C12 - Chapter 5 Broadening the Contract – Additional Principles and Perils.pdf View
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Terms | Definitions |
|---|---|
 Why is it unfair to the first insurer when an insured purchases two policies? | a loss by additional peril for the full amount of the first policy's limit was unfair. |
| What steps did insurers take to combat this problem? | insurer's added an other insurance clause to their policies to pro rate an additional perils loss between multiple policies. |
| What is the purpose of the Insurance Bureau of Canada's Agreement of Guiding Principles? | clarifies multiple insurance policies where practice departs from stat specs, where law is unclear, where gaps exist in the law, or in unusual or disputed circumstances |
| Describe the unique difficulties of insuring against earthquakes. | earthquakes are unpredictable, the spread of risk is narrowed and the chance of catastrophic loss is greater |
| What determines whether an earthquake and a series of aftershocks are considered one event? | all shocks within a 168 hour period are considered a single event. |
| Define land subsidence. | is a sudden falling in of the ground, often caused by the extraction of minerals or water from the earth. |
| Name five different kinds of theft. | - conversion (entrusted property) - mysterious disappearance - theft from vehicle - break-in - theft by trick |
| What is the difference between mysterious disappearance and unexplained disappearance? | object cannot be located or accounted for mysterious disappearance may appear in policy wordings as part of an exclusion but unlikely to be included as an insured peril, unexplained disappearance is a clearer alternative term. |
| How is premium determination for theft insurance different from premium determination for fire insurance? | the difference is in the details. fire - always a risk of total loss, theft - rarely total loss. |
| What is graded rating? | different layers of loss with the higher rate at the first layers. each successive layer is larger than the layer below it. |
| Name three factors that affect the premium for insuring property in transit. | 1. insurer's limit of liability for property in transit 2. perils applying to such property. (many perils possibilities) 3. the probable frequency of loss |
| Why do insurers use the term named perils to describe multi-peril contracts that combine a number of perils beyond fire and the additional perils? | helped to distinguish from policies in which every insured peril is listed from other policies written on all risks basis. |
| Explain the difference between named perils and all risks. | named perils state which losses will be covered all risks state which losses will not be coeverd |
| Describe the conditions in which wilful acts may still be covered. | may be still covered if the act was unintentional unless proven that the insured was aware of consequences of the acts or acted recklessly. |
| What four different aspects of the contract do exclusions in an all risks policy deal with? | property, locations, events, direct loss. |
| What events or circumstances would be considered indirect or consequential losses? | delay, loss of market, loss of use, loss of occupancy |
| What is the purpose of sub-limits on certain types of property? | to provide full coverage where property loss is not attributable in some degree to the fragility of the property or its attractiveness to thieves |
| Why were the Additional Conditions originally developed? | were to cover important points that had been omitted in some inland marine-based forms that were not subject to the fire insurance provisions of the insurance acts |
| The Notice to Authorities condition concerns only what peril? | only deals with theft losses |
| What is the purpose of the Pair and Set condition? | loss of part of a pair or set will not be considered a total loss. prevents claims for the value of pair and salvaging the remaining articles. |
| Why would subrogation rights be important to an insurer? | would allow the insurer to recover funds paid to claims losses from the responsible party |
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