NEED TO KNOW Flashcards
15 credits a year needed to renew license
Can carry over 7.5 credits.
3 applied and 2 electives.
Have to be licensed to
talk to any public person
CIP
Need 5 mandatory. 10 courses
3 applied and 2 electives.
Insured
Client
Insurer
Insurance company
Insurer gets net premium
Brokerage gets commission.
What is trust account?
Unearned premiums.
3o days can take out money made for month.
Fiduciary
Person of higher trust, someone who holds position of trust.
Code of conduct
A formally adopted statement of applied ethics, or a statement of what is expected in practice from the members of a company, organization, or association that has formally declared its operating values and principles.
Most codes of conduct begin with a description of the principles and values to which the organization aspires.
The code may also prohibit specific behaviors or actions by those it covers.
Must disclose all the markets
Give them all the options
Can’t accept
Anymore money than premium
Can only change information if
insured says so or by law.
Broker
Sells for many.
Agent
Sells for one.
Prescription, in law is
a time after which a cause of action ceases. In insurance, its the time after which a claim may not be brought.
Errors and Omission
Must be $500,000 per claim per person MIN
$2 Million max per claim
Can deny coverage if
Person didn’t buy that coverage.
Public Adjuster
Paid by the insured.
Independent adjuster
Paid by insurer.
Company adjusters
Salaried by insurance company.
Trust account
Where premium goes
Nothing can be taken out of
the trust account
Risk
Refers to the chance of financial loss to which an object of insurance is exposed.
Dealing with risk
Avoidance
controlling risk
loss prevention
Major function of insurance
Spreading the losses of the few among many
Underwriters
Work together with the broker.
Person who reviews application/risks to ensure they fall within the insurers guidelines. The person who determines which risks are acceptable to the insurance company.
Defining Insurance
“Agreement”.
The undertaking of one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of insurance may be exposed… or to pay a sum of money or other thing of value upon the happening of a certain event.
Indemnify
To provide compensation for loss or expenses incurred. A contract, express or implied, to repay in the event of a loss.
Insured neither gains nor looses.
Defining Risk
Risk is simply described as the chance of financial loss or object of insurance.
Speculative risk
This involves the possibility of either financial loss or gain.
“Playing the lottery”
Pure risk
This involves the chance of financial loss which does not; at the same time offer a chance of financial gain,
for example; loss of property. When there is no opportunity for a person to profit from a loss the risk is pure.
Pure risk
Only pure risk is insurable.
Moral hazard
Danger of loss arising from the nature of the insured rather than from the physical nature of the risk.
This would encompass those instances where the chance of loss is increased by an Insured’s carelessness, incompetency, recklessness, indifference to loss or an insured’s fraudulent nature.
Five element of contracts
1-Agreement- Unconditionally agree/accept
2-Considereation- Exchange of value between two parties
3-Legality of object- Must be legal
4.Legal capacity of the parties to contract must be competent
Trade names
May enter under other than personal name
Insurance contract must be between the owner of the trade name and the insurer. Corporations are deemed to be legal entitles and have same legal capacity to enter into a contract as that of a natural person.
Insurance contrracts
Require 8 elements enforable
Insurable Interest
Would suffer financially by a loss
All contracts require 5 elements to be enforable
Must contain 3 elements; Insurable interest, utmost good faith and indemnity.
Utmost good faith (Uberrima Fides)
Insurance contracts require a higher standard of honesty.
Indemnity
They indemnify insured for their losses
Insured’s only receive actually amount of loss, no more and no less.
If insurance contract doesn’t contain each of the 8 elements
the contract is VOID
Void Contract
A void contract is one which is unable in law to support the purpose for which it was intended.
Voidable
“One which is void as to (the) wrongdoer but not void as to (the) wronged party, unless he elects to so treat it”
Example; A contract between minor and an adult is generally voidable only at the election of the minor.
Any changes to contract will always be
In writing. Both parties must agree to change.
