Chapter 5+

Question 1

Outline the options available for insuring loss of or damage to the insurers automobile

Answer 1

Own damage coverage
Physical damage coverage
First party veh damage coverage
Loss or damage coverage

Question 2

What are the 4 subsections of coverage under loss or damage coverages

Answer 2

Specified perils
Comprehensive
Collision or upset
All perils

Question 3

List the specified perils

Answer 3

Fire
Theft or attempted theft
Lightening
Windstorm, hail, or rising water
Earthquake
Explosion
Riot or civil disturbance
Falling or forced landing of an aircraft
The stranding sinking burning derailment or collision of a conveyance in or upon which a described automobile is being carried on land or water

Question 4

What does comprehensive insurance cover

Answer 4

Perils listed in specified perils
Falling or flying objects
Missiles
Vandalism

Question 5

What is All perils ?

Answer 5

All perils is the combination of collision or upset coverage with comprehensive

Question 6

Exclusions under loss or damage coverage

Answer 6

General wear and tear or lack of maintenance on a veh
Damage caused by theft of a person who is in the lawful possession of the veh
Damage caused by voluntary parting with title ownership
Damage directly or indirectly caused by contamination of radioactive material
Damage to contents of trailers or personal effects
Damage to media in which is detached from the veh
Damage caused by the insured if they are under the influence of alcohol or drugs.
Loss or damage caused by a person living in the same dwelling

Question 7

Outline the additional benefits under loss or damage coverages

Answer 7

Payment if charges
Forgoing the right to recover
Coverage for temporary substitute automobiles
Coverage for loss of use due to theft

Question 8

What is general average

Answer 8

A term used in marine insurance for a loss that is shared by interests such as owner of the ship, owners of the cargo, receivers of the freight charges

Question 9

What additional charges may arise that the insurer agrees to pay under payment of charges

Answer 9

General average charges
Salvage charges
Fire department charges
Canadian or us customs duties

Question 10

When will an insurer for go the right to recover ?

Answer 10

When the person has the automobile in connection with a garage business, including selling, repairing, maintaining, storing, servicing or parking the automobile

When the person using the automobile violates any condition of the policy or operates it for any illegal use, as described under the policy under the exclusions for loss or damage coverages

Question 11

Define TSA temporary substitute automobile

Answer 11

An automobile that is used by an insured temporarily because the described automobile is out of service because of a break down, repairs, servicing, theft, sale, or destruction.

Question 12

Summarize Loss of use due to theft coverage

Answer 12

There must be coverage purchased under a subsection of the loss or damage to insured automobile section of the policy, which includes protection against loss by theft

Theft of entire automobile

Coverage is confined to the reimbursement of the actual outlay for rental of a similar substitute automobile, for hiring taxis, or for public transit

Reasonable expenses will be reimbursed to a total amount of 900

The period of reimbursement doesn’t begin until 72 hours after the police or insurer has been notified

Question 13

Under loss of use due to theft when does the reimbursement period end?

Answer 13

When the stolen veh is replaced
If the veh is recovered and after the necessary repairs are completed
Upon such earlier date as the insurer makes or tenders settlement for the loss or damage

Question 14

Phantom vehicle

Answer 14

A veh that does not exist or is already wrecked

Question 15

Paper collision

Answer 15

When parties conspire to create the illusion of an accident using either pre damaged vehs or by intentionally and covertly inflicting damage on suspects vehicle

Question 16

What’s the purpose of automobile insurance application

Answer 16

The application contains information needed to underwrite, rate, and issue the policy. The actual form used must be approved by the provincial or territorial insurance regulator and is standard within a given jurisdiction

Question 17

What provisions apply when a policy is issued and it differs in any way from the written application

Answer 17

The insurer must point out to the insured in writing in what ways the policy differs from the application

If the insured does not object to the changes by advising the insurer in writing within 7 days the policy is deemed to cover as it is written

Question 18

Outline the information requested in an automobile insurance application

Answer 18

Item 1: applicants full name and postal address
Item 2: policy period
Item 3: particulars of the described automobile
Item 4: coverages
Item 5: list of all drivers of the described automobiles
Item 6: impairments
Item 7a: convictions
Item 7b: previous accident or insurance claims
Item 8: past licence experience
Item 9: past insurance experience
Item 10: use of veh
Item 11: commercial use of veh
Item 12: registered owner and actual owner info
Item 13: penalty of false statement
Item 14: additional info for drivers shown in item 5
Item: 15 name and address of employer
Item 16: all residents of household or employees in the business not already listed in items 5 and 14
Item 17: veh used for carpools or share the ride arrangements
Item 18: fuel if not powered by gas or diesel
Item 19: unrepaired damage
Item 20: special equipment
Item 21: veh anti-theft device
Item 22: previous addresses
Item 23: total number of private passenger vehicles in household
Item 24: remarks
Item 25: report of broker/agent
Item 26: broker/agent declaration
Item 27: description of any trailer if not listed
Item 28: commercial rated veh
Item 29: commercial use for veh
Item 30: any merchandise or material carried
Item 31: volatile, toxic, corrosive, radioactive, or explosive materials
Item 32: any machinery or equipment mounted or attached to the vehicle

