Mid Term Mix

Question 1

Subrogation is the substitution of one party for another?

a. As creditor
b. As debtor
c. As insured
d. As arbitrator

Answer 1

c. As insured

Question 2

Legislation states that the insurer must provide which of the following to the insured immediately upon request after receiving a notice of loss?

a. Instructions to obtain an appraisal
b. forms to make a proof of loss
c. Settlement of terms
d. refund of unearned premiums

Answer 2

b. forms to make a proof of loss

Question 3

Under statutory condition # 3 Change of interest, which of the following requires consent from the insurer?

a. Assignment under the Bankruptcy act
b. Chang of title by death or named insured
c. change of title by succession
d. Sale of property

Answer 3

d. Sale of property

Question 4

Which of the following causes of fire are excluded from coverage by the insurance Act?

a. Fire resulting from the explosion of natural gas
b. Fire resulting from lightning
c. Fire resulting from riot
d. Fire resulting from flames escaping from a wood stove

Answer 4

c. Fire resulting from riot

Question 5

Which of the following is an example of indirect loss
a. Debris Removal
b. Loss of revenue
c. Depreciating
d. Vandalism

Answer 5

b. Loss of revenue

Question 6

Which of the following is the best general definition of actual cash value?

a. repair cost less depreciation
b. repair cost less damage
c. Replacement cost less service charged.
d. replacement cost less depreciation

Answer 6

d. replacement cost less depreciation

Question 7

In addition to the peril of fire, the basic fire policy must also insure against?

a. All smoke and water damage
b. Limited explosion and lightning damages
c. Lightning and windstorm
d. Vandalism and vehicle impact

Answer 7

b. Limited explosion and lightning damages

Question 8

Under the basic fire policy if it is necessary to move property to protect it from loss:

a. coverage for the cost to move property is automatically excluded
b. Coverage for the moved property always remains in force for the remainder of the policy term
c. The amount of coverage available for the moved property is the amount left from what has already been incurred for the loss
d. Ther is no coverage for the moved property unless an endorsement is issued

Answer 8

c. The amount of coverage available for the moved property is the amount left from what has already been incurred for the loss

Question 9

War is an example of which general category of exclusions is usually found in all-risk policies

a. Those better covered by other insurance forms
b. Uninsurable losses
c. Those that require additional underwriting
d. Wear and tear losses

Answer 9

b. Uninsurable losses

Question 10

The proximate cause of a loss may be defined as:

a. An approximation of the exact cause of the loss
b. The event that immediately precedes the loss
c. The event that initiates the continuous chain of events leading
d. The indirect loss caused by the direct loss to the loss

Answer 10

c. The event that initiates the continuous chain of events leading

Question 11

Most fire losses are

a. frequent but not severe
b. Severe but not frequent
c. Partial loss
d. Total loss

Answer 11

c. Partial loss

Question 12

In Statutory condition # 9 Salvage the insured

a. Can abandon the damaged property to the insurer
b. Must take all reasonable steps to prevent further loss or damage to the property
c. Must arrange for repairs of the damaged property immediately
d. Must give the undamaged property to the insured so they can sell it to recuperate loss

Answer 12

b. Must take all reasonable steps to prevent further loss or damage to the property

Question 13

Tornadoes are covered under the named perils or all-risk policy as they fall within the

a. Act of God peril
b. Earth movement peril
c. Windstorm or hail peril
d. Hurricane peril

Answer 13

c. Windstorm or hail peril

Question 14

Which of the following insurance policies covers two or more lines of types of insurance

a. Multi-limit policy
b. Single limit policy
c. Package policy
d. Subscription policy

Answer 14

c. Package policy

Question 15

The correct term used to describe flooding caused by rain is

a. Fluvial flooding
b. Feudal flooding
c. Pluvial flooding
d. Tsunami

Answer 15

c. Pluvial flooding

Question 16

The three IBC Homeowner forms differ mainly in their:

a. Perils and Exclusions
b. Extension and Exclusions
c. Premium charged and deductible
d. policy issuing and claims adjustment

Answer 16

a. Perils and Exclusions

Question 17

A deductible is

a) An amount by which a loss payment to the insured is reduced
b) Available to the insured for an additional premium
c) The insurer’s portion of the loss
d) An endorsement added to a policy

Answer 17

a) An amount by which a loss payment to the insured is reduced

Question 18

The Waiver of Co-insurance clause:
a) Waives insurance to value
b) Waives the Co-insurance clause at the insured’s discretion
c) Waives the Co-insurance clause at the insurer’s discretion
d) Waives the Co-insurance clause for losses of less than specified amounts

Answer 18

d) Waives the Co-insurance clause for losses of less than specified amounts

Question 19

The Mortgage Clause:
a) Creates a separate contract between the insurer and the mortgagee
b) Creates rights and obligations for both the mortgagee and the insured
c) Does not permit the mortgagee to give notice or proof of loss
d) Protects the mortgagee provided the named insured has not breached any policy condition

Answer 19

a) Creates a separate contract between the insurer and the mortgagee

Question 20

A fortuitous loss is:
a) A chance event
b) One made inevitable by inherent fault or defect in the object destroyed or damaged
c) One that benefits insured
d) The result of willful or fraudulent action by insured

Answer 20

a) A chance event

Question 21

In addition to the fire peril, the Basic Fire Policy must also insure against:
a) All smoke and water damage
b) Limited explosion and lightening damage
c) Lightening and windstorm damage
d) Vandalism and vehicle impact damage

