Insurance Law

Question 1

insurance act?

Answer 1

statute regulating insurance in Alberta

Question 2

define 
insurer
insured
premium
risks/perils
agent
broker
adjusters
insurance defence lawyer

Answer 2

-insurer: party agreeing to make the compensation
insured: party receiving the compensation
premium: consideration/price paid for policy
risks/perils: events insured against
agent: sells insurance contracts
broker: retained by the insured to secure the necessary coverage
adjusters: investigate + settle insurance claim on behalf of insurance company
insurance defence lawyer: works for insurance company/large law firm, vested interest to limit company liability.

Question 3

what is insurance?

Answer 3

a contract where the insured pays premiums in exchange for the insurer’s promise to cover the risk.
- spreads the risk.

Question 4

why is it important to read insurance contract carefully?

Answer 4

don’t assume you’re covered for everything. know exactly what you’re qualified for.

Question 5

what is contra proferentum rule?

** know this**

Answer 5

since most insurance contracts are drafted by insurance company, with little input from insured, courts balance resulting inequalities by interpreting ambiguities in the favour of the insured.

Question 6

Types of Insurance

Answer 6

• property
• business interruption insurance
• life and health insurance
• liability insurance
• bonding

Question 7

what is property insurance?

Answer 7

covers losses to property due to fire + other perils

Question 8

property insurance: co-insurance clause?

Answer 8

insured either bear some risk of loss themselves or get additional insurance
- if have additional insurance, they each contribute, won’t give you more than the loss

Question 9

deductible?

Answer 9

insurance never pays for 100%

- small amount beared by you

Question 10

what is business interruption insurance?

Answer 10

cover lost profits + added expenses incurred to bring business back
- be careful of what is covred

Question 11

what is health + disability insurance?

Answer 11

part of life + health insurance

pay health care expenses, income while unable to work – probs part of benefits package with employment

Question 12

what is life insurance?

• whose life can u insure.

Answer 12

business can insure lives of key personnel - but MUST HAVE INSURABLE INTEREST
- can insure spouse, children, parents, grandparents but not siblings.
exception is dependents

Question 13

What is liability insurance?

Answer 13

insurer only pays if the insured is at fault.

• important to have in company/profession
• does not cover willful, deliberate acts; only negligence.
• insured may any amount over + above the insured amount

Question 14

2 types of bonds

Answer 14

fidelity bonds

surety bonds

Question 15

what are fidelity bonds?

Answer 15

employer pays a fee to have the employee bonded, if the employee commits a wrong, the employer recovers from the insurer (who can go after the employee)

Question 16

what are surety bonds?

Answer 16

provide assurance that a party to a contract will perform that contract - if that party fails to complete the task, the bonding insurer pays compensation to the injured contracting party.

Question 17

general insurance principles

Answer 17

1. legality
2. insurable interest
3. utmost good faith
4. subrogation
5. salvage
6. forfeiture rule

Question 18

what is legality related to insurance?

Answer 18

1. if one commits wrongful act = loss of insurance policy; unenforceable
2. contracts of insurance are unenforceable, if there does not exist an insurable interest.

Question 19

insurance act is what?

Answer 19

dictates that without an insurable interest, the contract is void.

Question 20

utmost good faith in insurancE?

Answer 20

• risk is key for insurer
• insured has DUTY TO DISCLOSE
  insurance contract is contract of utmost good faith
• prompt notice from insured if any changes occur
• failure to disclose may be grounds to rescind the contract
• insurer has duty to process claims fairly.
• insurer has duty to defend the insured if they are sued.

Question 21

what is subrogation?

important

Answer 21

stepping into the position of the insured
- once insurer pays out on the policy, it steps into the insured’s shows + can bring any lawsuit that the insured was entitled to bring

Question 22

what is salvage?

Answer 22

• enables the insurer to minimize its loss

- if item is damaged beyond repair + must me replced, insurer has to right to sell the item + keep the proceeds.

Question 23

what is forfeiture rule?

Answer 23

criminal should not be allowed to profit from his crime; insured is not permitted to profit from his wilful misconduct.