Chapter 4

Question 1

List 3 things that form the key elements of an insurance policy

Answer 1

Declarations,
policy wording,
endorsements/floaters

Question 2

What is the difference between a shelf property policy and a manuscript property policy? When might each type be preferred by the insurer?

Answer 2

Shelf property wording is minimal modify wording

Manuscript property wording to be better reflect their own marketing and underwriting philosophies

Question 3

List seven things listed in the declarations or coverage summary

Answer 3

Named of the insured
Mailing address
Locations of property 
Coverage provided
Limits insured
Deductibles
Names and addresses of mortgagees and loss payees

Question 4

List eight things covered in the wordings policy for a non Quebec policy

Answer 4

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

Question 5

Why are endorsements and or floaters added to a policy?

Answer 5

Additional insurance provided for items that maybe limited in coverage, not covered, or excluded from coverage in the policy contract

Question 6

Plain language advantages and disadvantages

Answer 6

Advantages: average layperson can read the policy and generally understand what it means

Disadvantages: the wording isn’t as precise as legal definitions

Question 7

List 5 types of personal property insurance policies

Answer 7

Package policies 
Subscription policies
Non package policies
Multiple limit policies
Single limit policies

Question 8

Explain how and why personal property insurance policies evolved from basic fire coverage to package policies?

Answer 8

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.

Question 9

Explain how personal property coverage is calculated for most home owners?

Answer 9

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

Question 10

Define adverse selection

Answer 10

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

Question 11

List 2 ways the package approach lowers premiums

Answer 11

1. By reducing the risk adverse selection

2. By issuing uniform contracts, which simplifies policy issuing and claims adjustments

Question 12

Give 3 examples of situations where the residential basic form would be preferable to a package policy

Answer 12

1. Simpler and more modest
2. Habitational
3. Serves those who are ineligible for an insurers package policy

Question 13

Define subscription policy

Answer 13

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

Question 14

Define single limit policy

Answer 14

single limit policy semicolon a type of habitational policy where one Insurance amount is shown in composing the building and personal property

Question 15

Is a multi-limit policy or a single limit policy stronger and or more expensive?

Answer 15

Single limit policy is more expensive and stronger coverage

Question 16

List three IBC homeowners forms and compare them how are they similar how are they different?

Answer 16

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

Question 17

What key causes are almost all common in both personal and commercial wines policies?

Answer 17

Limitations of liability, additional interest, mortgages, and rateable contribution

Question 18

Name a clause that usually only used in commercial line policies

Answer 18

Co- Insurance clause is the most used in commercial lines

Question 19

List three types of clauses that can limit the liability of the insurer

Answer 19

The deductible clause
The coinsurance clause
The special limits clause

Question 20

Give at least two reasons for the use of deductibles and policies

Answer 20

Advantage of deductible, lowers premiums, avoids small, frequent claims that are expensive

Question 21

List three different applications of a deductible

Answer 21

Separate items
Occurrence basis
Lost paid in full over deductible

Question 22

How do special limits of insurance work and why are they used how do they help ensure his manage the risk?

Answer 22

Special limits is used to limit the intrinsic exposure to certain types of personal property that would otherwise be covered

Question 23

List 7 things covered by special limits for any insured peril

Answer 23

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

Question 24

List seven things covered by special limits only for the theft peril

Answer 24

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

Question 25

Define loss payee

Answer 25

A person or an entity other than the named insured

Question 26

Why do borrowers have even more incentive to seek Insurance than lenders?

Answer 26

The lender must be repaid even if the property is damaged or destroyed

Question 27

“only the named insured May instruct the insurer to show lost payable to the lender”why is this true?

Answer 27

Privity of contract

Question 28

Outline how provincial legislation protects the interests of loss payees

Answer 28

Ventura may not cancel our altar policy to the determinant of a payee without prior written notice to the payee.

Question 29

How is protection of loss payees interests limited

Answer 29

other than legal requirements regarding changes prejudicial to the payee or premature termination of the contract, there is no separate agreement with loss payee

Question 30

Why is it becoming difficult to obtain insurance for at least Crown Land in some provinces?

Answer 30

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

Question 31

Define chattel mortgage and contrast it with regular mortgage

Answer 31

Shadow mortgage, any property other than freehold land and leased hold interest in land

Question 32

Why was the IBC standard mortgage clause helpful in establishing insurance policies on mortgaged properties

Answer 32

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