C12 TEST 1 QUESTIONS & ANSWERS
Define indemnity and explain how this insurance principle is applied in the Basic Fire
Policy - Answer -Indemnity is the compensation offered by the policy of insurance. The
principle of indemnity is that the insured shall not receive more than the actual loss
suffered.
The Basic Fire Policy is relatively simple and serves as an example of the minimum
terms and conditions necessary to form a contract of fire insurance.
What is property insurance, and what are the NINE (9) key elements that each policy
sold must contain? - Answer -Property insurance is first-party insurance that
indemnifies the owner or user of property for its loss, or the loss of its income-producing
ability, when the loss or damage is caused by a covered cause of loss, such as fire or
explosion.
Each policy of insurance that is sold shall contain certain key elements:
- The name of the insurer
- The name of the insured
- The name of the person or persons to whom the insurance money is payable
- The amount, or method of determining amount, of premium for the insurance
- The subject matter of insurance
- The indemnity for which the insurer may become liable
- The event on the happening of which liability is to accrue
- The effective date of the insurance
- The expiry date or method by which it is to be fixed
What is a mortgagee? How are mortgagee's investments protected by legislation? -
Answer -Mortgagees or other lenders who have accepted insured property as security
for their loans will be prejudiced by the loss, damage, or destruction of that property, so
they have an insurable interest in it.
The mortgagee's interest is often protected by the addition of a Mortgage clause to the
property policy. A Mortgage clause offers greater protection for a mortgagee in
exchange for some benefits that accrue to the insurer.
Statutory conditions are set out in the respective provincial Insurance Acts. In each of
the following situations, identify the Statutory Condition that would apply and describe
how it would apply - Answer -a) The insured cancels the coverage during the policy
term
Statutory Condition 5: Termination - the insured may cancel the policy immediately, on
request
Define indemnity and explain how this insurance principle is applied in the Basic Fire
Policy - Answer -Indemnity is the compensation offered by the policy of insurance. The
principle of indemnity is that the insured shall not receive more than the actual loss
suffered.
The Basic Fire Policy is relatively simple and serves as an example of the minimum
terms and conditions necessary to form a contract of fire insurance.
What is property insurance, and what are the NINE (9) key elements that each policy
sold must contain? - Answer -Property insurance is first-party insurance that
indemnifies the owner or user of property for its loss, or the loss of its income-producing
ability, when the loss or damage is caused by a covered cause of loss, such as fire or
explosion.
Each policy of insurance that is sold shall contain certain key elements:
- The name of the insurer
- The name of the insured
- The name of the person or persons to whom the insurance money is payable
- The amount, or method of determining amount, of premium for the insurance
- The subject matter of insurance
- The indemnity for which the insurer may become liable
- The event on the happening of which liability is to accrue
- The effective date of the insurance
- The expiry date or method by which it is to be fixed
What is a mortgagee? How are mortgagee's investments protected by legislation? -
Answer -Mortgagees or other lenders who have accepted insured property as security
for their loans will be prejudiced by the loss, damage, or destruction of that property, so
they have an insurable interest in it.
The mortgagee's interest is often protected by the addition of a Mortgage clause to the
property policy. A Mortgage clause offers greater protection for a mortgagee in
exchange for some benefits that accrue to the insurer.
Statutory conditions are set out in the respective provincial Insurance Acts. In each of
the following situations, identify the Statutory Condition that would apply and describe
how it would apply - Answer -a) The insured cancels the coverage during the policy
term
Statutory Condition 5: Termination - the insured may cancel the policy immediately, on
request
