Study 1

Question 1

Define Property Insurance

Answer 1

First-Party insurance that indemnifies the owner or user of property for its loss, or the loss of its income producing ability when the loss or damage is caused by a covered peril, such as fire or explosion

Question 2

Insurable Interest

Answer 2

An interest that the insured must have in the subject matter of the insurance purchased so that if the event insured against occurs, the insured will suffer an economic loss

Question 3

Indemnity

Answer 3

A contract, expressed or implied to repay in the event of a loss. The insured neither gains nor loses

Question 4

Contract

Answer 4

An agreement or promise between two or more parties that is intended to be legally enforceable and is constituted by the acceptance by one party of an offer made by another party, to do or to abstain from doing a specific act. The offer and acceptance may either be expressed or be inferred through the conduct of the parties

Question 5

Contract (Quebec)

Answer 5

An agreement of wills by which one or several persons obligate themselves to one or several other persons to perform a prestation (that is, a duty, a payment, or a service).

Question 6

Uberrimae Fidei

Answer 6

Of the utmost good faith. The basis of all insurance and reinsurance contracts. Both parties to the contract are bound to exercise good faith and do so by a full disclosure of all information material to the proposed contract

Question 7

Peril

Answer 7

The event that caused a loss covered by the policy, for example, fire, windstorm

Question 8

Deductible

Answer 8

An agreed specified amount that the insured must pay on a claim before the insurance company will cover the rest of the claim. This amount is agreed upon by both the insurer and the insured

Question 9

Fire Insurance

Answer 9

Coverage for losses from fire, lighting, and limited explosion and also the resultant damage caused by smoke and water. Usually supplemented by extended coverage insurance

Question 10

Exclusion

Answer 10

Risks, perils, or properties defined in the policy as not covered

Question 11

Flashpoint

Answer 11

The lowest temperature at which a liquid gives off sufficient vapors to form an ignitable mixture with the air

Question 12

Statutory Conditions

Answer 12

Special prescribed and standardized conditions that the provincial and territorial insurance acts require to be included in insurance policies

Question 13

Extended coverage insurance

Answer 13

An endorsement that enlarges the coverage afforded by the primary policy. Coverages such as Windstorm, Hail, Smoke and riot are extended coverages on a Fire Policy

Question 14

Mortgage clause

Answer 14

A clause in an insurance policy that stipulates the rights and obligations of the insurer and the mortgagee

Question 15

First party insurance

Answer 15

Protects the named insured and others with an insurable interest in or mortgage on the property or who entrust their property to the insured, against loss or damage to the insured property

Question 16

Third-Party Insurance

Answer 16

Liability insurance is purchased by the insured (the first party) from an insurer (the second party) to compensate or indemnify another (the third party) for damage or loss for which the insured is lawfully liable

Question 17

Direct Loss

Answer 17

Damage to property by direct action of a peril insured against, as distinguished from contingent or indirect damage

Question 18

Plain language Policy

Answer 18

Policies written in everyday language so that they are easily understood. Technical terms with their technical meanings are used only where required by law or when substitutions would be misleading

Question 19

Warranty

Answer 19

Statement or stipulation or promise in an insurance contract, the breach of which may nullify the contract

Question 20

Proximate cause

Answer 20

A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened

Question 21

Concurrent Causation

Answer 21

A doctrine that holds that if a loss to property is attributable to more than one cause, any one of which is covered by the insurance policy, the loss is payable under the policy

Question 22

Actual Cash Value

Answer 22

The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. Actual Cash value ACV) is usually calculated in one of three ways,
1. Cost to repair or replace less depreciation
2. Fair market value
3. Consideration of all relevant evidence of the value of the damaged property

Question 23

Replacement Insurance

Answer 23

Insurance coverage that indemnifies for loss or damage to insured property at the current market price rather than a depreciated value. Thus, the rating and premium are based on the current cost to replace the insured property

Question 24

What is the Consideration paid by insureds or policyholders?

