Overall

Question 1

General insurance is referred to as?

Answer 1

Property and casualty insurance

Question 2

A client wants terrorism insurance for his hotel; however, the insurance companies that the broker deals with do not provide such coverage. The broker can obtain such coverage from?

Answer 2

Wholesale brokers who specialize in non standard or difficult to place risks

Question 3

Material info disclosed to a broker or agent by a client is deemed to be?

Answer 3

Knowledge of the insurer

Question 4

As an insurance professional, your role throughout the interaction with your client is?

Answer 4

Contact person, salesperson, insurance advisor, and service provider

Question 5

What is utmost good faith

Answer 5

Is the legal principle that requires all people involved in an insurance contract to act with the highest ethical standard and requires full disclosure by the insured and brokers/agents of all information material to the contract

Question 6

What is errors and omissions?

Answer 6

to have done something wrong to have not done something you should have done

Question 7

What is the best defense against errors and omissions?

Answer 7

documentation: always keep a record in your file detailing whom you talked to, the date the discussion took place, what you talked about and the subsequent actions that you have taken
communications: communicate clearly with your clients what you will do on their behalf, and confirm action taken. Provide your insurers with prompt, complete instructions and information. Act within the scope of your authority and competence.

Question 8

What are some possible causes of E&O?

Answer 8

?inadequate coverage
?the agent/broker did not understand the nature of the risk and did not obtain the full detail of the risk by asking the required questions
?the agent/broker did not pursue placing coverage
?wrongly advised the client that coverage was not available
?or wrongly advised the client that coverage was already in place when it was not
?wrong coverage ex. client requires replacement cost on his COED but the broker arranged coverage based on ACV

Question 9

After the broker/agent has pre?qualified the client, what actions must he or she take to fulfill the insurance negotiating process?

Answer 9

? review the clients insurance portfolio
?solicit information from the client as required
?offer options to improve coverage, if possible
?carry out the clients instructions
?arrange insurance coverage
?arrange changes to existing coverage
?arrange for cancellation or lapse of coverage

Question 10

Define risk

Answer 10

The possibility of loss or damage to property, or the change of incurring liability. Individuals transfer their risks, business and personal, to insurance companies by buying insurance policies.

Question 11

What is an insurance policy?

Answer 11

A contract formed between an insurance company (the insurer) and a customer (the insured), in which the insurer reimburses the insured for specified losses.

Question 12

What are the three major categories of insurance?

Answer 12

Social insurance
Life and health insurance
General insurance/property and casualty insurance

Question 13

What is an insurance intermediary?

Answer 13

Also known as agents and brokers, they help in identifying insurance needs, matching those needs with products that are available, and facilitating insurance contracts to the satisfaction of both insurers and insureds.

Question 14

What limits the type of insurance an intermediary can provide?

Answer 14

Insurance intermediaries can deal with all of the lines of insurance, provided they are licensed to do so

Question 15

What are the difference between an agent and a broker?

Answer 15

Agents? generally sell and service the insurance policies offered by a single insurer. The agents are either employed by an insurer or operate independently on contract with only one insurer.

Brokers? Independent business people, own brokerages. The brokerage is paid commission for each policy it issues on behalf of its clients. Sometimes will charge a fee to clients for its services, rather then taking a commission from the insurer. Brokerages operate with multiple insurers.

? both act as intermediaries
?both act to facilitate the purchase of an insurance policy
?both service the account

Question 16

What is the difference between an employed agent and an independent agent?

Answer 16

Employed agents? work directly for the insurer. These insurers are known as direct writers, because they sell insurance directly to the public. The insurance policies sold, business written and client list belong to the insurer.

Independent Agents? Maintain separate offices from the one insurer they deal with. These companies are known as agencies. The business and client list usually belong to the insurer, and commissions for new business is generally set higher to encourage production.

Question 17

When would a wholesale broker be used?

Answer 17

When a clients risk cannot be adequately covered through the one or more insurers that a broker or agent represents, the broker or agent may be able to arrange coverage through a wholesale broker.

ex. golf courses, hotels or motels, fine art galleries

Question 18

What is a non standard risk

Answer 18

Client could have poor loss history, or the risks, by their very nature, could be hard to place in regular markets. Non standard risks require a higher degree of underwriting expertise not generally available from the regular insurance markets.

Question 19

Define agent as it is used in the Law of Agency

Answer 19

An agent is a person who is authorized to act on behalf of another. Under common law, agents are employed to secure contracts or act for their employers in contractual matters. Consequently, agents may be employees, or they may be independent business people.

Question 20

What is a mandate, mandator and madatary?

Answer 20

mandate? a contract
mandator? the principal
mandatory? the agent

Question 21

.

What are the responsibilities of an insurance intermediary?

Answer 21

The dual responsibilities of the intermediary role places obligations to act as both agent to the insurer and as principal and agent for the insured at different points in the insurance transaction.

?when soliciting insurance applications, describing types of coverage and policies available, and interpreting policy provisions, and interpreting policies provisions, intermediaries act for the insurer

?when providing insurance advise, carrying out specific tasks requested by a client, such as increasing coverage, and monitoring a clients insurance needs, they act for the client

Question 22

From what document does an intermediary receive authority?

Answer 22

agency/brokerage contract or agreement

Question 23

What is the purpose of the agency/brokerage contract or agreement?

Answer 23

Details the authority, obligations, rights and duties of each party. The contract is the basis of the relationship between the broker or independent agent and the insurer

Question 24

Define duty of care

Answer 24

A legal duty that one owes to another, arising out of the principal relationship. Standards are prescribed by common law, the civil code of quebec, and statute law.

When acting as an insurance intermediary, perfection is not required, but a reasonable degree of care?that of a reasonable competent agent? is expected.

Question 25

How are the rights of consumers protected?

Answer 25

Common law, civil code and statutory duties flow from the responsibilities assumed by intermediaries: what they say they will do, what they do, and to what extent clients have relied on statements made by them. These laws protect the rights of consumers. When it comes to analyzing to whom the duty of care is owed, the insurance professional can expect that the clients interests should come above those of the insurer.

Question 26

What is an insurance intermediarys functions?

Answer 26

prospect for potential new clients
qualify the client
advise the client
facilitate the application for insurance
obtain instructions from the client
negotiate insurance
facilitate the claims process

Question 27

How can you identify potential clients?

Answer 27

target marketing? developing a sales strategy to target a specific segment of the population

market segmentation? identifying the potential insureds you could approach based on your target marketing plan

advertising? advertising your services in relevant publications or by creating a sales publication to be distributed

cold?calling? contacting people you have never met, to introduce yourself and offer your services

referrals? selling to friends or family members of existing clients based on the clients recommendations

Question 28

What advice does an insurance intermediary offer to a client?

Answer 28

?evaluate clients exposures and advise what improvements can be made to the clients current insurance program
?recommend insurance
?advise of all insurance available
? advise to control risk

Question 29

What are some of the steps in the insurance negotiating process?

Answer 29

?review the clients insurance portfolio
?solicit information from the client, as required
?offer options to improve coverage, if possible
? carry out the clients instructions
?arrange insurance coverage
?arrange changes to existing coverage
?arrange for cancellation or lapsing of coverage

Question 30

What actions and responsibilities do you have when a claim is reported?

