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107 Cards in this Set
- Front
- Back
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What book of the Civil Code of Quebec is concerned with obligations?
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book 5
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Describe the conditions in which a contract is deemed to have been made "in province." |
"1. subject of contract is property in the province
2. resident of province has insurable interest " |
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What nine pieces of information must every policy contain? |
"1. name of insurer
2. name of insured 3. name of person whom insurance money is payable to 4. amount of premium for the insurance 5. subject matter of insurance 6. indemnity which the insurer is liable 7. the event on the happening of which liability is to accrue 8. effective date of insurance 9. expiry date of insurance " |
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If two appraisers cannot resolve a dispute between an insurer and an insured, who determines the outcome of the disagreement? |
an umpire is assigned
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When can a contract term be waived in whole or in part by the insurer? |
when a waiver is stated in writing
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How may an insurer respond to an unpaid premium? |
insurer may terminate contract after giving 15 days notice by registered mail
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How many days must pass after proof of loss before an action may be brought for recovery of money payable under a contract of insurance? |
60 days must pass
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In the Insurance Act, what is excluded in the description of loss against fire? |
"1. goods undergoing application of heat
2. riot, war, rebellion etc." |
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Describe the conditions in which fire insurance would not cover damage caused by an explosion. |
not covered if the cause of explosion was due to riot, war, rebellion etc.
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If property is removed from the premises to prevent loss or damage, is that property still covered under a contract of fire insurance? Explain. |
provincial insurance acts extend coverage to insured property if it is needed to be moved to prevent damage or further damage
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Why is an insured obliged to take all reasonable steps to minimize loss? |
insured receives no more than the insured amount
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What provisions help ensure that the insurer is not placed at a disadvantage while helping the insured minimize loss? |
automatic extension applies for no more than 7 days from the time property is removed.
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Define distribution. |
splitting of a single amount of insurance to apply to property in more than one location
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Describe the two conditions upon which the distribution provision is based. |
"1. amount of insurance is only the difference between the original amount of insurance and the amount of loss already suffered when it was removed
2. if the amount of loss is equal to or greater than the amount of insurance, the full amount is payable" |
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What are the benefits of written applications? |
reduces misunderstanding
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Why do insurers use custom applications for certain kinds of insurance contract? |
it makes it easier for the insured to see what options are offered and allows insurer to be aware of requests for variation in the terms of customary contracts
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If an insurer issues a policy on different terms than the application and advises the insured accordingly, but the insured does not reject the contract within two weeks, what options does the insured have? |
the insured cannot reject the change in terms but only can terminate the application
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Explain limiting clauses and what is required for them by the Insurance Acts. |
limits recovery by the insured to a specified percentage of the value of property at the time of loss. insurance at requires that policy be marked to that effect.
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When more than one of an insured's contracts contain a deductible, how are the insurers' shares of a loss determined? |
each insurer is liable to the insured for its rateable proportion of the loss.
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Describe the three conditions on which the insurer may avoid a contract for misrepresentation. |
"1. falsely described property to the detriment of the insurer
2. misrepresented any circumstance material to the insurer's assessment of the risk 3. fraudulently omitted to mention such circumstance " |
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What must an insurer prove in order to avoid a contract for omission of a material circumstance? Why? |
an insurer must prove material fact
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Why have the courts found Statutory Condition 2 difficult to apply? |
the condition does not define the word "owned"
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What differentiates Statutory Condition 4 from Statutory Condition 1 |
the difference is that stat 4, false material facts are given during the policy term
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If an insurer cancels a policy, how is the insurer's pro rata share of the policy premium calculated |
it is unearned premium minus earned premium
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According to Statutory Condition 7, how is fraudulence determined |
the onus is on the insurer to prove fraud
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How does Statutory Condition 9 maximize the value of the insurer's salvage rights |
it obligates the insured to protect damaged property from further damage
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What five elements are embodied by the insuring agreement? |
"1. an agreement
2. between legally capable parties 3. for the consideration 4. demonstrating intent 5. to do something legal " |
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What is the principle of indemnity? |
to return a loss to its original financial position prior to the loss. no profit from loss.
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How is the rate of premium calculated for fire insurance policies? |
it is commonly expressed as a rate per100 of the amount of insurance or percentage.
