Exam (elaborations)
PNC Learning Main Points Questions and Answers
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PNC Learning Main Points
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PNC Learning Main PointsFederal: Office of the Superintendent of Financial Institutions (2 responsibilities) -
answer- Licenses of insurers that operate in multiple provinces
- Monitors & sets strict financial standards to ensure stability
Provincial: Office of the Superintendent of Financial Institutions (4 responsibilities) -
answer- Regulate terms of insurance policy (they approve all policy wordings)
- Licenses insurers that operate in their province
- Monitors financial stability of provincially licensed insurers
- Administers the insurance act (Act varies among provinces)
Fiduciary - answerhandles other people's money
Responsibility of brokers - answerhold commissions in trust and return unearned
commissions
Responsibility of insurers - answerreturn unearned premiums
Insurance Act (8) - answer- Contents of insurance policies
- basic fire policy coverage
- removal clause
- standard legislation exclusions
- statutory conditions
- limitation of liability clause
- delivery of policy
- waiver of terms/ conditions
Contents of insurance policy (7) - answerMust appear on the declaration page
- parties of the contract
- loss payable and payee
- policy period
- coverage
- subject matter of insurance
- rates and premiums
basic fire policy. What is it, what are 2 insured perils? - answer- fire with ignition that
causes destructive burning
1. Lightning
2. explosion
, removal clause (insurance act) - answercovers property for up to 7 days if moved to a
location not stated on the policy to prevent (further loss) (aka. Necessary removal)
Standard legislation exclusions Fire policy(insurance act) - 5 - answer- Application of
heat: because it is friendly fire
- Radioactive contamination
- Electrical currents (i.e. power surges)
- Lightning damage to electric devices (resultant fire = OK)
If lightning struck my tv it wouldn't be covered, but if it struck the tv and caught fire and
then the house caught fire, it would be covered.
- Riot, insurrection, war, act of a foreign enemy: because they are deliberate acts of
violence with large losses
Statutory conditions - answerrights and responsibilities of the parties
Rights after loss (Statutory conditions) ACE - answerAbandonment - insured cannot
abandon property
control - insurer cannot take control of the property after loss
Entry - insurer can come and investigate
Dealing with risk: CART - answerControl - try to reduce the frequency of loss
avoidance - avoid the activity
retention - paying for losses yourself
transfer - shift the financial risk to someone else
Elements of all contracts (5) - answer- agreement
- intent
- consideration
- legality of object
- legal capacity of the parties
Elements special to insurance contracts (3) - answer- insurable interest
- utmost good faith
- indemnity
What is a binder? - answerAn interim policy. Broker commits the insurer to an insurance
contract without checking with them
Broker represents who's interest? - answerClient's
Agent represents who's interest? - answerInsurer's
What is a major source of E&O? (3) - answer- inadequate coverage
- failure to advise of exclusions
- incorrect coverage
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