Caib 2 Chapter 1

Front 1

What is included in the definition of building?

Back 1

-Fixed structures pertaining to building;
Additions and extensions in contact with building; Permanent fittings and fixtures (heating etc); Materials, equipment and supplies used for minor maintenance; Growing decorative pains, inside building

Front 2

What is included in the definition of stock?

Back 2

-Merchandise USUAL to insureds business; packing, wrapping and advertising material; similar property to others, for which insured is liable

Front 3

What is included in equipment?

Back 3

-General contents usual to the insureds business, furniture, fittings, machinery etc; tenant's improvements; Similar property belonging to others for which the insured is liable

Front 4

What conditions need to be present for "similar property belonging to others" to be insured?

Back 4

-Insured has to be legally liable; Insured was obligated to insure it; it must be similar to insureds usual stock or equipment already insured

Front 5

What are the 5 ways to determine ACV?

Back 5

1.Formula/cost depreciation

-Straight line depreciation

-plateau depreciation 2.Market value/direct sales approach 3.True value to owner 4.Income approach 5.Broad approach

Front 6

What are 6 factors used in the broach approach to determine value?

Back 6

Assessed valuation

; Resale value

; Market value

; Obsolescence
; Use of building

; Rental value

Front 7

What are two ways to insure commercial property?

Back 7

All property
; Scheduled

Front 8

What are three ways property can be valued?

Back 8

ACV
; Replacement
; Book

Front 9

What is reinsurance?

Back 9

Ceding part of the risk to other insurers

Front 10

What are 3 rules/guidelines of resinsurance?

Back 10

1.All share in premiums and losses

; 2.The contract is between the primary insurer and the reinsurers

; 3.The primary insurer controls the policy and claims

Front 11

What is subscription insurance?

Back 11

When a group of insurers participate in providing insurance coverage.

Front 12

What are the 2 rules/characteristics of subscription policies?

Back 12

1. All share in premiums and losses

; 2. Each agreement is negotiated separately

Front 13

Why might someone negotiate a subscription policy?

Back 13

-Risk exceeds limits of what insurers is willing to pay at once

; -Risk is too specialized for reinsurance treaties

; -Spread business among large markets

; -Type of risk is not one insurer wants to expose it's reinsurers to

Front 14

Three common commercial policy clauses?

Back 14

Deductible

; Indemnity

; Co-insurance

Front 15

Why do exclusions exist?

Back 15

-Some losses are not insurable (war)

; -Some losses would be catastrophic (earthquake)

; -Some losses are best served with specialized policies (air/auto)

Front 16

What is permission?

Back 16

- To have concurrent insurance

- To make additions, alterations or repairs

- To do such work and keep such articles which are necessary for the insureds business

Front 17

When will a breach of conditions not affect a claim payout?

Back 17

- If breach had nothing to do with loss

; - If breach occured in area of premises not controlled by insured

Front 18

Who is protected from subrogation?

Back 18

Business partner or anyone with insurable interest

Front 19

What conditions apply to property protection systems?

Back 19

- To notify forthwith of any defects or flaws

; - To notify forthwith if the service has been discontinued or cancelled

; - To notify forthwith if the authorities have suspended response to service

Front 20

Why does the Verification of Values clause exist?

Back 20

-Allows the insurer to confirm that the levels of insurance are reasonable

-Allows the insurer to determine values on hand after a previous loss

-Allows the insurer to check for the existence of other insurance policies, which may have to share claim payment

Front 21

What property has special basis of settlement?

Back 21

Tenant's improvements

; Business records (blank plus cost to copy)

Front 22

What are the terms of the locked vehicle warranty?

Back 22

-vehicle must be locked, windows rolled up

; -vehicle must have enclosed space

; -vehicle must have been forcibly entered

; -visible signs of forcible entry must be present

Front 23

What are breaches of good faith under Statutory Condition 1?

Back 23

1. Any false description of property

; 2. Any misrepresentation of material fact

Front 24

What counts as a material fact?

Back 24

1. Matters inherent to the property

- details about heating and electrical

; 2. Personal info bearing moral hazards

Front 25

What personal information about moral hazards would be considered material fact?

Back 25

-Claims history
; -Other insurance

; -Number of mortgages on property
; -Been turned down for insurance

; -Vacancy
; -Use of premises

Front 26

What facts are not deemed to be material?

Back 26

-facts which are known (or reasonably presumed known) to insurer

; -facts which are easily discovered upon inquiry

; -facts which lessen risk

Front 27

What must an insurer do to deny coverage based on misrepresentation?

Back 27

Prove that the misrepresentation contributed to the loss.

Front 28

When an insurer received notice of a Material Change what may they do?

Back 28

-Cancel policy and return unearned premium;

-Accept policy with higher premium

Front 29

What are some additional conditions?

Back 29

-Notice to authorities

; -Sue and labour - duty of insured to try to ; recover property

; -No benefit to bailee

; -Pair and set

; -Parts

Front 30

What is the difference between package and manuscript polices?

Back 30

Package combine under one form.
Manuscript policies are written for risks which so standard coverage exists.

Front 31

What is the intent of the waiver of co-insurance clause?

Back 31

Eliminates the needs for costly inventory to prove compliance with co-insurance.