Statutory Conditions

Question 1

What is Statutory Condition 1?

Answer 1

Misrepresentation. It is violated if the applicant falsely describes the property to the detriment of the insurer or misrepresents the risk.

Question 2

What is Statutory Condition 2?

Answer 2

Property of Others. The insurer is not liable for loss or damage to property owned by any person other than the insured, unless specifically stated in the contract.

Question 3

What is Statutory Condition 3?

Answer 3

Change of Interest. The insurer is liable for loss or damage occurring after an authorized assignment under the Bankruptcy Act or change of title by succession, operation of law, or death.

Question 4

What is Statutory Condition 4?

Answer 4

Material Change. This applies to any change material to the risk within the control and knowledge of the insured occurring during the policy term. The change needs to be presented to the insurer so it can judge whether to continue insuring the risk or charge the appropriate premium.

Question 5

What is Statutory Condition 5?

Answer 5

Termination. The insurer can cancel by providing 5 days written notice personally delivered or 15 days via registered mail. Cancellation is calculated on a pro-rata basis. The insured can cancel immediately upon request for the requested date, and may have to sign a form.

Question 6

What is Statutory Condition 6?

Answer 6

Requirements After Loss. The insured shall give notice to the insurer in wiring and deliver a proof of loss verified by statutory declaration - complete inventory of destroyed property showing quantities, costs, actual value and state how the loss occurred, and how it was caused.

Question 7

What is Statutory Condition 7?

Answer 7

Fraud. This denies recovery to an insured whose statutory declaration is fraudulent or wilfully false.

Question 8

What is Statutory Condition 8?

Answer 8

Who May Give Notice and Proof. If the insured is unable to do so, an agent of the insured named in the contract can give notice or make proof of loss, or any person to whom money is payable.

Question 9

What is Statutory Condition 9?

Answer 9

Salvage. The insured shall take all reasonable steps to prevent further damage to damaged property and prevent damage to other insured property. The insurer will contribute to the expenses to complete these steps.

Question 10

What is Statutory Condition 10?

Answer 10

Entry, Control, Abandonment. The insurer has right of access and entry to survey and examine the property. The insurer is not entitled to the control or possession of the property. The insured cannot abandon the property without the insurer’s consent.

Question 11

What is Statutory Condition 11?

Answer 11

Appraisal. An appraisal will determine the value of property in case of disagreement as provided under the Insurance Act before any recovery can be made. Proof of loss must be delivered first.

Question 12

What is Statutory Condition 12?

Answer 12

When Loss Payable. The loss is payable within 60 days after complete of the proof of loss, unless a shorter period is specified in the contract.

Question 13

What is Statutory Condition 13?

Answer 13

Replacement. The insurer can repair, rebuild, or replace the damaged property after giving written notice of its intention within 30 days after receipt of proof of loss. The work must start within 45 days after receipt of proof of loss.

Question 14

What is Statutory Condition 14?

Answer 14

Action. Every action or proceeding against the insurer for recovery is absolutely barred unless commenced within one year after the loss or damage occurs.

Question 15

What is Statutory Condition 15?

Answer 15

Notice. Any written notice to the insurer may be delivered or sent by registered mail to the chief agency or head office of the province. Written notice may be given to the insured by letter personally delivered or registered mail.

Question 16

What is the difference between Statutory Condition 1: Misrepresentation and Statutory Condition 4: Material Change?

Answer 16

A misrepresentation occurs prior to the policy being issued to falsely describe the property. A material change occurs during the policy period and affects the undertaking of the risk by the insurer.

Question 17

Under Statutory Condition 1: Misrepresentation, what must the misrepresentation have resulted in for the insurer to avoid the contract?

Answer 17

• the issuing of a policy that would not have been issued had the insurer been aware of the truth
• the charging of an inadequate premium for the risk

Question 18

What are the requirements of the insured under Statutory Condition 6: Requirements After Loss?

Answer 18

• prompt written notice of loss
• proof of loss as soon as practicable verified by statutory declaration
• an inventory, if required, of undamaged property and/or costs, actual cash value of damaged property
• stating when and how the loss occurred and how it was caused

Question 19

According to Statutory Condition 7, how is fraudulence determined?

Answer 19

If the insured made the statutory declaration knowing it was false or without believing it to be true or recklessly.

Question 20

What does a material change do?

Answer 20

It avoids the contract because the insurer will no longer be insuring what it undertook to insure. The change eliminates the meeting of minds - the intent to contact - required of all legal contracts.