Answer 30

?reassure your client that you are there to assist in notifying the insurer of the claim and in explaining the claims process to the client

?Review the situation and offer any immediate assistance if necessary

?avoid making any comments on the validity of a claim as brokers and agents do not confirm or deny coverage

?outline the basic claims process and advise your client of what to expect

?notify the insurer

? monitor the progress of the claim

? call the client to verify that the claim is progressing to his or her satisfaction

Question 31

Why do licensing requirements for intermediaries exist in every jurisdiction?

Answer 31

They are protection for the consumer to ensure that those who advise the public on insurance matters are qualified to do so.

Question 32

What is restrictive and progressive licensing?

Answer 32

Allows the license holder to transact business in only certain classes of insurance, and some offer different levels of licensing.
The first level permits the licensee to work under the supervision of a more experienced individual and handle only certain types of insurance.

After completing further study and obtaining work experience, individuals are permitted to write the next level of examination.

Question 33

What characterizes a professional insurance agent or broker?

Answer 33

Must be well informed, comply with the law and relevant rules of insurance, and operate with the utmost good faith.

Question 34

Under the code of ethics, what duties are brokers expected to render to their clients? To their insurers?

Answer 34

Duty to clients? provide the coverage best suited to the clients needs, not be swayed by remunerative gain, not take advantage of clients lack of knowledge or inexperience, hold information in strict confidence and competently perform services undertaken, which requires broker to be well educated and indicates the needs for continuing education

Duties to the insurer? be honest and trustworthy, stay within the terms of the broker agreement and disclose all relevant material facts to the insurer, even if it will make placing the risk difficult

Question 35

What is a material fact

Answer 35

Any information that could affect the contract of insurance to an extent that, if it were disclosed, it wold change the agreement between the insurer and the insured. Material facts must always be disclosed. If such facts are not revealed when asked about, the policy involved could become void as a result, meaning the clients claim will not be paid.

Question 36

What is PIPEDA?

Answer 36

The Personal Information Protections and Electronic Documents Act?governs the collection and use of personal information. PIPEDA, a federal statue, states that personal information collected must be relevant, and that all information collected must be held in the strictest of confidence.

Question 37

What are the common elements of customer service?

Answer 37

Timeliness, clarity in conveying information, accuracy, courtesy and professional manners.

Question 38

What skills are required for effective communication?

Answer 38

verbal? body language, tone, and the way words are delivered, not just through the words themselves

Written? email, letters, faxes etc.

Active listening? listen to what is being said, interpreting how it is being said, processing non verbal cues, questioning those parts that you did not understand, and confirming that what you did absorb was understood correctly.

Question 39

What are matching and mirroring in verbal communication?

Answer 39

When communicating in person with a client if you tend to assume at least some of the same body positions or postures, this is matching. When similar actions are performed, as if looking in a mirror, this is called mirroring.

Question 40

What are some of the cues to listen to during a telephone conversation?

Answer 40

?tone
?vocabulary
?rate of speech

Question 41

How would you prepare for a telephone conversation with a client?

Answer 41

make available the things you will need
? pad of paper
?pens
?access to the computer files
?client files for reference
?a calculator
?any forms or applications you may need

Question 42

How would you counter a clients reaction to bad news?

Answer 42

Remain calm, clarify the clients position, keep the discussion focused on the facts, and avoid falling into the traps inherent to the specific situation.
Spend time with your client, appreciate their feelings, have empathy for the situation

Question 43

What is a target market? What is a lead?

Answer 43

A source of potential clients, this may be further segmented into groups identifiable by age, socio?economic backgrounds, personal interests, business pursuits, coverage needs etc.A Lead is a member of a group of potential clients that fits a certain profile, which you have determined as your marketing target.

Question 44

What information do you require to qualify a client?

Answer 44

?name
?address and email address
?phone numbers
?family information
?interests and hobbies

Question 45

What are three sources of clients?

Answer 45

Referrals? majority of brokers business comes from referrals. Because existing clients have referred them, new prospects are generally from the same target segment.

Advertising/walk ins? advertising in the local media or yellow pages can generate clients. If your brokerage operates a storefront business clients may see your office and come in.

Cold calling? making contact with a person you do not know in order to introduce yourself and your services.

Question 46

What is an X date and what is the importance of collecting them?

Answer 46

also known as an expiry date, tracking expiry dates is a way to form a database of prospective customers.

Question 47

How long are files retained?

Answer 47

There are no provincial regulations that specify how long insurance documents must be kept or how they are to be kept. Generally insurance professionals are guided by the prescription periods applicable to various classes of insurance when determining the length of time that documents should be retained.

Question 48

What is a prescription period

Answer 48

In law, is a time after which a cause of action ceases. In insurance, it is the time after which a claim may not be brought.

Question 49

What is risk management?

Answer 49

The minimization (at a cost) of the detrimental effects of risk by identifying the risk, measuring the risk, and controlling the risk.

Question 50

What is risk analysis?

Answer 50

Assessing your potential clients exposures in the broader context of risk. this includes, risk to physical property, financial exposures to liability risks, and the assessment of the potential client.

Question 51

What are some property risks a client could face?

Answer 51

Physical property refers to any material goods a client may own. These can range from high value items such as a car or house, to a clients collection of antique dolls. Anything that would result in a financial loss to the client should loss or damage occur

Question 52

What are some liability risks a client could face?

Answer 52

Liability refers to a legal obligation. Liability exists where an individual has a responsibility for the safety or property of another. Not only are individuals responsible for their own actions, however unintentional, they are also responsible for the actions of their children and pets.

Question 53

When evaluating loss exposures, what are the three main aspects a broker should consider?

Answer 53

?The subject of insurance exposed to loss
?the perils that might give rise to loss
?the estimated financial impact a loss will cause

Question 54

What is the subject of insurance?

Answer 54

What is exposed to loss. ex. house, car, personal property, liability

Question 55

What is a peril?

Answer 55

An event that could cause a loss ex. fire, theft windstorm, explosion, earthquake, and vandalism.

Question 56

What are the types of financial impact that can result from a loss?

Answer 56

direct losses? loss of property and contents

indirect losses? financial losses caused not by the event itself but as a consequence of the property being destroyed. ex. a small restaurant is destroyed by fire, as they can not operate due to this loss they will also have a loss of income.

Question 57

Define two major types of hazard

Answer 57

A hazard is a condition that may cause a peril to occur.

physical hazard? a factor that may influence the outcome of a loss. It increased the change of a peril affecting the insured, or makes the damage resulting from the peril more severe. Usually it can be quite readily identified and measured and often it can be completely removed or reduced by preventive methods. ex. flammable materials stored near a heating system increase the likelihood of a fire occurring and spreading more quickly to other areas of the building.

Moral Hazard? refers to conditions attributable to the human element. It grows out of attitudes, and depends on the character of insureds and their employees. It can involve outright dishonesty, which could lead to fraud, but it is also concerned with carelessness and poor management. It may lead to the occurrence of a peril, or to making the resultant damage from a loss more severe.

Question 58

What is the difference between moral hazard and morale hazard?

Answer 58

moral hazards are the characteristics of the insured (or applicant) that increase the probability or severity of a loss. ex. a client that has gone bankrupt several times may benefit financially from an insurance loss and would then find making an insurance claim attractive.

Morale hazard relates not to the dishonesty and the like, but to a poor attitude on the part of the insured. Ex. poor upkeep of the premises, poor maintenance of equipment, a don’t care outlook, hiring low quality employees or lack of supervision.

