Chapter 8 Claims Settlement

Question 1

How many days does the insurer have to pay the claim after receiving a completed proof of loss from the insured?

a. 30

b. 45

c. 60

d. 90

Answer 1

c. 60

Question 2

What is the statutory requirement when submitting a claim against the Crown?

a. A demand letter needs to be sent to the Crown as soon as the damage is assessed.

b. The notice of the claim must be made to the right parties within a set number of days.

c. The subrogation demand needs to be sent to the liable party after the claim is paid.

d. The claimant has to hire a lawyer to submit a claim against the Crown.

Answer 2

b. The notice of the claim must be made to the right parties within a set number of days.

Question 3

What is the insured’s duty for salvage?

a. The insured does not have a duty to protect the salvage since the property is a total loss.

b. The insured needs to abandon the property to the insurer.

c. The insured has a duty to protect the salvage only if the insured gets to keep the undamaged portion of the property.

d. The insured has a duty to take all reasonable steps to prevent further damage to the insured property.

Answer 3

d. The insured has a duty to take all reasonable steps to prevent further damage to the insured property.

Question 4

Who can receive the settlement cheque even when the insured breaches a policy condition?

a. Insured’s attorney

b. Insured’s broker

c. Bank

d. Mortgagee

Answer 4

d. Mortgagee

Question 5

Which legally binding form signals that a third-party claim is settled?

a. Proof of loss

b. Release

c. Waiver

d. Consent form

Answer 5

b. Release

Question 6

What best describes the principle of indemnity?

a. A person should be put into financially the same position after a loss without any benefit.

b. A person should be compensated by the insurance company in an amount that may exceed his or her economic loss.

c. The insured can collect twice for the same loss when two or more policies are in force for the same property.

d. The principle applies to first-party insureds, not third-party claimants.

Answer 6

a. A person should be put into financially the same position after a loss without any benefit.

Question 7

What policy guarantees the insured can collect the total amount of insurance without further proof of value?

a. ACV policy

b. Valued basis policy

c. Replacement cost policy

d. Unvalued policy

Answer 7

b. Valued basis policy

Question 8

What does the defendant’s lawyer file within the deadline to avoid a default judgment?

a. Defence

b. Certificates of readiness

c. Statement of claim

d. Demand of notice

Answer 8

a. Defence

Question 9

Which document grants an extension to the deadline for filing a statement of defence?

a. Notice of extension

b. Writ of summons

c. Notice of intent to defend

d. Demand of notice

Answer 9

c. Notice of intent to defend

Question 10

What is the highest level of court within most provinces and territories?

a. Superior Court of Justice

b. Small Claims Court

c. Court of Appeal

d. Supreme Court

Answer 10

c. Court of Appeal

Question 11

What is the statutory requirement when submitting a claim against the Crown?

a. A demand letter needs to be sent to the Crown as soon as the damage is assessed.

b. The notice of the claim must be made to the right parties within a set number of days.

c. The subrogation demand needs to be sent to the liable party after the claim is paid

d. The claimant has to hire a lawyer to submit a claim against the Crown.

Answer 11

b. The notice of the claim must be made to the right parties within a set number of days.

Question 12

A witness making sworn or affirmed testimony out of court as part of the discovery process.

Answer 12

deponent  

Question 13

How does ACV vs replacement cost differ in Quebec?

Answer 13

Civil coder 2490, 2491 & 2493

The insurer pays ACV unless specifically stated otherwise in the policy

Question 14

A loss suffered by the insured as first party to the insurance contract.

Answer 14

first-party loss  

Question 15

A loss suffered by the insured arising out of the insured’s liability for loss or damage suffered by another who is not party to the insurance contract—that is, by a third party.

Answer 15

third-party loss  

Question 16

A provision, generally in property insurance coverage, to provide a substitute of the damaged or lost property with something similar, including having the same use but not necessarily identical to the property being replaced, without extra cost to the insured.

Answer 16

replacement cost clause 

Question 17

A hazard arising from the character, interest, habits, and lack of integrity of the insured or person concerned.

Answer 17

moral hazard 

Question 18

A deductible applied as a whole to all the claims that occur during the policy year. Once this aggregate deductible is met, the balance of insured claims are paid without a deductible.

Answer 18

aggregate deductible 

Question 19

A provision in an insurance policy whereby the insured pays all claims up to the amount set in the franchise. If, however, any loss exceeds that amount, the insurance company assumes full responsibility for the full amount of the loss, including the franchise amount.

Answer 19

franchise deductible (or clause)

Question 20

An oral or written discharge from an obligation, duty, or demand. To let go of, or give up a legal claim or right to one against whom it could be enforced.

Answer 20

release 

Question 21

The time prescribed by law within which a party has the opportunity to bring a legal action

Answer 21

Limitation period

Question 22

A rule in tort law stated in provincial legislation that specifies that a limitation period begins when the material facts upon which an action is based had been, or ought to have been, discovered by the plaintiff through due diligence.

Answer 22

discoverability rule  

Question 23

The formal written allegations or denials by parties in a lawsuit to a tribunal and the remedies or dispositions the parties seek.

