broad form, all risks on the dwelling building and detached private structures the same named perils are insured by the basic form on the personal property
Homeowners comprehensive form, all risks on all items
What key causes are almost all common in both personal and commercial wines policies?
Limitations of liability, additional interest, mortgages, and rateable contribution
Name a clause that usually only used in commercial line policies
Co- Insurance clause is the most used in commercial lines
List three types of clauses that can limit the liability of the insurer
The deductible clause
The coinsurance clause
The special limits clause
Give at least two reasons for the use of deductibles and policies
Advantage of deductible, lowers premiums, avoids small, frequent claims that are expensive
List three different applications of a deductible
Separate items
Occurrence basis
Lost paid in full over deductible
How do special limits of insurance work and why are they used how do they help ensure his manage the risk?
Special limits is used to limit the intrinsic exposure to certain types of personal property that would otherwise be covered
List 7 things covered by special limits for any insured peril
Money including cash cards, gift certificates, or bullion
Securities
Garden type tractors, including attachments
Wine and spirits
Spare automobile parts
Business property
Cannabis in all consumable forms
List seven things covered by special limits only for the theft peril
Works of art
Jewelry, gems, precious or semi-precious stones, pearls, and watches
For garments garments trimmed with fur
Numismatic property, manuscripts, stamps, and philatelic property
Collectible cards
Collections not subject to any other limitation
Bicycle and their equipment
Define loss payee
A person or an entity other than the named insured
Why do borrowers have even more incentive to seek Insurance than lenders?
The lender must be repaid even if the property is damaged or destroyed
“only the named insured May instruct the insurer to show lost payable to the lender”why is this true?
Privity of contract
Outline how provincial legislation protects the interests of loss payees
Ventura may not cancel our altar policy to the determinant of a payee without prior written notice to the payee.
How is protection of loss payees interests limited
other than legal requirements regarding changes prejudicial to the payee or premature termination of the contract, there is no separate agreement with loss payee
Why is it becoming difficult to obtain insurance for at least Crown Land in some provinces?
the leases outlined insurance requirements for at least land, and many leases require her Majesty the queen in right of Canada the crown and right of Canada or other legal entities to be added as an additional interest on insurance policies. This requirement has caused problems for the insurance industry
Define chattel mortgage and contrast it with regular mortgage
Shadow mortgage, any property other than freehold land and leased hold interest in land
Why was the IBC standard mortgage clause helpful in establishing insurance policies on mortgaged properties
a mortgage clause creates a separate contract between the insurer and the mortgagee and so protects the mortgagee even if the named insured is unable to recover because of condition of the policy has been breached