Question 59

What are the benefits of meeting a client in person?

Answer 59

? establish a one on one relationship
?if meeting at the clients residence or place of business you also have the opportunity to inspect the premises as part of your assessment.
?affords you the opportunity to secure a premium deposit immediately.

Question 60

What is risk control?

Answer 60

An aspect of risk management, involves suggesting safety precautions for the identified loss exposure that can help prevent perils from occurring, or that can help reduce the extent of loss arising from a particular peril.

Question 61

Why should brokers inform their clients about loss control or loss prevention techniques?

Answer 61

Using risk control techniques will reduce the amount of money that insurers pay in claims, which improves the financial results of the insurers and ultimately reduces insurance costs to consumers. Remind clients that extra care and investment now may save them the time and trouble of claims made later as a result of possibly preventable peril.

Question 62

What is an application?

Answer 62

A request for insurance that introduces the applicant to the insurance company. It also identifies your brokerage as the broker of record, and identifies the insurer to whom you are directing the request for coverage.

Question 63

Who is an applicant?

Answer 63

Can be a new client who has no coverage at all, is looking for an alternate quote for whatever policy is currently expiring, or wants to evaluate the services provided by another broker because they are not satisfied with their present broker

Question 64

What is duty of disclosure?

Answer 64

Is fundamental to the principle of utmost good faith that underlies all insurance transactions. Misrepresentation of material facts in the application can have serious consequences, in the most extreme cases causing losses to be denied and/or the insured policy to be voided.

Question 65

What is misrepresentation?

Answer 65

Giving false information to an underwriter, knowing it is false? in other words, telling a lie.

Question 66

What is a representation?

Answer 66

A factual statement about the risk, either expressed or implied, that needs to be communicated to the underwriter so that the risk may be properly assessed.

Question 67

What is an oral application?

Answer 67

When the insured and broker discuss insurance needs, either over the phone or in person, and you document your conversation in signed, dated notes.

Question 68

What is a written application?

Answer 68

This may be a printed form provided by the insurer, a combination of a letter and forms developed by either the insurer or the broker, or just a letter. the form can be conventional paper or electronic versions.

Question 69

What is CSIO/CEPA?

Answer 69

A national organization of property and casualty insurers and independent insurance brokers working together to achieve electronic business solutions for the insurance industry.

Question 70

What is insurable interest?

Answer 70

When the applicant stands in such position to the subject of insurance that he or she could be financially prejudiced by that property’s loss or damage, and financially benefited by its continued existence.

The applicant also has an insurable interest in his or her potential capability to pay damages in the event that he or she is found responsible (legally liable) for having caused injuries to other or damage to their property.

Question 71

How can trade names be used as legal names?

Answer 71

Trade names are not legal entities until registered as a limited company.

Question 72

What is a loss payee?

Answer 72

The generic term for someone other than the named insured to whom the proceeds of insurance will be paid.

Question 73

What is a mortgagee?

Answer 73

A special class of loss payee. Mortgagees have a registered interest on real property?that is, buildings or land? offered as security for the money that they have loaned the property owner.

Unlike other loss payees, who are simply noted on the policy as such with respect to the property that they have an interest in, the mortgagees interests are protected by a separate insuring clause granting additional protection to the mortgagee.

Question 74

Why do insurers want signed applications?

Answer 74

It becomes a declaration made by the applicant, confirming that the statements made are accurate and even when it does not form part of the policy, the application is the basis on which the contract issued.

Question 75

What is the process that a broker takes when selecting personal lines insurance to match the needs of a client?

Answer 75

?Checking the insurers underwriting guidelines. These will normally be clearly outlined in the personal lines manual that each insurer provides your brokerage
?analyzing and comparing the products of your insurer. Each insurer has its own version of the various personal lines package policies?broad form and limited (or named perils) form. Automobile wordings are statutorily dictated by province
?selecting an insurance policy based on your analysis of your clients needs and the policies your insurers supply.

Question 76

What is the process that a broker takes when selecting commercial lines insurance to match the needs of a client?

Answer 76

?applying your knowledge of the products available. Select appropriate policies based on your discussions with your client and your analysis of their insurance needs and the adequacy of their existing coverage.
?applying your knowledge of what your insurer(s) want. The insurers will have communicated to your broker management the classes of business they cover and the specific products they offer. Some of your markets may be better able than others to meet your clients insurance needs
?talking to your colleagues about which market would be the most appropriate for your client, if you are unclear about what your markets want. As you gain experience, you will come to know the types of business that you various markets prefer.

Question 77

What is binding authority?

Answer 77

A brokers capacity to confirm to applicants that they have coverage against certain losses. Individuals with binding authority can tell their clients that they are covered by an insurance policy without first submitting the application for insurance to the insurer.

Question 78

In what document is binding authority granted?

Answer 78

Broker agreement

Question 79

Is there standard binding authority granted to all brokers?

Answer 79

Not all brokers are granted binding authority or the same degree of binding authority. When granted, binding authority is normally limited to personal lines policies and smaller commercial lines policies. The binding authority depends on the terms negotiated between insurer and brokerage, and may differ between brokerages contracted with the same insurer. ex. wholesale brokers generally are granted binding authority for specific situations only, such as pre arranged insurance programs where the wholesale broker operates as the insurer.

Question 80

What are some of the terms of binding authority?

Answer 80

?the classes of risk and the limits of insurance that the brokerage is permitted to bind
?the risks that the brokerage cannot bind. (such risks could be extremely hazardous, or require special underwriting expertise, or an insurer may simply have decided not to insure these classes of risk, or not be licensed to write them.)
?the reporting requirements, including time frame within which the insurer expects the broker to forward notice of binding. That is, you will have a certain number of days after binding insurance to submit the binder to the insurer, or binding will not be valid, and you could be held liable for any uninsured or under insured loss.

Question 81

What effect does binder authority have on a brokers powers?

Answer 81

The binding limits outlined in the broker agreement do not represent the maximumamount an insurer will consider; they primarily act as a control on brokers’ bindingpowers.

Question 82

What role does the broker have in preventing fraud?

Answer 82

Brokers have an important role to play in fraud prevention; they are the eyes andears of the insurer.

Question 83

What are the warning signs of potential fraud?

Answer 83

Client wants you to backdate a policy

Client asks to bind coverage for a new risk without adequate information

A new applicant is in a hurry to get the cover bound

Question 84

What is a binder?

Answer 84

A binder can be written or oral. Since there is typically a delay between the time a risk is bound and the time thepolicy is issued, it is preferable to have written confirmation of the coverage that wasbound.

Question 85

What is the different between a binder and cover note?

Answer 85

There are two forms of document used to record interim or temporary cover:1. A cover note issued by the broker2. A binder issued by the insurer

Question 86

What information is generally included in a binder?

Answer 86

?Name of the insured
?Mailing address of the insured
?Any loss payees or mortgagees
?Time and date that the coverage takes effect ?Time and date the coverage expires
?Location and type of risk that is being insured
?Exact coverage details
?Clause that states that the cover is subject to all the terms and conditions usual tothe insurer’s policy wording
Details of deductibles, special warranties, any conditions, or any special wordingsthat restrict or broaden coverage
?A clause stating, This policy contains a clause that my limit the amount payable.”

Question 87

What does contra proferentem mean?

Answer 87

means against the offeror.”Any ambiguity in wording will be construed in favour of the insured.”

