Terms and Coverage Types Flashcards
Actual Cash Value (ACV)
Today’s value minus depreciation.
Depreciation
Determined at the time of loss.
Replacement Cost (RC)
Today’s price, but NO Depreciation is applied.
Replacement Cost can be applied to both building and contents (Coverages A, B & C).
Under Coverage A, claims paid under either the Guaranteed Replacement Cost or Replacement Cost must meet certain criteria, as shown in Section 7.4.7.2. If these criteria are not met, the claim is paid on an ACV basis.
Under Coverage C, the Replacement Cost endorsement must have been included in the policy, otherwise, the claim is paid on an ACV basis. Section 7.4.7.2
Coverage A: Dwelling
Section 7.5.2.1
What it covers:
1. Dwelling & attached structures (i.e. garage)
- Permanently installed outdoor equipment (i.e. child’s swing set)
- Outdoor swimming pool & attached equipment (i.e. above or below ground)
- Materials & supplies located on or adjacent (i.e. construction supplies for a renovation, etc.)
- Building fixtures & fittings permanently removed (i.e. storm doors or shutters)
- Outdoor trees, shrubs, plants & lawns (but not covered against perils like windstorms, hail, or theft)
Coverage A1: The Unit
Section 7.5.2.2
What it covers:
- $100,000 is the automatic limit, and it can be increased.
This is designed to cover the owner of the unit, not the building.
Coverage A (building) is actually provided under the Condominium Corporation Master Policy, in which every unit (or condo) is a part owner.
A1 comes into play if there is a deficiency in the Condominium Corporation Master Policy!
If anything were to happen to the building itself that effects the unit, and the Master Policy didn’t have enough coverage, this coverage will be triggered.
Coverage A2: Loss Assessment
Section 7.5.2.2
What it covers:
1. $10,000 to cover loss assessment.
A loss assessment is when the Master Policy is insufficient to pay for a claim thereby requiring the Condonimum owner to request payment from the Unit owners to cover the gap.
If the Master policy has inadequate limits, or if there has been a co-insurance penalty on the Condonimum owner which resulted in the need for a loss assessment, then A2 is designed to provide coverage to the insured. But, not if it is within the Master Policy’s deductible!
Coverage A3: Unit Improvements or Betterments
Section 7.5.2.2
What it covers:
- The amount shown is the same as A1. To increase A3, one needs to increase A1.
- Unit owner improvements not covered in Corporation Master Policy and exclusively owned by the unit owner such as:
* Material and supplies for the alteration and repair of your unit
* Outdoor fixtures, equipment
* Outdoor domestic water containers inculding swimming pools, hot tubs, saunas
* Trees, plants, shrubs, lawns
These improvements belong to the unit owner and are permanent changes to the unit. Therefore, when selling the unit, the buyer will be receiving a “better” unit.
So, if something were to happen to the whole building and this unit was effected, the Master Policy would only pay for what was originally installed. Therefore, any of these investments (i.e. improvements or betterments) would leave the unit owner at a loss.
Coverage B: Detached Private Structures
Section 7.5.2.3.
10% of Coverage A.
What it covers:
- Detached structures or buildings on premises.Connected by fence, utility line or similar are considered detached
- Separated by clear space.
- Not included under Coverage A.
Automatically included, however, the limit is set to 10% of Coverage A.
Coverage C: Personal Property Contents
Section 7.5.2.4
Personal Property is broken down into 3 sub-sections:
- Contents.
- Special Limits A.
- Special Limits B.
Contents
- On Premises
- Off Premises
- Student
Contents - On Premises
All items that are usually kept only at home, like;
Dwelling contents, clothing, personal items (owned or used).
Contents - Off Premises
- Items that are normally kept at home, but temporarily away from premises, anywhere in the world. I.e. when you travel, your luggage & its contents.
- Stored in a warehouse or storage facility for a period of 30 days but not beyond the policy expiry date or if terminated.
- Items kept in a safe box.
- While residing in a nursing home or healthcare facility - Up to $10,000 in all for owner, parents or dependents
- While in transit to and at another location within Canada which is to be occupied by owner as principal dwelling - 30 consecutive days starting date of removal from principal dwelling but not policy expiry date or if terminated.
This coverage does not increase amounts of insurance.
Contents - Student
This is defined as any property of a student temporarily living away from home while they are attending school.
In many homes, there are children. As they grow up & move away for school, their possessions often need to go with them.
Contents - Special Limits A
Section 7.5.2.4.6
- Garden Tractors including attachments and accessories - $5,000
- Business Property on premises - $2,000
- Securities - $2,000
- Spare Automobile Parts - $1,000
- Watercraft, their furnishing, equipment, accesories and motors - $1,000 can be increased by endorsement
- Utility Trailers - $1,000
- Animals including birds and fish only is caused by Specified Peril other than impact by aircraft or land vehicle - $500
- Money, buillion, or cash cards - $200
Special Limits were created for two reasons;
One, some items need to be individually specified as property items;
Two, those items on a package policy where there is no limit if the loss is caused by a specified peril (other than theft).