Endorsements
Acknowledges a change in the terms of the contract which adds, subtract or alters coverages
Endorsements can also be called
Rider - Adds additional coverage to the existing contract
Endorsements can also be called
Rider - Adds additional coverage to the existing contract
Floater- Covers property having a high degree of mobility. Coverage for property that moves location to location.
Rider
Adds additional coverage to the existing contract
Floater
Covers property having a high degree of mobility. Coverage for property that moves location to location.
Law of large numbers
The determination of amount of premiums is law of large numbers
which is the principle that the reliance to be placed upon a given probability is increased when the number of trails or cases is increased.
Dealing with risk
Avoidance, controlling and transfer.
Controlling risk or loss prevention
controlling risk is concerned with taking measures to reduce the frequency and severity of losses.
Controlling risk or loss prevention
controlling risk is concerned with taking measures to reduce the frequency and severity of losses.
Transfer of risk
Transfer all or portion of risk to someone else.
Binding a risk
An insurer’s agency agreement will provide the brokerage with the authority to bind the insurer for certain classes of risks and limits.
Direct loss
When the object of insurance is actually attacked by an insured peril.
How do you measure the amount of loss
ACV
Interest
Limit of insurance provided.
ACV
Actual cash value
Utmost good faith
Trust what they say
Indemnity
Receive only actual amount
Insurance contract must contain
8 elements or will be void.
Rider
Adds additional coverage to existing contract.
Endorsements
Acknowledges a change in the terms of the contract which adds, subtracts or alters coverage.
OSFI
Office of the superintendent of financial institutions
IBC
Insurance Bureau of Canada
IBAC
Insurance brokers of canada
ICPB
Insurance advisory organization
Two major types of insurers
Private and proprietary.
Private insurers
Alberta
Proprietary Insurers
Exist to make a profit; can be either incorporated or unincorporated.
Types of insurers who are proprietary are Joint stock companies (Incorporated)
Being unincorporated
All underwriters become personally responsible for all the losses on insurance business they chose to underwrite.
Llyod’s of London
Unincorporated
People known as syndicates.
Insurance market and largest brokerage house in the world.
Non- proprietary insurers
Reasons other than profit. Owned and controlled by policy holders who have banded together to secure insurance at the lowest cost possible.
Mutual companies
Owned by the policy holders
Fraternal societies
Which exist for the benefits of its members and are usually set up for life insurance, accident and sickness (service clubs)
Government Insurer’s
Saskatchewan, Manitoba, BC and Quebec provide compulsory automobile insurance plans for their residents.
Consumers have option for insuring their personal and business property.
Two major distribution systems
Brokers
Agents
Independent Agency/Brokerage
Brokers.
Represents many insurers
Owners are responsible for payment of all expenses with the business (earned commissions are used)
Direct writing systems
Agents
Employees of the insurer
Insurer owns all the business written
Administration function assumed by insurer.
Insurance in Canada is
Supervised and regulated by the federal and provincial governments.
To make sure contracts are drafted fairly, conducted to the general benefit of the public.
Role of Federal Government
Finically.
Provides licensing to insurers that meet strict financial standards.
Established by the OSFI (Office of the superintendent of financial institutions).
They ensure the companies have enough capacity for the risks that they take on. Ensure their solvency and financial stability.
Role of the Provincial Governments
Insurance Act.
Each common law province has a superintendent of insurance that’s responsible for administering the insurance act.
Responsibility concerns; -Licensing insurers, agents, brokers, adjusters
- Supervise the terms and conditions of insurance contracts
- Monitoring the solvency of provincially licensed insurer’s.
Four insurance councils
Alberta insurance council
Insurance Adjustors council
Life insurance council
General insurance council
Alberta Insurance Council
Financial arm of councils, provides investigation and administrative services to other councils.
-Provides administrative services to the continuing education accreditation committee appointed by the minster of finance.