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How has public fire protection changed premiums charged to insureds? |
larger cities with more sophisticated water networks lowers the chance of a complete destruction of building by fire.
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How many clauses does the Commercial Property Broad Form have? |
it has 18 clauses, one more than the named perils form
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What new clause was inserted just before the Definitions clause in the Broad Form? |
the new clause is the locked vehicle warranty
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What clause, present in the Named Perils Form, is divided into Sub-clauses A and B in the Broad Form? Why is it divided into these two sub-clauses? |
the insured property clause is divided into sub-clauses A and B. it expands the scope of contract beyond only locations identified on the declarations page. also includes some losses otherwise excluded.
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What clause in the Named Perils Form is the Broad Form's Sub-clause A identical to? |
it is identical to the insured property clause in the named perils form.
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Under what circumstances does the Broad Form's Sub-clause B provide coverage where the Named Perils Form does not? |
in circumstances which provide coverage in a single policy for property at more than one location or while in transit.
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Explain the distinction between a temporary location and a newly acquired location. |
temporary location excludes a location owned, rented or controlled by the insured.
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How should an insurer consider insuring property that would otherwise be covered under Sub clause B if that property is valuable, unusual, or attractive to thieves? |
would be better to omit coverage for such high exposures under the commercial property broad form and issue a separate policy on terms that reflect the exposure and loss control measures needed.
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How is the Broad Form's Insured Perils clause different from the Named Perils Form's Insured Perils clause? |
it extends coverage not merely against perils named in this clause but against all risks of direct physical loss of or damage to the property insured.
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Why do exclusions in all risks wordings exempt losses that would be covered by the Basic Fire Policy? |
in order to meet the legal requirements for fire insurance contracts.
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How many exclusions does the Broad Form have? Which ones are identical to their counterpart; in the Named Perils Form? |
"there are 16 exclusions in the broad form. 7 are identical to the named perils form counterpart.
-vacancy or unoccupancy exclusion, electrical devices exclusion, growing plants exclusion, money, securities and related property exclusion, property illegally acquired or kept exclusion, roadways and walkways exclusion." |
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Explain the Broad Form's Sewers, Drains, and Watermains exclusion. |
it excludes sewers, drains, watermains and other types of property that may be part of an insured building or fall within the definition of equipment.
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Define the term stock as it relates to the Commercial Broad Form. |
stock includes the insured's own property and property of others. for vets and pet stores, that includes live pets.
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The Animals, Fish, or Birds exclusion in the Broad Form limits coverage to what perils? |
it limits coverage to the perils of the named perils form and theft or attempted theft.
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How do its two exceptions limit the Furs, Jewellery, Precious Stones exclusion? |
"1. exempts 1st part of loss (1k in IBC form)
2. restores coverage for full amount of a loss caused by one of the named perils" |
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Which exclusion is meant to limit the scope of coverage to insured property in transit? What exceptions are there to this exclusion? |
the marine insurance and waterborne property exclusion. it excludes coverage for insured property also insured under a marine policy.
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What is the exception to the Property in the Custody of Others exclusion? |
only exception is for property in the custody of a carrier delivering it, where the insured is responsible for the property until it is delivered
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Define the term free on board. |
at the risk of the insured's customer.
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Which exclusions under Excluded Perils are the same in both the Broad Form and the Named Perils Form? |
war risks, nuclear incident, by-laws exclusions
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Along with fire following an earthquake, the exemption in the Broad Form's Earthquake exclusion applies to what three other perils? What type of property is not covered by the Earthquake exclusion? |
"also applies to explosion, smoke and leakage from fire protective equipment.
property in transit is not covered in the earthquake exclusion." |
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What do the two Non-insurable Losses exclusions exclude? |
"1. loss due to dampness, dry air, temp changes
2. shrinkage, evaporation weight changes occurring during processing" |
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Define the term agricultural smudging. |
containers of slow-burning combustible material are ignited to create a blanket of smoke. uses in operations such as fruit orchards.
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What are the two exceptions to the Pollution exclusion? Give an example of a situation in which each exception would apply. |
"1. escape of pollutant caused directly by an insured peril. e.g. faulty design in an oil container causing spill
2. insured peril caused by escape that was caused by an insured peril e.g. fire started by workers, leads to oil pipeline explosion" |
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Describe the Mysterious Disappearance exclusion. |
theft losses are covered by an all risks policy but the insured must prove that theft took place.