Special Limits B
Section 7.5.2.4.6.2
Specified property where a theft has occurred. The amount of coverage is a total amount, not an amount per item.
What it covers:
* $2,000 for watches, jewellery, gems, fur garments or garments trimmed with fur.
* $2,000 for collectible cards, memoribilia.
* $1,000 for manuscripts and philantelic property (e..g stamps).
* $500 for bicycle or e-bicycle, its equipment and accessories.
* $200 for numismatic property including medals(e.g. coin collection).
Can purchase increased limits for specified items.
Coverage D: Loss of Use of Your Dwelling
Section 7.5.2.5
- Additional Living Expenses
- Fair Rental Value
- Prohibited Access by Civil Authorities
Coverage D: Additional Living Expenses
As a result of an insured peril:
1. Damaged or unfit to occupy:
-Additional costs incurred during the time living away while the home is repaired.
2.Payment is made for;
-Irregardless of the time it takes to repair, the claim is limited to the dollar amount available on the policy.
-Taxi fares, meals, accommodations, etc. over and above your average living daily costs.
(i.e. an average daily living cost could be $200/day. If it now costs $600/day, the insured gets $400/day)
Coverage D: Fair Rental Value
Only for time required to repair/replace part of the dwelling or additional building. Payment is specific to rental value.
1. Damaged or unfit to occupy:
-Rental income lost while the home is repaired.
2.Payment is made for;
Payment is limited to within the available amount shown on the policy.
Co-insurance Clause
Commercial Property Insurance
Section 10.3.5 Page 356
A clause in certain property insurance policies which applies a penalty for partial losses if owners of property fail to insure a minimum percentage of the value of such property as specified by the insurer.
Total loss payout = Policy limit purchased
Partial loss paid = Co-insurance Formula
Named Perils Form (IBC 4036)
Commercial Property Insurance
Section 10.3.7.1
Basic form for limited coverage for a risk.
Provides coverage for:
* Fire
* Lightning, including loss or damage to electrical devices
* Explosion (limited)
* Impact by aircraft, spacecraft, or land vehicles
* Riot, vandalism, or malicious acts
* Smoke due to sudden, unusual, and faulty operation of any stationary furnace
* Leakage from fire protective equipment
* Windstorm or hail
Comparable to Specified Perils policy in habitational insurance.
Broad Form (IBC 4037)
Commercial Property Insurance
Section 10.3.7.2
Insures against all risks of physical loss or damage, subject to policy limits and exclusions.
Broad Form (IBC 4037)
Examples of Excluded Property
Commercial Property Insurance
Section 10.3.7.2 Page 360
- Sewers, drains, and watermains located beyond the outside bearing walls
- Street clocks and exterior signs
- Animals, birds and fish
- Money, platinum, cash cards, evidence of debt or title
- Automobiles, watercraft, aircraft (but not unlicensed automobiles or unlicensed trailers) used on the insured premises while on the insured’s business
- Property in custody of sales representatives outside the premises, unless an amount is shown on the declarations page for the sales representative
- Any pressure vessel having a working pressure greater than 103 kilopascals
- Any boiler, including its connecting pipe and equipment, containing steam or water under steam pressure
Broad Form (IBC 4037)
Examples of Excluded Perils
Commercial Property Insurance
Section 10.3.7.2 Page 360
- Earthquake
- Flood
- Seepage or leakage
- Backup or overflow of water from sewers, sumps, septic tanksm and drains
- The entrance of rain, sleet or snow through doors, windows, skylights or other openings
- Centrifugal force, mechanical, or electrical breakdown
- Failure to control temperature or humidity
- Trade losses
- Pollution or contamination
Common Clauses
Commercial Property Insurance
Section 10.3.7.3
- Debris Removal Clause
- Reinstatement Clause
- Subrogation Clause
- Breach of Condition
- Property Protection Systems
- Premium Adjustments
- Basis of Valuation
- Property of Others
- Locked Vehicle Warranty
- Many others
Included in the policy wording and are followed by the definitions and the policy conditions or Statutory Conditions
Package Policy
Commercial Property Insurance
Section 10.7 Page 370
Package policy coverages are not standardized, but they generall include:
* Property insurance
* Business interruption insurance
* Liability insurance
* Criminal insurance
Surety Bonds
Commercial Property Insurance
Section 10.6 Page 367
Seven characteristics of surety bond:
1. There are 3 parties to the contract - principal, obligee, surety
2. No losses are expected.
3. The principal is liable to the surety.
4. Bond premium (service fee to underwrite the risk).
5. Bond limit or penalty - the surety will pay to the obligee if the principal defaults.
6. A surety is of indeterminate length and non-cancellable.
7. It is a written contract and excecuted under seal of the surety and principal.
Oral contract are not binding on the surety.
Debris Removal
Chapter 7 Property Insurance
Section 7.5.2.7
For loss or damage by an insured peril.