Following councils are regulator bodies who are responsible for licensing and discipline of agents, brokers and adjusters in Alberta
- Life insurance council
- General Insurance Council
- Insurance Adjustors council
Canadian Insurance Claims Managers Association (CICMA)
Organization of insurance company claims manager that promotes a high standard of ethics in the handling of claims.
One of it’s main functions is to administer the Canadian Inter-company Arbitration Agreement, Which it sets up to arbitrate disputes among the companies who are signatories to the agreement.
This avoids many possible cases of litigation between insurers.
Insurance Bureau of Canada (IBC)
The national trade association that represents the insurance companies.
Insurance Institute of Canada (IIC)
Offers educational programs to the general insurance industry in Canada, Including employees of insurance and reinsurance companies, brokerages, agencies, adjusting firms and risk managers.
Insurance Brokers of Canada (IBAC)
This non-profit trade association is the national body of Canada’s organized brokers.
Developed and maintains licensing courses and maintains close liaison.
Insurance Advisory Organization (ICPB)
One of Canada’s leading loss control firms
Risk inspections, advisory rating services, operates a loss control school for insurance and fire department personnel.
Fire Underwriter’s Investigation Bureau (FUIB)
Crimes relating to fire and other property losses by the following branches set up;
Fire underwriters investigation bureau and Canadian automobile theft bureau.
Property and Casualty Insurance Compensation Corporation (PACICC)
When bankruptcy occurs and claims cannot be paid, the corporation will then pay all valid claims. All participation insurance companies are then charged an assessment to cover the total amount of the claims.
The following can be claimed under this industry funded plan;
-Max of $250,000 for all claims arising from a single occurrence
-A refund of up to 70% of unearned premiums, to may $700 per policy
Underwriters Laboratories of Canada (ULC)
Not for profit organization which operates laboratories and a certification service for the examination, testing and certification of devices, construction materials and services to determine their effect on fire, accident and property hazards.
Government Insurers
Saskatchewan, Manitoba, Bc and Quebec (Automobile)
Insurance Bureau of Canada
It’s national industry association representing Canada’s private p and c insurers.
Property and Casualty Insurance Compensation Corporation
- Max of $250,00 for all claims arising from a single occurrence
- Refund up to 70% of unearned premiums, subject to a max of $700 per policy.
Over time is not covered
Mold, fungus and other biological hazards is not covered.
Facility association
If having trouble getting automobile insurance in regular market can get it from Facility Association.
A CGL Policy generally covers a client’s
Premises, operations, products and completed operations liability.
3-D Policy
Crime and fidelity coverage
Binding is always between
Insurer and broker
DID
——- X Loss “Partial Losses only”
SHOULD
Should = Value x %
What they should of insured it for full partial loss
DID= Insured purchased
Vicarious Liability
An employer is liable toc ompensate persons for harm caused by an employee in the course of employment
Word or phrase most closely with legal liability?
Careless act
Personal injury covers
Slander or libel of a person or an organization
Utmost good faith
the disclosure of material information is required by all parties
Additional living expenses
If house burning
everything covered
If house not burning
Covers for 14 days
Floods never covered unless
You add it on
Did over should
Find out should first
times the % then do did
Co-insurance is like
gambling
co-insurance caluses are designed to
discourage the insured from gambling on suffering only a partial loss
Co-insurance is
Partial loss only
Theres 15 stat conditions
Section 1
Property coverage
Coverage A - Dwelling building
Anything attached
- attached structures
- tree
- attached equipment
- material not covered by theft
Coverage B- Detached structure
Any structure or building separted from the dwelling by a clear space
Coverage C- Personal Property
Everything other than auto or trailer
Coverage D- additional living expenses
the dwelling is damaged by an insured peril
Extensions of coverage same for all forms
Debris removable, property removed, moving, fire department charges, change of temp, freezer food
Freezer food
Will cover up to $2,000
due to power failure or mechanical breakdown
Lock replacement
keys stolen or loss, reported to cops
$500
Homeowners Basic Form
This form insures loss or damage caused by the 13 perils
13 perils-homeowners ALL COVERED
1- fire or lighting
- explosion (dont include water hammer)
- smoke- sudden, unusual and faulty operation
- falling object -has to hit building
- impact by aircraft or land vehicle -by others
- Riot
- Vandalism or malicious acts- by others
- water damage - sudden or accidental from water main
- windstorm or hail -not personal property
- glass breakage
- transporation
- theft, including damaged caused by attempted theft
- electricity
Smoke damage covered under
Comprehensive if it was your fault
Basic covered- Named
Comprehensive- All risks
Homeowners broad form
dwelling building and detached is ALL RISKS
Named perils is provided for personal property
Coverage A-
Dwelling building- comprehensive
Comprehensive
Coverage B- Detached private
Coverage C
Personal property- basic
Coverage D
Additional living expenses - comprehensive
Mobile home insurance
Only covered to move it in emergency
If stuff tied down it’s covered.
