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49 Cards in this Set
- Front
- Back
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Property insurance |
First - party insurance that indemnifies the owner or user of property for its loss, or the loss of income-producing ability, when the loss or damage is caused by a covered peril, such as fire or explosion |
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Insurable Interest |
An interest that the insured must have in the subject matter of the insurance purchased so that if the event insured against occurs, the insured will suffer and economic loss. |
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Indemnity |
A contract, expressed or implied, to replay in the event of a loss. The insured never gains nor loses |
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Contract |
An agreement or promise between two or more parties that is intended to be legally enforceable and is constituted by the acceptance by one party of an offer made by another party, to do or abstain from doing a specific act. The offer and acceptance may be either expressed or inferred through the conduct of the parties. |
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Contract (Quebec) |
An agreement of wills by which one or several persons obligate themselves to one or several other persons to perform a predation (that is, a duty, a payment, or a service) |
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Uberrimae fidei |
Of the utmost good faith. The basis of all insurance and reinsurance contracts. Both parties to the contract are bound to utmost good faith and do so by a full disclosure of all information material to the proposed contract |
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Peril |
The event that caused a loss covered by the policy; for example, fire, windstorm |
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Fortuitous |
The loss must be accidental and not something that is bound to happen in the ordinary course of events |
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A legal contract, in common law must be (5): |
- an agreement - between two legally capable parties - for a consideration - demonstrating intent - to do something that is legal |
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Insurance policies are distinguished from other types of contract by adding the additional principals of (3): |
- indemnity - insurable Interest - utmost good faith |
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Deductible |
An agreed specified amount that the insured must pay on a claim before the insurance company will cover the rest of the claim. This amount is agreed upon by both the insurer and the insured. An insured's obligation to pay a deductible is not based on whether the insured is at fault. |
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Elements of the property insurance policy (9) |
- the name of the insurer - the name of the insured - the name of the person or persons to whom the insurance money is payable - the amount, or method of determining the amount, of the premium for the insurance - the subject matter of insurance - the indemnity for which the insurer may become liable - the event on the happening of which liability is to accrue -the effective date of insurance - the expiry date or method by which it is to be fixed |
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Fire insurance |
Coverage for losses from fire, lightning, and limited explosion and also the resultant damage caused by smoke and water. Usually supplemented by extended coverage insurance. |
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Exclusion |
Risks, perils, or properties defined in the property as not covered |
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The basic fire policy includes 2 groups of exclusions: |
- exclusions for legislative considerations - exclusions for underwriting and rating considerations |
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Basic fire policy exclusions for legislative considerations (4): |
- Electrical damage exclusion. There is no coverage for loss to electrical devices or appliances if the damage is caused by lightning or other electrical currents. - Application of heat exclusion. There is no coverage for loss or damage to items of property that occurs as a result of heat being applied to the item. However, the resultant fire damage to other property is covered. - War risks excluded. There is no coverage for loss or damage arising from foreign or civil war, riot, or other civil disturbance - Nuclear incident excluded. Loss or damage caused by a nuclear incident is excluded. Coverage is provided for the resultant loss caused directly by fire, lightning or explosion. |
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Exclusions for underwriting and rating considerations (5): |
- Excluded property - money, books of account, securities for money, evidences of title or debt - automobiles, tractors, and other motor vehicles - aircraft - watercraft - this exclusion identifies types of movable property that may present unusual hazards, require specialized insurance, or raise underwriting issues. - Alterations and additions exclusion. - loss or damage to a building or its contents that occurs during and as a result of alterations or additions to the building is excluded unless the insured has secured written permission from the insurer to undertake the alterations and additions - normal repairs such as painting, repairing damaged drywall, or repairing a furnace are not subject to the exclusion - Vacancy, unoccupancy, or disuse exclusion. - loss or damage that occurs where the insured knows the buildinfbhas been vacant, unoccupied, or shut down for more than 30 consecutive days is excluded. - Volatile substances exclusion. - loss or damage that occurs when the insured knows there is more than a gallon of gasoline, benzene, naphtha, or other substance if an equal or lower flashpoint in the insured building, or kept where insured property is kept - Bylaws exclusion - no coverage for increased costs or repair or replacement arising from the enforcement or application of a bylaw, regulation, ordinance, or law that rewulates the zoning or the demolition, repair, or construction of the buildings |
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Flashpoint |
The lowest temperature at which liquid gives off sufficient vapoursbto form an ignitsbke mixture with the air |
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Statutory conditions |
Special prescribed and standardized conditions that the provincial and territorial insurance acts require to be included in insurance policies Insurance act in all provinces except Quebec,. They have the civil code of Quebec and it is not required that these articles by inserted in fire insurance contract. |
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What two extensions are covered with the basic fire policy? |
- removal of insured property. This covers any removed property from the insureds location to prevent further damage. 7 days from the date the removal of property begins or until the policy expires, whichever comes first. - debris removal. |
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Extended coverage insurance |
An endorsement that enlarges the coverage afforded by the primary policy. |
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What are the extended coverage perils that were added to the basic fire policy (6)? |
- Explosion - Impact by aircraft, spacecraft, or land vehicle - Riot, vandalism, or malicious acts - Smoke - Leakage from fire-protective equipment - Windstorm or hail |
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Other additional perils added to the basic fire policy (5) |
- Falling object - Glass breakage - Water damage - Theft - Loss in transit |