Answer 21

b) Limited explosion and lightening damage

Question 22

The formula for calculating recovery for loss under a policy with a Co-insurance clause is:
a) (Amount required – Amount carried) X Amount of Loss
b) (Amount required/Amount carried) X Amount of Loss
c) (Amount carried/Amount required) X Amount of Loss
d) Amount required – Amount carried

Answer 22

c) (Amount carried/Amount required) X Amount of Loss

Question 23

Which of the following is an example of indirect loss?
a) Debris removal
b) Loss of revenue
c) Depreciation
d) Vandalism

Answer 23

b) Loss of revenue

Question 24

Which of the following types of property are excluded from the Basic Fire policy?
a) Jewelry
b) Safes
c) Securities for money
d) Sports equipment

Answer 24

c) Securities for money

Question 25

Under Statutory Condition 3 (Change of Interest) which of the following requires consent from the insurer?
a) Assignment under the Bankruptcy Act
b) Change of title by death of the named insured
c) Change of title by succession
d) Sale of property insured

Answer 25

d) Sale of property insured

Question 26

Which of the following is not covered under the definition of “Building” in the Commercial Building, Equipment and Stock Named Perils form?
a) Additions and Extensions
b) Building Fixtures and Fittings
c) Materials, equipment and supplies for repairs & maintenance
d) Growing plants, trees, shrubs or flowers outside for decorative purposes

Answer 26

d) Growing plants, trees, shrubs or flowers outside for decorative purposes

Question 27

In fire insurance the insurer may NOT avoid the policy or reduce the insured’s recovery if a material circumstance was:
a) Misrepresented intentionally
b) Misrepresented innocently
c) Omitted innocently
d) Omitted intentionally

Answer 27

c) Omitted innocently

Question 28

Under the Vacancy, Occupancy and Disuse exclusion – loss is excluded while the insured knows the building is vacant for:
a) 21 days
b) More than 30 consecutive days
c) More than 10 consecutive days
d) 30 days

Answer 28

b) More than 30 consecutive days

Question 29

Which of the following exclusions can be overridden by special endorsement?
a) Electrical devices exclusion
b) By Laws exclusion
c) Application of heat exclusion
d) Nuclear incident exclusion

Answer 29

b) By Laws exclusion

Question 30

What is the prime rating factor when determining if Flood coverage can be added to a policy?
a) Age of building
b) Maintenance of building
c) Whether or not plumbing has been upgraded
d) Location/exposure to potential loss

Answer 30

d) Location/exposure to potential loss

Question 31

Which of the following is not one of the items that legislation states must be contained in every insurance policy?
a) Name of insurer
b) Subject matter of insurance
c) Waiver of co-insurance
d) Name of person(s) to whom insurance money is payable

Answer 31

c) Waiver of co-insurance

Question 32

Which of the following causes of fire are excluded from coverage by the Insurance Act?
a) Fire resulting from the explosion of natural gas
b) Fire resulting from lightening
c) Fire resulting from flames escaping from a woodstove
d) Fire resulting from a riot

Answer 32

d) Fire resulting from a riot

Question 33

Which of the following provinces has legislation stating the short rate method of cancellation calculation is not allowed for fire insurance policies?
a) North West Territories
b) Alberta
c) Manitoba
d) Quebec

Answer 33

b) Alberta

Question 34

If the underwriter imposes a clause called a “Warranty” on a property policy what does it do? Name 3 examples of Warranties they might add

Answer 34

It restricts coverage specifically regarding the use, condition or maintenance of the insured property.
Examples: Alarm, Jewellery in a vault, backwater valve and Woodstove

Question 35

. Explain fully the principle of Subrogation

Answer 35

Literally, subrogation means the substitution of one party for another as a creditor. It describes how someone who has discharged the debt of another person acquires the right to enforce a claim against that person to recover the amount of the debt. In property insurance, it is the principle under which the insurer assumes the rights of an insured against whoever was responsible for loss or damage to the insured property once the insurer has paid the insured’s loss

Question 36

Identify who qualifies as an insured

Answer 36

The named insured’s spouse,
the relatives of either the named insured or his spouse, living with them
the named insured’s spouse, any person under the age of 21 in the named insured’s care
Any student dependent on the insured temporary away from home in school

Question 37

List the four underwriting considerations for earthquake insurance.

Answer 37

Underlying geology of insured premises, method of construction, age of the structure, height of structure

Question 38

Describe the coverage provided by Fair Rental Value

Answer 38

If an insured peril renders the building unfit for occupancy, not only will the insured be displaced but they may lose the rental income paid by a tenant. Even if the part of the dwelling normally held for rent is empty when the loss occurs – if the insured can prove that if it wasn’t for the loss it would have been rented – they may be entitled to claim for fair rental value

Question 39

Under what conditions is a structure considered detached as opposed to being part of the main dwelling?

Answer 39

Detached Private Structures are separated from the dwelling building by a clear space, or are connected to the building only by a fence, utility line or other similar connection

Question 40

List 3 conditions for settlement at replacement cost

Answer 40

In the same location,
with a structure of the same occupancy,
with materials of similar quality,
within a reasonable time frame

Question 41

List two important features of the Automatic Reinstatement feature of an insurance policy.

Answer 41

1) the amount of insurance remains unchanged throughout the policy period even if losses are paid
2) if the insured cancels the policy after a loss even one equal to the full amount of insurance the insurer must return premium calculated on a short rate basis for the unexpired part of the policy period as required by the statute

Question 42

30. List the 15 Statutory Conditions that apply to Fire Insurance policies and fully explain one of them

Answer 42

Misrepresentation
Property of Others
Change of Interest
Material Change
Termination
Requirements after a loss
Fraud
Who may give notice and proof
Salvage
Entry, Control, Abandonment
Appraisal
When loss payable
Replacement
Action
Notice