5% additional is available for debris removal (Coverage A for homeowner, Coverage C for Condo owner)
Extensions of Coverage: All Risk Coverage
Property Removed
Chapter 7 Property Insurance
Section 7.5.2.7
Under the comprehensive policy form, the policy provides coverage for property removed up to 30 days, or until the policy expires.
(This extends the basic fire policy limits from 7 days to 30 days.)
Extensions of Coverage: All Risk Coverage
Fire Department Expenses
Chapter 7 Property Insurance
Section 7.5.2.7
If the fire department charges for a legitimate call (i.e. a fire), up to $1,000 is provided, with no deductible.
Extensions of Coverage: All Risk Coverage
Freezer Food
Chapter 7 Property Insurance
Section 7.5.2.7
Up to $2,000 for loss or damage to food due to a power failure, with no deductible.
Extensions of Coverage: All Risk Coverage
Lock Replacement
Chapter 7 Property Insurance
Section 7.5.2.7
For example, if you had your home keys stolen, up to $500 is provided to replace the home locks, with no deductible.
Extensions of Coverage: All Risk Coverage
Extensions of Coverage: All Risk Coverage
Credit or Debit Cards, Forgery and Counterfeit Money
Chapter 7 Property Insurance
Section 7.5.2.7
Theft or other types of losses attributed to forgery and receipt of counterfeit money are covered up to $2,000, without a deductible.
Inflation Protection
Chapter 7 Property Insurance
Section 7.5.2.7
In personal lines insurance, the application process determines the value of the property, and those values are often system generated.
However, the cost of materials is vulnerable to inflation. This extension is in the contract so that, for policies that automatically renew, the limit of insurance remains current (i.e. against inflationary changes).
Extensions of Coverage: All Risk Coverage
What Is A Comprehensive (or All Risk) Policy?
A Comprehensive, or All Risk policy, provides coverage against all risk of direct physical loss or damage, subject to policy conditions and exclusions.
Business
Chapter 7: Property Insurance
Section 7.5.2.8.1
Do not insure buildings or structures, in whole or in part, for business or farming purposes. (Unless consented to by the insurer!)
Exclusion
Antennae
Chapter 7: Property Insurance
Section 7.5.2.8.1
Damage to outdoor radio or TV antennae, including satellite receivers, or their attachements, caused by windstorm or hail, ice, snow, sleet, or collapse.
Exclusion
Vacancy
Chapter 7: Property Insurance
Section 7.5.2.8.1
Occurring after your dwelling has, to your knowledge, has been vacant for more than 30 consecutive days.
What is vacant?
This can get into grey areas, however, the key is; the intent by the insured to return to the dwelling.
If the insured goes on a ski trip, there is intent to return. i.e. Not Vacant.
If the insured leaves the country, buys a new house & lands a job in that other country, the intent to return is not likely. i.e. Vacant.
Exclusion
Damage To Other Property
Chapter 7: Property Insurance
Section 7.5.2.8.1
To personal property undergoing any process or while being worked on, where the damage results from that process or work, the resulting damage to other property is insured. The policy does not provide coverage for faulty workmanship.
For example, if a table is being refinished and while working on that table it is destroyed. The table would not be covered.
Exclusion
Water Damage
Chapter 7: Property Insurance
Section 7.5.2.8.1
Caused by continuous seepage or leakage of water (i.e. a tap keeps running and overflows).
Caused by backup or escape of water by a sewer, sub-pump, or septic tank.
Exclusion
Mold
Chapter 7: Property Insurance
Section 7.5.2.8.1
Caused by rust or corrosion, wet or dry rot, fungi or spores.
Exclusion
Fuel Oil
Chapter 7: Property Insurance
Section 7.5.2.8.1
Resulting from the release, discharge, or dispersal of fuel oil.
For example, many houses in rural areas need fuel oil for heating. If there is a release, the owner is liable for the cleanup. This liability is unlimited (i.e. it can go on for years without limit to what can be charged)
Exclusion
Secondary Dwelling
Section 7.7
This is a separate dwelling. It may be rented for investment purposes.
On the application, it is to be listed as Location 2 to the primary dwelling policy.
This property must be listed on the Declarations page.
It carries its own property limits, but liability coverage is extended from Section II of the primary policy.
Coverage is on a Specified Perils Coverage basis. Payments are paid on,
- Building ACV or RC.
- Contents ACV.
Seasonal Dwelling
Section 7.7
This is a property owned by the insured for use on an intermittent or seasonal basis, i.e. a cottage.
The seasonal residence is not their primary and they do not spend most of the year living there. Like the Secondary, it is added to the Primary Policy as Location 2.
As with the Secondary, this property must be listed on the Declarations page.
It carries its own property limits, but liability coverage is extended from Section II of the primary policy.
The Basis of Claim payment for building and contents is;
ACV only.
Coverages for Secondary & Seasonal Dwellings
Section 7.7.1.3
Named Perils Policy
Vandalism is included in the Secondary but is not in the Seasonal.
Coverage A: Dwelling and attached structures. Does not unclude trees or shrubs.Detached structures at Seasonal Dwelling are included under Coverage A.
