Other Than Life Exam Prep Guide

Other Than Life Exam Prep Guide
How to use this study guide:

The most key words/ideas are bunched together for easy reading/highlighting:
- EX. Business Interruption Insurance: restores lost income if caused by insured perils up to the level the
business would have earned if the loss hadn’t occurred (insured perils = same as property insurance)
When remembering a list of things (ie. exclusions), just remember 3-5 of them. In this study guide, lists are
sorted to have the most important or easiest to remember things at the top.
An “=” sign typically indicates a definition.
Bolded words are key ideas, if you remember nothing else, try to remember the bolded words.
If you’re taking Fundamentals, it will be entirely multiple choice; in that case, instead of rote memorization,
try to understand the idea behind the concepts. Try to put yourself in the insurer’s shoes and try to see
how certain terms, exclusions, etc are reasonable.
Definitions:
1. “Insured” = actual insured(s) & employees of insured
2. AoI = Amount of Insurance
3. On Premises = on the premises stated on the declaration page of the policy
4. “Controlled” = owned, rented or controlled by insured
5. CoC = course of construction
6. “Owned” = owned, rented or leased (or otherwise controlled)
7. “Vehicles” includes watercraft and other motorized vehicles (not only cars)
Introduction to Insurance
Insurance = an undertaking by one party to indemnify another if a specific peril damages an object of
insurance
Functions of Insurance:
- Spread Risk: from few to many (most important function)
o Premiums are used to pay losses
o Spread risk amongst a large number of insureds, classes/types of risk & geography
o Law of large numbers: the more data you have, the more accurate the prediction. If you
look at a large number of policies, you can use that to predict the likely future losses.
- Insurers participate in Loss Prevention/Reduction measures (i.e. better building codes, safe driving
campaigns, discounts for alarms, etc.)
- Peace of Mind: eliminates worry and lets people take risks (i.e. starting a business)
o Pay small fixed amount to fend off large uncertain amounts
- Supply Credit: lenders won’t lend for unprotected property. Insurance encourages lending.
- Source of Jobs & Capital: insurers invest their premium $$ && creates jobs directly & indirectly
o Insurers can only invest in stable & secure assets and maintain Loss Reserves = to IBNR
Losses [losses that are incurred (occurred) but not yet reported]
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Definition of insurance:
1. Agreement between insurer and insured: to transfer risk
2. Insurer promises to pay when a specific peril damages an object of insurance OR when insured
causes loss to others
3. Insurance pays only for accidental losses that happen after the agreement starts
4. Principle of Indemnity: amount of claim payment = Amount of Loss based on the value of the object
immediately prior to loss
5. Payment can be in money or repairing/replacing the property
General (Property & Casualty) Insurance Categories:

1. Automobile Insurance: largest volumes, required by law
2. Property: personal and business property, 2nd biggest
3. Liability: provides protection if legally responsible for causing injury or damage to 3rd party
Types of Insurers: private & government

1. Government Insurance: ie. EI, provincial health plan, Workers Compensation, etc. (~compulsory)
a. Some provinces like SK & MB have Compulsory Insurance for auto
b. BC Gov offers an Alternative Market where private insurers also offer Optional Coverage
2. Private Insurance Companies:
a. Stock Companies: owned by shareholders & profit oriented
i. Earn underwriting profit (if premiums collected > claims paid) + investment income
b. Mutual Companies: owned by policy holders & not profit oriented
i. Cheapest insurance
ii. If the company loses money: policy holders pay the difference
iii. If surplus: pay to policy holders as dividend
iv. 4 Types: Assessment, Cooperative, Factory, Stock
1. Assessment: every policyholder is a member & elect a board of directors
a. Premiums = communal fund for claims
b. Employs a secretary to administer the organization
c. Insured signs a premium note with a face value. Face value minus
the premium = amount remaining to pay losses
2. Cooperative: shareholders are insureds & contribute capital
a. Each shareholder gets 1 vote & surplus $$ is paid out based on
amounts contributed. Profits are paid as dividends or retained in
reserves
b. Premiums = non-assessable based on results
3. Factory: focus on fire insurance & prevention (requires strict fire protection
before insuring & conducts detailed inspections)
a. Insured pay a deposit used to pay losses, expenses & funds a reserve
+ gets credits back for investment income.
b. @ end of term, deposit is either returned or credited towards a
renewal
4. Stock = an Assessment Mutual that underwent a legal transformation to let
them insure the public. Premiums are fixed @ inception & not subject to
adjustments (i.e. if the Mutual makes or loses money)
c. Captive Insurer: insurer is wholly owned & controlled by its insureds. They operate like a
traditional insurer putting their own money at risk and benefit from any profits. Usually set
up as a risk financing measure to insure a group of large related companies only.
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2 ways to Distribute Insurance: Direct writer or Independent Broker
1. Direct Writer: Insurer sells its own products direct to consumer (D2C) using employees
a. Employees sometimes called “captive” or “employed” agents since they’re employees
2. Independent Broker: Represents more than 1 insurer and gets commission (usually a % of
premiums). Pays their own expenses. Clients belong to the broker. Can have some underwriting,
quoting, claims power. They shop the market, try to find the best fit for clients, and services them
3. (Exclusive) Agency System = small business owners [agents get (usually higher) commissions, pay
their own expenses & don’t own their book of business]
a. They represent 1 insurer & the Facility Association
b. Ex: State Farm & Co-operators
4. Independent Agency: Same as a brokerage but can represent 1-3 insurers
5. Managing General Agents (MGA) = “wholesalers” = intermediaries between insurers & brokers.
They have underwriting powers, settle claims, and even appoint brokerages to sell their products.
a. Usually have specialized expertise & products (i.e. E&O/Professional Liability insurance)
b. Can be structured as an independent brokerage or independent agency
6. Online/Call Centre Services: for better customer service, many use call centres, live chats, etc. to
provide 24/7 service to customers.
a. Can go online to add coverage or make changes on your own but to avoid E&O, they might
make you speak to a licensed rep before reducing coverage
Lloyd’s of London: they insure the stuff uninsurable in normal markets

