C12 - Insurance on Property – Midterm Exam Questions and Answers 100% Pass

C12 - Insurance on Property – Midterm Exam Questions and Answers 100% Pass 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 The Basic Fire Policy - Extensions - Correct Answer ️️ -1. Removal of insured property - extends any remaining coverage to insured property removed from insured locations to prevent further damage 2. Debris removal - covers the expense of removing ruble or debris from the insured location, as a result of loss or damage by an insured peril Additional Perils - Correct Answer ️️ -Broadening of the basic policy 1. explosion (beyond basic fire) 2. Impact by aircraft / spacecraft / land vehicle 3. Riot, vandalism or malicious acts 4. Smoke 5. Leakage from fire protective equipment 6. Windstorm or hail Other additional perils - Correct Answer ️️ --Falling object -Glass breakage -Water damage Multi-Peril Policies - Correct Answer ️️ --Combine policy forms, covering various classes of business in package policies -Perils were on different policies -Combines perils: Theft, loss in transit Mortgages and Mortgagees - Correct Answer ️️ --Protection for financial lenders -Mortgage = interest in property as security for a debt -Mortgage clause: 1. greater protection for lender 2. protection due to breach of contract 3. separate contract What is Covered - Correct Answer ️️ -1. subject of insurance (tangible): -documented in policy -details of risk -Insurable interest / property of others 2. Breakdown of a policy -Property 1st party -liability 3rd party 3. Direct vs indirect loss Fundamental principles of insurance - Correct Answer ️️ -1. Limitation of liability clause 2. Identified articles 3. Names / unnamed locations 4. Special stipulations (ex: warranties) 5. Automatic reinstatement 6. Renewal of contract 7. Waiver of contract terms Key Claim Concepts - Correct Answer ️️ -1. Fortuity (occurs by chance or by accident) 2. Proximate cause (unbroken chain of events that results in loss or damage, immediate cause and effect) 3. Concurrent causation (more than one cause, perils occur simultaneously) 4. Basis of payment (ACV, RC, indemnity) Common Law - Correct Answer ️️ --Origins = england -Case law provides guidance -Statute law -Canada's system = case and statute law -Contra proferentem Civil Code of Quebec - Correct Answer ️️ --Exclusive to quebec -Based in part on France's code -Courts formulate own opinion Statutory Conditions - Correct Answer ️️ --Applicable to all fire insurance contracts -Must be printed on all fire policies -15 conditions 15 Statutory Conditions - Correct Answer ️️ -1. Misrepresentation 2. Property of others 3. Change of interest 4. Material change 5. Termination 6. Requirements after loss 7. Fraud 8. Who May Give Notice & Proof 9. Salvage 10. Entry, Control, Abandonment 11. Appraisal 12. When loss payable 13. Replacement 14. Action 15. Notice Statutory Condition 1: Misrepresentation - Correct Answer ️️ --Material facts -Full disclosure required