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1
Q

Risks faced by people fall into these categories

A
  • Personal Risk
  • Property Risk
  • Liability Risk
2
Q

Common ways to deal with risk

A
  • Avoidance of Risk
  • Controlling of Risk
  • Retention of Risk
  • Transfer of Risk
3
Q

Risk control

A

Taking measures to reduce the frequency and severity of losses. (alarm systems)

4
Q

Avoidance of Risk

A

All chance of financial loss eliminated. (rent rather than own building) generally one exposure is replaced with another.

5
Q

Risk Retention

A

Self insuring - suitable for large corporation - more cost effective than other options available to them

6
Q

Transfer of Risk

A

The transfer of risk through insurance is the most popular and practical means of dealing with risk.

7
Q

Major function of Insurance

A

Spread the losses of the few among the many

8
Q

Definition of Insurance

A

The undertaking by one person to indemnify another person against loss or liability for loss n respect of a certain risk or peril to which the object of the insurance may be exposed.. or to pay a sum of money or other thing of value upon the happening of a certain event.

9
Q

Two types of risk

A
  • Speculative Risk

- Pure risk

10
Q

Speculative Risk

A
  • Possibility of either financial loss or gain. (investments, gambling)
  • Insurers will not provide insurance for speculative risk, as the interests of society would not be served if people were able to profit from these losses
11
Q

Pure Risk

A
  • Possibility of financial loss which does not offer a chance of financial gain.
  • No opportunity for people to profit from a loss
  • Only pure risk is insurable.
12
Q

Five elements of a contract

A
  • Agreement
  • Consideration
  • Legality of Object
  • Legal Capacity of Parties to Contract
  • Genuine Intention
13
Q

Define Contract

A

An agreement between two or more persons which creates an obligation to do or not to do a particular thing.

14
Q

For an agreement to exist, there must be:

A
  • An offer made

- An unequivocal and unconditional acceptance of the terms of that offer.

15
Q

Consideration

A

An exchange of something of value between the parties.

  • A return promise
  • An act performed
  • An agreement not to act
16
Q

Legal Capacity to Contract

A

Law enforces only those contracts of persons it recognizes as being competent. Incompetents are protected in law from exploitation.

  • Minors
  • Mental Incompetents
  • Persons under the influence
  • Trade Names
17
Q

To prove Genuine Intention, it is necessary to show that the agreement between the parties was not affected by:

A
  • Fraud
  • Duress
  • Concealment
  • Mistake
18
Q

Elements unique to insurance contracts

A
  • Insurable interest
  • Utmost good faith
  • Indemnity
19
Q

Define void contract

A

one which is unable in law to support the purpose for which it was intended

20
Q

Define voidable contract

A

one which is void as to the wrongdoer but not void as to the wronged party, unless he elects to so treat it.

21
Q

Depreciation is influenced by the following factors:

A
  • Condition of the object
  • Resale value
  • Normal life expectancy
22
Q

Define insurable interest

A

Someone has insurable interest when they can show that they would suffer financially from a loss.

23
Q

Define utmost good faith

A

-Complete honesty of all parties critical to the contract

24
Q

Indemnity

A

-Ensures that people receive the actual amount of their loss, no more and no less.

25
Q

What is an insurance binder?

A

-Broker has committed the insurer to provide a contract of insurance on the subject matter under discussion. May be oral or written. Written binders should include all details to be incorporated into the policy.

26
Q

Peril

A

Cause of the loss

27
Q

Direct Loss

A

Object of insurance attacked by insured peril

28
Q

Indirect Loss

A

Losses which arise as a consequence of a direct loss. (food spoilage, rental income, etc)

29
Q

Actual Cash Value

A

Depreciation is reflected in the settlement.

  • Condition of the Object
  • Resale Value
  • Normal Life Expectancy
30
Q

Replacement Cost

A

Repair or replace with like kind and quality, without deduction for depreciation

31
Q

Valued Policy

A

Insured and Insurer agree at the time the policy is issued as to the cash value of that property. This amount will be paid in the event of a loss.

32
Q

Blanket coverage

A

Selecting a single limit of insurance for all property falling within a specific class. (Golf Equipment)

33
Q

Scheduled coverage

A

Property which is itemized on a policy

34
Q

Role of Provincial Government (ICM)

A
  • Supervise terms and conditions of insurance contracts
  • License insurers, agents, brokers, and adjusters
  • Monitor solvency of provincially licensed insurers.
35
Q

PACICC

A

Property and Casualty Insurance Compensation Corporation

36
Q

What amounts can be claimed under PACICC?

A
  • Maximum of $250,000 for all claims arising from a single occurrence.
  • A refund of up to 70% of unearned premiums, max $700 per policy
37
Q

Basic Coverages

A
  • Fire
  • Lightning
  • Explosion of Natural, Coal, or Manufactured Gas
38
Q

Two types of exclusions

A
  • Property

- Losses

39
Q

Exclusions exist to remove coverage for property or losses:

A
  • Which should be insured elsewhere (auto, aircraft)

- Which are uninsurable and would bankrupt an insurer

40
Q

Fire Insurance policies do not insure:

A
  • losses due to direct application of heat
  • lightning damage to electrical devices and appliances
  • other electrical currents
  • contamination by radioactive material
41
Q

Three forms of misrepresentation

A
  • False description of property to the prejudice of insurer
  • Misrepresentation of material fact
  • Fraudulent omission of material fact.