Fundamentals 1: BC Flashcards
One of the clauses contained in Commercial Property insurance policies is the Co-Insurance Clause. The purpose for including this clause in the policy is to
Limit the claims payment after a partial loss when the insurer finds that the insured has deliberately underinsured the values
An underwriter is required to perform numerous task, however, the primary function of an Underwriter is to
Select those risks that are most likely to be profitable to the insurer
Insurance Brokers are often asked to issue a “binder” as confirmation of the existence of valid insurance. A broker’s authority to commit the insurer to a contract:
Is stated in the “Agency Agreement” between the insurer and the brokerage and applies to specific types of risks and limits
The Homeowners Basic Form (IBC1151) provides coverage for Glass Breakage. Under the peril all of the following losses, except one, are insured. Select the loss for which coverage is excluded under this form.
“Breakage of the glass table top which slipped out of the helpers’ hands during the move to the insured’s new residence”
What is the Special Limit of insurance for stolen jewelry
$2,000
Your client is the owner of a condominium and is currently covered under the condominium unit owners package (IBC 1165), which includes Loss Assessment coverage. She does not believe that this coverage is important. You advise her that the loss assessment coverage would respond to all the following claims, except one. Pick the exception.
The portion of the cost to replace personal property damaged by fire because of an inadequate limit under her own policy
Select the term that matches the following statement:
A wrongful act or infringement of a right legally recognized as grounds for a lawsuit, especially if it causes injury or harm.
Tort
The professional liability exposure of insurance brokers is ONLY insured under a policy of:
Errors and omission insurance
The insurance meaning given to “risk” refers to the:
Chance of financial loss to which the object of insurance may be exposed
If the insured breaches a policy condition the Standard Mortgage Clause guarantees the mortgagee will be paid;
Their interest
Under the Homeowners’ Basic Form (IBC 1151) the following loss is not insured:
Damage caused by vandalism to a dwelling building in the course of construction
In regards to Crime Insurance, the following are policies that would provide an array of coverages. Pick the exception.
Hold-up
Property excluded and Perils excluded are the two types of exclusions found on Property Policies. The following is a list of common exclusions. Pick the exceptions.
Sporting equipment
Both, insurance companies and brokers are considered fiduciaries. Under the Insurance Act, the fiduciary responsibility of a broker requires that
Unearned commissions are held in the trust to be available should the policy be terminated before the expiry
A doctor’s visit or hospitalization while traveling outside the provinces of Canada would be catastrophic if there is no insurance to cover medical expenses. As a broker, you would strongly advise our clients to purchase travel insurance, which is designed to pay all of the following expenses, except one. Pick the exception:
The cost for a pre-arranged medical procedure at a health clinic abroad
What is not a provision of building replacement cost;
Replacement shall be made on property damaged only by the peril of fire
The Builders’ Risk-Board Form can be used to insure all of the following items, except one. Pick the exception:
Contractor’s tools and equipment
In the event of an occurrence, claim or action, the insured under a liability policy must do all the following, except one. Pick the exception:
Make such voluntary payments on behalf of the insurer as are required interim to satisfy the plaintiff
All Homeowners Policies contain the section “Extensions of Coverage”. All the following losses are covered under this section, except one. Pick the exception:
The cost to repair the “tear out” damage to the insured’s driveway that was necessarily caused to replace the ruptured water main
In Canada the General Insurance Industry is strictly regulated by federal and provincial statutes. The provincial government performs all of the following functions, except one. Pick the exception.
Establishing premium levels for insurance contracts
Regardless of which coverage is selected the underwriting is the same for all Homeowners Forms. The amount of insurance applicable to coverage B - Detached Private Structures is
10% of Coverage A - Dwelling Building, which is in addition to the amount of insurance stated for Coverage A
Which of the following properly described Off-Premises Coverage
Provides coverage for personal property temporarily away from the insured premises insured anywhere in the world
The financial solvency of insurers is a crucial matter. Solvency refers to
The ability of an insurer to pay for all insured losses
Your client lost jewelry during a recent burglary and reported the loss of a matching gold necklace with pendant and earrings. However, the insured found one of the earrings under her bed, but she claimed the full set value. How will the insurer settle this loss?