- Advantages: writes unique risks & has a greater capacity (give larger limits or can write more
policies)
- Corporation of Lloyd’s supports and overseas the market
- They are a group of underwriters who assume risks themselves
o Anyone can be a Lloyd’s underwriter if they meet financial requirements
- Syndicates = groups of underwriters approved by Lloyds to participate
o Underwriting/Managing agent manages the syndicate & appoints a “lead underwriter” who
is an expert in that class of business
- Process: you write business through a network of Lloyds Brokers and Coverholders (<- can bind
coverage on behalf of insurers)
o Producer provides broker w/ underwriting information on a “slip”
o Underwriters commit to a % of the risk, until the policy is fully subscribed
o “Slip” sent on to the Lloyd’s Policy Signing Office
Reinsurance = when 1 insurer (the reinsured) cedes risk to another insurer (the reinsurer)
o Retrocession: when a reinsurer cedes the risk AGAIN to another (the retrocessionnaire)
- 4 reasons for Reinsurance:
o Increase Capacity (capacity = the amount of coverage an insurer can take on)
▪ An insurer doesn’t want to have $5M tied up in 1 risk, they might reinsure $4M so
they free up $4M in capacity to write other business
▪ Helps spread the risk amongst more people
o Premium Reserve Ratio: they can’t write more than X times the amount they hold in “cash”
so they use reinsurance to get some $$ “off the books”
▪ Premium capacity = the amount an insurer can safely write (as per Insurance Act &
GAAP)
o Catastrophe Protection: natural disasters, etc. can cause insurers to pay huge sums & go
bankrupt. They use reinsurance/retrocession to spread that risk.
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o Underwriting Stability: if insurers can put an upper limit of their liability via reinsurance,
they won’t have to change their pricing as often in response to losses
o Leaving a Class of Business: if they don’t want to write that type of business anymore &
want to get the liabilities off their books, they could reinsure it away instead of cancelling
- Types of Reinsurance Contracts: based on the way its placed & way premiums/losses are shared
o Treaty Reinsurance: covers all policies in a particular class – automatically cedes the risks
o Facultative Reinsurance: arranged separately for each policy – more flexible as the
reinsurer/insurer gets to choose which one(s) to cede
o Proportional Reinsurance: shares all losses/premiums by % split

o Non-proportional Reinsurance (most common): reinsurer pays losses > $X
Purchasing Insurance:
- New Business:
o Step 1: Greeted professionally by the CSR taking their application
▪ Ask enough questions to understand their needs – pry if you think they might be
missing something > ID companies that are likely to insure them & the product(s)
they need > Send application to the client
▪ Might need specific apps for some products or special risks (i.e. home-based biz)
▪ Applicants & brokers have the duty to disclose all material facts & make accurate
representations (discussed later). The insurer relies on this info and if false or
omitted, can lead to VOID policies and denied claims.
▪ Oral Applications: make sure you take written notes (+ who & when), record calls,
keep these records properly (i.e. upload to broker management system), and send
written confirmation
▪ Written Applications:
• Brokers can make their own or use the insurer’s
• CSIO provides standardized applications
• Pros:
o Most accurate (especially if the client reviews & signs it)
o Checklist to make sure you’re asking all the right questions
o Gives coverage/risk management recommendations (i.e. it may
include a section on cyber insurance or have questions related to
cyber security measures – if they don’t have those things, maybe
they should)
o Prevents errors – no transcribing or double entries necessary
o Can be used as evidence of coverages & proof of questions asked
o Better service – you get all the info upfront
o Has legal & privacy disclosures that clients agree to when signing
▪ Generally Required Information: may see more questions for specific risks
• Named Insured (aka Applicant) + Mailing Address (for Notices)
• Loss Payees = someone other than the named insured who can collect $$
o If there are a lot of loss payees, they need to investigate due to
potential moral hazard. Is there a lot of debt on the property?
▪ Is the insured suffering financial difficulties? If so, they
might commit insurance fraud or neglect maintenance
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• Subject of Insurance: What are we insuring (i.e. a home, car, liability, or a
piece of business equipment)? Limit of Insurance? Coverage required?
o For Property: what, where, limits required, usage (i.e home)
o For Autos: what (description), territory of operation, usage (i.e
business or personal use), who drives, who has insurable interest?
• Policy Term: inception & expiry date (usually 1 yr)
o You can back-date a policy but requires detailed investigation. Can’t
get coverage for anything that already happened!
• Loss History (frequency & type of loss): is used to predict future losses and
has an effect on terms, conditions and acceptance
o Note: losses ≠ claims. You can have a loss but not claim it.
o Look-back period varies: 3-5 yrs for Home, 5-10 for Auto
• Insurance History: previous insurer, policy # & expiry is used to:
o Confirm loss history
o Check for unexplained gaps in coverage
o Previous declines/refusals to insure/renew. Is there a good reason?
• Intermediary’s Report: add info based on your personal knowledge (i.e.
based on your relationship with the applicant, site visits, etc.)
o Very important for getting business approved that would otherwise
not be (i.e. include photos of a clean & well-kept facility)
• Signatures: Auto = always signed. Home = sometimes. Commercial = rarely.
▪ Audio Signature: client reads & agrees on a recorded call
o Even if not mandatory, try to get a signature because…
▪ It may not be part of the policy but it’s still based on the app
▪ Applicant confirms the statements are true – they’re legally
responsible for their answers
o Online Insurance Sales: usually don’t require signatures but could
have privacy issues if they’re not expressly consenting to insurers to
investigate their info (i.e. run a credit check or check driving record)
▪ At least have a “read & confirmed” checkbox
o Step 2: Complete the app in full & explain everything to the client
o Step 3: Take payment & give receipt + all documentation before they leave
▪ Ex: binder/confirmation letter as per Reg. 991, liability card, etc.
o Step 4: If policy issued, keep a copy + send a copy of application & dec. page to insurer
▪ If policy NOT issued, send application to insurer for issuance & sent back to broker
for delivery to client (check for errors first)
- Renewals: important for growth/profitability (cheaper to renew than it is to get new business)
o Most personal lines policies are automatically renewed by insurers BUT you should review
policies prior to renewal date OR the insured/intermediary send instructions to the insurer
o Step 0: Insurers sometimes send a list of renewals for the month + renewal terms. If they
don’t hear from anyone, it lapses (unless it’s an auto renew)
o Step 1: Contact insureds 2-3 months before the renewal date (noted on the expiration list)
▪ Check for changes to coverage & limits BEFORE policy issuance to save time
▪ Maybe request homeowners update their info prior to renewal (questionnaire),
send letters recommending coverage or increased limits to auto clients, etc.
o Step 2: Upon renewal, notify insurer. You may need to issue a binder & invoice if the policy
doesn’t arrive by renewal time (rmbr: double check it for errors)
▪ May require another signed application + insurer review
o Step 3: Update the expiration list after policy delivery
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Establishing Organizational Structure:
1. Task Analysis: list tasks/services so people know what needs to be done
2. Task Grouping: group tasks in a logically so people can do them efficiently (1 person may do many)
3. Delegate Authority: key to efficient operation if the delegate is able & willing
4. Coordinate Job Positions: to ensure proper workflow & communications (must work together)
Methods of Organization: divide responsibilities based on line or function (note: there is no “best” way)
- Line of Business = dividing responsibilities based on line of business (i.e. personal & commercial)
o Advantage: natural (i.e. just add more departments as you grow into new lines of business)
o Disadvantage: duplicate functions (i.e. each dept. needs its own claims tracking function)
- Functional = divide workflow by function (i.e. sales, marketing, underwriting, claims, accounting,
admin, etc.)
o Disadvantage: different departments process things differently & require different skills
- Most businesses mix functional with line based on business mix, client needs, and staff
Agent = someone appointed to act on behalf of another
Law of Agency: governs situations where an agent is appointed to act on behalf of the principal (Ex: an
insurance intermediary is an agent for the insurer helping them distribute insurance)
o Agents owe a duty to the Principal
- Common Law interpretation: agents act on contractual matters
- QC Civil Code: Mandate = contract where the Mandator (principal) assigns the Mandatory (agent) to
perform some task per the contract
Agency/Broker Contracts: varies, negotiated separately, have 1 w/ each insurer you work with, 5 sections
1. Broker’s Authority: guidelines RE: risks/limits that can be bound (aka binding authority),
rules/rate manuals, collect premiums & hold in trust, deadline for remitting premiums, promptly
notify insurer of any claims, applications or business written.
a. Ex: may be able to issue policies, settle claims, or may be required to submit applications to
insurers for review. Powers vary.
2. Ownership of Expirations: brokerage’s own their clients (insurer could own if premiums not
remitted)
a. Billing Procedures: can remit premiums to insurer in…
i. Account Current: ID accounts due within a X time period & write a cheque for that
1. Usually a 1 month period. Most contracts allow 30-60 days to pay
ii. Insurer Statement: insurer bills the brokerage for amounts due within X time period
(usually 1 month)
iii. Direct Bill: insurer sends premium notices, bills client directly & remits $$ to broker
1. Sometimes the broker collects the 1st month
3. Commissions: ranges from 10-20% (avg = 15%) of premiums
a. Contingent Profits or Bonuses depend on performance/loss ratio of the book of business
4. Expenses: brokers pay their own expenses but insurer may share advertising costs, etc.
5. Termination: must give (usually) 90-180 days notice before terminating the contract
6. Other Provisions: include a clause that holds the broker harmless against insurer’s mistakes
Insurance Company Structure (Departments): depends on the size of the insurer (6 parts - # 3, 4 & 6 are
unique to insurance companies)
1. Admin:
a. HR: hiring, training, employee assistance, etc.
b. Legal: ensure compliance with provincial/federal statutes
c. Materials Management: manages buildings, equipment, vehicles, policy applications/forms
d. Management Information Systems: gather data from divisions & create reports for mgmt.
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2. Finance: handles broker statement (paying of commissions), accounts payable/receivables,
payroll/benefits, investments, financial reports to government & management, etc.
3. Underwriting: vets risks to see if they’re eligible for insurance based on underwriting
guidelines/policies
a. Different underwriters/departments are created for different classes (i.e. property, liability,
surety, etc.). A lot of underwriting for small or simple policies is automated.
b. Head Office UW:
i. Upper Management: sets guidelines based on company strategy
ii. Technical Underwriters: assist, train and audit underwriters @ regional branches
c. Some insurers also offer risk management services: inspections, loss prevention, etc.
4. Claims: makes sure claims are investigated & paid according to the principle of indemnity
a. Regional offices usually handles them w/ input from HQ or they handle the small ones
b. Fraud Prevention: form Special Investigative Units of adjusters, specialists, and ex-law
enforcement to investigate suspicious claims. Will collaborate with fire & police.
c. Claims Departments: work to adjust losses
i. Adjuster: represents the insurer on claims (can be company staff or independent)
1. Their work is important for maintaining public good will
ii. Supervisor: makes sure it runs smoothly & helps with complex or problem claims
iii. Examiner: direct loss investigation, audit adjuster reports, direct adjusting work
1. Decides whether a company or independent adjuster is needed
2. Handles claim-related litigation
3. Usually highly experienced
5. Marketing: ensure growth & profit by developing insurance products that consumers want
a. Distribute/train/promote those products to “Producers” (aka brokers/reps who sell)
b. Insurer’s marketing reps deal with appointing & managing broker relationships
6. Actuarial: “Pricing Actuaries” analyze data and determine how to price policies (ratemaking) &
“Reserve Actuaries” monitors financial situation (figures out how much reserves are needed to
account for IBNR or adverse claims reserve ← in case claims > IBNR reserves)
Government & Insurance Industry Regulations