Extensions do not increase limit of Coverage A - only extends to be covered.
Coverage B:Up to 10% of Coverage A limit for optional extensions, including outbuildings (Coverage B), fixures temporarily removed or fair rental value.
It is a pool of funds divided equally amongst all properties.
Coverage C:Only personal property of insured, not tenant. Upt to 10% of Coverage C for optional extensions of coverage:
* Uninsured property of others
* Personal property temporarily removed
* Additional living expenses (Coverage D)
Extensions that do not increase limit are:
* Debris removal
* Property removed (30 days_
* Fire departments ($1,000, no deductible)
Additional Conditions
Statutory Conditions
Section 7.9.2
- Notice to Authorities.
- No Benefit to Bailee.
- Pair & Set.
- Parts.
- Sue and Labour.
- Basis of settlement.
- Subrogation.
Persons On Premises
Section 8.4.3
People may enter one’s property by invitation, such as guests, work, or delivery, or they may be uninvited. There is a difference in the standard duty of care expected of the owner in these situations.
There are three situations for this;
- Trespassing
- Visitors (in Ontario)
- Children
Persons Outside Premises
Section 8.4.3
Neighbours or passers-by.
Domestic Animals
Section 8.4.3
Animal bites or attacks.
Children
Section 8.4.3
Children are often responsible for their own actions, unless parental supervision was proven to be a reasonable expectation.
Children are attracted to …
Landlord
Section 8.4.3
This gets tricky. Most landlords are exempt from liability, however, it all depends on the lease agreement and how a landlord sets up their rental unit to be used.
As always, there are exceptions (See Section 8.4.3.5).
General Damages
Section 8.5.3 Page 221
Subject to interpretation and are for such items as pain and suffering, loss of limbs, damage to reputation, or mental anguish. The amount the court believes is necessary to compensate the aggreved party fairly.
Special Damages
Section 8.5.3 Page 221
Quanitfiable and can be accurately measured.
Specific to medical, rehabiliation, and other like damages.
E.g. Doctor’s bill
Nominal Damages
Section 8.5.3 Page 221
Personal injuries such as libel and slander.
Punitive or Exemplary Damages
Section 8.5.3 Page 221
These are damages intended to punish a defendent for their actions and serve to deter others from similar behavious in the future. Payments for these damages are borne by the insured themselves.
Coverage E: Personal Liability
Section 8.7.1
To insure the legal liability of insureds anywhere in the world.
Accidental injury or damage caused by insureds is included.
The base limit is set at $1,000,000. (higher limits can be purchased)
Covers:
* Legal liability of insureds in their role as private citizens while anywhere in the world.
* Injury or damage arising out of the ownership, use, or occupancy of all listed premises by this Section.
Coverage E: Personal Liability - Exclusions
Section 8.7.1
1.Only who is contracted with is able to apply for coverage.
2.Damaged to property owned by the insured.
3.Property damage to property of others used, occupied, leased/rented, or in the care & custody of the insured, except for unintentional damage caused by fire, explosion, water, and smoke.
4.Damage to personal property or fixtures as a result of work being done on them.
5.Bodily injury to the person residing in the household other than a resident employee.
6.The personal actions of a named insured who does not reside on the premises as described on the Coverage Summary page.
Coverage E: Personal Liability - Defence, Settlement, Supplementary Payments
All liability policies have the insurer agree to pay all costs associated with the defence and settlement of claims (including the following supplemental payments).
This is described in three ways;
- The insurer agrees to pay all costs associated with defence and settlement of claims including supplemental payments, even if the claim made against the insured is groundless or without merit.
- The insurer agrees to investigate, negotiate and settle any claim they decide appropriate, and only pay for legal counsel the insurer selects.
- The Supplemental payments are in excess of the limit of insurance purchased is under Section E.
Coverage F: Voluntary Medical Payments
Payment for reasonable medical expenses when the insured, unintentionally, injures another person or if they are accidentally injured while on the insured’s premises.
The limit is set a $5,000.
- The insurer agrees to voluntarily make such payment on the insured’s behalf.
- Coverage includes surgical, dental hospital, nursing, and ambulance service or other transportation services expenses.
- Payments not made to injured persons when covered by provincial workers compensation plan (WSIB), a hospitalization plan, or other private insurance plans.
Coverage G: Voluntary Payment for Damage to Property
This section responds to unintentional damages the insured may do at another person’s residence.
Personal Liability policies include coverage for this act of the insured.
The limit is set a $1,000.
- Insurer makes a voluntary payment for property damage unintentionally caused and where the insured would not be legally liable.
- Reimburses others for direct property damage caused intentionally by an insured 12 years of age or under.
- No coverage for damage to the insured’s own property or their tenant’s property.
Coverage H: Voluntary Compensation for Residence Employees
Coverage in the event of the injury or death to a resident employee.
Covers:
* Loss of life including funeral expenses.
* Temporary total disability.
* Permanent total disability.
* Injury benefits (weekly indemnity).
* Medical expenses.
Each claim is assessed individually by the insurer.
