Chapter 9

Question 1

What provinces have a minimum third-party liability of $200,000?

Answer 1

BC
Alberta
Nunavut
Northwest Territories
Yukon
Saskatchewan
Ontario
Newfoundland and Labrador
New Brunswick
Prince Edward Island

Question 2

What province has a legal liability limit of $50,000?

Answer 2

Quebec

Question 3

Which provinces have a third-party liability limit of $500,000?

Answer 3

Nova Scotia
Manitoba

Question 4

What are factors that underwriters use to determine risk acceptance and rating factors for commercial auto insurance?

Answer 4

Exact nature of business
Operating radius
Gross vehicle weight
List price or ACV
Drivers experience
Drivers abstract
Stability of applicants workforce
Maintenance and loss control procedures
Individual claims experience

Question 5

How many vehicles must be owned or operated for to be considered a fleet?

Answer 5

Five or more

Question 6

Explain monthly reporting basis fleet

Answer 6

Each month the client reports the amount of actual receipts, mileage, or other rating basis for the proceeding month and the insure will calculate the earned premium based on this statement

Question 7

Explained blanket fleet

Answer 7

A deposit premium is charged at the policy inception, and all additional and deletions with the effective dates are reported at expiry at which time of final premium is determined

Question 8

Explain long-haul trucking

Answer 8

Transferring goods locally, across Canada, or into the United States
Trucks entering the US require an automobile filing to run in the US
Filing is proof that the trucker is licensed and has the minimum required insurance coverage

Question 9

Explain non-owned automobile coverage

Answer 9

Does not respond to the employers non-owned liability
Used to cover third-party liability, but will not cover damage to the vehicle itself
Employees still need to carry their own insurance

Question 10

Who is the named insured under a garage policy?

Answer 10

Any person who drives, occupies, or operates an automobile owned by the named insured with the insureds consent
Named insured, employee, or partner of the insured

Question 11

What are the three main classes of automobiles covered under garage policy?

Answer 11

Owned automobiles-for pleasure business only
Customers automobiles-being towed, pushed, driven, or in the care, custody, or control of the insured in connection with the business stated in the declarations
Non-owned automobile-employees vehicles

Question 12

What are common endorsements on a garage policy?

Answer 12

Excluding owned automobiles-used insured is not in the business or buying and selling automobiles
Excluding financed automobiles-used when the insured is in the business of buying and selling automobiles
Excluding drivers-usually imposed by the insurer to reduce their risk
Open lot pilferage-deletes the exclusion for lost caused by partial theft
Additional insured-extend coverage
Comprehensive coverage for customers automobiles- to include liability arising out of the careless act by the insured or employees
Physical damage coverage for specified owned automobiles- used when the insured wants to self insure collision for some vehicles or to provide coverage only on high value vehicles

Question 13

Explain theft

Answer 13

Taking property with or without violence while the insured premises is open or closed
No visible marks of forcible entry or exit are needed
Crime policies rarely offer theft as a peril

Question 14

Explain robbery

Answer 14

The taking of insured property from a custodian by person(s) who have caused or threatened to cause the custodian bodily harm
Commit an unlawful act witness by the custodian
Taken such property from custodian, who has been killed or rendered unconscious

Question 15

What is covered under safe burglary coverage?

Answer 15

Loss of or damage to the safe or vault
Loss of the contents of the safe or vault
Damage to the premises because of a break-in

Question 16

What are the three classes of safes?

Answer 16

Class 1- fire restrictive
Class 2 and class 3- burglary restrictive (class 2 is small class 3 provides great burglary resistance)

Question 17

Explain stock burglary

Answer 17

Someone steals your clients inventory
Coverage applies when the premise is not open for business
Excludes loss from pilferage or inventory shortage
Underwriters require information on the physical protection of the risk to assess and rate the exposure

Question 18

what are the 3 “D” in a 3-D policy?

Answer 18

Comprehensive dishonesty
Disappearance
Destruction

Question 19

What are the five insuring agreements in the 3-D policy?

Answer 19

Employee dishonest
Loss of money and securities while inside the premise
Loss of money and securities while outside the premise
Money orders and counterfeit paper currency
Depositors forgery

Question 20

What extensions are included in a 3-D policy?

Answer 20

Extortion
Computer fraud

Question 21

What are the three general categories for cyber attacks?

Answer 21

Deliberate and unauthorized breaches of security
Unintentional or accidental security breaches
Operational IT risks

Question 22

Explain individual fidelity bond

Answer 22

Insure a single employee for a defined time

Question 23

Explain blanket fidelity bonds

Answer 23

Insure all employees of the insured for loss of money or other property stolen by the employee acting alone, in concert with other employees, or in collusion with others outside of the business

Question 24

Explain primary commercial bond

Answer 24

Provides a specific limit per loss for all employees, regardless of how many employees are involved in any one loss

Question 25

Explain blanket position bond

Answer 25

Provides a specific limit per employee

Question 26

Define obligee

Answer 26

A person or corporation under a fidelity or surety bond who is the beneficiary under the terms of the bond

Question 27

Define surety

Answer 27

One who guarantees the performance of the obligations of the principal to the obligee; one who assumes legal responsibility for the fulfilment of another’s debt or obligation and becomes liable if the other defaults

can be an individual or a corporation, usually an insurance company, that guarantees the performance or faith of another

Question 28

Explain bid bond

Answer 28

Guarantees that the successful bidder of a project will enter into the contract under the bidding terms

Question 29

Explain performance bond

Answer 29

Bond guarantee that a contractor will do the work and do it in accordance with the specifications and plans of the contract. Secures owner against contractors failure to perform the contract

Question 30

Explain labor and material payment bond

Answer 30

A contract bond guaranteeing the payment by the contractor of all bills for labour and material that are used in the construction of the project

Question 31

Explain maintenance bond

Answer 31

A bond guarantee corrective work made necessary by defective workmanship or materials that appear within a specified period after the completion of a job will be done and paid for

Question 32

Explain license bond

Answer 32

A bond required by federal, provincial, or municipal authorities to grant licenses to persons intending to conduct certain business
Also known as a permit bond

Question 33

Explain customs and excise bonds

Answer 33

Safety compliance concerning federal and provincial tax and regulations

Question 34

Explain court and fiduciary bonds

Answer 34

Required by the judiciary as security for court costs to release liens and to comply with probate and bankruptcy laws

Question 35

Explain lost documents bonds

Answer 35

Guarantees that the owner of a loss document will reimburse the issuer of the document for any loss incurred should the original turn up later and be cashed/presented for payment