Your client will receive a settlement for the value claimed less the value of one earring
Loss of property, money and securities due to burglary, robbery or theft is a major concern for many business owners. For this reason, your client has purchased Safe Burglary Insurance. All of the following statements regarding this coverage are correct, excerpt one. Select the statement that is incorrect.
This coverage will respond to a loss of property from a safe regardless of the cause, so long as the insured is able to prove the value lost.
The law requires that insurance brokers exercise “reasonable skill, care and diligence” in carrying out their duties. Failure to do so can result in an Errors and Omissions claim against the broker. The main reason for Errors and Omissions claims is due to
The failure to properly identify the client’s loss exposures and offering the required coverages
What is the purpose of an Appraisal insurance?
Determines the value of an object
One of the elements that determine whether a contract is legally enforceable or not is the “legal capacity of the parties”. In all of the following contracts, except one, the parties are considered to have “legal capacity”. Select the one which does not meet this element.
An invoice for merchandise shipped to the order of Mandy’s Souvenir and Gift Shop
In regards to the liability for Independent Contractors, when would the occupier not be held responsible?
When the occupier provided blue prints of the work to be done.
The following are examples of factors used to determine the amount to be paid. Pick the exception.
Purchase price of the object
The following items are all subject to a Special limit of insurance. Pick the exception.
Computer hardware
All homeowners policies define the persons who are deemed to be an insured. All of the following persons are insured, except one. Pick the exception:
The tenant who occupies the basement suite in the insured’s dwelling
An insured has purchased a policy in on their commercial building and is insuring it with an 80% co-insurance limit. The building has been evaluated at $180,000. What is the minimum amount the insured should insure the building for?
$144,000
When the insurer opts to repair, rebuild or replace damaged property rather than make payment in the form of cash settlement, it must:
Provide the insured with written notice of its intention to do so within 30 days after receipt of proof of loss
Coverage under the Builders’ Risk - Broad Form usually ends automatically
When construction of the project is completed and the building is occupied
Debris removal is available when loss or damage is caused by an insured peril. Which of the following is the limit provided for this coverage?
5% above the amount of insurance
When the insurer has indemnified the insured for a loss caused by a third party, the insurer has a legal right of recovery from that party. This legal process is referred to as
Subrogation
“Consideration” is required of all parties to a contract. Consideration means:
An exchange of something of value between the parties
When do you have to notify the company of a change in title?
Change of the title due to sale
Personal property temporarily removed is insured under the Homeowners Form…
Anywhere in the world
All of the following are covered by a Basic Form Policy. Pick the exception
Explosion of the pipe in the basement due to water hammer
When dealing with financial risk a person has several options available. In your opinion which of the following is the best option for most people?
Transfer of the risk
Which form of the business interruption insurance provides the best coverage?
Profits Form.
Your client has made an application for “appraisal”. The intent of the appraisal process is to settle the dispute between your client and the insurer regarding the:
Amount of the settlement being offered
Most liability policies provide coverage on an occurrence basis. All of the following statements, except one, correctly describe what the policy covers. Select the statement which is incorrect:
The amount of insurance stated on the policy is the maximum amount payable for all occurrences, which happened during the policy period
An insurance broker is;
Not a party to the contract.
A fire partially damaged the insured’s garage and destroyed some of the personal property, which was stored there. The insured called you because the insurer has advised that, except for one, all of the following damaged items are subject to a special limit. Select the item for which the insured will receive the full value.
A leather coat lined with fur valued at $2,500 kept in a closet in the garage for winter storage
The loss of money due to actual destruction, disappearance or wrongful abstraction would be property insured under the following policy:
Money and Securities (Broad Form)
When determining the required premium for insuring commercial property the underwriter will first establish the fire rate. For this purpose the underwriter will consider all of the following factors, except one. Select the one, which is not a factor in determining the fire rate.
