C12 EXAM QUESTIONS AND ANSWERS
What is Property Insurance and how does it work? - Answer -First party insurance that
protects one home and other possessions. Indemnifies owner of property.
Intangible product
What are the 4 requirements of Property Insurance? - Answer -Utmost good faith
(ultimate trust on both sides)
Fortuitous (chance, covers sudden/accidental loss)
Indemnity (If covered-put someone back to the same situation they were in prior to the
loss)
Insurable interest (need to care about asset- have financial interest)
What are the 5 elements of a basic contract? - Answer -1. An agreement
2. Between legally capable parties
3. For a consideration
4. Demonstrating intent
5. to do something that is legal
What are 3 additional items of an Insurance contract? - Answer -Indemnity
Insurable Interest
Utmost Good faith
Who is covered under property insurance? - Answer --Person (people)=
spouse
relatives living at the insured's residence
students living away from home (under 21 and in your care)
-Business
-Leinholder (third party)
mortgager
Concurrent Causation - Answer -Multiple perils that lead to a loss
one peril may be covered, one may not
Ex. Lightning hits home and a fire starts which creates hole in the roof that causes water
damage. Water damage is excluded but in this case it would be covered because it was
the peril lightning (covered) that caused the water damage
Automatic Reinstatement - Answer -After loss occurs the insured's limits are restored to
the original amount during the policy period
Proximate Cause - Answer -The initial cause of claim
,(ex. during a concert firecracker is thrown around in the audience causing a person to
go blind- the first person who threw it is the cause of the loss)
Warranty - Answer -Statement/stipulation in an insurance policy that restrict coverage
specifically regarding the use, condition, or maintenance of the insured property, if
breached will nulify contract
Ex.
Alarm warranty
Backwater valve warranty
Woodstove warranty
Pose challenges for insurers, as often court will side with insured
Contra Proferentem - Answer -If there are any grey areas/confusing legalities/ambiguity
in a contract then it is against the person that wrote the contract as they had the
opportunity to make it clear
(often when a situation ends up in court, the judge will side with the insured because the
company is to ensure that the contract is correct/clear)
Relief from Forfeiture - Answer -Insurer may argue that an insured's failure to comply
with a particular condition of the policy forfeits the claim.
Insured may then argue that the condition was unreasonable and apply to a court for
relief of forfeiture- the court may agree for the insured to be excused in part or full
(ex. company may only give 15 days to fix roof on house but insured is in the middle of
a bad wind/snowstorm- this would be considered unreasonable)
Material Fact - Answer -Key facts about a risk that may influence the insurance
companies decision to write a risk
Failure to report material fact may result in the insurer:
-Cancelling the policy
-Renewing the policy at a higher amount
-Denying the claim
Define the term Statutory Conditions - Answer -Elements of an insurance contract that
are required by government act/statue
Outline rules of doing business within an insurance property transaction (a promise)
Put in place to protect the insurer and the insured
List the Statutory Conditions - Answer -Misrepresentation
Property of Others
Change of interest
Material Change
Termination
, Requirements After Loss
Fraud
Who may give Notice and Proof
Salvage
Entry, Control, Abandonment
Appraisal
When Loss Payable
Replacement
Action
Notice
S1- Misrepresentation - Answer -Can result in contract being VOID- in this case
premium would be refunded and claim denied on basis that the policy did not exist
(occurs before contract takes effect)
S2 Property of Others - Answer -States that the insurer is not liable to pay for losses to
any person other than the insured unless his/her interest is stated in the contract
ex. two unrelated roomates (one listed on policy, other not) unnamed roomate property
is therefore not insured under the policy contract
ex. borrowed neighbours contents and destroyed it- insurance will not cover
S3 Change of Interest - Answer -Insured cannot assign their rights under the contract
to another party without the insurers consent
You cannot lend your insurance out to people
What are the exceptions to S3 (Change of interest) - Answer -Bankruptcy
Change of title by succession, operation of law, or death of named insured
S4 Material change - Answer -Occurs AFTER contract takes effect.
Insured is obligated to notify insurer of any material changes or contract could be in
breach
Mortgagees and other loss payees listed on the policy are equally obligated
S5 Termination - Answer -Insured can cancel at anytime, some insurers require signed
cancellation
Insurer has regulations (2 methods)
Short rate/pro rata, insurer is required to cancel in writing- personally delivered (need to
give 5 days notice), registered letter (15 days notice). Required to be pro rata
cancellation
S6 Requirements after loss - Answer -Proof of loss providing all details
Insured to notify the insurer as soon as reasonably possible following the loss so an
appropriate investigation to assess coverage can be undertaken
What is Property Insurance and how does it work? - Answer -First party insurance that
protects one home and other possessions. Indemnifies owner of property.