Licensing of Insurers: make sure insurers are stable ($$), contracts are fair & doing biz for public benefit
1. Federal: Office of the Superintendent of Financial Institutions (OSFI)
a. Licenses insurers that operate in multiple provinces & foreign insurers
b. Monitors & sets strict financial standards to ensure stability & solvency
i. Ensure funds are managed properly so the public is protected
2. Provincial: BC Superintendent of Financial Institutions (OR same name as Federal)
a. Regulate terms of insurance policies (they approve all policy wordings)
b. Licenses insurers that operate in their province
c. Monitors financial stability of provincially licensed insurers
Monitoring Solvency:
1. Solvency = ability to meet financial obligations (suspended if not enough assets)
2. Property & Casualty Insurance Compensation Corporation: non-profit that covers policy holders
even when insurer goes bankrupt (≤ $250,000 per claim, refund premiums ≤ 70% ≤ $700)
a. Insurers also need to set aside Loss Reserves to pay for potential future losses
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Insurance industry = Fiduciaries:
1. Fiduciary: handles other people’s money
2. Responsibility of Brokers: hold commissions in trust & return unearned commissions
a. In Ontario, remit premiums to insurer in 30-60 days, deposit $$ in trust fund w/ in 3
banking days, maintain detailed books & allow authorized person to inspect. Produce
audited financial statement w/ in 30 days of request.
3. Responsibility of Insurers: return unearned premiums (must keep an Unearned Premium Reserve)
a. Premium is earned pro-rata & is fully earned upon policy expiry
i. Ex: If premium = $2400, premium earned after 3 month is $600. The $1800
unearned premium must be held in trust ready to be returned
Many regulations apply to insurance: PIPEDA, Insurance Act, Insurance Companies Act, PACICC, etc.
- Highway Traffic Act: governs regulation/licensing of vehicles/drivers, traffic control on highways,
insurance requirements, safety, motorcycle helmets, penalty points, headlights, brakes, etc.
Insurance Act: varies from province to province & applies to life, A&S, fire, auto (& hail sometimes)
o Some terms like policy contents, limitations on legal action & VOID rules apply to all policies
1. Contents of Insurance Policies: must appear on the Declarations Page (1 st page)
a. Parties to the Contract (i.e. insurer & insured)
b. Loss Payable or Payee: all parties with insurable interest
c. Policy Period: starts 12:01 AM Standard Time @ Address of the Named Insured (many
policies change this to Local Time @ Risk Location)
d. Coverage & Amount of Insurance: types of coverage & limits
e. Subject Matter of Insurance: property insured and location (address)
f. Rates & Premiums: cost of insurance
2. Basic Fire Policy Coverages:
a. Fire = ignition that causes “destructive burning” (incl. fire-fighting damage i.e. water dmg)
1. Actual ignition (fire) required – heat doesn’t count
2. The thing on fire must not be usually on fire
3. Must be accidental (arson – fire deliberately started by 3rd party = OK)
ii. Friendly Fire = deliberate & contained application for beneficial purposes
iii. Hostile Fire = not contained & destructive effects (insurable)
b. 2 Additional Perils Insured:
i. Lightning: damage to property (excluding electrical devices)
ii. Explosion of Coal, Natural or Manufactured Gas: excludes explosion of boilers or
pressure vessels
3. Standard Legislated Exclusions:
a. Excluded Perils: insurers may optionally cover: lightning, riot, civil commotion
i. Application of heat: because it is friendly fire (resultant fire = OK)
ii. Radioactive Contamination
iii. Electrical Currents (ie. power surges)
iv. Lightning damage to electrical devices (resultant fire = OK)
v. Riot, insurrection, civil commotion, war, act of a foreign enemy, (counter) terrorism,
military: because they are deliberate acts of violence with large losses
4. Statutory Conditions = rights and responsibilities of the parties, no changes (for fire, A&S, auto ins.)
a. 3 Types of Misrepresentation:
i. False description of property to the prejudice of the insurer: making it look better
than it is
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ii. Misrepresentation of a “Material Fact”: give a true account of material facts. 3 types:
1. Innocent mistake
2. Fraudulent: done with intent to mislead
3. Extreme carelessness: a statement was made without regard to truth
iii. Fraudulent Omission of a “Material Fact” (aka Concealment/Non-disclosure):
applicant deliberately withholds material information they are obligated to give
1. Material Fact: something that would change the insurer’s decision if known
(ie. decide not to cover or to increase premiums)
a. Ex: loss history, previous cancellations/denials of insurance
iv. Note: it is NOT a misrepresentation if it doesn’t disadvantage the insurer
v. Coverage = VOID if misrepresentation is related to loss
vi. Policy is voidable if insurance is obtained through the above improper means
b. Material Change: no coverage if loss caused by a known, unreported material change
i. If reported: cancel & full refund OR ask insured to pay more
ii. Even after placing the insurance, insured is required to disclose material changes &
any failure to do so means the policy is voidable.
c. Fraud: VOID the entire claim if found (fraud is a deliberate deception to secure a gain)
d. Requirements upon Loss: insured must provide proper documentation
i. Notice of Loss: ASAP in writing
ii. Proof of Loss (loss details) + Statutory Declaration as soon as practicable
1. Inventory of damaged property: #, ACV, amount claimed
2. How the loss occurred (best effort): must swear loss was accidental
3. Location @ time of loss
4. Other insurance: limits & insurers (policy pays pro-rata vs total coverage) if:
i. The policies cover the same peril (cause) and property lost
ii. They are enforceable and cover the same insurable interest
1. No condition was breached & same insured
iii. They were in force at the time of loss
iv. No clause stating it’s not liability to contribute. If both state
they’re not liable to contribute, they would both contribute
1. Some are excess policies where they only pay when
the primary policies are used up. If all the policies
are excess, they both contribute
b. In QC: one insurer pays and then seeks reimbursement from others
5. Interest of the insured & others
6. Changes in property since policy start: change in use, ownership, location,
exposures, etc.
iii. Inventory of undamaged property (if required): #, ACV & cost
iv. Produce: verified accounting records, receipts, invoices, inventory lists, etc.
1. (if required/practicable)
e. Giving Notice or Proof of Loss: insured can give +
i. Agent of the insured (if justified)
1. Agent = anyone authorized (ie. lawyer, relative, friend, etc.)
2. Those with insurable interest can file Proof of Loss if insured refuses
f. Termination responsibilities: refunds payable by money, money order or cheque
i. Insured: must notify insurer w/ loss payee’s consent (termination = immediate)
1. Premium Refund: on a short-rate basis to cover admin costs sent ASAP
a. Short Rate Basis = pro-rata minus administration fee
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ii. Insurer: must give written notice of termination
1. By Registered Mail: 15 days’ notice starting the day after the notice is
received by the insured’s addressed post office
2. Hand Delivered: 5 days’
3. Refund = pro-rata (proportional) & accompanies the notice or ASAP if more
information is needed from the insured
a. May be subject to minimum retained premium
g. Notice:
i. Insured: in writing to the provincial head office/chief agency of the insurer
ii. Insurer: in writing to the last known address of the insured
h. Property of Others: no coverage unless you’re insured by the policy (policy may extend)
i. Change of Interest: if insured no longer has insurable interest in the property, coverage is
not automatically extended to new owner (i.e. not if you sell a car/home) EXCEPT FOR:
transfers under the Bankruptcy Act, succession, death, other “legally-mandated” title change
i. BUT… insureds can choose the beneficiary of any payouts or premium refunds (i.e.
to the premium financing company that paid the premiums upfront on your behalf
or to the mortgagee)
j. Salvage: insured must take reasonable steps to protect property from further loss
1. Insurer will share costs
ii. If the insurer pays as if it was a total loss, they own the salvage (i.e. they get the
wrecked vehicle to resell)
1. In this context, Salvage = the remaining value in the damaged property
k. Entry, Control & Abandonment: rights after loss (ACE)
i. Abandonment: insured cannot abandon property to insurer
ii. Control: insurer cannot take control of the property after loss
iii. Entry: insurer can enter immediately after loss to investigate
l. Appraisal: outlines procedures for claims disputes (amt of loss, property saved/insured)
m. Losses Payable: within 60 days of receiving Proof of Loss (unless contract says shorter)
n. Replacement: when insurer decides to repair or replace instead of paying cash give...
i. Written Notice to Insured: within 30 days of receiving Proof of Loss
ii. Repair or Replacement: start within 45 days of Proof of Loss
o. Action: legal action must be taken within 1 year of date of loss (ie. if insurer denies claim)
i. Note: Alberta changed this to 2 years in 2012 (many provinces allow 2 years)
5. Limitation of Liability Clause: mark any terms that may reduce amount of payment in red ink (i.e.
deductible & co-insurance) “This Policy Contains a Clause(s) That May Limit The Amount Payable”
6. Delivery of Policy: if the policy has been delivered, the insurer must pay for losses even when the
premium has not been paid
7. Subrogation: insurer can sue in place of the insured after paying a claim
i. In QC, insurers can sue in their own name instead of insured’s name
ii. Provincial Insurance Acts may have special rules on subrogating fire and auto losses
iii. May waive subrogation rights for liability of related parties (i.e. employees, insured)
b. Subrogation = to “stand in the shoes of another” and assume their legal rights
c. Insured can claim with insurer for loss caused by others
d. Insurer can recover all amounts (including deductible) from the responsible party
i. They will pay you back the deductible
8. Waiver of Terms/Conditions: only the insurer can change policy terms and conditions.
i. Must be written and signed by an “authorized person”
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9. Removal Clause: covers property for up to 7 days if moved to a location not stated on the policy to
prevent (further loss) (aka. necessary removal)
a. Limit available @ new location = amount remaining after paying for loss @ primary
b. Important because: there is usually no coverage for property not @ stated location
Insurance Companies Act regulates federal insurers in 3 key areas (all around financial stability):
o Provincially licensed insurers can register under the federal Act w/ same requirements
o Act enforced by the OSFI
1. Starting an insurance company under federal jurisdiction by outlining:
i. Directors & their power
ii. Shareholders
iii. Shares
iv. Capitalization: money needed to underwrite risks
v. Meetings
vi. Corporate Powers
vii. Procedures
b. When you meet all the requirements, the Minister issues a “letters patent” granting the corp
legal status
c. Advantage to federal incorporation = can operate in multiple provinces automatically
2. Prerequisites to starting:
a. Step 1) Submit incorporation documents and proof of capitalization + other required info
b. Step 2) Superintendent issues an Order of Commencement giving you approval to operate
an insurance business (stipulates classes of insurance you can write + limitations)
c. Step 3) Publish in a newspaper generally circulated in/near the head office +
superintendent will post it on the Canada Gazette
3. Supervision:
a. Superintendent keeps a register of all licensed insurers + info on the company, directors,
auditors
i. Anyone can examine the register during business hours and make copies
b. Insurer is required to keep liquid assets in reserve per the Insurance Companies Act
i. Based on formula factoring in the type of insurance you write
ii. Must also keep reserve for unearned premiums & likely claims
c. Restricts certain types of investments from being held + must adhere to investment/lending
practices that a reasonable & prudent person would do to avoid unnecessary risk while
earning a reasonable return (be conservative with the money!)
d. Must prepare an annual statement on the condition and affairs of the company each
financial year end to show: assets, liabilities, income, expenses, reserves + other info
deemed necessary by the Superintendent
i. Act dictates how assets & liabilities are valued
e. Superintendent may request additional info to prove compliance with the Act and financial
condition + may inspect offices at least once every 3 years (can be annually or more if
necessary to monitor financial condition)
f. Fail these and the Superintendent may take control of the company & liquidate it
Provincial Insurers: List of provincial regulators: http://www.ibc.ca/pe/resources/industry-

