Fundamentals of Insurance Definitions Exam Questions and Correct Answers Already Passed
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Fundamentals of Insurance Definitions
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Fundamentals Of Insurance Definitions
Fundamentals of Insurance Definitions Exam Questions and Correct Answers Already Passed
Peril - Answers The event that caused a loss covered by the property (fire, windstorm)
Subrogation - Answers right of the insurer to the same rights of recovery against the responsible party as rested with th...
Fundamentals of Insurance Definitions Exam Questions and Correct Answers Already Passed
Peril - Answers The event that caused a loss covered by the property (fire, windstorm)
Subrogation - Answers right of the insurer to the same rights of recovery against the responsible party as
rested with the insured
Indemnity - Answers Concept that an insured will be reimbursed for his loss (subject only to policy limit
and terms)
Short Rate Cancellation - Answers When the insured terminated the policy prior to its expiry, the insurer
is entitled to refund a percentage amount than the unearned premium
Treaty - Answers An agreement between an insurance company and another company who accepts a
portion of the ceding company's liability for a specified class or classes of business; insurance company
and reinsurance company agree to transfer some of their risk to another.
Negligence - Answers Failure to use the degree of care expected from a reasonable and prudent person
Proof of Loss - Answers A formal statement made by the policy owner to an insurer regarding a loss. It is
intended to give information to the insurer to enable them to determine the extent of its liability
Vacant - Answers Property that usually has the contents removed and where no person is returning to
occupy the property
Waiver of Co-Insurance - Answers Clause contained in commercial property insurance policies which
provides that a penalty will not be applied in situations involving small losses even though the insured
may not be in compliance with requirements
Pro Rata - Answers Cancellation of an insurance policy with the return premium credit being in full
portion of premium for the unexpired term of policy. Incur no penalty
Tort - Answers Legal wrong arising from duty fixed by law. Breach of this duty causing injury to persons
or property is addressed by legal action for damages
Statute Law - Answers Law set down in government act and passed by legislation and takes priority over
common law dealing with same matter
Vicarious liability - Answers indirect legal responsibility, such as an employer being liable for the acts of
an employee while in commission of their duties
Reinsurance - Answers An agreement by which a re-insurer, for money, indemnifies an insurer for all or
part of the insurer's risk
Unoccupied - Answers referred to in property insurance as the risk in which no one is living but does
have furniture contained there and someone will return to the property to live in it
,Statutory Conditions - Answers special prescribed and standardized conditions that the provincial
insurance acts require to be included in fire, auto, and accident/sickness
Fiduciary - Answers someone who holds a position of trust in handling other people's money
ex. insurance company, broker, bank
Automobile fleet - Answers group of automobiles under the same ownership and management which
may, because of the number, justify a discount in the insurance premium
Cover Note - Answers Also known as Binder; document which tells insured that the insurance described
therein is in effect
Named Perils - Answers policy in which the perils insured against are listed
Absolute liability - Answers covers bodily injury and property damage even if insured breaches contract.
innocent victims shouldn't have to bear costs arising from negligent actions.
often found in cases involving explosives and automobiles
Law: responsibility owed to 3rd party regardless of fault, negligence, or breach
Caveat Emptor/Doctrine - Answers buyer beware - not part of an insurance contract
Disclosure - Answers act of making something known
Bailee - Answers In contract and property law, one to whom goods are entrusted for a stated purpose.
Can be gratuitous or for hire
Consequential - Answers An indirect result of the occurrence that causes the loss
Adverse Selection - Answers situation occurring when an insurer does not receive a fair cross-section of
a broker's portfolio of business such as when a broker places all of their poor risks with one insurer
Deductible - Answers An agreed sum to be deducted from the amount of loss and assumed by the
insured
Estoppel - Answers A bar created when someone, by their action or lack of it, indicated that they will not
exercise a right they have, which in turn stops them from exercising their right later
All Risk - Answers A policy that covers against all perils except those specifically excluded.
Co-insurance - Answers A clause in an insurance policy requiring an insured to carry a certain percentage
of insurance in relation to the value of the property insured
,Facility Association - Answers An insurance pool in which all licensed automobile insurers participate and
which provides insurance to those who may be refused insurance by private insurers, guaranteeing a
market for all licensed drivers. It has many rules and regulations strict and must be adhered to.
Independent Adjuster - Answers Person who represents an insurer on investigations and dealings with
respect to settlement of claims. May be salaried employee
Staff (Company) Adjuster - Answers most insurance companies have them who handle the bulk of their
claim settlements
Attractive Nuisance - Answers tort doctrine which holds that any person who creates any condition on
his premises that may be considered to pose a danger to children and at the same time, attract them to
it. That person had a duty to prevent injury to minors
Public Adjuster - Answers employed by an insured/policyholder to represent them in their claim
negotiations with an insurance company. usually takes a percentage of the amount collected as
compensation. DOES NOT ACT ON BEHALF OF INSURANCE COMPANY
Insurance Brokers Association of Alberta (IBAA) - Answers dedicated to preserving and strengthening
insurance brokers with education, member benefits, and lobbying with government insurance
regulators
Insurance Brokers Association of Canada (IBAC) - Answers national voice of insurance brokers and
advocate for insurance consumers in canada for professional development, standards of qualification,
and ethics
Insurance bureau of Canada (IBC) - Answers increase public understanding of home, auto, & commercial
insurance. advocate to public that P&C insurance is available & affordable to all Canadians
Insurance Act - Answers
Why Auto Insurance is Needed - Answers 1. Required by Law
2. Legal Liability for operation & ownership of vehicle
3. Accident benefits
4. Protect the investment
5. Coverage for loss of use of vehicle
3 Sections of Auto Insurance in AB - Answers A: 3rd Party Liability
B: Accident Benefits
C: Loss/Damage to Insured Auto(s)
Private Insurers - Answers Aviva, Wawanesa, Intact, etc.
, Facility Associations
Found in AB, ON, & Atlantic provinces
Government Insurers - Answers Compulsory government insurance plans
Differs in each province
Found in BC, SK, MB, QB
Private insurers will compete against them to provide extra coverage
No fault coverage - Answers exists to provide benefits to persons injured regardless of who is at fault
Pure No Fault - Answers removes the right of auto legal action
no subrogation or suing
Manitoba & Quebec
Threshold No Fault - Answers auto legal action is permitted once a threshold is exceeded:
1. monetary
2. severity of injury
Ontario
Modified No Fault - Answers auto compensation claimed from the government insurer, but if the
amounts paid are inadequate and the claimant demonstrates economic loss, then action against the
responsible party may proceed.
Saskatchewan
5 functions of Insurance - Answers 1. spread of risk
2. basis of credit system
3. eliminates worry - encourages entrepreneurship
4. loss prevention & loss reduction
5. source of employment & investment capital
Spread of Risk - Answers losses of the few are shared among the many
Definition of Insurance (5 points) - Answers 1. shifts risk of a loss from one party to another
2. payment made only in the event of a certain risk/peril
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