Study four Flashcards
(12 cards)
What 3 conditions must be met so that an occurence is classified as a fire?
1) there must be an actual fire or ignition
2) there must be something on fire which ought not to have been on fire
3) there must be something in the nature of a casualty or accident
Define friendly fire.
- is a fire intentionally kindled in a place provided for it
- as long as it does not leave the place provided for it (fire place)
Define hostile fire.
- when fire leaves place provided for it and ignites something outside
- it refers to the second or accidental fire
What does the basic fire policy insure against?
1) fire
- must be actual ignition, with something that shouldn’t be on fire, and must be an accident
2) lightning
- excludes damage to electrical appliances unless damaged by ensuing fire
3) explosions of natural, coal, or maufactured gas
Define extended coverage endorsement.
- is attached to a basic fire policy
- the means by which additional perils were insured
Added insurance for:
- explosion
- falling object
- impact by aircraft/land vehicle
- lightning damage to electrical appliances
- water escape, rupture, freezing
- smoke
- vandalism/malicious acts
- windstorm/hail
- riot
- known as Fire & EC
What are other important facts about extended coverages?
1) it adds insurance against additional perils
2) it applies to property already insured against fire
3) it does not affect the amount of insurance
What info is included in a fire policy?
1) identification
- names of insurer and insured
- property insured
- amount of insurance
- rate and premium
- term, commencement, expiry date
2) basic agreement
- insured agrees to pay premium and insurer agrees to indemnify
3) type of loss insured
- covers against direct physical loss or damage
4) perils insured against
- fire, lightning, explosions of natural, coal or manufactured gas
5) how indemnity is to be computed in the event of a loss
- insurer will at least pay for:
i) the ACV of the property at the time of destruction/damage
ii) the interest of the insured in the property
- reinforces the principle of insurable interest and indemnity
- if insured only has partial financial interest, he is only entitled to recover to the extent of his interest
6) automatic extensions of coverage
- if it is necessary to remove property to prevent loss/further loss from an insured peril, coverage is automatic
i) coverage for 7 days or if policy expires sooner than taht
ii) if there is property in more than one location, coverage under this extension is pro-rated according to the value of property in each location
iii) the amounf of coverage available is the amount that is left over from what the insurer has already incurred for the loss
7) exclusions
- three general types are:
i) those that exclude losses considered to be uninsurable
ii) those that exclude property that can be insured under other types of policies
iii) those that restrict or limit coverage
8) links with the rest of the policy
- specific property describe in wordings
- fire statutory conditions must be included
- any other conditions must be attached
- signature clause is signed by insurer (usually on declaration page)
What do the fire statutory conditions include?
1) misrepresentation
- total honesty required
- false description of property/ misrep. or fraudulent omission of a material fact made with intent to deceive may void a particular coverage or entire policy
2) property of others
- no coverage unless there is an insurable interest of the insured
3) change of interest
- when a house is sold, the change of interest makes the insurer not liable
4) material change
- change must be disclosed to insurer promptly, otherwise the coverage will be affected
- once insurer receives this info they can either:
i) cancel contract and return unearned premium
ii) continue contract subject to additional premium
- the insured has 15 days after receipt of written notice to pay premium
5) termination of insurance
- can be terminated by either parties subject to provisions
- termination by insurer:
i) needs to give insured 15 days notice by registered mail or 5 days written notice personally delivered
ii) must refund premium at pro rata rate for expired time - this refund should accompany the notice unless premium is subject to adjustment
- termination by insured
i) can terminate at any time
ii) insurer must refund asap, at short rate premium
6) requirements after loss
- following a loss a insured must:
i) give notice of loss immediately
ii) deliver to the insurer as soon as possible, a proof of loss which must be:
- verified by statutory declaration
- give full details of the occurrence of the loss
- state amount claimed
- state the interest of the insured and all others in the property
- give details of any other applicable insurance
iii) if required, a complete inventory of undamaged property and produce books of account and other documentation
7) fraud
- will invalidate claim of person making the declaration
8) who may give notice and proof
- an agent of the insured may give notice/ proof when an insured is absent or is unable to do so
9) salvage
- the insured is required to take all reasonable steps, including the removal of property, to prevent further damage
- any costs incurred are usually referred to as salvage expenses
- insurer agrees to contribute pro rata to any reasonable salvage expenses incurred
- if property is insured to full value, insurer will pay all salvage expenses
10) entry, control, abandonment
- the insurer has the right of entry to survey damage and make an estimate, appraisement of damage and amount of loss
- insurer is not entitled to control or possession of the property
11) appraisal
- appraisal must take place is there is a disagreement on the value of property
12) when loss is payable
- within 60 days after completion of the proof of loss
13) replacement
- statutory conditions gives insurer several options for delivering indemnity
- they may elect to repair, rebuild, or replace property instead of making payment
- if insurer chooses these methods, must give written notice within 30 days of receipt for proof of loss
- work must commence within 45 days after receipt of proof of loss
- the amount of insurance becomes irrelevant
- insurer must restore property to its original state
14) action
- all court actions to recover from insurer must be started within 1 year from time the loss or damage occur
15) notice
- written notice to insurer may be personally delivered or by registered mail to chief agency or head office of insurer in province
- notice to the insured may be personally delivered or by registered mail to the latest post office address notified to insurer
What conditions receive automatic consent?
1) authorized assignment under the bankruptcy act
2) a change of title by succession
3) a change of title by operation of law
4) a change of title by death
How is indemnity computed in the event of a loss?
Insurer will pay the least of:
1) the ACV of property at time of destruction/damage
2) the interest of the insured in the property
- reinforces Principle of indemnity
3) amount of insurance applicable to the item
What are the main features of automatic extension coverage?
If it’s necessary to remove property to prevent loss or further loss from an insured peril, auto coverage is granted in policy
1) coverage is for 7 days or if policy expires sooner
2) if there is property in more than 1 location
- extension is prorated according to value of property in each location
3) amount of coverage available is the a,punt that is left over from what the insurer has already incurred for loss
Describe details of fire statutory conditions.
1) must be a part of every fire insurance contract
2) impose certain obligations on both parties
3) are the same in all common law provinces
