Chapter 5 Flashcards
What is an insurance policy?
A contract between the insured and the insurer outlining the terms of coverage.
What are the two types of insurance policy wordings?
Standard forms and manuscript wordings.
What is a manuscript policy?
A custom-designed policy for a specific risk, often used for large commercial accounts.
What does a certificate of insurance certify?
The existence of insurance coverage.
In automobile insurance, what is a standard renewal certificate used for?
Renewing policies without repeating existing information.
What is an endorsement in insurance?
A change to a policy, often attached as a separate document.
Can endorsements override statutory conditions?
No, statutory conditions cannot be overridden.
Who must sign an endorsement?
A representative of the insurance company.
What is a binder in insurance?
A temporary agreement providing coverage until the policy is issued.
What is the purpose of a cover note?
to inform the insured that coverage has been set up.
What are the main issues with oral binders?
Uncertainty about whether a contract was made, intermediary authority, and contract provisions.
What should a written binder or cover note include?
Name of insured, coverage details, insurer, effective and expiry dates, and special terms.
What are the five main sections of an insurance policy?
CIAPS
Coverage summary, insuring agreements, statutory conditions, policy conditions, and signature clause.
What is included in the coverage summary?
Parties to the contract, policy term, premium, amounts insured, and deductibles.
What does the insuring agreements section state?
SPEC
The subject of insurance, perils covered, exclusions, and claim conditions.
What are statutory conditions?
Mandatory conditions for certain policies, such as fire and automobile insurance.
What is the purpose of Quebec general conditions?
To regulate automobile and fire insurance contracts in Quebec.
Who signs an insurance policy?
The insurer’s representative; the insured’s signature is not required.
What is a subscription policy?
A policy where multiple insurers share the risk, led by a primary insurer.
Can an insurance policy be assigned without consent?
No, except in cases of death or bankruptcy of the insured
an proceeds of a policy be assigned without insurer consent?
Yes, such as claims payments or return premiums.
How can insurers terminate a policy?
By providing notice and returning pro rata premiums.
What happens to claims if a policy is canceled?
Claims occurring during the notice period must be covered.
What does it mean to void a policy?
To treat the policy as if it never existed.
What are the two ways insurance policies are renewed?
Specific instructions or automatic renewal.
What is a renewal certificate?
A document summarizing coverage details for the next term.
What authority issues a cover note?
Agents or brokers.
Why is it essential to have clear terms in temporary insurance?
To avoid misunderstandings and potential lawsuits.
Name three reasons for issuing an endorsement.
Change of ownership, addition of property, or rate adjustment due to hazard changes.
Who drafts and signs an endorsement?
Insurers or intermediaries, signed by the insurer.
What must be included in a binder or cover note under legislation?
Key policy details like coverage dates and terms.
How do statutory conditions affect termination?
They dictate notice requirements and refund terms.
Can policy conditions contradict statutory conditions?
No, statutory conditions take precedence.
What does “short-rate premium” refer to?
A reduced refund when the insured cancels the policy early.
What is the effect of misrepresentation in insurance?
It can result in cancellation or the policy being voided.
Why do brokers focus on renewals?
Renewals are vital for client protection and financial security of the brokerage.
What is the purpose of a deductible?
To define the portion of the loss the insured must cover.
Why must policies be carefully worded?
Ambiguities are interpreted in favor of the insured.
What happens if no renewal instructions are received?
The policy lapses after the expiry date.
What is the role of the signature clause?
To validate the policy with the insurer’s official signature.