The claim can be paid according to the schedule.
But,
- No obligation on the insurer to make payment in the following instances:
* When the residence employee or their representative refuses to accept these benefits.
* When the residence employee sues the insured. - Insurer has the right to subrogate against anyone other than the insured who is responsible for the residence employee’s injury or death.
Resident employees can be caretakers, nurses, gardeners, or housekeepers. There is a schedule for coverages, limits, and exceptions.
Coverage I: Loss Assessment
(Condominium Unit Owners only)
As the Master Policy first responds to property claims, so it is with liability. If there is a deficiency, then the insured’s own liability coverage will respond, under Coverage I.
This is comparable to the insured’s policy responding to a claim involving Coverage A1.
The limit is 250% of Coverage A1.
The insurer will pay a special assessment if:
- Assessment is valid under the Condominium Corporation’s governing rules,
- Assessment is made necessary by occurrence(s) to which Coverage E applies.
Liability - Special Limits
Section 8.7.7 Page 229
- Watercraft & Motorized Vehicles (Lawn mowers)
- Trailers
- Business & Business Property
Liability - Special Limits: Watercraft & Motorized Vehicles
Section 8.7.7.1.
Watercraft is covered under Section E, Policy limit:
Owned watercraft is limited by engine size or length:
* 16 HP Outboard motor
* 50 HP Inboard motor
* 26 Feet sailboat length
*Anything larger must be specified on the policy & endorsed.
Non-Owned - The use of any boat of any size, not owned by insured, is covered. For example, borrowing a boat from a friend, or being at the wheel of a boat while on a lake.
Motorized Vehicles (Lawn mowers)
Owned is limited by engine size: 25 HP
Anything larger must be specified on the policy & endorsed. * Section E, Policy limit.
*Non-Owned is not covered.
Liability - Special Limits: Trailers
Trailers are attachments to any vehicle that can carry or transport items. When these are attached to a vehicle, the liability of the vehicle flows back to the trailer.
An unhitched and parked trailer becomes a premises liability. It can be a small open cart to a large closed container to a housing trailer.
Coverage for injury or damage by ownership, use, or operation of any trailer or its equipment, provided trailer not attached to, carried, or towed by motorized vehicle subject to motor vehicle registration.
For example, injury or damage caused by children playing in a parked trailer at the side of a house.
Damage caused to others or as a result of it being** in motion**, either while being mobile and becoming disconnected from a towing vehicle would come under the automobile policy.
Liability - Special Limits: Business and Business Property
- The business may totally operate out of the home. If the home policy is endorsed with a Home Business extension then the liability of the activities are covered under that extension, or under a commercial liability policy, except those listed below.
- Liability for any business pursuits or business use of the premises excluded under Section II: Liability Coverages, would not be covered.
The insurer does agree to provide coverage for liabilities relating to the following business activity related scenarios:
1. Personal actions during trade, profession, or occupation not related directly to trade, profession, or occupation. For example, a client visits and is bitten by your dog.
2. Occasional rental to others of the portion of the dwelling usually occupied by you as a private residence.
3. Rental to others of a family dwelling usually occupied as a residence.
4. Rental of space in residence to others for incidental office, school or studio.
5. Rental to others, or the holding for rent, of not more than 3 car spaces or stalls in garages or stables.
6. Temporary or part-time business pursuits of an Insured person under the age of 21.
(i.e.freelance graphic designer)
Business
Section 7.8.11
“any continuous or regular pursuit undertaken for financial gain including a trade, profession or occupation.”
Commercial General Liability (CGL)
1. Product Liability - Some businesses make things i.e. clothing. When the use of a product results in injury or damage, consumers have a right to take legal action against the party that made or sold the defective product.
2. Completed Operations Liability - Some businesses “make” things, i.e. building a back deck. When completed work is put to its intended use and injury or damage results, the party responsible for the work may be sued for damages.
3. Personal & Advertising Injury Liability - Where public perception matters. Injury, including consequential bodily injury from; libel & slander, malicious persecution, unauthorized use of another’s advertising idea, etc.
Ocurrence-based Policy Form
(IBC 2100)
The insurance company that was on the risk at the time of the loss occurred willl respond to the claim.
A claim that occurred in the past is responded to by the insurer at that time. E.g. Fires on customer’s end resulting of cables sold, claim goes back to date of production.
Determinate time loss started
Claims Made Policy Form
(IBC 2200)
The insurance company that is on risk at the time the claim was made will respond.
Claim
Indeterminate of time loss started, despite occurring in the past.
Claims Made policies are under a Professional Liability policy.
Umbrella Policy
This Umbrella policy is designed to only respond after the underlying or primary policy has responded:
Personal:
1. Not enough insurance under the primary policy.
2. No coverage.
Commercial:
1. Inadequate limits where the primary insurer denies increased limits (reinsurance and capacity).
2. Inadequate coverage.
Insurance
According to the Insurance Act
Chapter 1
“the undertaking by 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.”
Principle of Indemnity
Chapter 1
A basic rule og insurance stating that policyholders receive the actual amount of their loss, no more and no less.