Question 88

Give examples of policy wordings that are legislated and examples of those that are not

Answer 88

Automobile Insurance ?Automobile policy wordings are subject to a standard form legislated by statute orregulation in the various provinces and territories. In common law provinces, automobile policies are subject to Statutory Conditions. In Quebec, automobile policies are subject to the General Conditions.

Property Insurance? Property insurance policy wordings differ from insurer to insurer. Provincial statutes state the minimum coverage that fire policies must include ?perils of fire, lightning, and limited explosion?but do not specify the exact wordingsof policies. Provincial legislation can also specify information that must be included in the policywording. If there is any clause in the policy that limits the amount an insured may recover,such as, a deductible, co?insurance, or distribution clause, the phrase This policycontains a clause that may limit the amount payable.” must be stamped or printed onthe face of the policy.

Question 89

What is in the policy declarations?

Answer 89

names of the insured and the insurer; 
effective and expiry dates; 
names and addresses of any loss payees and mortgagees; 
total premium; and 
amount insured.

Question 90

What is the function of the insuring agreements?

Answer 90

Explains what is covered and for how much

Question 91

What is included in the insuring agreements?

Answer 91

Shows the coverage’s applicable; term of the policy; perils covered; exclusions (which restrict the perils insured); and circumstances under which the insured will receive payment of the proceeds of a claim.

Question 92

Explain the policy conditions

Answer 92

policy conditions affect the actions of the insured or insurer under the contract under certain circumstances. If a condition is breached by the insured, the policy may be void or voidable, or a claim arising out of the breach may be denied by the insurer, depending upon the condition involved.

Question 93

define void

Answer 93

the policy is treated as if it never existed

Question 94

define voidable

Answer 94

means that the policy can be affirmed or rejected at the option of the aggrieved party? effectively, the insurer (if the aggrieved party) has the discretion to either pay or deny any claims

Question 95

What are warranties

Answer 95

promises the insured makes as part of the contract that a specified state of affairs will continue to exist for the duration of the policy. They are obligations which the insured must fulfill in order to keep the policy in force. A failure to satisfy a warranty could result in the insurer not paying a claim

Question 96

What is the difference between a warranty and a condition?

Answer 96

A true condition may be recognized by the fact that the clause says, in effect, if the insured does or does not do such and such, the insurer will not pay or the policy will be voidable. A warranty is a promise by the insured to do something or to maintain something in a particular condition.

Question 97

what is a deductible?

Answer 97

The amount of a loss that the insured must pay.

Question 98

How can a deductible be used to the advantage of an insured?

Answer 98

Larger deductibles can be selected as a method of reducing premiums.

Question 99

What are some underwriting considerations of a personal lines risk?

Answer 99

?location
?construction
?age of building
?occupancy
?maintenance and housekeeping
?protection
?nearby risk exposures

Question 100

Why is the location of the risk significant?

Answer 100

Underwriters want to know the risk’s proximity to fire protection (fire hydrant, fire halletc.).

Question 101

What effect does building construction have on an underwriters decisions?

Answer 101

?The type of construction materials used in the building affects how susceptible it is toloss.
?There are separate rating classifications for frame, brick veneer, masonry, or fireresistive construction.
?The more fire resistive the construction, the less likely it will suffer a fire loss,therefore, the lower the premiums will be.
?The roofing materials are rated separately.
?the more fire resistant the building, the less likely it is to be involved in a fire, so the lower the premiums charged.

Question 102

Why would the age of a building be an underwriting issue?

Answer 102

?The method and the materials used to construct a building are directly related to abuilding’s age.
?Newer buildings conform to newer (stricter) fire codes.
?Historic buildings are a specialized insurance risk
?Materials for rebuilding historic buildings may be difficult to obtain, and the repaircosts higher than those to replace a normal (non?historic) building, thus, insurancefor them ay carry a higher premium.
?Since the value of historic buildings is difficult to determine, they should beappraised by an independent professional.
?Building services include electrical, heating, and water systems, and insurers willwant to know details about them including any updates to them.
?Some insurers require all services to be updated every 30 years, others only requiresome updates to services and proper overall maintenance to the rest.

Question 103

What are the common types of personal lines dwelling occupancy?

Answer 103

?owner occupied principal residence ?seasonal dwelling or cottage
?rented dwelling

.

Question 104

What are condominiums?

Answer 104

A form of home ownership that allows the purchaser to buy the home without having to buy the building.

Question 105

What are housing cooperatives?

Answer 105

A form of home ownership which can be similar to condominiums, though not as common. Members of equity cooperatives own the building collectively and each member of the cooperative owns a share or shares in the cooperative and is granted a lease of his unit.
Non equity, non profit cooperatives own the building collectively. In the most common form of cooperative, the member is not required to make any monetary outlay except for a monthly housing charge. Certain cooperatives may be organized differently and actually permit ownership of the unit.

Question 106

What are some of the underwriting criteria for cottages?

Answer 106

?Is it a year?round dwelling or luxury dwelling intended to be a retirementhome?
?What is the age, construction, heating system, and general condition of thecottage? ?It is one building or many?
?How often is the cottage used and what time of the year is it used? (i.e. is itwinterized?) ?How accessible is it throughout the seasons? ?What municipal fire protection is available?
?Are there any year round neighbors with access to the cottage?
?Is there aneighborhood watch?

Question 107

How are cottage outbuildings covered by the policy?

Answer 107

Limits for the outbuildings are including in the limit for the main building

Question 108

What are the unique characteristics of a rented dwelling?

Answer 108

?The market for small residential rental businesses can be quite restrictive.
?Query your client’s leasing conditions.
?The number of tenants is an underwriting and rating factor.
?Larger rental properties (risks with more than four to six rental units) aregenerally insured as commercial risks.
?Clients with a home business have exposures beyond the scope of a typicalhomeowner and may require separate insurance.

Question 109

What is meant by the terms vacant and unoccupied?

Answer 109

? Premises are unoccupied when the building contains contents but no one lives orworks in it. Some insurers extend coverage if notified of the vacancy.
?Premises are vacant is when they contain no belongings, no one lives or works inthem and the insured does not plan to return to them.

Question 110

What factors would you consider when reviewing the insurance for a dwelling under construction?

Answer 110

?Premises that are under construction have similar considerations to vacantpremises.
?If a new building is being constructed, it may require a builder’s risk form or course of constructionform.
?If an existing building is being renovated, the insurer mayagree to endorse the existing policy to give permission for renovations or repairs.
?If your client advises you she is renovating, determine the extent of the renovations? buildings altered one part at a time can create concreted spaces; buildingscompletely gutted essentially become a new building with an old facade.

Question 111

What are adjoining or adjacent exposures?

Answer 111

Properties that are attached or in close proximity to your clients premises represent a potential increased risk of loss to your clients premises. If the building next door is a chemical research plant or a dynamite manufacturer the business is exposing your client’s premises to additional risk.

Question 112

What are some issues that might create a problem when a client is renovating?

Answer 112

If renovations alter one part at a time, or are mostly cosmetic, the alterations can create concealed spaces, which increases the risk of a fire starting unnoticeably and spreading quickly.

Question 113

What additional fire or burglary protection might a commercial risk have?

Answer 113

?sprinkler systems
?security guards/watchmen
?central station burglary alarm protection

Question 114

What are your goals in placing insurance coverage for a new client?