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Define the term warranty. |
a warranty is a statement or stipulation in a contract the breach of which nullifies the contract
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What three types of risk are normally underwritten individually at the time of application, renewal or whenever new information comes to light? |
commercial, manufacturing and mercantile risks are normally underwritten individually.
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Other than the occupancy risks they insure, what distinguishes habitational policies from other policies? |
the language is less formal
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Into what two categories are habitational policy provisions divided? |
"section 1 - property insurance
section 2 - personal liability insurance" |
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What is the commercial equivalent of the Coverage Summary called? |
it is the equivalent of the declarations page used in commercial insurance policies
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What nine pieces of information must be included in the Coverage Summary? |
"1 name and postal address of insured
2 address of the property insured 3 policy's effective and expiry dates 4 occupancy, construction and public fire protection for each insured location 5 name(s) and address(es) of loss payee(s) for each location 6 the form (policy wording) that applies to each location 7 amounts of insurance for each form and for each item, section and coverage 8 deductible amount 9 premium." |
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What words, required by law in the common law provinces, are stamped or printed on the Coverage Summary page of a policy that has limitations? |
"this policy contains a clause that may limit the amount payable"
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What policy may be thought of as the habitational version of the Basic Fire Policy? |
the residential basic form
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Identify a form that serves those who are ineligible for an insurer's package policy or who have a location that is ineligible for broader coverage. |
the residential basic form
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What documents, usually included in a contract with the Residential Basic Form and the Coverage Summary, are not clear language documents because they must use the exact words taken from provincial Insurance Acts? |
the statutory conditions are not clear language documents.
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In what two ways does the packaging approach allow the insurer to reduce premiums? |
it cuts costs and enhances coverage.
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What helps the insurer maintain underwriting profitability when using the packaging approach? |
"1 reduces the risk of adverse selection
2 issues uniform contracts which simplifies policy-issuing and claims adjustment. " |
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What two factors affect the variation in these from insurer to insurer? |
rules of eligibility and rating criteria.
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What policy, abbreviated CDP, was a precursor to the Residential Basic Form? |
the composite dwelling policy
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The absence of what peril differentiated the Homeowners Limited Form from the Basic Form? |
the theft peril was not included for either dwelling building or personal property.
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Identify an all risks property form that was originally offered as an inland marine coverage. |
The Homeowners Broad From - all risks on the dwelling building and same perils as the basic form for persona property.
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What inland marine coverage form, which was generally offered to wealthy people travelling abroad, is abbreviated PPF? |
Personal Property Floater - expensive all risks policy covering personal property worldwide and offered only to wealthy people who often traveled abroad.
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The IBC Homeowners forms 1151, 1153, and 1155 are better known by what names? |
"1151 - homeowner's basic form
1153 - homeowners broad form 1155 - homeowners comprehensive form" |
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Which IBC Homeowners form includes all risks on all items? |
homeowners comprehensive form (IBC 1155)
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What type of insurance is addressed in Section I of the Homeowners forms? What type of insurance is addressed in Section II of the Homeowners forms? |
"section 1 - concerns property insurance
section 2 - concerns personal liability insurance" |
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In which section would you find Additional Living Expense coverage? |
section 1 - property insurance. it applies to consequential loss - indirect loss arising as a consequence of a direct loss covered by ABC.
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Which type of form uses a unique version of Section II? |
the condominium unit owners form is unique.
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What is the Homeowners building limit based on, rather than cash value? |
it is based on replacement cost rather than actual cash value.
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What alternative do most insurers require of insureds who choose not to have a professional appraisal done to determine a building's replacement cost? |
they require the completion of an estimator or calculator (a formula) devised by professional appraisers that estimates replacement cost.
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What is the minimum amount of insurance for Coverage B? |
the minimum amount is usually 10% of the amount for coverage A.
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What term, formerly the title used for the Cover Summary Page, is now often used as the subtitle of the Cover Summary Page? |
Declarations is often subtitled.
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Give five examples of objects encompassed by the term domestic water container. |
"1. hot water heating tanks and their piping and radiators,
2. hot-water storage tanks and associated piping, 3. water beds, 4. kettles 5. water reservoirs and dispensers" |
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Domestic water containers are significant to what peril? |
they are significant to the "sources of water damage" peril.