Registered Insurance Brokers of Ontario (RIBO)
Chapter 1
A self-governing, self-funded organization of general insurance brokers of Ontario.
General Insurance
Property and Casualty insurance
Chapter 1
Any insurance product other than travel, health or life insurance.
Risk
as related to insurance contracts
Chapter 1
The chance of financial loss occurring, or an object or activity that is insured or about to be insured.
Speculative Risk
Chapter 1
The possibility of either financial loss or gain.
Pure Risk
Chapter 1
The chance of financial loss with no chance of financial gain.
Physical Hazard
Chapter 1
Observable conditions relating to the object of insurance.
E.g. Building construction
Moral Hazard
Chapter 1
Subjcetive characteristics of an insured or an applicant for insurance that increases the likelihood of loss.
E.g. Dishonesty
Reinsurance
Chapter 1
A form of insurance that can be purchased by an insurance company to limit the amount of los it might experience at any one time.
Risk Retention/Self-insurance
Chapter 1
A conscious decision on the part of an organization to self-insure all or a portion of losses rather than purchasing insurance (that is, a planned acceptance of future losses,)
Registered Insurance Broker
Chapter 1
An insurance broker in Ontario who is governed by the Registered Insurance Brokers Act.
They provide independent advice and sell general insurance products from a variety of insurance companies. They represent their client’s best interest when negotiating a contract between the client and the insurance company.
Property & Casualty Insurance
(P&C insurance)
Chapter 1
aka General Insurance.
Property - coverage for homes, business assets, equipment, etc.
Casualty - coverage against a finding of legal responsibility for causing injury to another person or damage to their property.
Indemnify
Chapter 1
The action of compensating an insured following a loss under their insurance policy.
Indemnity
Chapter 1
The contractual obligation by one party (the insurer) to make good the losses suffered by another (the insured) by putting them back in the same financial position they were in at the time the loss occurred.
Hazard
Chapter 1
Any condition that increases the risk or chance of a loss occurring or increases the amount of damage that may happen if there were a loss.
Writing Insurance
Chapter 2
The act of selling or issuing an insurance policy.
Can be purchased through Direct Writers (insurance company) or through Intermediaries (Brokers/Agents).
Direct Writer
Chapter 2
Sells insurance products directly to customers, typically through call centres and online.
E.g. TD Bank, Belair Direct
Intermediary
Chapter 2
A person or organization who acts as a mediator or link between two parties.
Two types are agents and brokers.
Stock insurance companies
Chapter 2
Ownership: Shareholders
Main goal: Cover costs and make profit for shareholders
Operations come from private funds or through publicly traded stock.
Examples are Intact and AVIVA
Mutual insurance companies
Chapter 2
Ownership: Policyholders
Main goal: Collect sufficient premiums to cover costs of claims and operating the company
Profits are kept in reserve, re-invested in the company, or distributed back to policyholders in the form of lower premiums (sometimes refunds.)
Syndicate
With regard to insurance
Chapter 2
A group of insurance companies and individuals (underwriters) who assume risks for themselves to underwrite large, high-risk operations or unusual risks.
Lloyd’s of London
Chapter 2
A marketplace for insurance companies and individuals who assume risks for themselves that form syndicates to underwrite large, high-risk operations or unusual risks.
Goal: to make a profit for the members.
Agent manages affairs of each syndicate-> appoints an expert underwriter fir each class of business written.
E.g. voices of singers, commercial aircraft, nuclear power plants, cance
Managing General Agents (MGA)
Chapter 2
A type of insurance brokerage that has been granted authority by one or more insurance companies to transact business on their behalf.
Extend insurance company to write higher-risk operations without in-house expertise.
AKA “broker for a broker”
E.g. Sports liability, professional liability, demolition contractors
Binder
Chapter 2
Written or oral agreement giving temporary insurance protection, pending issuance of the insurance policy by the insurer.
Broker binding authority
Chapter 2
The power given to a brokerage under a contractual agreement allowing the brokerage to immediately provide insurance coverage to an applicant up to a pre-agreed limit without first receiving an approval from an underwriter.
Underwriter
Chapter 2
The person at the insurance company who anaylzes application forms submitted by brokers to ensure applicants; risks meet the insurance company’s established eligibility criteria.
Fiduciary
Chapter 3
Someone who has undertaken to act for and on behalf of another person in a particular matter, in circumstances that give rise to a relationship of trust and confidence.
Void Contract
of Insurance
Section 3.3.2
Considered to have never existed.
Voidable Contract
of Insurance
Section 3.3.2
May be rendered void or unenforceable for one or more reasons discussed earlier.
Financial Services Regulatory Authority of Ontario (FSRA)
Chapter 3
An independent regulatory agency created to improve consumer protection in regulated professions in Ontario, including insurance.
They are responsible for all :
* Automobile forms/underwriting approvals, rates and claims forms,
* Licensing of both life and general insurance agents and insurers,
* Monitoring insurer solvency, and
* Ensuring fair marketing practices.
