Caib 1 Chapter 1 - Section 2
Checkpoints Questions And Answers
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Provide 3 reasons why governments are involved in the regulation of the insurance
industry - ANSWER✔✔1. Insurance companies will be financially competent to
discharge their obligations
2. Forms of contracts are drafted fairly
3. Business is being conducted to the general benefit of the public.
Explain the role of the Property and Casualty Insurance Compensation Corporation
(PACICC). Indicate the level of protection provided to all insureds under this
compulsory industry plan - ANSWER✔✔The role of PACICC is to protect the
consumer against insurer insolvency. Each insurance company is assessed an
amount based upon the total of their direct written premium. The maximum
amount available for any one claims is $250,000. A refund of up to 70% of
unearned premiums, subject to a maximum of $700 per policy.
Identify the 3 coverage's required to be provided under all policies of fire insurance
issued in the common law provinces. - ANSWER✔✔1. Fire
2.Lightning
3. Explosion of natural coal or manufactured gas.
Losses which arise proximately from an insured peril are also covered by all
property policies. Provide two examples of proximate damage insured under the
peril of fire. - ANSWER✔✔1. Damage caused by water and other extinguishing
agents.
2. Physical damage to buildings caused by firefighters
, 3. Damage resulting from other actions to prevent the spread of fire. (Demolishing
an adjacent building)
Provide 2 reasons why exclusions are provided on insurance policies. -
ANSWER✔✔1. To remove coverage for which more specialized coverage forms
are available.
2. To remove coverage for losses which are insurable (e.i. war)
Would a policy of fire insurance respond to pay: Fire damage to a dwelling which
arose when iron used to press insured's pants over-heated? Damage to pants which
were being ironed at the time? - ANSWER✔✔Dwelling: Yes, as it is resultant
damage. Pants: No, the application of heat directly caused the damage and it is
specifically excluded
Would a policy of fire insurance respond to pay: Lightning damage to wiring in a
motor of deep freeze? Resultant fire damage to deep freeze? -
ANSWER✔✔Lightning damage to wiring in the motor is not covered by the basic
Fire Policy. Resultant damage to the deep freeze by ensuing fire would be covered
by all fire policies.
Would a policy of fire insurance respond to pay:Damage to electrical wiring in
fridge motor caused by a power surge? Resultant fire damage to fridge? -
ANSWER✔✔Damage to the fridge by the power surge is not insured. However
resultant fire damage would be covered.
Would a policy of fire insurance respond to pay:Fire damage to insured's dwelling
caused during invasion of foreign enemy? - ANSWER✔✔Fire damage caused
during invasion of foreign enemy is not covered by the Fire Policy
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