The number of employees in the insured’s business
Property policies exclude certain types of property. All of the following properties are generally excluded, except one. Select the exception:
A building that to the insured’s knowledge has been vacant for more than 15 days
The limit of insurance on building would include;
The value of perimeter fencing
Law states that every insurance policy for Fire must cover
Lightning, fire and certain types of explosions
When will Homeowners Liability cover the following money making ventures?
Rental of 3 parking lot spaces to neighbors.
Personal property temporarily removed is insured under the Homeowners Form…
Anywhere in the world
If the insured breaches a policy condition the Standard Mortgage Clause guarantees the mortgagee will be paid;
Their interest
When an insurer terminates a policy all of the following conditions must be followed, except one, for the termination to be valid.
The refund must be calculated on a short rate basis.
The Removal Clause requires the insurer to extend coverage to another location where the insured property is kept, even if this location is not stated on the policy. Only one of the following situations would qualify for this coverage
The insured moved personal property to a storage facility to protect it from loss because of an encroaching forest fire
When does liability insurance cover you?
As a private citizen anywhere in the world.
A lawsuit alleging damage to a neighboring property during excavation work was filed against the property owner and the contractor. All the following statements regarding the legal liability for injury or property damage arising out of the work performed by a contractor are true, except one. Pick the exception:
The owner will always be held liable for injury or property damage resulting from the work performed by the contractor
All Homeowners policies include the section of “Extensions of Coverage”. Which of the following statements pertaining to this coverage section is incorrect?
The insurer will cover lock replacement when the insured’s keys have been lost or stolen
All of the following statements apply to the Statutory Conditions, except one. Pick the exception.
Even if the insured had a reasonable chance to protect property from loss but failed to do any such thing, this usually does not effect the claim settlement
Your client is the owner of a condominium and is currently covered under the condominium unit owners package (IBC 1165), which includes Loss Assessment coverage. She does not believe that this coverage is important. You advise her that the loss assessment coverage would respond to all the following claims, except one. Pick the exception.
The portion of the cost to replace personal property damaged by fire because of an inadequate limit under her own policy
All Homeowners and Habitational Package policies include liability insurance. Coverage E would respond in all of the following instances, except one. Pick the exception:
Property damage to a third party resulting from the personal actions of a named insured who permanently resides away from the insured premises
When an applicant for supplementary travel insurance has a pre-existing condition, coverage is:
May be available if the condition has been under control for a period of time, three or six months depending on the condition
The Homeowners Basic Form (BC1151) insures loss or damage caused by Windstorm or Hail. Only one of the following losses would be covered under this peril; select the loss for which the coverage is provided.
Damage to the exterior and interior during a severe windstorm which had ripped off a section of the roof on the insured’s house.
Coverage provided for an insured’s records under most policies of commercial property insurance is limited to:
Blank value only
when do you have to notify the company of a change in title?
Change of the title due to sale
Your clients were forced to temporarily move out of the home after a tree, which was uprooted during a serious windstorm, hit the house causing structural damage. Coverage D - Additional Living Expenses under the Homeowners policy pays additional living expenses due to an insured loss. Which of the following expenses will not be paid under this coverage?
Mortgage payments to the insured’s bank until the insured’s bank until the insured is able to return home
Your client lost jewelry during a recent burglary and reported the loss of a matching gold necklace with pendant and earrings. However, the insured found one of the earrings under her bed, but she claimed the full set value. How will the insurer settle this loss?
Your client will receive a settlement for the value claimed less the value of one earring
The additional rate or premium charged by the insurer to pay for additional perils insured under a commercial property insurance policy is called:
A loading
In the event of a claim there are also a number of Statutory Conditions that affect both the insurer and the insured. One of the following statements regarding these conditions is incorrect. Select the statement that is incorrect.
In the claim the insured included an article she did not even own, therefore, the insurer will only pay for the articles for which the insured can prove ownership
The Commercial General Liability Policy insures the liability exposures common to most businesses. Your client is an electrical contractor, who replaced the wiring in a customer’s building. Two days after the work was finished, a fire broke out, and the fire chief determined that it was caused by a faulty connection. Which liability coverage in the CGL would respond to this claim?
