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C11 > Chapter 5 > Flashcards

Chapter 5 Flashcards

1
Q

What is an insurance policy?

A

A contract between the insured and the insurer outlining the terms of coverage.

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2
Q

What are the two types of insurance policy wordings?

A

Standard forms and manuscript wordings.

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3
Q

What is a manuscript policy?

A

A custom-designed policy for a specific risk, often used for large commercial accounts.

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4
Q

What does a certificate of insurance certify?

A

The existence of insurance coverage.

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5
Q

In automobile insurance, what is a standard renewal certificate used for?

A

Renewing policies without repeating existing information.

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6
Q

What is an endorsement in insurance?

A

A change to a policy, often attached as a separate document.

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7
Q

Can endorsements override statutory conditions?

A

No, statutory conditions cannot be overridden.

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8
Q

Who must sign an endorsement?

A

A representative of the insurance company.

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9
Q

What is a binder in insurance?

A

A temporary agreement providing coverage until the policy is issued.

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10
Q

What is the purpose of a cover note?

A

to inform the insured that coverage has been set up.

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11
Q

What are the main issues with oral binders?

A

Uncertainty about whether a contract was made, intermediary authority, and contract provisions.

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12
Q

What should a written binder or cover note include?

A

Name of insured, coverage details, insurer, effective and expiry dates, and special terms.

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13
Q

What are the five main sections of an insurance policy?
CIAPS

A

Coverage summary, insuring agreements, statutory conditions, policy conditions, and signature clause.

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14
Q

What is included in the coverage summary?

A

Parties to the contract, policy term, premium, amounts insured, and deductibles.

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15
Q

What does the insuring agreements section state?
SPEC

A

The subject of insurance, perils covered, exclusions, and claim conditions.

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16
Q

What are statutory conditions?

A

Mandatory conditions for certain policies, such as fire and automobile insurance.

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17
Q

What is the purpose of Quebec general conditions?

A

To regulate automobile and fire insurance contracts in Quebec.

18
Q

Who signs an insurance policy?

A

The insurer’s representative; the insured’s signature is not required.

19
Q

What is a subscription policy?

A

A policy where multiple insurers share the risk, led by a primary insurer.

20
Q

Can an insurance policy be assigned without consent?

A

No, except in cases of death or bankruptcy of the insured

21
Q

an proceeds of a policy be assigned without insurer consent?

A

Yes, such as claims payments or return premiums.

22
Q

How can insurers terminate a policy?

A

By providing notice and returning pro rata premiums.

23
Q

What happens to claims if a policy is canceled?

A

Claims occurring during the notice period must be covered.

24
Q

What does it mean to void a policy?

A

To treat the policy as if it never existed.

25
Q

What are the two ways insurance policies are renewed?

A

Specific instructions or automatic renewal.

26
Q

What is a renewal certificate?

A

A document summarizing coverage details for the next term.

27
Q

What authority issues a cover note?

A

Agents or brokers.

28
Q

Why is it essential to have clear terms in temporary insurance?

A

To avoid misunderstandings and potential lawsuits.

29
Q

Name three reasons for issuing an endorsement.

A

Change of ownership, addition of property, or rate adjustment due to hazard changes.

30
Q

Who drafts and signs an endorsement?

A

Insurers or intermediaries, signed by the insurer.

31
Q

What must be included in a binder or cover note under legislation?

A

Key policy details like coverage dates and terms.

32
Q

How do statutory conditions affect termination?

A

They dictate notice requirements and refund terms.

33
Q

Can policy conditions contradict statutory conditions?

A

No, statutory conditions take precedence.

34
Q

What does “short-rate premium” refer to?

A

A reduced refund when the insured cancels the policy early.

35
Q

What is the effect of misrepresentation in insurance?

A

It can result in cancellation or the policy being voided.

36
Q

Why do brokers focus on renewals?

A

Renewals are vital for client protection and financial security of the brokerage.

37
Q

What is the purpose of a deductible?

A

To define the portion of the loss the insured must cover.

38
Q

Why must policies be carefully worded?

A

Ambiguities are interpreted in favor of the insured.

39
Q

What happens if no renewal instructions are received?

A

The policy lapses after the expiry date.

40
Q

What is the role of the signature clause?

A

To validate the policy with the insurer’s official signature.

C11 (9 decks)

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