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Other than the named insured, who is included in the definition of the term insured? |
while living in the same household: insured's spouse, relatives of either the insured or spouse, any person under 21 in their care.
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Who may take legal action to enforce the contract? |
only the insured in the coverage summary
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In what instance is a student living away from home no longer covered by the named insured's policy? |
the student must be dependent on the named insured (or spouse) for support and maintenance.
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Define the term premises as it is used in the Homeowners Basic Form. |
premises means simply the land within the lot lines on which the dwelling is situated.
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Define the term residence employee. |
a person who is traveling for the insured.
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If unoccupancy lasts more than 30 consecutive days, is the policy coverage interrupted? |
no it does not, the exclusion in the habitational forms applies only to vacancy.
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Other than the dwelling itself, what other structures or objects does Coverage A-Dwelling Building cover? |
covers structures attached to the house (patios) and permanently installed outdoor equipment. (fences)
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Other than the insured's, what property can be covered under Part One of Coverage C? |
uninsured personal property of others that might be damaged while it is on the part of the premises occupied by the insured.
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In what circumstances does Part Two of Coverage C cover personal property? |
personal property temporarily away from the premises.
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What is personal property stored in a warehouse covered against? |
it is only covered against theft.
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What is the amount of insurance called that covers all items insured under Coverage C? |
blanket limit.
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What three types of property are excluded under Coverage C? |
"1. motorized vehicles and their equipment
2. camper units, truck caps, trailers or their equip. 3. aircraft or their equip." |
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Explain why Coverage C's Exclusion a) and Exclusion b) are necessary. |
"1. initially removes coverage of all kinds of motorized vehicles and then in effect restores certain types
2. excluded because auto insurance is more appropriate than property insurance." |
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Why were the Special Limits introduced to Coverage C? |
it prevented skewing of the blanket limit by a few high valued articles.
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List the eight Special Limits, found in Coverage C of the Homeowners Basic Form, that apply to loss or damage by all insured perils. |
"1. business property
2. securities 3. personal property used by an insured student 4. money, including cash cards or bullion 5. garden type tractors 6. watercraft 7. computer software 8. spare auto parts" |
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Explain the term consequential loss as it pertains to the Homeowners Basic Form. |
indirect loss that arises from physical loss or damage to described property.
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What three coverages are combined in Coverage D? |
"1. additional living expense
2. fair rental value 3. prohibitive access" |
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Under the Prohibited Access in Coverage D, coverage applies when a civil authority orders the insured dwelling's occupants to move out for one of which two reasons? |
"1. a neighboring premises has sustained damage that poses danger to the insured premises.
2. a mass evacuation is required" |
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What six causes of evacuation does Prohibited Access coverage exclude? |
"1 flood
2 earthquake 3 war risks 4 terrorism 5 nuclear incident 6 radioactive contamination" |
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Describe the effect of the Automatic Reinstatement clause on the extension for Property Removed. |
if the amount of insurance is reinstated after a loss, the amount available under the Property Removed extension will still be the full amount of insurance for each item.
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When the insured moves to a new primary residence, how long will the Moving to Another Home extension cover property in transit and situated at the new residence? |
extension applies for not more than 30 consecutive days.
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Describe a situation in which the Change of Temperature extension would apply. |
thieves break a window in a sun room. cold winter air enters the room and kills rare tropical plants. damage to window is director loss. plants is an indirect loss.
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What are four limitations on the protection provided by the Credit or Debit Cards, Forgery and Counterfeit Money extension? |
"1. cards must be in insured's name
2. no coverage for liability arising from cards issued to insured's employer or business 3. insured's failure to notify the issuer of a card that it has been lost or stolen 4. the insured must have compiled with all conditions of the card agreement." |
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EQ Rating |
1 Geographical location 2 Building design and construction 3 Soil conditions 4 occupancy |
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Deferred payment clause |
Think "Farms" - the insured is indemnified for only a portion of the total loss to a building at the time of the loss.
The remainder of the loss payment is deferred until the insured repairs or replaces the building.
This helps deter moral hazard. |
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Homeowners basic form coverages |
A - Dwelling building B - Detached private structures (10%) C - Personal property D - Additional living expenses (20%) |