They enforce the provincial Insurance Act and the Compulsory Automobile Insurance Act.
Office of the Superintendent of Financial Institutions (OSFI)
Chapter 3
An independent agency of the Government of Canada **to contribute to the safety and soundness of the Canadian financial system. **
Property and Casualty Insurance Compensation Corporation (PACCIC)
Chapter 3
Industry-funded organization that protexts eligible policyholders from undue financial loss in the event that a member insurer becomes insolvent.
Membership is required for P&C insurers.
Contents - Not insured
- Business Property except as shown under Special Limits
- Samples and goods held for sale
- Evidence of debt or title
- Sporting equipment - loss due to use
- Property in any fairground, exhibition or exposition for the purpose of exhibition or sale
- Property illegally acquired, kept, stored or property subject to forfeiture
- Any property lawfully seized or confiscated, unless destroyed to prevent spread of fire
- Camper units, truck caps or their equipment
- Aircraft including UAV or drones and their equipment equipment as in audio, visual, recording or transmitting equipment powered by the electrical system of a motor vehicle or aircraft - not included in Spare Automobile parts
- Motorized vehicles and their equipment except:
- Wheelchairs or scooters with 2+ wheels specifically for physical disability
- e-bikes
- watercraft
- golf carts including attachments and accessories
- lawn mowers
- garden tractors including attachments and accessories
- snowblowers
Other than those used for compensation or hire
Coverage D: Prohibited Access by Civil Authorities
Direct result of damage to a neighbouring premises by an insured peril.
Covers Additional Living Expenses and Fair Rental Value loss for a maximum period of 2 weeks. Does not insure cancellation of a lease or agreement.
Property Insurance: Additional Coverages
- Change of Temperature
- Debris Removal - additional 5% for removal if loss equals insurable amount
- Credit, Debit or Automated Teller Cards, Depositors Forgery and Counterfeit Paper Money -$10,000 in all, no deductible, not covered for entrusted persons
- Fire Department Charges - $1,000, no deductible
Reinstatement Clause
Commercial Property Insurance
10.3.7.3.2
“Loss under any items on this form shall not reduce the applicable amount of insurance.”
The limits of insurance provided bythe policy remain unchanged for the entire policy period, regardless of the number and amounts of claims paid
Subrogation Clause
Commericial Property Insurance
10.3.7.3.3
“The insurer, upon making any payment or assuming liability therefore under this form, shall be subrogated to all rights of recovery of the insured against others and may bring action to enforce such rights. Nothwithstanding the foregoing, all rights of subrogation are hereby waived against any corporation, firm, individual, or other interest with respect to which insurance is provided by this policy.”
The insurer agrees not to exercise the right of subrogation against any party having insurable interset in the property insured such as, payees, business partners, and subsidiary firms.
Gross Earnings Form
Commercial Property Insurance
10.5
Start: Time of loss
End: Reinstatement of the lost or damaged property
Goal: To return insured to the competitive position they were in immediately prior to the loss.
Profits Form
Commercial Property Insurance
10.5
Start: Time of the loss
End: Income is restored to the level that would have been earned if the loss had not occurred, subject to the indemnity period selected at inception.
Business may be open but has not been restored to its former competitive position. Higher premium due to longer coverage period.
Coverage D: Prohibited Access by Civil Authorities
Direct result of damage to a neighbouring premises by an insured peril.
Covers Additional Living Expenses and Fair Rental Value loss for a maximum period of 2 weeks. Does not insure cancellation of a lease or agreement.
Property Insurance: Additional Coverages
- Change of Temperature
- Debris Removal - additional 5% for removal if loss equals insurable amount
- Credit, Debit or Automated Teller Cards, Depositors Forgery and Counterfeit Paper Money -$10,000 in all, no deductible, not covered for entrusted persons
- Fire Department Charges - $1,000, no deductible
Extra expense insurance endorsement
Commericical Property Insurance
10.5
Insures extra expenses incurred after a loss to continue normal business operations.
Limited to over and above normal expenses including:
-Renting temporary premises
-Renting temporary equipment
-Paying overtime salaries
Single limit and spread over defined period.
Types of Traveller Risks
Chapter 11
11.2
- Medical Risks
- Non-Medial Risks Faced by Travellers with a Medical Emergency
- Destination Risks
Travel Health Insurance
An insurance product designed to cover unexpected medical and related costs due to a medical emergency occurring while a resident is travelling outside of their home province or territory.
Change in a health condition
Chapter 11
Any illness, accident, injury or symptoms for which the insured consulted a physician, was hospitalized, was prescribed or received a new treatment or medication, or received a change in existing treatment or medication.
Collateral Benefits
Chapter 11
Sources of benefits available to an injured person. These can incude a group or private income replacement, rehabilitation benefit, and more.
Co-ordination of Benefits
Chapter 11
A policy clause intended to ensure that benefits payable under multiple policies do not exceed 100% of a person’s eligible incurred expense. This clause upholds the principle of indemnity.
