Mock Test Flashcards
Types of Damages Covered by Liability (SGCP)
- Special (ex: Medical expenses)
- General (e.g., pain & suffering, disability)
- Compensatory Collectively Special and General damages
- Punitive (punishment, deterrent, lesson)
Liability Damages insurance is concerned with (SGC)
- Special
- General
- Compensatory
What is included in the Coverage Summary Page (PCPA)
- parties to the contract
- commencement date,
term, expiry date - premium and rate
4.amount insured
Which party makes a claim against liability?
Third party (someone outside of the insurance contract)
What are the unique elements of an insurance contract? (IIU)
- Insurable Interest
- Indemnity
- Utmost Good Faith
What are compensatory damages for?
Compensatory Damages are a sum of money to which a plaintive is entitled that makes amends for an actual loss (nothing more nothing less)
What does fiduciary mean?
“Trust”
-a person to whom the administration of something is entrusted for the benefit of another; a trustee; someone appointed to oversee another
What does premises mean under the liability section of the policy wording?
Premises - means all premises where the person(s) named as insured in the declarations, or their spouse, maintains a residence, including seasonal and other residences, provided such premises are specifically described in the Declarations
What does insured mean under the liability section of the policy wording?
Insured - person(s) named as Insured on the Cover Summary Page and while living in the same household:
-their spouse
-the relatives of either
-any person under 21 in their care
What is legal liability?
Legal Liability = Negligence
Legal Liability pays for harm done to third parties
What is Negligence?
-failure to use the degree of care expected from a reasonable and prudent person
So, negligence is:
-Doing something unreasonable
-Omitting to do something a reasonable person would do
How is defense, settlement, and supplementary payments paid out? Are they paid from the limit of insurance or are they paid beyond the limit of insurance?
If you fight a charge in court, the policy will pay for the lawyers and court stuff over and above the policy limit.
Defense cost settlement payments do not deplete from your coverage.
How is weekly indemnity paid out in Coverage H?
2/3 of residence employee’s weekly wage at the date of the accident, up to $100 per week.
Formula will be:
weekly wage / 3 x 2
(weekly wage divided by 3, multiply by 2)
Define actual cash value.
*Replacement Cost – Depreciation
*The current cost of replacing an article with a similar one of the same condition, taking into account factors that may augment or lower value
Exclusions of Coverage G.
Coverage G is Voluntary Payment for Damage to Property
a. damage to property you or your tenants own or rent
b. damage to property which is insured under Section I
c. claims resulting from the loss of use, disappearance, or theft on property
How is temporary insurance terminated?
It’s terminated just like an actual insurance.
What is the purpose of Statutory Conditions?
Provide insureds with a consistent approach to having their claims settled and bind the insured and insurer, establishing certain rights and obligations for both parties.
What optional perils are available under a property policy?
- Personal articles
- Watercraft, outboard, motor trailer and Miscellaneous Equipment Coverage
- Freezer Foods
- Fine Arts
- Fine Arts Breakers
- Earthquake
- Personal COmputer
- Residence Glass
- Sewer Back Up / Water Escape
- Mass Evacuation
- Vacancy Permit
If someone wants a higher amount of coverage on expensive jewelry, what would you suggest purchasing
Personal Articles Coverage (Endorsement/Rider)
What is a standard mortgage clause?
It protects the mortgagee from the actions of the insured.
It creates a separate agreement between the bank and insurance company. The bank will get their money even if the insured has done something that breached a Statutory Condition and is not getting indemnified.
Review the Additional Conditions section in the policy wording booklet
- Notice to Authorities - notify the police or other authorities immediately if the loss is due to malicious acts, burglary, robbery, theft or attempted theft.
- No Benefit to Bailee - it is warranted by insured that insurance should not benefit any other carrier or bailee
- Pair and set - articles which are part of a set or pairs if lost or damaged, the measure of loss should be a reasonable and fair proportion to the total value, but will not mean total loss of set
(ex: if one earring is damaged - it does not mean insurance will pay for the value of the pair) - Parts -
What is GLACC and what is LCC?
Genuine Intent
Legality of Purpose
Agreement
Capacity to Contract
Consideration
LCC determines enforceability
Manuscript Policies
A Manuscript policy is specially designed for a particular risk.
A manuscript policy does not use standard preprinted wording but rather is an individual manuscript; it must incorporate all elements of a normal policy.
These are used for unique risk; manually put together.
Subscription policy
A subscription policy usually comes into play with large risks.
It is one large risk insured by multiple insurance companies.
What is the primary function of insurance?
Spread the loss of a few amongst the many
Who is the mortgagor?
Mortgagor is the person who holds the mortgage
-This is the person who owns the house
Who is the mortgagee?
A Mortgagee is the person who provides the mortgage (usually a bank)
How do insurers achieve spread of risk? (VDD)
3 considerations to achieve spread of risk are:
- Volume – insure a large number of risks
- Diversity of type of risk – insure as many different kinds of risk as possible
- Diversity of location – insure as many different locations as practicable
What is Proximate Cause?
the immediate and effective cause of loss, which in a chain of circumstances leads naturally and directly to the loss – not necessarily the last event before the occurrence.
– An insured peril must be the proximate cause!
Pure risk
can only offer loss, not gain
Only pure risk is insurable
Speculative risk
offers the chance for loss or profit
Mutual Insurance Companies
Mutual insurance companies are owned by their policyholders.
They are a form of co-operative enterprise.
Assessment or Premium Note Mutual Insurance Co
Founded on mutual aid; each policyholder is a member
Factory Mutuals
Specialize in fire prevention, expertise makes them good at fire prevention
Stock mutuals
Started as pure assessment then incorporated to write participating policies with the public
Co-operative stock mutuals
Members are policyholders; capital comes from member shareholders who are also the insureds
Quebec Term - Mandate
Contract
Quebec Term - Mandator
Principal
Quebec Term - Mandatory
Agent
What is the price of a unit of insurance for a period of one year called?
Rate
The regulation of all insurance intermediaries falls under.
Provincial Jurisdiction