resources/insurance-regulators
1. Supervised by provincial authorities that do the same stuff as the federal authorities
2. Contracts: provincial government regulates automobile + fire policies
a. I.e. statutory conditions or minimum fire policy coverages (see above)
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3. In some jurisdictions, intermediaries are self-regulated. Brokers set their own qualifications,
operation standards & discipline.
a. Still answers to government of course
b. Agents are still licensed by government
4. Adjusters: disciplines independent adjusters by de-licensing them & staff adjusters by penalizing
the insurer
Supervising Foreign Insurers: must follow the same rules as Canadian insurers (i.e. get approval unless
Canada considers their home jurisdiction equivalent) +
1. Must vest $X in securities into a trust @ a Canadian bank approved by the OSFI
a. Assessed value must satisfy Superintendent
b. Assets will be released if Act requirements met & you apply to the Superintendent
2. Appoint an actuary
3. Chief agency or head office must be in Canada – if you change or move, must get a new power of
attorney from Ottawa
Contract Law & Insurance Contracts

Types of Risk:
1. Personal Risk: financial hardship due to accident, sickness or death
2. Property Risk: damage or destruction of tangible property (more property = more risk)
3. Liability Risk: actions of individuals or businesses that result in injury or damage to others
Dealing with risk: CART

1. Controlling: try to reduce frequency and severity of loss (can’t control everything ie. earthquake)
2. Avoidance: avoid the activity (no chance of loss but not practical)
3. Retention: paying for losses yourself
4. Transfer: shift the financial risk to someone else (most realistic) (ie. buy insurance)
Types of Financial Risk: speculative & pure risk

1. Pure Risk: can only lose (this is the only type of risk that is insurable)
2. Speculative Risk: might win or lose (ie. gambling)
Risk Management: make sure you are offering coverage that offers adequate/relevant protection
- Understand your client’s business so you can identify exposures > Create a plan to manage those
risks > Recommend suitable coverage
- Help clients figure out what losses to insure, how much insurance to get, and which ones aren’t
insured and how to deal with those. ← this is an important value-add of a good advisor
o Examples of non-insurance loss prevention/mitigation techniques: install railings, alarms,
cyber security systems, segregating the storage of stock, using fire-proof cabinets, etc.
- Some large companies may employ dedicated risk managers while smaller ones leave it to regular
managers. CFO’s, Controllers, or other finance managers are typically responsible for buying ins.
o Risk Manager’s Job: ID loss exposures, figure out ways to prevent/reduce/finance losses,
educate & help managers with risk management
▪ Usually works with intermediaries & understand insurance well.
▪ Execs should be involved in major decisions like signing off on renewals or
switching insurers/brokers
- For more on Risk Management, look at the Canadian Risk Management (CRM) Designation
o Learn how to: ID, assess, monitor, and limit risks in more detail
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Contract = legally enforceable agreement (i.e. to do or not do something)
Legally Enforceable = courts agree to enforce terms of the contract (i.e. force performance of obligation)
- Express Contracts: specifically stated and agreed orally or in writing
- Implied Contracts: act based on some “unspoken” understanding or precedent (undesirable)
o Ex: If you’ve always bound a particular type of policy and the insurer never said anything,
there’s an implied understanding that it’s OK
Elements of ALL Contracts (to be legally enforceable) under Common Law:

1. Agreement: definite offer + acceptance. All terms have been agreed to with no further negotiations.
i. Can be written or verbal or even implied through actions
2. Genuine Intentions: all parties freely enter and are aware of all terms (honesty)
a. No fraud, duress, concealment, major mistake/error
3. Consideration: all parties bring something of value so everyone benefits (i.e. pay $$ for insurance)
a. Must include:
i. Price: must state some monetary value or equivalent (i.e. to exchange services)
ii. Exchange of value
iii. Timely (in the present or future): can’t be some past consideration (i.e. if you
purchased a product at full price but later say a discount somewhere, you can’t go
back and claim it)
4. Legality of Object: purpose of the contract is legal (i.e. not contrary to public good or illegal)
5. Legal Capacity of the Parties: all parties understand the obligations undertaken
a. Minors: can contract for “necessities” (i.e. food, clothing, shelter) but the other party may
not be able to enforce it. Their guardian can sign.
b. Mental Incompetents: have no legal capacity
c. Person under the influence of drugs/alcohol
d. Trade Names: can’t enter contracts (no legal status so must be attached to legal entity)
e. Corporations: can enter contracts
Elements special to insurance contracts:

1. Insurable Interest: only those who actually suffer loss are entitled to benefit from policy
i. I.E. owner, mortgagee, bailee, anyone who can be held legally responsible for 3 rd
party injury, etc.)
b. Property: if they have a financial interest or benefit financially from the property, they
would suffer financially if it was lost
i. I.e. transportation companies could be liable for client goods
c. Liability: you have insurable interest in any damages that you are responsible for
i. I.e. If you hit someone with your car
2. Indemnity: establishes amount of entitlement (rmbr: pays actual amount of loss ONLY)
3. Utmost Good Faith: both parties must be open, honest & comply with policy terms & conditions
a. Insured fully disclose material information otherwise the insurance could be void
i. Underwriters need it to determine whether to take the risk, how much to charge,
and what terms to give
b. Insurers are paid in advance so they must – in good faith – honour their promise to pay
Must meet both types of requirement or VOID ( treated as if it never existed)

