Flashcards in Study 2 - Underwriting The Risk: An Overview Deck (28)
Define contra proferentem
A legit term that provides that any ambiguity in a contract must be interpreted against the person who drew the contract because they had the opportunity to make it clear
Define replacement cost clause
A provision, generally in property insurance coverage, to provide a substitute of the damaged or loss property with something similar, including having the same use but not necessarily identical to the property being replaced, without extra cost to the insured
Define actual cash value
The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. Actual cash value (ACV) is usually calculated in one of three ways: 1) Cost to repair or replace less depreciation, 2) Fair market value or 3) Consideration of all relevant evidence of the value of the damaged property
What simple way is contra proferentem described?
Against the offeror
What is a manuscript policy?
Specialty policy; unique risk
Some features may be standard while others are not
How did liability policies adjust to the liability crisis in the mid 1980s?
Policies were on an occurrence basis previously
They created claims made policies
What two cases set the basis for exclusions regarding abuse and molestation?
Sansalone v. Wawanesa Mutual Insurance Co.
Non-marine underwriters, Lloyds of London v. Scalera
What was the relevance of Dittmann v. Aviva Insurance Company of Canada in 2017?
How companies define the use of a motor vehicle
Lady in drive through spilt McDonalds coffee on herself, Aviva took the stance it was not an auto accident as she was not in motion, the courts disagreed and she was eligible for accident benefts
An agreement or promise between two or more persons that is intended to be legally enforceable and is constituted by the acceptance by one or more party of an offer made to him by the other party, to do or abstain from doing a specific act. The offer and acceptance may either be expressed or be inferred through the conduct of the parties
The value received to bind a contract. It is an essential part of a binding contract. Consideration is either expressed or implied. The money, or whatever is being used in substitution of money, paid for the article or contract is the consideration
What are the five elements of a contract?
Agreement (offer & acceptance)
Capacities of the parties to contract
Genuine intention (meeting of the minds)
Legality of the object
What are the four requisites to a binding contract in Quebec?
Capacity to Contract
Cause of Contract
Object of Contract
Define insurable interest
An interest that the insured must have in the subject matter of the insurance purchased so that if the event insured against occurs, the insured will suffer a pecuniary loss
A contract, expressed or implied to repay the event of a loss. The insured neither gains nor loses
What other three elements are unique to an insurance contract?
Utmost Good Faith
Define utmost food faith
A legal principle calling for the highest standards of integrity on the part of the insured and the insurer
Statements included in a policy that are agreed to by the insured and form the basis of the contract of insurance
What are the five different sections of a policy?
1) Coverage summary
2) Insuring agreements
3) Statutory conditions / Quebec general conditions
4) Policy conditions
5) Signature clause
What is detailed on the coverage summary / declarations page?
- Parties of the contract
- Commencement date, term and expiry date
- Premium and rate
- Amounts insured
What is detailed in the insuring agreements?
- Subject matter of insurance
- Perils insured against
- Circumstances under which the insured may receive the proceeds of the insurance
What three types of policies do statutory conditions apply to?
- Accident & Sickness
- Fire Insurance
Define subscription policy
A single policy covering a risk that is divided among a number of insurers; the policy is issued by the "lead" company (usually the one with the largest percentage) and signed by all participating companies
What are the five skills in an underwriter's toolkit?
- The environment
- The legal system
- The business
- The product
- The risk
What should an underwriter's understanding of the legal system encompass?
- Three sources of law in Canada; common law, statute law, civil code of Quebec
- Division of jurisdiction beteen federal, provincial and territorial
- Structure of federal, provincial and territorial court systems
- Distinction between civil and criminal law
- Aspects of civil law including law of tort and especially law of contract
- Insurance contract itself
What happened in Al's Towing Service v. Sovereign General Insurance Co. (1991)?
Court ruled that exclusions did not apply as the crane was used in the way it was designed, and the plaintiff action against the insurer was not allowed
What are some examples of an underwriter's technical skills?
Technology, research, rating and ratemaking
What two analytical skills must underwriters be comfortable with?
Words and numbers