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 What five elements are embodied by the insuring agreement? | 1. an agreement
2. between legally capable parties
3. for the consideration
4. demonstrating intent
5. to do something legal |
What is the principle of indemnity? | to return a loss to its original financial position prior to the loss. no profit from loss.
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| Define proximate cause. | the effective cause in a chain of events that leads to a loss |
| Describe the two primary ways insurers adapt the Basic Fire Policy to their own purposes. | 1. specific policy - builds on standard policy by including agreement, exclusions and limitations and stat and general conditions
2. modular policy - sum of several parts, each page containing a portion of the contract |
| Define indirect loss and state the most common type of indirect loss. | a consequential loss. most common form is business interruption e.g. loss of income |
| Why is it important for an insured to accurately describe the location of movable property? | to prove a loss, the insured must demonstrate the property damaged is the property described in the policy |
| What is the difference between one item and one object? Provide an example. | an item could be more than one object. e.g. office equipment could include multiple items |
| Define occupancy in the context of an insured building or structure. | it is the function of the building |
| How does the Basic Fire Policy give effect to the principle of indemnity? | it makes the amount payable to the insured the least of
1. actual cash value of loss (cost of replacement)
2. interest of the insured in the property
3. amount of insurance |
| When assessing the actual cash value of lost or damaged property, how is depreciation determined? | it is determined by several factors including physical conditions, resale value, life expectancy, market prices |
| Describe the circumstances in which loss of or damage to electrical devices or appliances is excluded. | loss is excluded if damage to devices or appliances is caused by lightning or other electrical currents |
| How does the Application of Heat Exclusion apply when fire spreads beyond the excluded property? | coverage applies if fire spreads, goods damaged under application of heat is excluded |
| Describe the types of event that would be listed under the War Risks Exclusion. | civil war, terrorism attacks etc. |
| What is the purpose of the Nuclear Liability Act? | the licensed operator of a nuclear installation has absolute liability regardless of fault for damage or injury to other other person or their property |
| What steps should an insurer take to avoid using ambiguous wording in an insurance contract? | have people responsible for issuing policies to have a thorough knowledge of their company's "standard" wordings |
| Under the Additions or Alterations Exclusion, what type of loss or damage is covered, and what type is excluded? | normal repairs are covered while major work e.g. construction, welding is not. |
| What is the significance of the word "while" to the Vacancy, Unoccupancy, Discuss Exclusion? | coverage is temporarily suspended while it is occurring |
| Explain the difference between unoccupancy and vacancy. | unoccupied - occupants are vacant but intend to return
vacancy - absence of all occupants, none of whom intend to return |
| Define the flashpoint of a liquid. | the lowest temperature in which vapours from a liquid upon contact with a spark can ignite |
| What are the arguments for and against coverage of loss or damage caused by by-laws? | for: bylaws only take effect in a loss, insurers should cover
against: independent of insured peril, similar to indirect loss |
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