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31 Cards in this Set
- Front
- Back
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How does earthquake insurance present the insurer with particular difficulties? |
· Neither their frequency nor severity can be accurately predicted.
· Coverage is primarily sought after in areas susceptible to earthquakes which narrows the insurer’s spread or risk.
· Risk acceptance must be controlled to protect against catastrophic loss.
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What are the uw considerations for earthquake coverage? |
o Geographical location (reflecting probability of loss)
o Building design and construction
o Soil conditions
o Occupancy
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The earthquake damage assumption endorsement assumes all shocks within a ____ -hour period are considered a single event. |
168 |
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What exclusions are in the earthquake endorsement? |
o A tidal wave or tsunami, is excluded- and these are normally caused by an earthquake with its epicentre in the ocean.
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What 3 things are considered other earth movement? |
-landslide -mudslide -land subsidence |
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Identify the 5 exclusions to loss by theft |
1) Conversion 2) Mysterious disappearance 3) Theft from Vehicle 4) Break-in 5) Theft by trick |
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Define Conversion |
Theft by persons to whom the property has been entrusted |
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Define Mysterious Disappearance |
§ Unexplained disappearance
§ Loss disclosed or discovered on taking inventory
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Define theft from vehicle |
§ Would require proof that vehicle was broken into.
§ Sometimes there is coverage if between certain hours.
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Define Break-in |
§ Theft with no proof of the break-in
§ Damage to the building itself covered as well.
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Theft by Trick |
§ i.e. defrauded by persons who profess interest in buying something the insured has offered for sale.
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What are the basic principles of premium calculation for theft? |
§ The potential extent of size or loss; § The susceptibility of insured property to loss; § The dollar values of likely claims
§ The general loss incidence within the territory in which the property is located and the level of protection afforded to the property. |
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How does graded rating work? (with regards to theft) |
§ The first layer of rates applies to the first several thousand dollars of insurance. § It represents the likely size of loss for the type of goods and the type of business involved. § It carries the highest rate, generating premium enough for the average loss for the class. § The second later applies to the next several thousand dollars
§ The third, to the next several thousand beyond that, and so on. |
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What is important to establish when insuring Property in Transit? |
· Policy must clearly state the intent of both the insured and insurer regarding property not kept on the insured’s premises
· It should also be clear whether property is to be covered only after being loaded on vehicles or while stored temporarily as well.
· The geographical scope should also be established.
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What factors affect the premium for Property in Transit coverage? |
o The insurer’s limit of liability for property in transit.
o The perils applying to such property.
o The probably frequency of loss
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What are some of the problems with a named perils polciy? |
· It must anticipate all the causes of loss to which the contract will respond.
· The onus is on the insurer to show that a peril does not apply or that the particular circumstances of the loss are excluded.
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To be indemnified for a loss, an insured must show: |
o The cause of loss must be fortuitous so far as the insured is concerned. o It must not be caused or contributed to by any connivance by the insured.
o It must be extraneous to the article involved. |
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to be indemnified for a loss, the insured must provide satisfactory evidence that: |
o The property damaged or destroyed falls within the subject matter of the insurance;
o It was, at the time of loss, at a location described in the policy;
o The loss occurred during the policy period.
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Explain the aspects of the contract that the exclusions in an all risks policy deal with |
§ A) when the subject matter is broadly described, property that falls within the subject matter of the insurance but is not intended to be insured needs to be identified and excluded. § B) when the territorial scope of coverage is broad, there may be locations or circumstances at or in which the insurer is unwilling to provide coverage and need to be excluded. § C) losses from events that meet the requirements for a risk but are not intended to be covered need to be excluded.
§ D) exclusions may be needed to emphasize that the policy covers only direct loss or damage or to precisely define the policy’s limited coverage of indirect loss. |
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What are the common exclusions of an all risks policy? |
§ Sporting equipment damaged while in use for its intended purpose, such as skis, tennis racquets, and golf clubs § Chipping, scratching, abrasion, or breakage of fragile or brittle articles § Faulty workmanship or the use of faulty materials § Earthquake, snowslide, landslide or other earth movement, flood § Extremes of temperature, rust, corrosion, wet or dry, mould, or pollution § Damage caused by birds, rodents, insects, or vermin |
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Identify two types of losses caused by events that are not regarded as insured risks. |
§ Wear or tear, deterioration, defect, or mechanical breakdown
§ And intentional or criminal act by the insured or any other person acting under the direction of the insured.
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Identify 4 indirect/consequential losses that are excluded from an all risks policy |
- delay - loss of market - loss of use - loss of occupancy |
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Susceptible property are sometimes limited in a policy, they include |
- Documents, valuable stamps, coins, or manuscripts - Bicycles, personal computers and portable electronic items and software - Money, bullion, platinum and other precious metals and alloys, securities, stamps, tickets, tokens, and evidence of debt or title - Jewellery, watches, gems, furs, and garments trimmed with fur |
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Identify the 7 additional conditions for multi-peril contracts. |
- Notice to Authorities - No Benefit to Bailee - Pair and Set - Parts - Sue and Labour - Basis of Settlement - Subrogation |
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Explain Notice to Authorities Condition |
· Deals with theft losses
· Requires the insured to report theft and related losses to the policy to deter fraud attempts.
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Explain No Benefit to Bailee Condition |
· This condition was needed to counter unscrupulous truckers who would stipulate in their bills of lading that insurance arranged by a shopper on goods bring transported would inure to the benefit of the carrier.
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Explain Pair and Set Condition |
· Loss of part of a pair or set will not be considered total loss of the pair or set.
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Explain Parts Condition |
· Similar to the pair and set clause, loss to only part of something cannot be treated as a constructive total loss. |
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Explain Sue and Labour Condition |
· If property is lost, the insured has a duty to take all reasonable steps to recover it.
· Any reasonable and proper expenses related to the recovery attempt are shared by the insured and insurer according to their respective interests.
· The term sue and labour comes from marine insurance contracts, sue meaning to follow or pursue.
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Explain Basis of Settlement Condition |
· The condition limits the insurer’s liability to the actual cash value of property at the time of loss.
· Property policies can include alternatives to actual cash value such as replacement cost, or agreed value as the basis of settlement. ACV being the default.
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Explain the Subrogration Condition |
· An insurer is entitled to rely on the possibility of subrogation and so will lose its right if the insured agrees to release an individual or organization from liability for loss of damage to his or her property.
· Within the clause, the insured is given permission to release other parties from liability before a loss occurs. The insurer is not precluded from inserting a clause in its policies permitting releases prior to loss.
· The provisions also provide for the proportional sharing of the proceeds of subrogation if, after deducting recovery costs, the amount recovered is less than a full indemnity.
· Sharing the proceeds is fair in that the insurer exercising its right of recovery against others on behalf of the insured. The insured is entitled to charge its expenses against the total amount recovered.
· The net amount may be retained by the insurer if the insured’s loss has been paid in full, unless any part of the loss was borne by the insured (deductible, etc.). The net proceeds must be shared in the proportions that each party has borne the amount of the insured’s loss.
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