Study ten Flashcards
Define oral application.
- is one in which the applicant gives the info orally to the broker/agent who writes it down and submits it to an insurer.
Define coverage.
- the term used for insurance protection.
Describe the use of written applications.
- are mandatory for A+S and life insurance
Are preferrable when:
1) if the app is to become a part of the policy
2) to avoid honest misunderstandings
3) to help prevent fraud
4) establish that a misrepresentation has been made
What is the purpose of including statutory conditions/general conditions in an insurance policy?
- they state the rights and responsibities of the insured and insurer under policy
- they are required by law to form part of every auto, A+S, and fire insurance policies
- they must be printed on each of these policies
How do the general conditions differ from the statutory conditions?
- policies in quebec contain only the general conditions
- the civil code specifies the points that must be addressed in the general conditions
- however, the civil code does not regulate the exact form in which they appear
- the conditions are statutory in nature but not in name
What are the basic questions asked to determine the coverage provided under an insurance policy?
1) who is covered?
2) what property is covered?
- general definition of property
- specfic description of property
3) what perils are covered?
4) where does the coverage apply?
5) what are the exclusions?
6) who is not covered?
7) what property is not covered?
8) what perils are not insured against?
9) are there locations where coverage does not apply?
10) are there any extensions of coverage?
- if so, which are automatic
- which ones are optional
- which ones are conditional
11) what are the conditions of coverage?
- what must insured do if there is a loss
- what must the insured do if there is a change in risk
- what must be done to recover loss
12) is there anything else to consider?
What option can be used to modify a policy, describe it.
- an endorsement
- are attachments that are used to make changes to a policy
- can be prepared by the broker or insurer
- can restrict or offer more coverage
- must be signed on behalf of the insurer
- if an endorsement changes contract in any way that deletes, reduces, or restricts coverage, the endorsed contract must also be signed by the insured
- two copies should be sent to the insured, one that is attached to their policy, and one for them to sign and send back
- overrules any wording in the policy that is inconsistent with the endorsement
What does the Insurance Act require that the insurer must prove in the happening of the discovery of a misrepresentation?
1) there is in fact a misrep
2) the applicant actually made the misrep at the time he or she applied for the insurance
What is the content of an application?
1) name and of applicant
2) address of applicant
3) previous insurance history
- has applicant has insurance declined, cancelled, or refused, why?
4) previous claims or loss history
- resulting from own negligence?
How is a underwriter’s decision decided, and how is the decision applied?
- once an underwriter determines if there is sufficient infortmation to enable him/her to decide to enter into a contract or not, the risk may be:
1) accepted, rated, and the policy issued
2) accepted subject to certain conditions - require improvements
- limited form of polocy
3) rejected aka declined
Define binder.
- a memorandum of an agreement to insure, issued to record the transaction pending the writing of a policy.
- policy will be issued as soon as all necessary info is at hand
- it will be effective as of the date of issue of the binder
- usually issued by the insurer
- must be written clearly to avoid misunderstandings and possible disputes
Define a cover note.
- is a document issued by agents/brokers which tells the insured that insurance described therein has been effected
- gives insured description of what insurance has been put into effect
- similar to a binder, but is a document given by an insurer to an agent/broker
- confirms coverage is in effect
What is temporary coverage?
- when insurer agrees to cover risk but does not yet have certain info or confirmations required to issue the policy
- is granted under a cover note or binder
- is legally binding coverage whether oral or written
What issues arise from binders, especially oral ones?
1) was a contract actually made?
- an applicant can be under the impression that an oral promise was received that coverage would be in effect, while the intermediary states the promise was only to try to obtain the requested insurance asap.
2) does the intermediary have authority?
- without authority, agents/brokers can’t bind insurers to a risk
- applicants may not be covered
3) what are the provisions of the contract?
- broker/agent must always deliver to the insured something in writing (formal cover note, letter, or handwritten memorandum)
What are the contents of a binder?
1) name and address of insured
2) address at which risk is located
3) time and date of commencement of coverage
4) time and date of expiry of coverage
5) description of property insured
6) amount of insurance bound
- broken down into items or classes of property
7) name of insurer bound
8) exact type and form of contract under which risk is bound
9) any special terms such as deductibles