Answer 24

Premium!

Question 25

Who else does a property policy protect?

Answer 25

The Lenders - like banks, private lender, credit unions

Question 26

What percent did Property Insurance account for in 2022 direct written premiums through 3 quarters

Answer 26

38.5%

Question 27

Is insurance tangible? What is it based on

Answer 27

Intangible, based on exchange of promises

Question 28

Fortuitous Meaning in context of insruance

Answer 28

A Chance Event - loss must be Fortuitous as far as the insured is concerned

Question 29

The two types of Property Insurance

Answer 29

Personal Lines, Commercial Lines

Question 30

Former name for Equipment Breakdown Insurance

Answer 30

Boiler and Machinery Insurance

Question 31

What is Aviation Insurance

Answer 31

Coverage for airplane itself, and buildings equip, and material relating to airport operations

Question 32

Builders Risk covers

Answer 32

Physical loss or damage to property while it is in the course of construction

Question 33

Under basic Fire policy, if lighting hits, what is important to know?

Answer 33

No coverage for damage to electrical devices or appliances caused by lightning or other electrical current unless fire originates outside the object

Question 34

The Two groups of exclusions in the basic fire policy

Answer 34

Exclusions for legislative considerations
Exclusions for Underwriting and rating considerations

Question 35

examples of “Legislative Considerations”

Answer 35

Elec devices exclusion
application of heat exclusion.
War risks exclusion.
Nuclear incident exclusion
Riot exclusion

Question 36

examples of Underwriting and rating considerations

Answer 36

Excluded property (money, watercraft etc)
Alterations and Additions Exclusion
Vacancy exclusion
Volatile Substances Exclusion
Bylaws exclusion

Question 37

Do the statutory conditions govern more than the Fire Insurance?

Answer 37

Not necessarily!! However insurers often extend the stat conditions to the other perils

Question 38

What’s wacky about Quebec and Stat Conditions?

Answer 38

The Civil code of Quebec does not require that its articles be inserted in the fire insurance contract. There is no equivalent in Quebec of the statutory conditions required in the common law provinces and territories

Question 39

The two extensions in basic fire policy

Answer 39

1. Removal of Insured Property - moving to prevent further dmg
2. Debris Removal - expense of the removal chosen by the insured

Question 40

Calculation of Debris Removal?

Answer 40

5% of the amount of insurance - does not increase the amount of insurance!

Question 41

Removal of Insured Property Characteristics

Answer 41

• Applies for 7 days from the date that removal of the property begins or until the policy expires, whichever occurs first
• coverage for property at temporary locations ends after seven days or when the policy expires (whichever happens first) unless agreed otherwise

Question 42

What is a Fire and Extended Coverage Policy

Answer 42

The Additional Perils combined with those covered under the basic fire policy

Question 43

What were the main perils in Additional Perils v2.0?

Answer 43

Falling Object
Glass Breakage
Water Damage

Question 44

What were the main perils in Additional Perils v3.0? AKA Multi-peril policies

Answer 44

Theft (casualty peril type)
Loss In Transit (Inland Marine type)

Question 45

A property policy must state ____ and ____ is covered

Answer 45

Who and What

Question 46

Type of loss Property Insurance is primarily concerned with

Answer 46

Direct Loss

Question 47

What is Indirect Loss?

Answer 47

It encompasses other loss suffered as a consequence of the damage to or destruction of the physical property

Question 48

Additional Living Expenses - type of loss?

Answer 48

Indirect Loss

Question 49

Business Interruption - type of loss?

Answer 49

Indirect Loss

Question 50

How do courts feel about enforcing warranties?

Answer 50

Generally favor the insured

Question 51

Does payment of a claim affect the insureds entitlement to receive a refund of premium if policy is cancelled before end of the term?

Answer 51

No, and policy limits are restored to the full amounts shown on dec page following the loss

Question 52

Age of dependant covered under property policy

Answer 52

21 and under