Answer 114

Provide the insured with better coverage than he or she had previously or, at least, no less comprehensive than his or her expiring policy.

Question 115

What are some discounts that may be available to clients?

Answer 115

Some insurers offer preferred rates or premium discounts to a particular target group or groups of personal lines clients, such as discounts for mortgage?free homeowners, certain age groups, or non smokers. Other insurers offer discounts to clients who have multiple policies or lines of coverage with them or are loyal customers who have maintained their insurance with the same insurer for a number of years. Discounts may also be offered to clients who have extra security systems, such as alarm systems or watchman services, particularly for commercial insurance clients. Loss history is another factor that will affect any discounts offered.

Question 116

What does a tenants package cover?

Answer 116

Contents coverage only

Question 117

Define Loss Assessment

Answer 117

Covers the unit owners share of the damge to common elements of the condo building

Question 118

Define Contingent Insurance

Answer 118

Covers loss arasing from any deficiency in the condo’s coverage policy

Question 119

If tenants are solely occupying the home of an insured. The homeowner has what type of personal lines package?

Answer 119

rented dwelling

Question 120

Does a personal articles floater cover items such as stamp collections?

Answer 120

Stamp collections are covered under a personal articles floater

Question 121

What are the three main packages available for personal lines?

Answer 121

Basic, Broad & Comprehensive

Question 122

What are the three most common personal lines dwelling risks?

Answer 122

?owner occupied principal residence
?seasonal dwelling or cottage
?rented dwelling

Question 123

Under most personal lines policies, damaged or stolen property is settled on the basis of what?

Answer 123

Replacement cost

Question 124

A fire policy covers losses arising out of what?

Answer 124

Fire, lighning, and explosion of coal, natural or manufactured gas

Question 125

Define Libel

Answer 125

Defamation or injury of a person reputation by a published writing

Question 126

Define Slander

Answer 126

Verbal defamation or injury of a persons reputation

Question 127

What are the three ways liability policies are written?

Answer 127

Occurrence basis? most common form of liability wordings

Claims?made basis? cause of loss must not be excluded

Accident basis? covers bodily injury or property damage which was unitended or unexpected

Question 128

What are the differences between the three home owners package forms?

Answer 128

?The Homeowner’s Basic Form (IBC 1151) provides coverage for named perilsincluding theft, glass breakage, and transportation.

? The Homeowner’s Broad Form (IBC 1153) provides coverage for all risks on thedwelling building and detached private structures and named perils on the personalproperty

?The Homeowner’s Comprehensive Form (IBC 1155) provides all risks on all items,subject to policy exclusions.

All homeowner’s package policies insure the dwelling building, detached privatestructures, contents, and additional living expenses.

Question 129

What is guaranteed replacement cost?

Answer 129

Insurers will pay the full cost of rebuilding even if this were to exceed the amount of insurance purchased provided the

?amount of insurance was 100% of the replacement cost at last valuation
?insured notified the insurer within 90 days of the start of work on any improvement, extension, or addition
?increased costs were not due to the operation of a by?law

Question 130

How is the replacement cost insurance value established for a building?

Answer 130

Insurance valuation is concerned with the actual costs to repair or replace thestructure with one of like kind and quality on the current site. A number of different valuation guides are available that may be helpful whendetermining replacement costs. ?Obtain appraisals

Question 131

What course of action could you recommend if the client does not agree with the valuation?

Answer 131

Client can determine if the standard limit offered on the policy is enough toadequately protect him or her by completing an inventory of his or her possessions

Question 132

How could you determine the value of the clients contents?

Answer 132

The limit of contents coverage under a homeowners form is usually a predetermined percentage of the building limit, some companies will allow the insured to increase this amount if it is not adequate. An inventory can be completed to determine an adequate limit.

Question 133

How does a tenants package differ from a homeowners form?

Answer 133

?All homeowner’s package policies insure the dwelling building, detached privatestructures, contents, and additional living expenses.
The Homeowner’s Basic Form (IBC 1151) provides coverage for named perilsincluding theft, glass breakage, and transportation.
The Homeowner’s Broad Form (IBC 1153) provides coverage for all risks on thedwelling building and detached private structures and named perils on the personalproperty
The Homeowner’s Comprehensive Form (IBC 1155) provides all risks on all items,subject to policy exclusions.

Tenants package policies are for insureds who rent houses or apartments. They are similar to homeowners policies except that the do not cover the building(except for limited coverage for theft damage). These policies cover the insured’s contents and leasehold improvements. The insured determines the amount of insurance coverage for his contents.
There are two forms: ?basic?which is a named perils form ?comprehensive?which is an all risks form

Question 134

What unique coverage is provided by a condominium unit owners package policy?

Answer 134

contingent insurance?covers loss to the insured own unite arising fromany deficiency in the condominium corporations policy

loss assessment insurance?covers the unit owner’s share of anassessment for damages to the common elements of the condominium.

Question 135

What are mobile homes and what are some unique underwriting considerations applicable to them?

Answer 135

A broad definition of a mobile home is one factory?built on its own chassis. With mobile homes, items that are considered contents in a normal home?such as appliances? can by considered part of the building. Because these fixtures tend to be built in, damage to them can lead to structural damage as well; this means that what might be a minor loss to a conventional home could be a major loss to a mobile home. Also, because of the high rate of depreciation of mobile home, replacement cost is not usually available for the building, though it might be available for the contents

Question 136

Why would someone require a personal articles floater?

Answer 136

Items such as jewellery, fine arts, furs, coin and stamp collections are generally restricted under the homeowners, condo and tenants policies, the personal articles floater provides coverage, subject to exclusions for these items.

Question 137

Whats valued insurance on the personal articles floater?

Answer 137

Requires client to provide copies of appraisals or valuations for items insured. Some insurers will provide insurance on a valued basis, so that in the event of a claim, the value of an item agreed upon will be paid by the insurer.

Question 138

How can a collection of valuable items be insured?

Answer 138

There are two ways to insure property that forms part of a collection, Blanket basis with a single limit of insurance or separate limits for each item.

When a blanket limit is provided insurer may limit is exposure to loss from any one item.

Question 139

Name some of the perils and property excluded under a personal articles floater

Answer 139

loss or damage caused by:
wear and tear
birds or vermin
nuclear incident
war
intentional or criminal acts by the insured
electrical currents, other than lightning, which damage electrical devices or appliances.

Question 140

What is the coverage and the limitations to coverage provided y the outboard motor and boat policy?

Answer 140

This coverage provides physical damage coverage to boats and motors.
? It can include limited cover for the insured’s liability for property damage arising fromcollision while afloat.
?It does not cover bodily injury.
?While wordings vary, there are some common exclusions: Damage to the boat when it is used for a purpose other than private pleasure, Damage to the boat while it is being refinished, renovated, or repaired, Damage to the boat when racing it

Question 141

What geographical restrictions are generally found in yacht policies?

Answer 141

There are two restrictions:
?The navigation warranty governs the use of the boat beyond the specifiedarea
?The lay up warranty governs the use of the boat when it is supposed to belaid up

Question 142

What form of crime coverage is generally provided to a seasonal dwelling?

Answer 142

Burglary is the unlawful removal of property from premises with visible signsof forcible entry (or exit).

Question 143

What additional coverage would you recommend to the owner of a rented dwelling?

Answer 143

?business interruption

Question 144

Why were specific wordings developed for farms?