Voidable = wronged party can choose to VOID
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Under the Quebec Civil Code, elements required in ALL contracts are: consent, capacity (their court
assigned guardian can handle their affairs), cause of contract (the consideration someone gets for
entering), object of contract (must be possible, in future, and in line with laws/morality)
- Compared to Common Law, Genuine Intentions isn’t a requirement in Quebec but no coercion can
be used and the contract must be possible and in line with laws & morality
- Lesion: voids a contract when minors/mental incompetents enter into contracts without help from
their guardian or when they exploit them
Insurance Policy = evidence of an insurance contract & outlines the terms. 2 types:
o Standard Forms: standard IBC or ISO forms with slight modifications
o Manuscript = custom policy typically used for large commercial or special policies
- 5 Sections:
o Declarations Page: coverage summary outlining: parties to the contract, start & end date,
premiums & rates, limits of insurance
o Insuring Agreement: subject matter of insurance (what are we insuring?), exclusions,
insured perils, circumstances for coverage
▪ If there is a disagreement as to the interpretation of wordings, courts will side with
the insured
o Statutory Conditions: required by law so applies to all policies except life insurance
▪ Called General Conditions in QC
o Policy Conditions
o Signature Clause: insurer’s rep (+ the CEO usually) signs the contract/policy
▪ If it’s a subscription policy, each insurer must sign as well
Changing an Insurance Contract (Insurance Policy) via documents: both parties must agree
1. Floater: insures mobile property (ie. cell phones & contractors’ equipment)
2. Rider: adds coverage (additional premium required)
3. Endorsement: issued by insurer to show change has been made (i.e. of ownership, limits, cover,etc.)
Separate Policies: for special property risks (ie. building under construction, automobiles, aircraft, etc.)
Certificate of Insurance = proof of insurance issued to an interested party (i.e. a contractor might ask their
broker to issue a COI to their client to prove that they have insurance)
o Will notify the interested party prior to policy expiry
- Renewal Certificate: used for auto policies in some provinces to renew insurance. Short & includes
some basic info: expiring policy, exclusions, clauses, etc.
Binder = temp policy issued pending the actual policy [if oral, confirm (coverage & limits) in writing ASAP]
(Broker commits the insurer to an insurance contract without checking with them – better to give insurers
the full details needed to issue a policy instead but sometimes time is of the essence)
- Must clearly outline policy terms
- When the policy is issued, the temporary coverage provided by the binder expires. If you don’t need coverage
past the binder’s expiry, you need to cancel it just like a regular policy
- New tech can allow broker to use a portal to generate instant policy docs – no binder needed
1. Agency Agreement: gives broker binding authority to commit the insurer to a contract
a. Subject to limits/conditions, can’t bind everything (i.e. only dwelling/contents < $500k,
decline farms, refer commercial risks to insurer for evaluation)
i. If you exceed binding authority: brokerage faces E&O claim & liable for any losses
2. Some provinces use cover notes as temporary proof of insurance (outlines the coverages &
confirms that it’s in force) if the broker/agent doesn’t have binding authority
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3. Problems with temporary coverage:
a. Contract formation: If it was an oral binder with no written record, was it issued? Was it an
oral binder or was it just a promise that you’ll do your best to secure coverage?
b. Binding authority: Not all intermediaries have binding authority
c. Contract terms: A binder/cover note should include:
i. Name/address of insured & risk location (if it’s different)
ii. Name of insurer
iii. Time & date of inception & expiry
iv. Type of contract/policies
v. Limits (by category)
vi. Other terms (i.e. deductibles)
If policy issued = different from application, insured has 2 weeks from receiving written notice to reject
The Process of Placing Insurance