Tenants package
Owner covers A and B dwelling and detached
Up to $500 for dmaages not including fire
personal and additional for tenant
Coverage C and D
Insured by tenant
Condominium policy
You own the air you breath inside and personal property.
everyone responsible for shared spaces.
Your policy covers improvements and betterments
made by you
anything you build is under your policy
Seasonal dwelling
- theft not covered if not there unless added on
- be there 1 day every 60 days can be put on homeowners
Personal articles endorsement
provides coverage for high value
can add and delete
property includes; firearms, jewelry, furs, stamps, coins, silverware, cameras
Fine arts endorsement
provides insurance for object as fine arts
- paintings
- pictures
- etchings
- tapestries
- rare glass
- rare objects
- antique furniture etc
Comprehensive form
jewerly covered for $2,000
Fire insurance
Fire damage caused by fire which followed a short circuit is covered
Insurance contract is enforceable only if it contains 3 elements
Insurable interest
Indemnity
Umberrima fides
Coverage G
Voluntary, good neighbor policy
Tort law
wrong other than breach of contract
We owe the greatest duty to
children on our property
Joint Liability
2 or more people are legally responsible, its jointly liable
Section 2 liability coverage of the homeowners
Coverage E- Personal Liability
$1 million
Coverage F-Voluntary medical payments $1000
Coverage G- Voluntary payment for damage of property $500
Coverage H- Voluntary compensation for residence employees - as per schedule
Intentionally acts covered for
12 years of age and under is covered
Watercraft and motorized vehicle you
do not own is covered for liability
Trailers covered when
not attached
Trailer attached to vehicle covered
under auto when driving
Can have 3 parking spaces if anymore
its under commercial insurance
Umbrella policy
will pay only when;
- not enough insurance under the primary policy
- no coverage provided under primary
Umbrella policy
will pay only when;
- not enough insurance under the primary policy
- no coverage provided under primary
A self- insured retention (SIR) applies to all losses covered by
the umbrella liability
Personal liability covered
all over the world
Commerical covered
Canada and the USA
CGL-
Commercial general liability policy
Commercial will pay medical payments for
third party
Additional Liability
Environmental impairment liability;
- provides coverage for pollution liability and environmental clean up
- Available only through specialty markets.
Section 1-
yourself
section 2
third party
Statute law is defined as;
Written law derived from bills introduced into parliament which, when passed, supersedes any existing common.