Answer 144

Because of unique exposures of farms as dwellings and businesses at one location, insurers developed a specific series of wordings to provide the required coverage in one policy.

Question 145

Consider some of the differences in insuring retail, office and contractors risks.

Answer 145

retail?a typical retail store could include insurance for COED, BI, crime exposures, CGL, and glass, also could include building, boiler and machinery, accounts receivable

Office? Could include COED, EDP, software and hardware, valuable paper, accounts receivable, extra expense, money and CGL

Contractors? Due to the wide range of work a contractor may specialize in, the information required by an underwriter and the coverage offered can vary, they may require COED, accounts receivable, valuable papers, tools and equipment, transit, installation floater or builders risk, CGL

Question 146

What does a statute do?

Answer 146

Covers a new area of law, or it consolidates and codifies existing practices.

Question 147

An offsite house cleaning service is an example of which type of exposure?

Answer 147

off?premises

Question 148

Define criminal law and civil law

Answer 148

civil law? courts determine fault and compensation

criminal law? courts determine guilt and punishment

Question 149

Some provinces have replaced the Common Law duties care to a trespasser, licensee, and invitee with a statutory duty called the?

Answer 149

occupier’s liability act

Question 150

There are many characteristics of a home business that will affect liability exposures and premiums. Name some.

Answer 150

the number of employees, type of product or service, the size of the business

Question 151

What are the three categories of persons entering property?

Answer 151

trespasser, licensee and invitee

Question 152

When arranging liability for commercial exposures it is wise for the broker to ask questions, what are standard questions that should be asked?

Answer 152

location of the business, condition, maintenance and construction of the physical premises, loss history for a minimum of 5 years

Question 153

Define punitive or exemplary damage

Answer 153

a punishment of the wrongdoer

Question 154

What are special damages?

Answer 154

Items such as out of pocket expenses

Question 155

Define damages

Answer 155

Asum of money claimed or awarded as compensation for loss or injury.

Question 156

Define compensatory damages

Answer 156

To compensate the third party for injury sustained because of the actions of the defendant

Question 157

Define general damges

Answer 157

Compensation for such things as pain or suffering

Question 158

Means the thing speaks for itself””

Answer 158

res ipsa loquiter

Question 159

What are the four types of Personal Liability policies as described in the text?

Answer 159

Personal Acts, Premises, Tenant’s legal liability, Employer’s liability

Question 160

Civil Law may impose liability because of?

Answer 160

negligence, nuisance and breach of contract

Question 161

Why would someone purchase liability insurance?

Answer 161

? Legal liability refers to responsibility assessed against a person for injury or propertydamage to another person as a result of the law being applied.
?A person can be held liable actions or inactions that cause harm to others ordamage to property of others.
?Under certain circumstances, people can be held liable for the acts and omissions ofothers (such as their minor children).
?Liability being assessed against a person, can have serious financial consequences:all of a person’s financial assets could be at risk.
?The costs to defend a liability lawsuit can be devastating (even if the person is foundnot liable).
?Liability insurance covers something abstract ? the possibility that an insured will besued for loss or injury to a third party, whether or not the insured is actuallyresponsible for the loss.
?Liability insurance protects a person found legally liable for the compensatorydamages incurred to an injured party and for the costs to defend against lawsuits,regardless of whether the lawsuits have merit.
?Thus, liability insurance protects an insured against lawsuits in two ways: ?For the costs of defending an action ?For the costs of settle the claim with the third party

Question 162

Explain the difference between the civil code of Quebec and the common law system

Answer 162

?The Civil Code of Quebec covers matters that might give rise to a dispute andcodifies them into a series of articles. The court’s role is to settle disputes according to the Civil Code. If a specific dispute is not detailed in the Civil Code, courts will apply the generalprinciples of justice set out in the Civil Code.

?The common law applies in all other jurisdictions. General principles developed through successive judicial decisions over many yearsform the basis of common law. It is the law of precedent ? judgments of current cases are based on, and guidedby, judgments made in prior, similar cases. Legal principles change over time as new cases are heard and social values evolve. The common law is a mixture of case law and statute law.

Question 163

What is statute law?

Answer 163

?Statutes are laws passed in written form by governments.
?A statue covers a new area of law or consolidates and codifies existing practice.
? In common law jurisdictions, statute laws supersede case law if there is a conflict.
?in Quebec, a statute replaces or amends the Civil Code, unless the statutespecifically states otherwise.

Question 164

What is negligence?

Answer 164

the omission to do something that a prudent and reasonable person wouldnot do or doing something that a prudent and reasonable person would not do.

Question 165

what is tort?

Answer 165

a wrongful act

Question 166

What is nuisance?

Answer 166

This is the substantial and unreasonable interference with a person’s right to enjoyand use his or her property. Legal actions of this type are relatively rare.

Question 167

How does liability insurance respond to breach of contract?

Answer 167

A breach of contract occurs when one of the parties to a contract fails to fulfill one or more of its obligations under the contract. Liability insurance usually has only limited application to breach of contract. A breach that is often covered under a liability policy concerns a clients responsibilities for bodily injury or property damage as the occupier of premises. Since insurable exposures arising from breach of contract are most likely related to lease agreements, or sales and supplier agreements, a review of these documents is advisable.

Question 168

What duty of care does a property owner or occupier have towards children?

Answer 168

?The duty of care owed to children is higher than to other persons, premises must bekept safe for children, even if they are trespassing. ?Occupiers must take care to make potentially dangerous sites not accessible tochildren. Sites which by their vary nature draw children to investigate them?such asconstruction sites or pools ? are considered an attractive nuisance or allurement.They may be subject to special legislation, such as municipal bylaws requiring poolsto be fenced and have a gate to restrict access to them.

Question 169

What is an attractive nuisance?

Answer 169

A place or thing, such as a construction site, that draws children to investigate it or play with it by its very nature

Question 170

What liability do animals owners have for their animals?

Answer 170

? In most provinces, liability arising out of owning an animal is defined in legislation.
?Usually, an animal’s owner is responsible for the supervision and actions of theanimal and can be held liable if unable of disinclined to properly control the animal.
?The owner could be liable for injury or property damage caused by the animal.
?Guard dogs are a significant liability exposure?the owner could be liable if the dogscause injury to visitors, even thieves entering the property illegally.

Question 171

What is strict liability?

Answer 171

Some exposures are subject to a higher standard of liability called strict liability
ex? ownership of dangerous things

Question 172

What is vicarious liability?

Answer 172

When employers are liable for the actions of persons employed by them

Question 173

What characteristics of a home business might affect liability exposures and premiums?

Answer 173

?the number of employees; whether customers/suppliers/contractors visit the home; the operations or activities related to the business that occur off thepremises; the size of the business; and the type of product or service provided by the business

Question 174

What liability exposures are usual to a farm?

Answer 174

Due to nature of a farm as home and business both types of exposures areconsidered together. Exposures that you will investigate will be similar to those for either personal orcommercial liability coverage.

Question 175

What are typical commercial liability exposures?

Answer 175

premises and operation, off premise, products liability, completed ops

Question 176

What are typical considerations when describing premises to be insured under a liability policy?

Answer 176

?Personal lines and commercial liability exposures arise from the property theyoccupy.
?Underwriters consider the same details for property risks as well as details ofexposures arising from what is being done on the premises.
?Business owners have a duty of care to the individuals entering the premises.
? An inspection of the premises may help a broker discover exposures, and thenprovide the opportunity to give the insured loss prevention assistance.
?Operations include what is done both on the insured premises and away from thepremises.

