Study Points Flashcards
What is pure risk?
It involves the chance of financial loss with no chance of financial gain. Only pure risk is insurable.
If a contract of insurance contains clauses which allows the insurer to pay an amount that is less than that purchased by the insurer, what must be done?
It must have printed or stamped upon its face sheet in red ink the words: “This policy contains a clause that may limit the amount payable.”
What kind of legislation is the Insurance Act?
Provincial
What is the principal of
Indemnity?
To ensure that people receive the actual amount of their loss. No more, no less.
Give four examples of government insurance
CPP
EI
WSIB
OHIP
What is the purpose of insurance?
To pay for losses which are both accidental and future.
What provision in an agency/broker contract protects brokers from responsibility for the acts of an insurer?
A clause in which the insurance company indemnifies and holds the broker harmless against all civil liability.
Give three examples of stock insurance companies
Intact
Aviva
Travelers
What is property and casualty insurance?
All types of insurance other than life and health
What is a floater?
A floater is also known as a rider. The terms are used interchangeably. A floater is used to provide coverage for property having a high degree of mobility.
In what situation could a term or condition of a contract of insurance be waived by the insurer?
If the waiver is provided in writing and signed by a person authorized for that purpose.
What is the standard deductible for home, auto and tenant?
$500
Who owns a mutual company?
Its policyholders
What duties does the Superintendent of Insurance have?
They are an employee of FSCO. They:
1: supervise terms and conditions of insurance contracts
2: license insurers
3: monitor financial stability of provincially licensed insurers
When is an insurer not required to provide coverage on a fire policy?
1: application of heat
2: electrical currents
3: contamination by radioactive materials
4: war
in the Agency/Broker contract, what is a standard termination notice period?
Usually 90 days
Give three examples of direct writers
Belair
RBC Insurance
Desjardins
When are commissions fully earned?
Not until the expiry of the insurance policy. This is a broker’s fiduciary responsibility.
What is insurance all about?
Risk sharing
What is the role of the Property and Casualty Insurance Compensation Corporation (PACICC)?
When a bankruptcy occurs and claims cannot be paid, the Corporation pays all valid claims.
What was the original fire policy called?
The Insurance Act
What is an endorsement or rider?
An endorsement or rider acknowledges a change in the terms of a contract.
When are premiums fully earned?
Not until the expiry of the insurance contract. This is an insurer’s fiduciary duty.
What is concerned with taking measures to control frequency and severity of losses?
Risk control
What is the role of the Office of the Superintendent of Financial Institutions?
To provide federal licensing to insurers and to monitor their financial stability.
What’s the difference between direct writers and an agency system?
Direct writers only sell for one insurance company. Agency systems are small business owners and have ownership in their boom of business.
What year was the birth of fire insurance?
1666
What does the law require that insurance brokers exercise?
Reasonable skill, care and diligence
What is the most common cause of errors and omissions claims, accounting for 50% of them?
Inadequate coverage.
Whose interest does an agent represent?
An insurer’s
Whose interest does a broker represent?
Their client.
What two things do Insurers have the right to expect of brokers?
- That they will tell the truth about the risks they submit
2. That they will not withhold or conceal important information
What *one thing do property insurance policies insure?
Direct damage only.
A condition imposed upon insureds requires what?
For them to do or not do something
What are the two types of conditions?
Statutory conditions
Policy conditions
If an insured has a trampoline or a golf cart, what could they be seen as having?
Liability exposures.
What two types of optional additional coverage should you always add?
Sewer backup
Mass evacuation
How many sections are there in the comprehensive homeowner, tenant condo package policy? What are they?
Section 1 - Property Coverages
Section 2 - Liability Coverage
Section 3 - Optional Additional Coverages
Who is able to take legal action against an Insurer?
Only the person(s) named on the Coverage Summary Page
Who does Coverage A - Dwelling Building apply to?
A Homeowner only
Who does Coverage A1-A2-A3 apply to?
A condominium owner only.
Under Coverage A, Dwelling Building, if there were materials and supplies intended for use in construction, alteration or repair of your dwelling or private structures, where must they be located?
On or adjacent to the premises
For theft only when the dwelling is completed and ready to be occupied.
In a condominium, if no insurance covers the collective interest of the unit owners, or if the Condo Corp has no or inadequate insurance, what are you insured for under Coverage A1-A2-A3?
Up to $100,000 or the limit specified on the Declarations for Coverage A1
Under Coverage A2 - Loss Assessment, what will be Insured and in what circumstances?
Up to $10,000 or the limit specified
Must be a peril insured by the policy
Who does Coverage B - Detached Private Structures apply to?
A Homeowner only
Who does Coverage C - Personal Property apply to?
Homeowner, tenant, condo owner
Under Coverage C, can the uninsured personal property of others be included?
Yes
Under Coverage C, where does your personal property have to be to be covered?
Anywhere in the world
If your personal property is stored in a warehouse, how long is it covered and in what situation can that be extended?
30 days only but can be extended if requested in writing
Under Coverage C, Is personal property normally kept at any other location you own, rent or occupy (like a secondary or seasonal residence) insured?
No
Under Coverage C, Special Limits of Insurance, what amount is insured of books, tools and instruments pertaining to a business? And in what circumstance?
Up to $2000, but only while on your premises.
If your personal property is stored in a warehouse, how long is it covered and in what situation can that be extended?
30 days only but can be extended if requested in writing
Under Coverage C, where does your personal property have to be to be covered?
Anywhere in the world
Under Coverage C, can the uninsured personal property of others be included?
Yes
Who does Coverage C - Personal Property apply to?
Homeowner, tenant, condo owner
Under Coverage C, Special Limits of Insurance, what amount is insured of books, tools and instruments pertaining to a business?
Up to $2000, but only while on your premises.
If a civil authority prohibits access to a homeowner, tenant or condo owners’ premises as a direct result of damage to neighbouring premises by an insured peril or mass evacuation, how long will they be insured for additional living expenses?
Only two weeks
If you have to remove property from your premises to protect it from loss or damage, how long is it insured for?
30 days or to the expiry of the policy.
Under Extensions of Coverage, how much will an insurer pay for loss or damage to food in a freezer? And what two stipulations are there?
Up to $2000, without deductible
Must be a freezer located in your premises, and must be caused by mechanical breakdown or accidental interruption of electrical power on or off the premises
What’s the most that will be paid under Credit or Debit Cards Coverage?
$2000, not subject to a deductible
How much will be paid for information which leads to a conviction for arson or burglary?
$1000, without deductible
And this coverage may increase the amount otherwise applicable.
What is the largest peril of loss?
Water
Loss or damage caused by water is not insured unless what?
A - sudden and accidental escape of water from a watermain
B - sudden and accidental escape of water or steam from within a plumbing, heating, sprinkler or A/C system located inside your dwelling
C - sudden and accidental escape of water from a domestic water container located outside your dwelling
D - water which enters your dwelling through an opening which has been created suddenly and accidentally by a specified peril other than water damage.
Is loss or damage caused by freezing during the usual heating season covered?
No
How many consecutive days must you be away from your residence for a loss not to be covered?
4
If a by-law, regulation or ordinance makes it impossible to repair or reinstate property as it was immediately prior to the loss, are you covered?
No. And Exclusion 25 does not cover demolition, debris or incremental costs.
Is there a deductible in liability coverage?
No
What will the insure pay in replacement cost for a detached private structure?
80% of the replacement cost of the damaged building
Are musical instruments played for a fee insured?
Not unless the insurer has given written permission
In Personal Articles Coverage, what does the letter V denote?
That the listed article is valued at and insured for the amount shown
