Insurance Law

Question 1

What is the insurance act?

Answer 1

The statute regulating insurance in AB, recently revised to reduce rates charged for automobile insurance.

Question 2

Who is the insurer?

Answer 2

Party agreeing to make the compensation.

Question 3

Who is the insured?

Answer 3

Party receiving the compensation.

Question 4

What is the premium?

Answer 4

the consideration (price) paid for the policy.

Question 5

What are risks or perils?

Answer 5

Events insured against.

Question 6

What are insurance agents?

Answer 6

Those who sell insurance contracts; may represent several insurance companies.

Question 7

What are insurance brokers?

Answer 7

Those retained by the insured to secure the necessary coverage, shop around to find the best plan.

Question 8

What are insurance adjusters?

Answer 8

Those who investigate and settle insurance claims on behalf of insurance companies.

Question 9

What is insurance?

Answer 9

A contract where the insured pays premium in exchange for the insurer’s promise to cover the risk.

Question 10

As risk increases, what happens to premium?

Answer 10

Premium also increases.

Question 11

What is the Contra Proferentum rule?

Answer 11

Since most insurance contracts drafter by insurer, the courts have tried to balance resulting inequities by interpreting any ambiguities in the contract in FAVOR OF THE INSURED.

Question 12

What are the 5 common types of insurance?

Answer 12

1. Property Insurance
2. Business interruption insurance
3. Life and Health insurance
4. Liability Insurance
5. Bonding

Question 13

What is property insurance?

Answer 13

Covers losses to property, fire for e.g.

Question 14

What happens if the insured is insured under several policies?

Answer 14

Still cannot collect more than the loss. Multiple insurers are entitled to contribute only a portion of the loss.

Question 15

What is business interruption insurance?

Answer 15

Insurance to cover lost profits and added expenses incurred to bring a business back into production.

Question 16

Why might a business insure lives of some personnel?

Answer 16

The personnel must have an insurable interest, something to lose for the business.

Question 17

What does liability insurance cover and not cover?

Answer 17

Only covers if insured is at unintentional fault. Does not cover willful, deliberate acts.

Question 18

What are the two types of insurance bonds?

Answer 18

1. Fidelity Bonds

2. Surety Bonds

Question 19

What is a fidelity bond?

Answer 19

A bond where the employer pays to have an employee bonded, in case the employee commits a wrong, the employer recovers from the insurer.

Question 20

What is a surety bond?

Answer 20

A bond that provides assurance that a party to a contract will perform that contract.

Question 21

What are the two principles of legality in terms of insurance?

Answer 21

1. If one commits a wrongful act that results in a loss, on public policy grounds, contract lacks legality and becomes unenforceable.
2. Contracts of insurance are unenforceable, if there does not exist an insurable interest

Question 22

What is utmost good faith?

Answer 22

The idea that the duty to disclose falls on the insured to come forward with risk information.

Question 23

What is the prompt notice?

Answer 23

The insured is required to promptly notify the insurer of any changes that impact upon the risk?

Question 24

What is subrogation?

Answer 24

Stepping into the position of the insured, once the insurer pays out the policy, steps into the insured’s shoes and can bring any lawsuit that the insured was entitled to bring.

Question 25

What is salvage?

Answer 25

A concept which allows the property to be sold by the insurer and the proceeds kept by the insurer, if the item is damaged beyond repair. Enables insurer to minimize its loss.

Question 26

What is the forfeiture rule?

Answer 26

The insured cannot collect if they deliberately cause the loss.