Theft is covered
under livestock
not insured if off farm property
Named perils form, basic
theft not covered
Personal property of employees covered
max of $250 per person
Property away from the insured premises
1-property in transit
2- property at temporary locations
Theft only covered with proof forcued into locked space
all glass coverage is covered expect fire, war and nuclear damage
Contractors insurance
1-builder’s risk only covers the building
2-installer’s floater covers equipment until installed
3-contractor’s equipment floater
floater covers equipment anywhere in canada and the usa
Boiler and machinery
- breakdown insurance
- cover what breaks and what it effects
power is defined in three ways;
- pressure (steam boiler)
- movement (running engine wheel)
- electricity (electric motor)
Property under broiler and machinery policy;
- machinery
- computers
- production machinery
- a/c
- miscellaneous electrical apparatus such as electrical panels
Burglary
locked and they entered. no people involved
robbery
deal with people
safe burglary
safe is all covered but money.
all loss or damage done will be covered
to cover money need money and securities
Comprehensive Dishonesty, Disappearance and Destruction 3-D
insurance coverage for dishonest employees is known as fidelity insurance
-pay any funds stolen by employees
Surety bonds are not insurance
There are 3 parties to a contract
and the bond must be signed under seal by two parties
-must be signed and sealed
3 parties- Obligee, principal, surety
Bid bonds
Like Bidding on jobs
Performance bond
Contractors promise to provide if their bid is accepted
Travel insurance
- Pre-exciting won’t be covered
- 180 days max anywhere in the world
- Pregnancy complications within 8 weeks of the expected due date with not be covered
Accident and sickness
-Policies provide 24 hour coverage for lost income caused by a disability
Marine insurance
Oldest form of insurance
it covers both the vessel itself (hulll) and the cargo
In alberta Min limit is
$200,000 inclusive for bodily injury and property damage
Auto section A
third party liability
Auto section C
own damage
Service carrier receives administration
costs from the pool - called nordick
can’t refuse anyone unless
they owe money to insurance
You star at 0 on the grid
Up 5 if you have accident, down 1 every year accident free
whoever owns the car
owns insurance
Lend your car
lend your insurance
quebec min limit
$50,000 auto
everywhere else is $200,000
14 days to get insurance
for new car, has to have insurance beforehand.
mortagee is the
bank
Covered for rentals in
Canada and the USA
ACV= Actual cash value
The new or replacement cost of the property at the time of loss, less depreciation
Personal liability policy
must be reported within one year of occurrence
An edorsement alters the
provisions of the policy
All perils covers
theft of a vehicle by a member of the household.
Under statutory conditions of property poliicy
the insured, insurer has right to cancel a policy
Civil law
written law
Every policy by law must have stat conditions
fire
auto
accident and sickness
Except liability policies.
liability is for third parties only
If insurer cancels
you get all the money back
Insured cancels
they do %
30 days
to tell about loss
45 days to repair
to repair
60 days to
pay it all back
Glass coverage is on all basic
for outside windows only
Personal property
contents
Should =
Value x % (clause)
Partial loss only
Treaty contract
must say yes
Fuculete
case by case , yes or no
insurer keeps retention
cede out to reinsurers
2nd time reinsure is called rectro cession
reinsurance is an arrangement
between the underwriting insurer and a professional reinsurance company
Access prohibited by order of civil authority
- 2 weeks flood not covered
- not your house, just can’t get to your
replacement cost if 100% is covered
will cover whatever the cost
nothing over time is
covered
outside windows
all covered
Vacant never coming back
No glass, vadislm and water is not covered
all other covered for 30 days
House needs to be checked everyday after
4 days straight being gone.