Completed Operations Liability
Statutory Conditions found in all policies of “fire” insurance:
Outline the duties and responsibilities of the insured and the insurer
All of the following are covered by a Basic Form Policy. Pick the exception
Explosion of the pipe in the basement due to water hammer
A dentist has rented an office in a strip mall and performed renovations to the space. What insurance will he need to cover this?
Tenants Improvement and Betterments
One of the elements that determine whether a contract is legally enforceable or not is the “legal capacity of the parties”. In all of the following contracts, except one, the parties are considered to have “legal capacity”. Select the one which does not meet this element.
An invoice for merchandise shipped to the order of Mandy’s Souvenir and Gift Shop
According to the Canadian Legal System, the Insurance Act is:
A statute Law
The Installation Floater is designed for contractors that specialize in the installation of machinery or equipment. The following property is not covered by this floater:
Property in warehouse on the insured’s premises
Under all Homeowners Forms the coverage for certain personal property articles is restricted to “special limits of insurance” unless the insured has purchased additional insurance. All of the Following objects are not subject to these “special limits” when a loss is caused by the peril of fire, except one. Pick the exception:
Computer games and cd’s with a combined value of $3,600
A physical hazard is:
A condition relating to the premises which caused a peril to occur
Crime policies define certain terms as they relate to coverage. The broadest meaning is given to:
Theft
Under a policy of “fire” insurance, the insurer must make payment for a loss within:
60 days after the completion of the proof of loss unless the contract provides for a shorter period
Your client has made an application for “appraisal”. The intent of the appraisal process is to settle the dispute between your client and the insurer regarding the:
Amount of the settlement being offered
Which of the following is not an example of Stock?
Leased photocopier
This one of the following would result in the claim being paid under Effect of Delivery of Policy as stipulated in the Insurance Act.
Policy cancelled by non-payment suffers a claim 7 days after a registered letter received
Select the term that matches the following statement:
Coverage to a limit of $200,000 provided by Autoplan Basic
Third party liability
The Property Protection Systems Clause requires the insured to report any flaw, defect or interruption, coming to the knowledge of the insured of all of the following systems, except one. Pick the exception.
Electrical system
In the event of an occurrence, claim or action, the insured under a liability policy must do all the following, except one. Pick the exception:
Make such voluntary payments on behalf of the insurer as are required interim to satisfy the plaintiff
All of the following are examples of conditions which affect the physical hazards of a risk, except one. Pick the exception.
Financial condition
Your client’s insurance policy was cancelled for non-payment of premium. 6 days after the notice of termination was mailed, your client had a loss.
The loss is covered because 15 days’ notice must be given by registered mail
The Insurance Act provides that a Waiver of Terms or Conditions of an Insurance contract is:
Not binding, unless it is in writing and under the signature of a person authorized by the insurer
‘Indemnity’ means:
Restoring the insureds to the same financial position as they were in immediately prior to the loss
The following claim would be insured by the Homeowners’ Basic Form (IBC 1151) under the peril of theft:
Damage to the door and lock persons attempting to break into the insured’s dwelling
Glass has one of the broadest coverage wordings including those listed below. Pick the exception.
Glass lamp falling from a shelf
Your client is transporting goods in their own vehicles and, because he is concerned about theft of property from a vehicle, has purchased the Commercial Building, Equipment and Stock Broad Form. The insurer has imposed the “Locked Vehicle Warranty,” which requires the insured to
Keep the insured property in a fully enclosed metal compartment in or on the vehicle, close all windows and lock all doors when the vehicle is left unattended
The following are examples of factors used to determine the amount to be paid. Pick the exception.
Purchase price of the object
The reinstatement clause contained in most policies of commercial property insurance provides that:
The insureds shall have as much insurance on the property after an insured loss as they had immediately prior to it
A building worth $360,000 is insured for $90,000 and the policy contains an 80% co-insurance clause. A fire causes $72,000 damage. The insured will recover:
$22,500
All of the following are excluded by a Comprehensive Form Policy. Pick the exception.
Smoke damage
Only the following person(s) have the authority to change the policy.
An officer of the insurance company.