1. An application is required for most risks. Let’s insurer determine the quality of risk.
2. Cost of Insurance: varies based on location, AoI, coverage, history of applicant, etc.
3. Entities Involved:
a. Agent/Broker (interchangeable) is the intermediary between Insurers and Clients helping
clients choose the best insurance for their needs – they depend on you for advice
i. Must follow Agency Agreement & license restrictions (i.e. level or class)
ii. Make an effort to understand underwriting also so you understand the process, can
send risks to the right place and not waste anyone’s time
b. Broker: represents client’s interest: determines insurance needs and selects insurer
i. Duty to Clients: legal requirement = to exercise “reasonable skill, care and diligence”
1. Inadequate coverage = major source of E&O (errors and omissions) claims
a. Make sure you understand the risk thoroughly – ask questions
2. Others = (basically: bad advice)
a. Failure to advise of exclusions/to place coverage
b. Incorrect coverage/advice RE: coverage availability
c. Errors in: cancellation/renewal/risk description
d. Violation of Agency Agreement
e. Processing Delays
ii. Duty to Insurers: tell the truth and not conceal important information
iii. Failure to meet duties and legal standards may cause financial loss to client or
insurer = get sued = E&O claims
1. E&O = the insurance purchased by brokers to insure against mistakes
c. Agent: represents insurer’s interest
i. Agent of the Insurer = a broker who is binding authority
d. Underwriters: non-client facing insurance company employees not selling insurance. No
license required but they need to know about:
i. Industry: know the market, competitor’s wordings/pricing/acceptance guidelines
ii. Products: understand policies and come up with custom (manuscript) policies
1. Manuscript policies: custom/modified policies to insure special risks
iii. Claims: loss frequency/severity, using past data to assess risk, ratemaking, terms
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They do…
i. Risk Selection: choose risks most likely to be profitable for the insurer (ie. least
risky)
1. Sources of information:
a. Application: gives info on risks and hazards & identifies the broker of
record and the insurer you’re approaching (some will take other
insurer’s apps – see above for more information on Applications
b. Broker: info on client’s personal and business reputation
c. Inspection Reports: helps evaluate hazards on commercial risks
(provided by Insurers’ Advisory Organization & others)
i. Hazard = condition that might cause a peril to occur
1. Physical Hazards: conditions related to premises
a. Construction: potential for loss (i.e. fire)
b. Housekeeping: maintenance
c. Occupancy: use of premises by applicant and
others
2. Moral Hazards: subjective characteristics of applicant
a. Moral Character: ethics and honesty,
questionable losses/claims
b. Financial Condition: payment history,
previous cancellations due to non-payment
c. Indifference to Loss (aka Morale Hazard):
carelessness, lack of loss prevention
ii. Some consult in-house/external teams on special risks to
help with rating & loss prevention suggestions
d. Loss Experience Data: info on loss experience for that class of risk
2. UW Decisions: based on: applicant information, details of hazards &
exposures, special factors (i.e. market conditions)
a. Exposures = sums insured OR danger of loss from nearby risks
b. Loss History is a BIG factor: type & amount paid + severity &
frequency in determining exposures/risk to the insurer &
pricing/terms
3. UW Outcomes: accept, accept with conditions or decline based on UW rules
a. Decline because:
i. They don’t insure that class of business
ii. Hazards are above average
iii. Substandard: poor risk management & unwilling to improve
b. Can salvage a decline by improving the risk or changing price/terms
4. Retention: the maximum amount they’re willing to insure depends on:
a. Concentration: of their book of risks in the same area/class
i. I.e. They don’t want to insure too many risks in the same
earthquake zone
b. Reinsurance: if they can cede part of the risk, they can offer more
ii. Rate Making: Actuaries set different rates for different risks or classes of
insurance. Usually programmed into software - input data and it outputs the rate
i. Manual Rating is used for some classes or complex commercial risk
1. Judgement based on experience with that class & factors
unique to the risk as there can be many variations
1. Rate = price per $100 or $1000 of value for 1 year of insurance protection
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2. Predictions depend on:
c. Sample Size: more samples = more accurate predictions
i. ^ law of large numbers
d. Sample Period: sampling over a longer period is better
e. Conditions: has something changed such that the situation is now
different? If so, past results may not be reliable.
3. Probability ≠ Uncertainty: probability of alien abduction is small but
uncertainty is big. Insurance tries to reduce uncertainty so we can predict.
4. Ratemaking:
f. Step 1) Classify: based on subject of insurance and exposures
i. Every insurer has different categories and risks they like (i.e.
farm, factory, restaurant, heavy manufacturing, etc.)
ii. Each category has different likely exposures (i.e. fire for
restaurants)
g. Step 2) Statistics: look at past loss data for each class (law of large #)
h. Step 3) Base Premium: is set based on what’s required to meet losses
i. Based on past data identified in Step 2)
ii. Ex: If they are charging $1000 for $100,000 of property,
they’re assuming it’ll burn down once every 100 years
i. Step 4) Total Premium = Base Premium + Loading for extras
i. Extra risks, inflation, expenses, marketing costs, profit, etc.
j. Step 5) Calculate Rating: per $100 using on the previous data
i. Premium = rate × amount of insurance
ii. Ex: $1000 fee for $100,000 cover = a rate of $1 per $100
iii. Policy Holder Services = paperwork: quotes, policies, changes,
renewals/cancellations, etc.
e. Claims Adjuster: investigates loss, determines amounts and how they’re settled
i. Loss = $$ the insurer must pay because one of the insured situations has occurred
ii. Claim = when a party demands indemnity from another for some insured loss
1. Can have a loss without a claim if you choose to not use insurance
iii. 3 Types:
1. Staff Adjuster: employee of insurer – can decide on claims ≤ $X
a. Phone Adjuster: handle small easy claims that don’t require visits
i. Deal with the insured and get info, etc. remotely
ii. May call in appraisers or contractors to assess minor damage
b. No licensed required outside of QC & NB
2. Independent Adjuster: contracted by insurer. Usually operates in specialty
types of claims, in rural areas, or when they need help during catastrophes
a. License required, usually needs insurer approval for settlements
3. Public Adjuster: independent adjuster that represents insureds. Usually
hired for large claims by large companies to help them handle/negotiate.
a. Paid a % of the claim by insureds
b. Rare in Canada – need to be licensed except for in NFL
iv. Forfeiture = lose the right to indemnity if you break conditions (i.e. misrepresent)
