chapter 5 Insurance Documents and Processes Flashcards
Insurance under property policies cannot normally be assigned unless the insurer consents. Which of the following changes in interest is the exception and receives automatic consent?
a. Rishma sells her house to Sean. Since Rishma is moving in with her sister, she no longer needs her Homeowners policy and sells the remaining term of the policy to Sean as well.
b. Alison begins to have trouble making her mortgage payments soon after moving into her house. Her parents agree to pay her mortgage. They ask Alison to change her Homeowners policy to show them as the named insureds.
c. Georgette has the ownership changed on her mother’s home after her mother dies, as Georgette is the sole survivor. She doesn’t contact the broker or arrange other insurance because there is six months remaining on her mother’s policy.
d. Melinda’s Flower Shop goes bankrupt. Leah buys the business from the receiver. Leah retains the employees and suppliers and will continue to operate under the original name. Nothing but the ownership has changed and the insurance policy that existed on the shop when it was owned by Melinda does not expire for four months
c. Georgette has the ownership changed on her mother’s home after her mother dies, as Georgette is the sole survivor. She doesn’t contact the broker or arrange other insurance because there is six months remaining on her mother’s policy.
It is common to find a clause in a policy that says assignment of the policy applies to transfer of the assets of those who have died to their executors or administrators.
Sally’s insurance company cancelled her policy mid-term because of non-payment of premium. What must her insurer do?
a. Give her a full refund of all premium paid
b. Give her a pro-rata refund of premium for the unexpired term of the policy
c. Give her a short-rate refund of premium
d. Give her no refund of premium since it is her fault the policy is being cancelled
b. Give her a pro-rata refund of premium for the unexpired term of the policy
The termination conditions state that the insurer can cancel only by giving a set number of days’ notice in writing (by registered mail or hand delivery, or recorded mail or prepaid courier, where allowed) and returning the pro rata premium.
Statutory/Quebec general conditions must be printed on all of which of the following types of policies?
a. Personal and commercial liability policies
b. Life, automobile, and property policies
c. Property, liability, and automobile policies
d. Automobile, accident and sickness, and fire insurance policies
d. Automobile, accident and sickness, and fire insurance policies
Statutory/Quebec general conditions must be printed on all automobile, accident and sickness, and fire insurance policies.
What are the five main elements of a policy?
a. The coverage summary, the insuring agreements, statutory conditions (Quebec general conditions), policy conditions, and signature clause
b. The declarations, the coverage summary, statutory conditions (Quebec general conditions), policy conditions, and signature clause
c. The coverage summary, the insuring agreements, subscription, statutory conditions (Quebec general conditions), and signature clause
d. The coverage summary, the insuring agreements, statutory conditions (Quebec general conditions), premium agreements, and signature clause
a. The coverage summary, the insuring agreements, statutory conditions (Quebec general conditions), policy conditions, and signature clause
Coverage summary, the insuring agreements, statutory conditions (Quebec general conditions), policy conditions, and signature clause are the five main elements of a policy.
What is a binder?
a. An attachment to the policy that varies the terms of the contract
b. An amount of the loss that the insured must pay before the insurer will pay the claim
c. A written or an oral agreement given by an insurer to insure a risk, pending the issuance of a formal policy
d. A short form certificate issued at renewal, referring to the expiring policy and stating that its provisions, clauses, and exceptions continue for another term.
c. A written or an oral agreement given by an insurer to insure a risk, pending the issuance of a formal policy
A binder is a written or an oral agreement given by an insurer to insure a risk, pending the issuance of a formal policy. A binder is deemed to be the policy and must be cancelled in the same manner.
Witch of the following best describes manuscript insurance policy?
a. A policy that lists the key coverage agreed upon between the insurer and the insured
b. A policy that reflects any alterations to the original policy provisions.
c. A policy that is written on a custom basis for a specific situation
d A policy that is worded identically by issuance companies
c. a policy that is written on a custom basis for a specific situation
A manuscript insurance policy is specifically designed for a particular risk. It does not use standard preprinted wording but is an individual manuscript and must incorporate all the elements of a Normal policy
This type of policy is used to insure a large risk that is divided among a number of insures.
a. standard policy
b. endorsement form
c. Coinsurance clause
d. Subscription policy
d. Subscription policy
Subscription policy is used to insure a large risk that is divided among a number of insurers. The policy is issued by a lead insurer and is signed by all participation insures.
Which of the following certifies that insurance exists, and a modified version can be issued as a convince to a party who may have an interest in the insurance
a. Interim receipt
b. Certificate of insurance
c. Endorsement
d. Renewal certificate
b. Certificate of insurance
A certificate of insurance is a written document stating that insurance is in effect. It may be a modified form of a policy, issued as a convenience to a party who may have an interest in the insurance.
A renewal certificate issued by an insured summarized the essential detains of the insurance and provides that of the original
a. True
b. False
True
A renewal certificate summarized the essential details of the insurance and provides that the original policy is continued in force for a further term.
The termination conditions states that if insured want to cancel a policy they can do so by giving a set number of days notice in writing and by paying a pro-rata premium.
a. True
b. False
False
The termination conditions states that the insurer can cancel the policy by giving a set number of days notice in writing by registered mail and hand delivered delivery and returning the pro rata premium, the insured may cancel at any time but will only get back short rate cancelation. Insurers may keep a fee.
What is an endorsement?
a. An attachment to the policy that varies the terms of the contract
b. An amount of the loss that the insured must pay before the insurer will pay the claim
c. A clause requiring the insured to bear a portion of every loss if there is underinsurance of the risk
d. A discount applied to the policy premium
a. An attachment to the policy that varies the terms of the contract
An endorsement is an amendment added to a written document, particularly an agreement between parties, altering its provisions.
When coverage bound through an agent or broker is granted under a cover note or binder, what happens if a loss occurs before the actual policy is issued?
a. The claim will be denied.
b. The loss is covered in the same manner as if the actual policy had already been issued.
c. Fifty percent of the claim will be paid immediately and the other 50 percent will be paid when the policy is issued.
d. The insured will be required to pay a deductible of 20 percent of the loss as stated on the binder.
b. The loss is covered in the same manner as if the actual policy had already been issued.
A cover note or binder is temporary insurance that can be legally binding whether expressed orally or in writing.
Which of the following is found in the coverage summary?
a. The premium and rate for the insurance coverage
b. The perils insured against
c. Provisions that state the rights and duties of the insured or insurer
d. Exclusions of the policy
a. The premium and rate for the insurance coverage
Which section of the policy states the commencement date, term, and expiry date?
a. Coverage summary
b. Statutory Conditions
c. Policy Conditions
d. Signature clause
a. Coverage summary
he coverage summary contains statements that are agreed to by the insured and form the basis of the contract of insurance, including the commencement date, term, and expiry date.
Which statement about the period of coverage under binders is true?
a. The normal intention when temporary insurance is granted under a binder or cover note is that such coverage is for a limited time.
b. Coverage under a binder lasts for six months commencing on the date the binder is issued and ending automatically after the six months.
c. Coverage under a binder is for 24 hours commencing at 12:01 a.m. on the date the binder is issued.
d. The normal intention when insurance is granted under a binder is that coverage is for the full period of the policy noted on the binder, typically 12 months.
a. The normal intention when temporary insurance is granted under a binder or cover note is that such coverage is for a limited time.
The normal intention when temporary insurance is granted under a binder or cover note is that such coverage is for a limited time.
