C12 - INSURANCE ON PROPERTY – MIDTERM
Defining Property Insurance - 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 - Answer -R: buildings or land (can't be moved)
P: office desk or machinery (can be transported)
Promise that Property Insurance is based on - Answer --Insured promise to pay a
premium
-Insurers promise to protect and indemnify
Five elements of an Insurance Contract - Answer -1. Agreement (offer and acceptance)
2. Capacity to contract
3. Consideration
4. Genuine intent
5. Legality
Additional Features of Insurance Contract - Answer -1. Insurable interest
2. Indemnity
3. Principle of utmost good faith
Insurance Policy - Answer --Formal agreement between parties
-Outlines the terms and conditions
-One year term
-Claims
2 Types of Classes of Insurance - Answer -1. Personal (habitational)
2. Commercial (building, equipment, stock)
Classes of Insurance - 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 - 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 - 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 - 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 - Answer --Specific circumstances
-Temporary or permanent
-May exclude part of the coverage
-Restricts
The 2 Groups of Basic Fire Policy Exclusions - Answer -1. Exclusions of legislative
considerations
2. Exclusions for underwriting and rating considerations
Group 1: Exclusions for Legislative Considerations - 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 - 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 - 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 - 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 - 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 - Answer --Falling object
-Glass breakage
-Water damage
Multi-Peril Policies - 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 - 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 - 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 - 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 - Answer -1. Fortuity (occurs by chance or by accident)
Defining Property Insurance - 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 - Answer -R: buildings or land (can't be moved)
P: office desk or machinery (can be transported)
Promise that Property Insurance is based on - Answer --Insured promise to pay a
premium
-Insurers promise to protect and indemnify
Five elements of an Insurance Contract - Answer -1. Agreement (offer and acceptance)
2. Capacity to contract
3. Consideration
4. Genuine intent
5. Legality
Additional Features of Insurance Contract - Answer -1. Insurable interest
2. Indemnity
3. Principle of utmost good faith
Insurance Policy - Answer --Formal agreement between parties
-Outlines the terms and conditions
-One year term
-Claims
2 Types of Classes of Insurance - Answer -1. Personal (habitational)
2. Commercial (building, equipment, stock)
Classes of Insurance - 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 - 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 - 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 - 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 - Answer --Specific circumstances
-Temporary or permanent
-May exclude part of the coverage
-Restricts
The 2 Groups of Basic Fire Policy Exclusions - Answer -1. Exclusions of legislative
considerations
2. Exclusions for underwriting and rating considerations
Group 1: Exclusions for Legislative Considerations - 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 - 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 - 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 - 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 - 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 - Answer --Falling object
-Glass breakage
-Water damage
Multi-Peril Policies - 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 - 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 - 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 - 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 - Answer -1. Fortuity (occurs by chance or by accident)