Answer 23

pleadings  

Question 24

A written statement by a plaintiff detailing the facts that support the claim against the defendant and the relief sought.

Answer 24

statement of claim 

Question 25

A summons or notice to a party that informs the party of its involvement in a lawsuit; filed at the court and served to the party before the formal statement of claim is issued.

Answer 25

notice of action  

Question 26

In a high court action, a plea in reply to a statement of claim. It responds with admissions or denials to the allegations and sets out additional facts, perhaps even including a counterclaim.

Answer 26

statement of defence 

Question 27

A demand made against another party on the same side of the lawsuit. The plaintiff may file a claim against another plaintiff, or a defendant may file a claim against another defendant.

Answer 27

cross-claim  

Question 28

The right of discovery is the right by which a party to a civil court proceeding, is enabled before the determination of any matter of consequence in those proceedings: (1) all his or her knowledge, remembrance, information, and belief concerning the matter in question; and (2) the production of all documents in his or her possession or power relating to such matter.

Answer 28

discovery 

Question 29

What types of property do NOT qualify for replacement cost coverage

Answer 29

Antiques
Find arts
Paintings
Memorabilia
Souvenir
Statuary
Collector’s items

Question 30

Define deponent

Answer 30

A witness making sworn or affirmed testimony out of court as part of the discovery process

Question 31

How long does the insurer have to pay the claim once the proof of loss is submitted?

Answer 31

60 days

Question 32

What should an adjuster consider when a contractor lists additional costs?

Answer 32

A
Did the contractor underprice the job at the estimate stage, perhaps in order to secure the job?
Was there a change in the scope of damage? Was there hidden damage? Should hidden damages have been anticipated?
Did some items not respond to repairs or cleaning, with the result that replacements were required?

Question 33

How does the limit of liability rule determine contribution?

Answer 33

Limits are determined as though no other insurance existed and applies what is the least of:

amount of insurance
amount of loss
amount payable after applying any policy limitation

Question 34

In Ontario, how many days notice do municipalities receive for non-repair?

Answer 34

10 days

Question 35

How long does an insured have to bring action against the insurer?

Answer 35

It indicates in the policy wordings

Generally one year, some jurisdictions are up to 3 from date of loss

Quebec is 3 and is from 60 days after proof of loss received

Question 36

In what provinces may plaintiff file a notice of action first if the limitation period is nearly over?

Answer 36

Ontario & New Brunswick

Question 37

What is the typical litigation process?

Answer 37

Notice of Action or Write of Summons

Statement of Claim

Affidavit of Service -> (1) OR (2)

(1) Notice of Default -> Default Judgment

(2) Notice of Intent to Defend

Statement of Defence

Appearance

Counter Claim OR Cross-Claim

Consent Judgment

Question 38

What is the right of discovery?

Answer 38

party to a civil court proceeding is enabled before the determination of any matter of consequence in those proceedings:

a) all his knowledge, remembrance, info and belief concerning the manner

AND

b) production of all documents in possession or power relating to such matter

Question 39

When may a party appeal a court decision?

Answer 39

Lawyer shows an error in law or an error in a combination of law and fact

Question 40

What are the two court systems?

Answer 40

Provincial & territorial court system

Federal court system

Question 41

What is the statutory requirement when submitting a claim against the Crown?

Answer 41

In claims against the Crown, a municipality, or other public authority, statutes require that notice of the claim must be made to the right parties within a set number of days.

Question 42

Explain aggregate deductibles and include any exceptions.

Answer 42

Aggregate deductibles are common for larger commercial risks.
An aggregate deductible is usually of a substantial amount.
It is a deductible applied as a whole to all the claims that occur during the policy year.
Once this aggregate deductible is met, the rest of the insured claims are paid without a deductible.
There can be exceptions. In some cases, the balance of insured claims may be subject to the deductibles outlined in individual policies.

Question 43

Explain salvage

Answer 43

Refers to the portion of goods or property that has been saved or remains after a loss.
The remaining value of property after severe damage by fire or other peril; in this case, after water damage to the contents of the trailer.
The damaged items that have been replaced for Ida may still have some usefulness and residual value.
The overall loss is reduced by the salvage value.
Undamaged property may be quite saleable, and some property may be only partially damaged, thus repairable and then saleable.

Question 44

What are the duties and responsibilities of salvageable items?

Answer 44

Common law statutory conditions provide that the insurer contributes proportionately, according to the respective interests of the parties, toward any reasonable and proper expenses in connection with protecting and moving such property:
The insurer should send a representative sample for cleaning to assess whether the items can be saved.
Economical and appropriate storage facilities may be required.
Costs to move such property to another location to prevent further damage are recoverable.
The general conditions of a Quebec property policy provide that the insurer will pay for such expenses to protect property.

Question 45

What are the rights and responsibilities of an insured for salvage?

Answer 45

The insurer has the right to view and appraise damages.
The insurer does not have the right to control or possess the property.
Ida cannot abandon any salvaged property to the insurer without the insurer’s consent.
An expert should evaluate the potential recovery from an item.
Ownership of the property must be established and control of property discussed with the insured and with loss payees.