v. Prescription = time limit you have to make a claim for a loss (statute of limitations)
1. Ontario = 2 year statute of limitations but 1 for auto & fire losses and 6
months for police complaints
2. Similar to the statutory condition of Action
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vi. Claims Process:
1. Insured reports to broker or insurer (online, call center, phone app, etc.)
i. Broker reports to insurer (if necessary)
b. Insureds must report claims promptly & not do anything to
prejudice the insurer (i.e. settle for a small amount)
2. Claims handler gets some initial information: location, cause of loss & type of
incident
3. Claims handler checks the policy coverage: applicable clause, named
insured, policy period or prescription, covered/not covered under the terms
a. Prompt notice to insured if it’s not covered
4. If covered, insurer assigns company adjuster to deal with the claim by…
i. Independent Adjuster: for specialized or far off losses
b. Check coverage, investigate loss, assess damage, negotiates the claim
to arrive at a settlement (or denial), recommends payment, look to
recover some money via subrogation, salvage or contribution
vii. Brokers’ Responsibility: monitor progress and advocate for your client & carrier
1. Remind them of policy requirements, discuss consequences/risks of each
course of action (i.e. reporting vs. settling privately), help report claims,
advise on loss control/prescription, reassure them
2. Some brokers can settle claims (depends on Agency Agreement)
viii. Adjuster’s Responsibility: keep the insurer informed & follow their instructions
1. Investigate loss (insured must provide evidence to prove the claim)
a. Supply relevant info to the insurer (i.e. accident reports)
2. Verify coverage to confirm/deny a claim (i.e. check for misrepresentations)
3. Assess damages, negotiate & settle the claim
ix. Claims Handling: clients expect prompt claims handling & may be upset. 5 Steps…
1. Opening Claims File: get information about the loss & report to insurer
2. Verify Coverage: check if their claim is actually covered. Don’t make
definitive commitments but let them know ASAP if it’s clearly not covered.
3. Submit Info to Insurer & make a note to Follow Up (good customer service)
4. Claims Handling: done by brokerage, insurer or independent adjusters
a. Brokerage Adjusting: large brokerages (especially commercial lines)
may have staff adjusters & authority to pay certain claims
b. Insurer Adjusting: insurers employ adjusters to handle claims
c. Independent Adjusters: used when staff adjusters aren’t available or
when special knowledge is required
5. Close File: when a claim has been paid (maybe deliver payment personally
to build a stronger relationship)
a. Know how insurers view losses (they may cancel if there are too
many too fast so warn your clients)
x. Communication: be professional & nice to insured, service providers, colleagues, etc.
1. Identify their needs & build rapport
2. Be prompt & explain the claims process & policy coverages to insureds to
remove uncertainty and help them calm down
3. Same communication skills discussed elsewhere in this course apply
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Characteristics of Property Insurance Policies
1. Property Insured: personal property policies insure private non-business use property, commercial
properties policies insure commercial use property @ named location
a. Types of coverage: named perils & broad form
i. Named Perils: insures losses by perils listed on the policy
ii. Broad Form: insures against all direct physical losses not excluded on the policy
b. Insure Direct Damage Only:
i. Direct Loss = insured property is damaged by peril (ie. fire damaging a building)
ii. Indirect Loss = result of direct loss (ie. loss of income or food in freezer)
iii. Note: only covered if the direct (Proximate) Cause of Loss was an insured peril.
Other losses in the chain of events = Remote Cause. Immediate Cause = the last link.
1. Ex: Someone gets hit by a car and is sent to hospital where a Dr makes a
mistake in treatment.
a. The car crash = Proximate Cause, malpractice = Remote Cause.
c. Only defined property & defined locations are covered
d. Exclusions:
i. Perils Excluded: because there is potential for catastrophic loss; commercially
uninsurable, naturally occurring or cumulative damage; uncommon losses
1. ie. nuclear, earthquake/flood, wear & tear/gradual deterioration, sewer
back-up, war, by-laws, corrosion (i.e. rust), smoke from industrial sources
a. Inherent Vice = a property of the property that destroys itself (ie.
rusting metal)
ii. Property Excluded: because there is greater than normal loss potential, expensive to
insure, or specialized forms exist
1. ie. vehicles/crafts, vacant property, money/securities, evidence of debt/title
2. Deductible Clause:
a. Deductible = cost the insured is required to pay per loss
b. Eliminates small losses & keeps insurance affordable
c. Higher deductible = cheaper premium
3. Standard Mortgage Clause = side agreement between insurer and mortgagee
i. Mortgagee: has insurable interest in property (they provide financing)
b. Guarantees payment to mortgagee when insured is denied coverage due to breach of
conditions (ie. misrepresentation, breach of warranty, fraud, vacancy, neglect, etc.)
c. Guarantees that insurer will not reduce coverage or terminate policy without notice
i. Or terminate at the request of insured without mortgagee’s consent
d. Mortgagee must notify insurer of any known vacancy, transfer of interest, increased hazard
& pay the additional premiums required
4. Conditions/Warranties:
a. Warranty = promise that something is true and shall remain true. Exact compliance is
required, if warranty is breached, the policy is VOID
b. Condition = requirement to do or not do something
i. Statutory Condition: legally required by law (applies to everyone)
ii. Policy Condition: stated on the policy, created by insurers
5. Claims payment rules (property insurance):
a. Pair & Set / Parts Rule: pay only for item lost, not the full set
b. Indemnity Agreement: amount of settlement = least of:
i. Actual Cash Value: replacement cost minus depreciation
1. Depreciation factors: condition, resale value, life span (+ obsolescence, age)
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2. Can also get a Replacement Cost policy (less potential for dispute = faster)
ii. Interest of Insured: insurable interest = how much of that property do you own
iii. Limit of Insurance: will only pay up to this limit
c. Alternative Basis of Settlement
i. Replacement Cost (RC) on Buildings: must be done with due diligence & dispatch
otherwise you won’t get the full amount
1. Must repair w/ materials of like kind and quality @ same/nearby location
2. ACV first, then full RC payment after replacement
ii. Replacement Cost on Personal Property: must be used for original purpose at time
of loss & replaced promptly
1. Replacement Cost = what it costs to repair or replace with materials of like
kind and quality (without depreciation)
iii. Valued Policies: limits established by professional appraisal ( alternative to RC)
1. Usually used for things where value is hard to determine (i.e. artwork)
Personal Property Insurance – Habitational Forms (wordings provided on exam)