Question 177

What is products liability?

Answer 177

Exposure could arise from bodily injury or property damage caused by the goods that your clients make or sell. To be held liable for injury or damage arising out of the product, the client need not be the manufacturer of the goods?they could be the distributor, wholesaler or any other part of the chain of production

Question 178

How could an insured be subject to a completed operations exposure?

Answer 178

If your client is a contractor, his product is the work he does. Once he has completed the job, he has exposure to liability arising out of that completed work. ex. if a contractor installs cabinets and they were later to fall off the wall and cause injury or damage to any third party, this would be a completed ops claim. Note that damage to the cabinets themselves is not covered under the CGL policy

Question 179

In Quebec, Article 1466 of the Civil Code places responsibility and onus of proof on the owner and the person making use of the?

Answer 179

Animal

Question 180

What are the parts of a claims department?

Answer 180

Claims manager or claims superintendent, claims examiner, telephone adjuster

Question 181

When addressing client concerns and expectations in regards to claims handling, what should you do?

Answer 181

give timelines, avoid giving legal opnions, reiterate policy specifics

Question 182

Define subrogation

Answer 182

transfers the insured’s right of action against the party responsible for the loss or damage to the insurer, and the insurer requires the third party to pay for the damage.

Question 183

In the event of a loss what are the insureds responsibilities?

Answer 183

report loss promptly, mitigate loss from further damage, obtain estimates when requested

Question 184

Reporting a loss by legal notice is called what?

Answer 184

A writ

Question 185

What is an ombudsman?

Answer 185

In some jurisdictions they are employed by the insurer or by the insurance regulator, is available to answer insurance queries, or to help resolve claims complaints.

Question 186

Define prescription

Answer 186

In law, means the time after which a cause of action ceases

Question 187

Define Estoppel

Answer 187

Actions or lack there which may cause one party to draw certain logical conclusions

Question 188

Define waiver

Answer 188

The voluntary relinquishment of a known right

Question 189

Define endorsement

Answer 189

an amendment to a policy that changes the terms and conditions

Question 190

What are the three ways a policy can be cancelled?

Answer 190

flat, pro rata, short rate

Question 191

How far in advance should the broker advise an insured if they do not wish to renew the policy?

Answer 191

30 days

Question 192

What is the process of change the client to a different insurer called?

Answer 192

Remarketing

Question 193

When are finance company plans used?

Answer 193

For Commercial accounts or high valued personal lines policies

Question 194

What is a portfolio transfer?

Answer 194

When an entire book of business is transfered from one insurer to another

Question 195

What does the limit of amount paid for loss endorsement do?

Answer 195

Makes it possible to insure a vehicle for less than it is appraised valued

Question 196

What does the waiver of depreciation endorsement do?

Answer 196

Insurer agrees to repair the vehicle as if it was brand new

Question 197

What does the agreed value automobile endorsement do?

Answer 197

Allows the insured to obtain replacement cost coverage on his vehicle

Question 198

What does the suspension of coverage endorsement do?

Answer 198

Temporarily removes third party liability and collision cover

Question 199

In general, who has the worst driving record?

Answer 199

Males, under the age of 25

Question 200

What is the plan de repartition des risques (PRR)

Answer 200

A type of risk sharing plan

Question 201

Define financial responsibility

Answer 201

The ability to pay for any damage incurred as a result of the driver’s actions or inactions

Question 202

What is all perils coverage?

Answer 202

A combination of collision or upset, specified perils and comprehensive

Question 203

What is a lienholder?

Answer 203

Someone who has claim on the legal title of the vehicle as security

Question 204

What does the family protection endorsement do?

Answer 204

Provides coverage when the third party is underinsured to cover for bodily injury

Question 205

In regards to legal systems in insurance. Canada operates under what type of system?

Answer 205

Tort and No?Fault

Question 206

What three provinces have government automobile insurance plans?

Answer 206

Saskatchewan, Manitoba, and British Colombia

Question 207

An MVR is an essential underwriting tool. MVR as described in the text means:

Answer 207

Motor Vehicle Record

Question 208

Who started the initiative to track the VIN on salvage vehicles since the terrorist’s attack of September 11, 2001?

Answer 208

ICBC

Question 209

Some of the factors that affect premium (with respect to auto coverage) are?

Answer 209

driver exeperience, driving location, driving location, vehicle use

Question 210

Most insurers now use the CLEAR system to rate their vehicles. CLEAR stands for ?

Answer 210

Canadian Loss Experience Automobile Rating

Question 211

What coverage is provided by the insuring agreements of a liability policy?

Answer 211

Under a liability policy, the insurer agrees to pay those sums that the insured becomeslegally obligated to pay as compensatory damages because of bodily injury or propertydamage to a third party.

Question 212

When would an insured require tenants legal liability coverage?

Answer 212

This coverage protects against damage caused by fire, explosion, water escape (asdefined), or smoke to premises or contents that the insured does not own but isusing or has in his care, custody, or control.

Question 213

What types of voluntary payments are insured under a personal liability policy?

Answer 213

The policy will reimburse the insured to a limited extent for voluntary payments madeto injured third parties where the insured is not legally liable but feels morallyobligated to pay for the damage.

Voluntary medical payments ? reimburse the insured for expenses paid by or to injuredthird parties for surgical, medical, dental, hospital, nursing, ambulance, and funeral costs.The insured must provide written proof and medical documentation.

Voluntary damage to property ? covers unintentional direct damage to third partyproperty caused by the insured and intentional direct damage caused by anyone included asan insured under the age of 12.

Voluntary compensation for residence employees ? compensates residence employeesfor loss of life, limb, sight, or hearing; provides a weekly indemnity for disability; and coversmedical expenses to employees injured during the course of their employment.

Question 214

What is covered by a commercial general liability policy

Answer 214

Third party liability coverage for bodily injury or property damage arising out of theinsured’so business premises; operations; products (made by the business); and completed operations.
Defence, settlement, and supplementary payment agreements
Personal injury coverage
Tenants legal liability coverage
Medical payments coverage

Question 215

How might the named insured on a commercial policy differ from one on a personal policy?

Answer 215

The named insured on a CGL policy differs from a personal liability policy becauseof the nature of a business entity.
? If the business is a person, it includes the named insured and his or her spouse.
?If the business is a partnership/joint venture, it includes the members, partners, andtheir spouses.
?If the business is a company, it includes the executive officers, directors, andstockholders.
?In all cases, coverage is only provided with respect to business duties.

Question 216

When would a client purchase non?owned automobile insurance?

Answer 216

Provides coverage for legal liability insurance for an employer whose employees or contractors use vehicles not owned by the business for business related activities. Ex. pizza delivery

Question 217

Why would a client purchase an umbrella policy?

Answer 217

The main reason to buy umbrella liability insurance is to obtain higher limits ofcoverage and broader coverage at a reasonable cost.

Question 218

What are some broader coverage’s that might be provided by an umbrella policy?

Answer 218

Broader personal liability including premises, occurrences, sports mishaps,personal injuryo Watercraft liability , Non?owned aircraft, Employers’ liability, Advertising liabilityo Rental cars

Question 219

Explain what is meant by SIR in an umbrella policy

Answer 219

Umbrella coverage is usually subject to a self insured retention or net retained limit? sometimes in the range of $5000 to $25,000, although it can be as little as $500. The SIR is similar to a deductible in that it is deducted from any loss that is not insured by the underlying insurance policy.