Delayed Departure
Chapter 11
A delay due to an emergency, including severe weather conditions, mechanical breakdowns, or an accident involving land transportation to the insured’s departure point.
Departure date
Chapter 11
The earlier of the date the applicant (1) boards the ticket transportation or (2) leaves Canada on an insured trip.
Distributor
Chapter 11
The marketing firm who sells (distributes) travel health products (for example, insurance brokers, travel agents, and credit card companies).
Emergency Health Services
Chapter 11
Health services given in connection with an acute, unexpected condition, illness, disease, or injury requiring immediate treatment.
Extension of coverage period
Chapter 11
A voluntary or involuntary extension of the policy expiration date beyond the original intended date of return.
Frequent Travel Plan
Chapter 11
An annual policy providing a frequent traveller with coverage for any number of short-trips in a one-year period.
Government Health Insurance Plan (GHIP)
Chapter 11
Universal health care system in Canada, administered through provincial and territorial health insurance plans.
Inbound Travel Health Insurance
Chapter 11
Travel health insurance for travellers arriving in Canada from another country who are not covered by a Canadian GHIP.
Insured Trip
Chapter 11
A trip where the applicant travels outside of their province/territory of residence, for which travel health insurance is in effect.
Outbound Travel Health Insurance
Chapter 11
A policy which pays the reasonable and customary medical and non-medical charges for such costs incurred while the insured travels outside of their home province/territory or outside of Canada.
Single-trip Plan
Chapter 11
Provides benefits for a single trip for a fixed number of days of coverage, equal to the total length of the insured’s trip, including the insured’s departure date and return date.
Third Party Administrator (TPA)
Chapter 11
An organization that is contracted to take over management of travel health insurance claims on behalf of the insurer (also known as the claims manager).
Unstable Condition
Chapter 11
A sickness or injury that would cause an ordinarily prudent person to expect to need medical treatment or investigation following departure.
Examples of Non-Medical Risks Faced by Travellers with a Medical Emergency
Chapter 11
- Child care expenses if a parent must be hospitalized due to an unexpected health emergency while travelling.
- Medical emergency of a travel companion, resulting in early or late return from a trip.
- Return of insured to their residence via regular air or MedEvac service.
- Automobile return to residence if medical emergency occurred while travelling within Canada or the United States.
- Trip cancellation fees or penalties.
- Pet return.
- Return of deceased insured.
Ontario Residency Requirements
Chapter 11
- Must hold a valid OHIP card.
- Ontario is their primary home.
- Physically be in Ontario for 153 days in any 12-month period. If the resident has been out of Ontario for more than 212 days in any 12-month period, their OHIP coverage is cancelled (unless applied for an exception).
- Physicallly be in Ontairo for at least 153 days of the first 183 days immedicately after the person begain living in the province.
Doctor Recommended Health Care Outside of Canada
Chapter 11
To obtain funding by OHIP, the treatment must meet all the following conditions:
* Must be performed at a hospital or licensed health facility.
* Is not experiemental or for research or for a survey.
* Is generally accpeted in Ontario as appropriate treatment for a person in th same medical circumstances as the insured person.
* Is either not performed in Ontario by an identical or equivalent procedure, or is performed in Ontario by the insured person must receive the services outside Canada to avoid a delay that would result in death or medically significant irreversible tissue damage.
Expenses incurred for non-medical services (e.g. travel, accommodation, meals unless patr of insured hospital services) are not covered by OHIP.
Kidney Dialysis for Travellers
Chapter 11
OHIP will reimburse dialysis costs upto a maximum of $210 CAD per treatment with no maximum number of treatments. The applicaiton and approval for out-of-country- dialysis is administered for OHIP by the Ontario Renal Network (ORN).
Dialysis patient should carry THI to cover the cost of emergency health services beyond the actual dialysis, for health emergencies not related to the dialysis.
Other sources of Emergency THI Coverage
Chapter 11
- Credit Card Companies
- Emplyee Benefit Group Plans
- OAP1 Section 4: Accidents Benefits Coverage**
Outbound THI Coverage
Chapter 11
- Emergency medical services and extended health care benefits
- Trip cancellation, interruption, or delay
- Miscellaneous benefits
Emergency Medical Services and Extended Health Care Benefits Coverage
- Direct payment to the hospitals and doctors providing care
- Local ambulance services
- Hospital care and related drug and diagnostic services
- Physician services
- X-ray and labratory fees
- Appliances and related services (e.g. wheelchair rental, crutches, boot cast)
- Private duty nursing services by a registered nurse and paramedical practitioner services (e.g. chiro/physio). A maximum dollar valuemay be stated for each practitioner.
- Assistance with bringing a family member to an isured person’s bedside
- Outpatient services
- Out-of-pocket expense (daily and overall dollar max applies) Reimbursement of additional out-of-pocket expenses (e.g.phone/tv rental charges) if the insured is hospitalized.
- Child care attendant (non-relative) Reimbursement of costs for a child care attendant to care for children accompanying the insured, if the insured is hospitalized.
- Air ambulance or commercial repatriation home, where medically necessary.