unless drained all pipes only
water not covered if no one checks
mobile home only covered if
moving it to prevent further loss
major causes of loss for mobile is
fire,windstorm and hail
improvements and betterments made by tenant will be
claimed under tenants policy
If pay condo fee’s
Get condo policy
Seasonal dwelling doesnt cover
attempted theft
Endorsements
no deciable to add or delete something
By law endorsment only paid if
you have it added on
basic of settlement
coverage is normally available on an actual cash value or replacement cost basis
Personal articles endorsement
provides coverage for certain types of high valued personal property while located anywhere in the world
Reinsurance is an arrangment between
underwriting insurer and a professional reinsurance company
a co insurer
is one who shares in the payment of a loss
Insured
the person named as insured on the coverage summary page, and while living with the same household
lock replacement
$500
Freezer food covers
$2,000 for food
when loss is damage due to;
power failure or mechanical breakdown
fleet
anymore than 5 or over on auto
tort law
a tort is a wrong, other than breach of contract, done to another person or entity in breach of a duty laid down by law
Strict liable
assumed to be guilty until proven innocent
liability
third party only
Special liability
doctor bills
Liability only covers watercraft and motorized vehicles you own
12kw (16HP
38kw (50 HP)
8 m (26 ft)
Auto no deductions for
fire, lighting and theft of whole car
Farm insurance
two part insurance policy
home and farm
Buildings
rates and types covered based on;
construction, use of building, type of heating, age
Livestock
has theft, not covered at stockyard
Broad form
theft while open
stock
anyting you give customer
Equipment
furniture, fitting, fixures, tools, equipment, phone system, improvements and betterments
A brokers binding authority is
granted through
their contracts with the individual companies
The sponsor of an applicant for an insurance license must;
vouch for the applicants general character
Insurance defined as
A contractual relationship where one party for consideration agrees to reimburse another for a loss
Auto
Min limit is $200,000 inclusive for bodily injury and property damage
Auto has no deductible
for fire, lighting and theft of the whole vehicle
Policy forms SPF number 1
leasing or own it
SPF number 2
standard driver’s automobile policy
SPF number 1
owner’s form
SPF #4
standard garage automobile policy
No fault
Ontario, Quebec, Manitoba, News Brunswick’s, Saskatchewan
SPF #2
Don’t own vehicle but drive
SPF #6
Boston pizza. Employees using vehicle for work
Standard Non-owned automobile policy
SPF #9
Ubers
Fleet policy
5 or more vehicles.
One insuring several automobiles for one owner.
ex. Dealerships
Marine
Vessel and cargo covered
Farm insurance
Two part insurance policy
Home and Farms
Buildings rates and types covered based on;
construction, use of building, type of heating and age
Livestock
Has theft, not covered at stockyard
Broad Form
Theft while open
Stock
anything you give customer
Equipment
furniture, fitting, fixtures, tools, equipment, telephone system, improvements and betterments
Builder’s risk
No coverage for contractors tools and equipment
Covers buildings in course of contruction
Umbrella Liability policy
A self-insured retention (SIR)
applies to all losses covered by the Umbrella Liability policy and which are not insured by the primary policy or policies. The SIR really functions as a deductible, the amount of which often does not exceed $250
If whole premium not paid and there’s a loss
The insured’s claim is paid out up to the policy limits stated
Bankruptcy or insolvency of a policy holder
It has no bearing on the insurance contract
A broker’s binding authority is granted through;
their contracts with the individual companies
The sponsor of an applicant for an insurance license must
Vouch for the applicants general character
Consideration means
anything of value
A temporary motor vehicle liability insurance card is valid for
30 days
Ordinary negligence must be established before payment will be made under
Bodily injury liability
Material change
15 days to pay additional premium
Subrogation
after paying loss, can go to person at fault to get the money
Dwelling coverage A
Stuff you take on and off your house is covered anywhere. It’s part of your home
Risk is
chance of loss
Hazard
a feature of a risk may give rise to a loss
Tort
legal wrong, civil wrong doing
Liability
world wide
Licensee
One who comes onto the premises for his own purpose but with the occupiers consent
Condominium policies include common elements such as
parking and party room
Animals are
property
Bodily injury and property damage
paid first
No deductible for
fire, lightening, theft of the entire vehicle
Salvage
Insurer
Personal property covered
anywhere in the world
cant rent more than
1 vehicle at once per family
Section C, Subsection 4 - Specified Perils
Fire, lightening, theft, attempted theft, the stranding, sinking, burning, derailment, transported on land or water, windstorm, hail, riot, rising water
Third party coverage
The coverage is designed to protect the insured against losses arising out of his legal liability for
bodily injury to, damage to the property of,, others
