Ch2: Regulations

Question 1

Who handles Federal Regulations

Answer 1

Office of the Superintendent of Financial Institutions

Question 2

Describe the duties of the Office of the Superintendent of Financial Institutions

Answer 2

1. to license insurance companies that operate in multiple provinces
2. monitor and set strict financial standards to ensure stability

Question 3

Who handles Provincial Regulations In B.C.

Answer 3

BC Superintendent of Financial Institutions

Question 4

Describe the 4 responsibilities of the provincial regulator

Answer 4

1. Regulate and approve insurance policy terms/wordings
2. Licenses insurers, brokers, and adjusters
3. Monitors financial stability of BC insurers
4. Administers the Insurance Act

Question 5

Define “Solvency”

Answer 5

ability to meet financial obligations

Question 6

What stands for “PACICC?”

Answer 6

Property And Casualty Insurance Compensation Cooperation

Question 7

What does PACICC do?

Answer 7

covers policyholders even when the insurer goes bankrupt

up to $250,000 per claim, refund premiums 70% or $700

Question 8

Define “Fiduciary”

Answer 8

someone who handles other peoples money

Question 9

What is a Brokers responsibility?

Answer 9

hold commissions in trust and return unearned commissions

Question 10

What is a Insurers responsibility

Answer 10

return unearned premiums

Question 11

What are the 6 Contents of a Insurance Policy

Answer 11

1. Parties of a contract
2. Loss Payable or Payee
3. Policy Period starts at 12:01AM Standard Time @ address of name of insured
4. Coverage and Amount of Insurance
5. Subject Matter of Insurance
6. Rates and Premiums

Question 12

When does the policy period start?

Answer 12

12:01AM Standard Time @ address of name of insured

Question 13

Define “Fire”

Answer 13

ignition that causes “destructive burning”

Question 14

Define “Friendly Fire”

Answer 14

deliberate and contained for beneficial purposes (not insurable)

Question 15

Define “Hostile Fire”

Answer 15

not contained & destructive affects (insurable)

Question 16

What are the 4 Basic Fire Policy Coverages?

Answer 16

1. Friendly Fire
2. Hostile Fire
3. Lightning
4. Explosion of Coal, Natural or Manufactured Gas

Question 17

Name the 5 Fire policy exclusions

Answer 17

1. Application of heat
2. Radioactive Contamination
3. Other electrical currents
4. Lightning damage to electrical devices
5. Riot, Insurrection, Civil Commotion, War, Act of a Foreign Enemy or Military deliberate act of violence with a large loss

Question 18

Define “Statutory Conditions”

Answer 18

rights and responsibilities of the parties - no changes

Question 19

Name the 3 types of Misrepresentation

Answer 19

1. False description of property
   i.e. Making it look better than it is
2. Misrepresentation of a “Material Fact”
   i.e. give a true account
3. Fraudulent omission of a “Material Fact”
   i.e. applicant deliberately withholds material information

Question 20

Define “Material Fact”

Answer 20

something that would change the insurers decision if known

Question 21

Name the 8 requirements upon loss

Answer 21

1. Notice of Loss
2. Proof of Loss
3. Inventory of Damaged Property
4. How the Loss Occurred
5. Location
6. Other Insurance
7. Interest of the Insured & Others
8. Changes in Property

Question 22

Who are the 3 people who can give notice for proof of loss?

Answer 22

1. the insured
2. the agent if justifiable
3. those with insurable interest - even if insured refuses

Question 23

Termination responsibilities of the Insured

Answer 23

must notify insurer (termination=immediate)
In Writing: to the provincial head office of insurer
Premium Refund = on short rate basis to cover admin costs

Question 24

Termination responsibilities of the Insurer

Answer 24

In writing: to the last known address of the insured.
Registered Mail: 15 days’ notice
Hand Delivered: 5 days’ notice
Refund = Pro Rata & accompanies the notice

Question 25

Define “Property of Others”

Answer 25

No coverage unless you’re insured by the policy

Question 26

Define “Change of Interest”

Answer 26

If insured no longer has insurable interest in the property, coverage is NOT automatically extended to the new owner

Question 27

What are the Exemptions to the “Change of Interest”

Answer 27

transfers under the bankruptcy act, succession, death or other
“legally-mandated” title change.

Question 28

Describe “Rights After Loss” (ACE)

Answer 28

Part of statutory conditions
Abandonment: Insured cannot abandon property to insurer.
Control: Insurer cannot take control of the property after loss.
Entry: Insurer can enter immediately after loss to investigate.

Question 29

Define Appraisal

Answer 29

Part of Statutory conditions. Outlines the procedures for claims disputes.

Question 30

When are losses payable?

Answer 30

Within 60 days of receiving proof of loss (unless the contract states otherwise)

Question 31

Define “Replacement”

Answer 31

Part of Statutory conditions, When the insurer decides to repair or replace instead of paying cash they must give written notice with 30 days and start replacement within 45 days.

Question 32

Define “Action”

Answer 32

Part of Statutory conditions. Legal action must be taken with one year of date of loss. No legal action can be taken within the Losses Payable period.

Question 33

Describe the function of the “Limitation of Liability Clause”

Answer 33

Any terms that may reduce the amount of payment in red ink.

Question 34

Define “Delivery of Policy”

Answer 34

If the policy is has been delivered, the insurer must pay for losses even when the premium has not been paid.

Question 35

Define “Subrogation”

Answer 35

To stand in the shoes of another and assume their legal rights

Insurer can sue in place of the insured after paying a claim to recover the loss.

Question 36

What is the Waiver of Terms/Conditions

Answer 36

Only the insurer can change policy terms and conditions.

MUST BE: Written and signed by authorized person.

Question 37

What is the “Removal Clause”

Answer 37

Coverage for property for up to 7 days if moved to a new location NOT stated on the policy to prevent further losses