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On a habitarional policy, who else is considered to be covered (3) (provided they live in the same household)? |
- the named insured's spouse - the relatives of either the named insured or the named insured's spouse - any person under the age of 21 in the named insured's care Note - a student temporarily living away from home is covered |
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Mortgage clause |
A clause in an insurance policy that stipulates the rights and obligations of the insurer and the mortgagee |
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First-party insurance |
Protect the named insured and others with an insurable interest in or mortgage on the property or who entrust their property to the insured - against loss or damage to the insured property |
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Third-party insurance |
Liability insurance is purchased by the insured (the first party) from an insurer (the second party) to compensate or indemnify another (the third party) for damage or loss for which the insured is lawfully liable |
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Direct loss (or damage) |
Damage to property by direct action of apparel insured against, as distinguished from contingent or indirect damage |
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Plain-language policy |
Policies written in everyday language so that they are easily understood. Technical terms with their technical meanings are used only where required by law or when substitutions would be misleading |
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What are 2 forms of indirect loss that may be covered under property insurance? |
- additional living expense - business interruption - the loss of earnings, rents, and rental income and also extra expenses incurred to keep a business in operation after a direct loss |
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Warranty |
Statement or stipulation or promise in an insurance contract, the breach of which may nullify the contract |
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What are four warranties found inhabitational policies? |
- alarm warranty - jewelry in a vault warranty - backwater valve warranty - woodstove warranty |
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Proximate cause |
A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened |
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Concurrent causation |
A doctor in that holds that if a loss to a property is attributable to more than one cause, any one of which is covered by the insurance policy, the loss is payable under the policy |
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Actual cash value |
The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. A CV is usually calculated in one of three ways: 1. Cost to repair or replace less depreciation 2. Fair market value 3. Consideration of all relevant evidence of the value of the damaged property |
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Replacement insurance |
Insurance coverage that indemnifies for loss or damage to ensure property at the current market price rather than at depreciated value. Thus, the rating and premium are based on the current cost to replace the insured property |
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Pq1: what must the insured have in the subject matter before they can be indemnified for a loss? |
Insurable interest |
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Pq2: in property insurance, what is a deductible? |
It is an amount the insured must pay on a claim before the insurance company will cover the rest of the claim |
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Pq3: what is the objective of indemnity? |
To return the insured as nearly as possible to the financial position he or she was in prior to the loss; no more, no less |
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Pq4: in the basic fire policy, for how many days does the removal of insured property extension apply to remove property from an insured location to prevent further damage? |
7 days or until the policy expires |
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Pq5: which of the following descriptions is correct as it relates to the statutory conditions in the common law provinces? |
The conditions must be identified and printed in every fire insurance policy |
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Pq6: what is the main benefit of a mortgage clause for the mortgage? |
The policy will cover the mortgage even if the insured has breached a condition of the policy |
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Pq7: a homeowner losing the ability to continue to rent his or her basement suite after a fire is an example of a? |
Indirect loss |
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Pq8: which of the following policy provisions is used to restrict coverage specifically regarding the use, condition, or maintenance of the insured property? |
Warranties are used to restrict coverage specifically regarding the use, condition, or maintenance of the insured property |
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Pq9: identify the doctor in that stipulates that, if a lost a property is attributable to more than one cause occurring simultaneously, any one of which is covered by the insurance policy, the loss is payable under the policy: |
Concurrent causation |
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Pq10: which statement is true about replacement insurance? |
It is the current market price |
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Pq11: discuss why the basic fire policy is important for understanding property insurance today (5 marks) |
Evolution of the basic fire policy: - while the basic fire policy is not really sold on its own today, this policy is the basis of today's property policies, so it is important to understand something of its features - are your policies covered direct physical loss or damage to ensured property when it occurs as a result of an insured peril - at first, those perils comprised fire, lightning, and explosion of natural, coal or manufactured gas - over time, as clients needs changed, additional perils were added to fire policies - today, fire policies have become property policies, which ensure against multiple perils - either named perils or all perils that are not excluded |
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PQ12: identify five different classes or specialized forms of coverage that ensures may sell within either personal lines or commercial lines property insurance (5 marks) |
- Marine (inland marine insurance or Marine cargo insurance) - aviation insurance - crop insurance - builders risk - earthquake insurance - equipment breakdown (boiler and machinery insurance) - flood insurance - habitational insurance (homeowners / tenants / condo) |
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PQ13: define an insurance contract. Outline the elements or principles that make it different from other contracts (5 marks) |
- the insurance contract is an agreement or promise between two or more persons, or parties that is intended to be legally enforceable - the written form of the insurance contract is issued by the insurer to the insured as a policy - insurance contracts or policies include the principle of indemnity - that the party shall not receive more than the actual loss suffered - insurance contract or policies include the concept of insurance interest - that the insured must end to benefit from the continued existence of the insured property or be prejudiced by its loss - Insurance contractor policies also include the principle of uberrimae fedei, or utmost good faith, which requires the insured to act with a high standard of honesty and disclose those facts that are reasonable person ought to know are material |
