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29 Cards in this Set

  • Front
  • Back
Utmost good faith
Standard of honesty greater than that usually required in most ordinary contracts
Most classes of general insurance do not require written application. Life insurance requires written applications. Provincial insurance acts specify which classes of insurance require written application


Misrepresentation
misleading the insurer as per material facts either by lying or not disclosing
Material fact
Something affecting a contract of insurance
Statutory conditions and Quebec general conditions
Provincial insurance act sets out certain conditions that must form part of every insurance policy. Quebec conditions are statutory in nature but it does not set out the exact words that must be used
Cancelling temporary insurance
Except a binder expires, it can only be terminated in accordance to statutory conditions which includes proper notice in a specified manner or by a given formality by surrendering of the document on mutual agreement.
Policy five components

Introduction


Insuring agreements: subject matter of insurance, perils, exclusions, circumstances for which insured may receive claim benefits


Statutory condition/Quebec general conditions: do not apply to every class of insurance


Policy conditions


Signature clause: insured's signature is not required.


Subscription policy
usually used to insure large risk. One insurer prepares the policy (lead company) while one or more insurers subscribe to it or participate in covering the risk.
Manuscript policy
designed for a particular risk and does not use pre-printed wordings but rather individual manuscripts.

If policy issued to insured is different from the application then...
The insured must be notified in writing. They are given time to respond. No specific time limit is given in Quebec.
Certificate of insurance
could be a modified form of a policy. Like in automobile, most provinces have a standard renewal certificate. It is quick and does not contain repeated information already existing in the original policy.
Endorsement
Any writing in the back of the policy which varies the terms of the contract. It overrules any wordings in the policy itself which is inconsistent with the endorsement.
Name the insurance documents: there are 6

Cover note, binder, endorsement, policy, certificate of insurance, application


Loss payable clause
Names of additional persons or corporations interested in the insurance like banks or mortgagee are written in the loss payable clause as the loss payees so that when a loss occurs, payment is jointly given to the insured and loss payee
Mortgage clause
It recognizes the existence of a mortgage. The purpose is to express an agreements between the mortgage and the insurer which is independent of the agreement between the insurer and the insured.
Rights of Mortgagee

1) Losses are payable to the mortgagee as their interests may appear: mortgagee has a right to share in the loss of payment as long as insured owes something on the mortgage.


2) Clauses entitles the mortgagee to receive a loss payment regardless of any act or negligence of the mortgagor or occupation of premises more hazardous than permitted by the policy.

Obligations of Mortgagee

1)Must inform insurer of any increased hazard or non-occupancy over 30 days. Mortgagee is not penalized when a loss occurs if they didn't know.


2) Most pay an extra premium, on reasonable demand, because of increase in hazard from the date the hazard existed.


Rights of insurer when insured has violated a condition of the policy

1) Pay loss and recover amount from mortgagor.


2) Buy out the mortgagee where insurer receives full assignment and transfer of mortgage and all other securities held as collateral.


If loss is less than the mortgage amount, option 1 is viable.

Franchise and disappearing deductibles are rarely encountered

Disappearing deductible
The higher the loss, the less the deductible

Franchise deductible
If loss is more than deductible, the full loss amount is paid
Coinsurance clause
Designed to encourage insured to carry adequate amount of insurance on their property by requiring them to bear a portion of the loss if underinsurance exists. Formula= actual ins/req ins * loss amount = amount insurer will pay
Can you assign your insurance over
No: unless the insurer consents to the contract with another person. Exceptions: Under the bankruptcy act where bankrupt persons transfer their assets to trustee for the benefit of creditors. Same applies to those who have died and transfer to executors or administrators. In house sale, the former owner can sign off his or her interest in the insurance policy; the new owner has insurable interest and the insurer consents to the change by issuing an endorsement.
Transfer of consent
Document used to effect the change and transfer of insurance policy.
Termination of insurance contracts by insurer and insured. Explain.
Insurer can only cancel by giving number of days notice in writing and returning the pro rate premium. Insured can cancel anytime but the insurer will retain premium calculated at a short date or short rate basis. The contract can also be cancelled by mutual agreement
Void policy
Void from the beginning so insurer would return the entire premium. If nondisclosure, the insurer can returns the pro rata premium making the policy valid and existent from the start.
Nondisclosure or concealment
Failure to disclose material fact.
How to read policy

Who is covered


what is covered


Perils


Coverage amount


Exclusions


Extensions


Conditions of coverage