Question 19

Underwriting rules

Answer 19

The rules used by insurance companies to assess the insurability of a particular risk

Question 20

Reasons insurers may reject risk

Answer 20

The insurer may not insurer that class of business
The risk may be so much more hazardous than the average that potential loss is almost certian
The risk may be substandard. The potential for improving our upgrading exists, but the applicant is not prepared to carry out suggested improvements
The risk could be very well managed with great engineering reviews but the claims frequency and severity for the last one or two years may have placed it in an unfavorable underwriting rating position

Question 21

What is the criteria used in auto rating

Answer 21

Age, gender, and marital status
Driving experience
Driving record
Other regular drivers
Territory and distance driven annually 
Veh usage
Veh description
Coverage

Question 22

Automobile statistical plan ( ASP)

Answer 22

A collection of statistical information that all automobile insurers who write business in Canada must record and file as prescribed by the superintendent of insurance commonly known as the green book

Question 23

Commercial liability statistical plan ( CLSP )

Answer 23

A manual that sets out the statistical data reporting requirements of each participating jurisdiction currently only in Ontario

Question 24

Ontario statutory accident benefits statistical plan ( OSABSP )

Answer 24

Every insurer that writes automobile insurance in Ontario must report data in accordance with the OSABSP

Question 25

3 components of loss costs

Answer 25

Paid losses
Outstanding losses
Incurred but not reported losses

Question 26

Earned loss ratio

Answer 26

Ratio of loss costs to the earned premiums

Question 27

Define trending

Answer 27

The process of adjusting statistics for premiums and losses to current or anticipated future levels to represent changes in insurance experience from economic and demographic forces and to use data to determine present and anticipated future levels of cost

Question 28

Define vehicle rate group

Answer 28

A rate group is a numerical value assigned to a vehicle based on its expected claims costs. The value assigned is based on a number of factors including body style horse power, costs of repairs, frequency and costs of actual claims and veh price

Question 29

Canadian Loss Experience Automobile Rating ( CLEAR)

Answer 29

A method for classifying different models of cars for insurance purposes by using historical claims data, including collision, comprehensive, DCPD and accident benefits coverage

Question 30

The control of rate boards exercised varies, as the following illustrates:

Answer 30

Prior approval - companies file their proposed dates and must wait for approval
File and use - companies file proposed dates and use them as proposed, but face inquiries by the board
File and use following adjudication period- companies file their proposed rates and the law allows a period of time such as 30 or 60 days during which the board can challenge them
Prior setting of rates by the board with various from benchmark - the board sets the rates and these are known as the bench mark

Question 31

Provinces and territories that do not have rating boards includes

Answer 31

Northwest territories
Nunavut
Quebec
Saskatchewan
Yukon

Question 32

Traditional rating vs UBI rating

Answer 32

Traditional: relies on actuarial studies of aggregated historical data to produce rating factors including the following driving record, credit bases insurance score, personal characteristics, veh type, garage location, veh use, previous claims, liability limits, deductible

UBI: driving behaviours and mileage are tracked using odmeter readings or in vehicle telecommunications device self installed into a special veh port. The data collected includes miles driven, time of the day the veh is driven, GPS where the veh is driven, rapid acceleration, hard braking, hard cornering, airbag deployment

Question 33

Statutory conditions that apply to SPF 1 in Alberta

Answer 33

Material change in risk
Prohibited use by insured
Requirements where loss or damage to persons or property
Requirements where loss or damage to the automobile
Inspection of the automobile
Time and manner of payment of insurance money
Who may give notice and proofs of claim
Termination
Notice

Question 34

Prohibited use by insured

Answer 34

They are not authorized to drive
They are not qualified to drive
They are below the min age requirement for licensing
They are engaged in any illicit or prohibited trade or transportation
They were in a race or speed test

Question 35

Requirements where loss or damage to persons or property

Answer 35

Give prompt notice to the insurer of any accidents or resulting claims
Verify that a claim arose from the insured automobile being operated and that the responsible party is insured under the policy
Forward immediately to the insurer all the writs, claims, correspondence, and so on
Do not assume or admit liability
Do not interfere with claims proceedings
Aid in securing information and evidence and the attendance of the witness and cooperate in the defence of any action

Question 36

Obligations of the insured where loss or damage to the automobile

Answer 36

When there has been a loss the insured us required to give prompt notice of loss, protect the automobile from further damage and submit a proof of loss within 90 days

Any further loss is excluded if it’s caused by the insureds failure to protect the automobile as far as reasonably possible

There are to be no repairs made nor any removal of evidence of damage unless the insurer gives it’s written consent or there has been a reasonable time for the insurer to examine the automobile

The insurer may require the insured to submit to an examination under oath and to present all documents pertaining to the loss

The insurers max limit of liability is at least ACV

The insured may not abandon the automobile even if the veh is a total loss

If the insurer and insured disagree about the repairs or replacements or amounts payable, they must comply a dispute resolution process as provided under the insurance act