Question 220

What is the drop down feature of an umbrella policy?

Answer 220

If a claim exceeds the limit of the underlying policy the umbrella policy provides theexcess coverage up to its policy limit. The umbrella policy drops down” when ?the underlying policy does not provide specific cover; ? limit of liability on the underlying policy is exhausted;

Question 221

Why would someone buy auto insurance?

Answer 221

All provinces and territories have legislation requiring automobile owners (with certain exceptions) to carry insurance.

Financing companies require vehicles purchased using their financing to be insured.

Leasing companies require vehicles leased from them to be insured.

Drivers are required by law to be financially responsible for any accident they cause.

?

Question 222

Define Financial responsibility

Answer 222

the ability to pay for any damage incurred as a result of the driver’s actions or inactions.

Question 223

What are other reasons to insure your automobile?

Answer 223

To protect their investment

To protect against injuries or damages caused by another person

Question 224

How can brokers distinguish their services from others?

Answer 224

product knowledge?
Through your knowledge of insurance policies, assist the clients in assessing their specific risks and assist them in selecting insurance coverage to protect them. Do not advise on limits of coverage to buy
market knowledge?knowledge of insurers underwriting criteria enables you to match your client with an appropriate insurance carrier
customer services? spend time with clients, answer questions, suggest alternative coverages
peace of mind? inspire trust in your client by providing knowledable and professional advise

Question 225

NAME?

Answer 225

A pink card, also known as a liability certificate, serves as proof of insurance

Question 226

What is show on a liability certificate?

Answer 226

Name and address of insurer 
? 
Name and address of the insured 
? 
Agency/brokerage name or number 
? 
Description of the insured vehicle 
? 
Policy number 
? 
Effective date and expiry date of the policy 
? 
Vehicle license plate number

Question 227

What are the penalties for driving without automobile insurance?

Answer 227

Fines 
? 
Demerit points 
? 
Loss of driving privileges 
? 
Imprisonment

Question 228

What are some disadvantages to driving without insurance?

Answer 228

Driver or passenger who is injured in an accident cannot collect income replacement or non?earner benefits
?
Automobile owner cannot collect damages in a no?fault jurisdiction
?
Being personally liable for all damages incurred as an at fault uninsured motorist? this could include being sued

Question 229

Which provinces have government insurance plans that provide auto insurance?

Answer 229

B.C. Manitoba, Saskatchewan, and Quebec

Question 230

Whate are the government plans for automobile insurance?

Answer 230

In B.C., the government insurer known as the Insurance Corporation of British Columbia (ICBC) must provide compulsory coverage to all persons
In Saskatchewan and Manitoba, the provincial insurers?Saskatchewan Government Insurance (SGI) and Manitoba Public Insurance (MPI)?are required to provide basic compulsory insurance to all provincial residents driving registered vehicles governed by the automobile insurance acts.
?
Quebec
Quebec’s automobile insurance plan is a combination plan, with some compulsory coverage provided by the government insurer and some provided by private insurers.
Insurers can transfer non?standard risks into a shared pool known as the Plan de Repartition des Risques (PRR) or Risk Sharing Plan.
When a risk is transferred to PRR the rates are still set by the insurer, although a premium surcharge might be applied in certain cases.

Question 231

What is the facility association?

Answer 231

In provinces where the government does not provide basic coverage, legislation has been passed to ensure a market is available to all insureds (including non?standard risks).

The Facility Association is a pool that provides insurance for licensed drivers who are less desirable from an underwriter’s point of view because their risks are more hazardous.

Question 232

When underwriting auto risks, what does an underwriter need to consider?

Answer 232

Insured 
Lienholder 
Lessor 
Vehicle(s) 
Use of the vehicle 
Driver 
Loss history 
Broker's knowledge of the client

Question 233

What information is required to insurance a vehicle?

Answer 233

the make, model, body type, year, and vehicle identification number (VIN) or serial number.

Question 234

The probability of an auto loss is directly related to what?

Answer 234

The use of the vehicle(s). 
? 
The conditions under which it is used and frequency it is on the road increase the likelihood of its being involved in an accident. 
? 
Confirm if the vehicle is used for 

pleasure;

driving to and from work (if so, how far it is to the client’s workplace); or

business

Question 235

What does the owners policy prohibit vehicles being used for?

Answer 235

compensation for hire

Question 236

Insurers determine premium rates for auto policies through statistics. What are the the statistics?

Answer 236

age, gender, marital status, and driving experiences are all factors that can predict potential for loss.

Question 237

What information should a broker obtain when submitting a request for insurance?

Answer 237

Insured
lienholder
lessor
vehicle(s)
use of vehicles
the drivers
licensing and training
experience
loss history
lapsed coverage and reason

Question 238

What are potential reasons for lapsing?

Answer 238

Client sold her car without replacing it with a new one
?
Client moved temporarily out of the country
?
Client used a company car and so had no need to own a vehicle

Question 239

Who controls the wordings of automobile policies and endorsements?

Answer 239

The wording of automobile policies and endorsements is controlled by provincialgovernments, and a government regulator in each jurisdiction approves the wording.

each jurisdiction has its own wording

In common law jurisdictions, policies contain statutory or mandatory conditions thatare quoted verbatim from the insurance act.

In Quebec, policies are subject to similar conditions known as general conditions,but they do not have to be printed in the policy.

Question 240

What do the statutory, mandatory and general conditions outline?

Answer 240

responsibilities for all parties tothe insurance contract (insurer and insured).

Question 241

What is the chief cause of legal liability related to automobile insurance?

Answer 241

negligence

Question 242

Explain a no fault system with respect to auto losses

Answer 242

Some provinces have adopted no?fault rules, where claimants are reimbursed bytheir own insurer, regardless of who is at fault.

Under no?fault systems, the right to sue is eliminated or restricted.

Insurers still determine who is at fault in an accident ? in order to apportionthe deductible and calculate future premiums.

Quebec, Ontario, New Brunswick, and Manitoba have no?fault schemes, butthey differ in how they are implemented.

Question 243

What auto policy coverage’s are compulsory?

Answer 243

Third party liability
Accident benefits
Uninsured automobile coverage

Question 244

What is covered under third party liability (auto)

Answer 244

Covers bodily injury and property damage arising from the use, ownership, oroperation of a motor vehicle, subject to exclusions.

Coverage is extended to the named insured and any person using or operating theautomobile with the permission of the named insured. (Operating” includes drivingthe vehicle and/or operating any part of the automobile, such as a door or window).”

Question 245

What is covered under accident benefits?

Answer 245

Accident benefits provide no?fault coverage for costs arising from bodily injury to thedriver and passengers.

They are compulsory in most provinces, but each province differs in how they areimplemented.

The coverage limits also vary among the provinces.

In provinces where the injured party’s right to sue has been eliminated, the benefitstend to be more generous, since they are the only way the victim can becompensated for injuries suffered in an automobile accident.

Question 246

What is covered under uninsured automobile coverage?

Answer 246

When an at?fault third party is unknown or uninsured, this coverage will compensatethe named insured or any passengers who suffer bodily injury.

The coverage varies from province to province.

Coverage takes effect if there is no known third party insurer or Highway Victim’sIndemnity Fund, or when the compensation provided by such a fund has beenexhausted.