Intangible product
What are the 4 requirements of Property Insurance? - Answer -Utmost good faith
(ultimate trust on both sides)
Fortuitous (chance, covers sudden/accidental loss)
Indemnity (If covered-put someone back to the same situation they were in prior to the
loss)
Insurable interest (need to care about asset- have financial interest)
What are the 5 elements of a basic contract? - Answer -1. An agreement
2. Between legally capable parties
3. For a consideration
4. Demonstrating intent
5. to do something that is legal
What are 3 additional items of an Insurance contract? - Answer -Indemnity
Insurable Interest
Utmost Good faith
Who is covered under property insurance? - Answer --Person (people)=
spouse
relatives living at the insured's residence
students living away from home (under 21 and in your care)
-Business
-Leinholder (third party)
mortgager
Concurrent Causation - Answer -Multiple perils that lead to a loss
one peril may be covered, one may not
Ex. Lightning hits home and a fire starts which creates hole in the roof that causes water
damage. Water damage is excluded but in this case it would be covered because it was
the peril lightning (covered) that caused the water damage
Automatic Reinstatement - Answer -After loss occurs the insured's limits are restored to
the original amount during the policy period
Proximate Cause - Answer -The initial cause of claim
,(ex. during a concert firecracker is thrown around in the audience causing a person to
go blind- the first person who threw it is the cause of the loss)
Warranty - Answer -Statement/stipulation in an insurance policy that restrict coverage
specifically regarding the use, condition, or maintenance of the insured property, if
breached will nulify contract
Ex.
Alarm warranty
Backwater valve warranty
Woodstove warranty
Pose challenges for insurers, as often court will side with insured
Contra Proferentem - Answer -If there are any grey areas/confusing legalities/ambiguity
in a contract then it is against the person that wrote the contract as they had the
opportunity to make it clear
(often when a situation ends up in court, the judge will side with the insured because the
company is to ensure that the contract is correct/clear)
Relief from Forfeiture - Answer -Insurer may argue that an insured's failure to comply
with a particular condition of the policy forfeits the claim.
Insured may then argue that the condition was unreasonable and apply to a court for
relief of forfeiture- the court may agree for the insured to be excused in part or full
(ex. company may only give 15 days to fix roof on house but insured is in the middle of
a bad wind/snowstorm- this would be considered unreasonable)
Material Fact - Answer -Key facts about a risk that may influence the insurance
companies decision to write a risk
Failure to report material fact may result in the insurer:
-Cancelling the policy
-Renewing the policy at a higher amount
-Denying the claim
Define the term Statutory Conditions - Answer -Elements of an insurance contract that
are required by government act/statue
Outline rules of doing business within an insurance property transaction (a promise)
Put in place to protect the insurer and the insured
List the Statutory Conditions - Answer -Misrepresentation
Property of Others
Change of interest
Material Change
Termination
, Requirements After Loss
Fraud
Who may give Notice and Proof
Salvage
Entry, Control, Abandonment
Appraisal
When Loss Payable
Replacement
Action
Notice
S1- Misrepresentation - Answer -Can result in contract being VOID- in this case
premium would be refunded and claim denied on basis that the policy did not exist
(occurs before contract takes effect)
S2 Property of Others - Answer -States that the insurer is not liable to pay for losses to
any person other than the insured unless his/her interest is stated in the contract
ex. two unrelated roomates (one listed on policy, other not) unnamed roomate property
is therefore not insured under the policy contract
ex. borrowed neighbours contents and destroyed it- insurance will not cover
S3 Change of Interest - Answer -Insured cannot assign their rights under the contract
to another party without the insurers consent
You cannot lend your insurance out to people
What are the exceptions to S3 (Change of interest) - Answer -Bankruptcy
Change of title by succession, operation of law, or death of named insured
S4 Material change - Answer -Occurs AFTER contract takes effect.
Insured is obligated to notify insurer of any material changes or contract could be in
breach
Mortgagees and other loss payees listed on the policy are equally obligated
S5 Termination - Answer -Insured can cancel at anytime, some insurers require signed
cancellation
Insurer has regulations (2 methods)
Short rate/pro rata, insurer is required to cancel in writing- personally delivered (need to
give 5 days notice), registered letter (15 days notice). Required to be pro rata
cancellation
S6 Requirements after loss - Answer -Proof of loss providing all details
Insured to notify the insurer as soon as reasonably possible following the loss so an
appropriate investigation to assess coverage can be undertaken
