C12 - INSURANCE ON PROPERTY – MIDTERM EXAM UPDATED
QUESTIONS AND ANSWERS
Defining Property Insurance - CORRECT ANSWER✅✅✅-Protection against loss/damage to property
-First party insurance
-Premium exchanged for protection
-Fortuitous losses (sudden and accidental)
-Insurable interest
-Intangible product
Real vs Personal Property - CORRECT ANSWER✅✅✅R: buildings or land (can't be moved)
P: office desk or machinery (can be transported)
Promise that Property Insurance is based on - CORRECT ANSWER✅✅✅-Insured promise to pay a
premium
-Insurers promise to protect and indemnify
Five elements of an Insurance Contract - CORRECT ANSWER✅✅✅1. Agreement (offer and
acceptance)
2. Capacity to contract
3. Consideration
4. Genuine intent
5. Legality
Additional Features of Insurance Contract - CORRECT ANSWER✅✅✅1. Insurable interest
2. Indemnity
3. Principle of utmost good faith
Insurance Policy - CORRECT ANSWER✅✅✅-Formal agreement between parties
,-Outlines the terms and conditions
-One year term
-Claims
2 Types of Classes of Insurance - CORRECT ANSWER✅✅✅1. Personal (habitational)
2. Commercial (building, equipment, stock)
Classes of Insurance - CORRECT ANSWER✅✅✅1. EBI - large machinery
2. Crop - growing of crops
3. Aviation - aircrafts
4. Earthquake
5. Flood
6. Marine - goods in transit
7. Builders risk - COC
Elements of the Property Policy - CORRECT ANSWER✅✅✅1. Name of insurer / insured
2. Names to whom the insurance money is payable
3. Premium
4. Subject matter of insurance
5. Indemnity for which insurer may become liable
6. Events / perils of which liability will accrue
7. Effective / expiry date
Deductible definition - CORRECT ANSWER✅✅✅An agreed, specified amount that the insured must
pay on a claim before the insurance company will cover the rest of the claim
Evolution of Property Insurance - CORRECT ANSWER✅✅✅-First insurance policy = fire policy.
It covered fire, lightning and limited explosion
, -Then it evolved into additional perils. So insurance against named perils or all risks
Purpose of Exclusions - CORRECT ANSWER✅✅✅-Specific circumstances
-Temporary or permanent
-May exclude part of the coverage
-Restricts
The 2 Groups of Basic Fire Policy Exclusions - CORRECT ANSWER✅✅✅1. Exclusions of legislative
considerations
2. Exclusions for underwriting and rating considerations
Group 1: Exclusions for Legislative Considerations - CORRECT ANSWER✅✅✅1. Electrical devices
2. Application of heat
3. War risks
4. Nuclear incident (exclusions also applies to radioactive material)
Group 2: Exclusions for Underwriting and Rating Considerations - CORRECT ANSWER✅✅✅1.
Excluded property
2. Alterations and additions exclusion
3. Vacancy, unoccupancy, or disuse exclusion
4. Volatile substances
5. By-laws exclusion
The Basic Fire Policy: Statutory Conditions - CORRECT ANSWER✅✅✅Legislation stipulates:
-Conditions must be printed
-Avoid any changes
-Only applies to fire insurance
Quebec has no equivalent, articles are not enclosed
QUESTIONS AND ANSWERS
Defining Property Insurance - CORRECT ANSWER✅✅✅-Protection against loss/damage to property
-First party insurance
-Premium exchanged for protection
-Fortuitous losses (sudden and accidental)
-Insurable interest
-Intangible product
Real vs Personal Property - CORRECT ANSWER✅✅✅R: buildings or land (can't be moved)
P: office desk or machinery (can be transported)
Promise that Property Insurance is based on - CORRECT ANSWER✅✅✅-Insured promise to pay a
premium
-Insurers promise to protect and indemnify
Five elements of an Insurance Contract - CORRECT ANSWER✅✅✅1. Agreement (offer and
acceptance)
2. Capacity to contract
3. Consideration
4. Genuine intent
5. Legality
Additional Features of Insurance Contract - CORRECT ANSWER✅✅✅1. Insurable interest
2. Indemnity
3. Principle of utmost good faith
Insurance Policy - CORRECT ANSWER✅✅✅-Formal agreement between parties
,-Outlines the terms and conditions
-One year term
-Claims
2 Types of Classes of Insurance - CORRECT ANSWER✅✅✅1. Personal (habitational)
2. Commercial (building, equipment, stock)
Classes of Insurance - CORRECT ANSWER✅✅✅1. EBI - large machinery
2. Crop - growing of crops
3. Aviation - aircrafts
4. Earthquake
5. Flood
6. Marine - goods in transit
7. Builders risk - COC
Elements of the Property Policy - CORRECT ANSWER✅✅✅1. Name of insurer / insured
2. Names to whom the insurance money is payable
3. Premium
4. Subject matter of insurance
5. Indemnity for which insurer may become liable
6. Events / perils of which liability will accrue
7. Effective / expiry date
Deductible definition - CORRECT ANSWER✅✅✅An agreed, specified amount that the insured must
pay on a claim before the insurance company will cover the rest of the claim
Evolution of Property Insurance - CORRECT ANSWER✅✅✅-First insurance policy = fire policy.
It covered fire, lightning and limited explosion
, -Then it evolved into additional perils. So insurance against named perils or all risks
Purpose of Exclusions - CORRECT ANSWER✅✅✅-Specific circumstances
-Temporary or permanent
-May exclude part of the coverage
-Restricts
The 2 Groups of Basic Fire Policy Exclusions - CORRECT ANSWER✅✅✅1. Exclusions of legislative
considerations
2. Exclusions for underwriting and rating considerations
Group 1: Exclusions for Legislative Considerations - CORRECT ANSWER✅✅✅1. Electrical devices
2. Application of heat
3. War risks
4. Nuclear incident (exclusions also applies to radioactive material)
Group 2: Exclusions for Underwriting and Rating Considerations - CORRECT ANSWER✅✅✅1.
Excluded property
2. Alterations and additions exclusion
3. Vacancy, unoccupancy, or disuse exclusion
4. Volatile substances
5. By-laws exclusion
The Basic Fire Policy: Statutory Conditions - CORRECT ANSWER✅✅✅Legislation stipulates:
-Conditions must be printed
-Avoid any changes
-Only applies to fire insurance
Quebec has no equivalent, articles are not enclosed