Personal property insurance = Homeowners Forms: Basic, Broad & Comprehensive
1. For single family dwellings occupied year-round by owners (1+ family = OK) OR can have 1+
principal dwellings OR dwelling under construction to be occupied by owner OR mobile homes on a
full basement
2. Common Characteristics of ALL Homeowner Forms: language, format, definitions, extensions,claims
a. Clear Language
b. Standard Format: section 1 (property coverages) & section 2 (liability coverage)
3. Uniform Definitions:
a. Persons Insured = named insured + “dependents”
i. Named Insured = person(s) named on the policy (aka: “you”)
ii. “Dependents” = any of the following while living in the same household:
1. Husband or Wife by legal marriage: or Common Law spouse that has lived
together for 3 yrs or 1 year if they have a child together
2. Relatives of Either: that are permanently residing with Named Insured
3. Any Other Person under 21 y/o in their care: care = dependent upon insured
(includes foster kids & exchange students, excludes roomers/boarders
because they are ‘tenants’)
4. Students attending School: must be supported by Named Insured or spouse
if temporarily away for school (i.e. at a dorm)
b. Dwelling = private residence (habitation only – not for business use)
c. Premises = the address noted on the policy (land within lot lines)
i. For Tenants or Condo Owner’s: premises includes garages, outbuildings, approaches
4. Losses Insured:
a. Section 1: Property Coverages
i. Coverage A – Dwelling Building
1. Coverage A1 – Condominium Unit
2. Coverage A2 – Loss Assessment (Condo Unit Owners only)
3. Coverage A3 – Unit Improvements & Betterments (Condo Unit Owners only)
ii. Coverage B – Detached Private Structures (Homeowners only)
iii. Coverage C – Personal Property (for all)
iv. Coverage D – Additional Living Expenses (for all)
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b. Section 2: Liability Coverages: included in ALL Homeowners Forms (protects 3rd parties)
i. Coverage E – Personal Liability
ii. Coverage F – Voluntary Medical Payments (no deductible)
iii. Coverage G – Voluntary Payment for Property Damage (no deductible)
iv. Coverage H – Voluntary Compensation for Residence Employees (no deductible)
v. Coverage I – “Liability” Loss Assessment (Condo Unit Owners only)
5. Extensions of Coverage: included in ALL Homeowners Forms
a. Moving to another home in Canada: covers new place & property while in transit for ≤ 30
days
b. Debris Removal: + 5% of Coverage A if original limit not enough
c. Property Removal: expands removal clause to 30 days (see above)
d. Credit/Debit Card, Forgery (of insured’s cheques), and Counterfeit USD/CAD: ≤ $2000
i. Limit ≤ $200 per cash transaction ; (no deductible)
ii. Must comply with the card company’s terms & conditions
e. Inflation Protection: limits automatically adjusted by inflation for mid-term losses
f. Tear Out: will repair walls, etc. tore out to get to a broken water pipe/appliance behind
i. Excludes swimming pool & public water main
g. Change in Temperature: covers indirect damage to personal property inside dwelling if
dwelling/equipment was damaged by insured peril
h. Freezer Food: spoilage due to outside power failure or freezer breakdown up to $2000.
i. Freezer is replace if ruined by the food (no deductible)
ii. For CAIB 1 Students:
1. Excludes losses due to operation of circuit breaker/fuse OR unplugging
i. Lock Replacement: ≤ $500 for stolen keys & reported to police
j. Fire Department Charges: ≤ $1000 the fire department from another city bills you
k. Arson/Burglary Conviction Reward: ≤ $1000 for info leading to conviction (no deductible)
l. Damage to Dwelling (for Tenants): $500 of the Coverage C limit can be used to pay for
damage to dwelling by (attempted) theft, vandalism to interior, or impact by vehicle driven
by insured
6. Basis of Claim Payment = Building + Property – Deductible (applied once to total amount of loss)
a. Dwelling & Detached Private Structures = Replacement Cost OR ACV if not repaired
i. Must repair w/ similar materials, same location/occupancy in reasonable time
1. Limit must be ≥ 80% RC otherwise payment is proportional
a. Ex: If limit = 40% RC, then payment = 50% of loss (40/80 = 50)
ii. Guaranteed Replacement Cost Coverage: covers full cost to repair even if > limit
1. Initial dwelling limit must = 100% RC & not reduced mid-term
2. Rmbr: must repair in reasonable time, same area, quality, etc.
a. Notify insurer within 90 days of starting work if the building is being
impoved
3. If any additions increase value by ≥ $5000, must notify insurer w/in 30 days
b. Improvements & Betterment (for Tenants or Condo Owners): same as Dwelling (RC or ACV)
c. Excludes By-law costs
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d. Personal Property = replacement cost but ACV for:
1. Fine Art, Antiques & Memorabilia (hard/impossible to replace by nature)
2. Property not well maintained
3. Property no longer used for original purpose (i.e. out of fashion clothes)
4. Property not replaced within 180 days (insured can opt for ACV first but has
180 days to change mind back to RC)
ii. Media for: only cost to recopy from duplicates
iii. Books of Account for: blanks + cost to recopy/transcribe
Section 1 – Property Coverages:

Coverage A – Dwelling Buildings: limit of insurance covers…
1. Dwelling + attached structures: ie. main house + garages, porches attached, etc.
2. Permanently attached outdoor equipment: ie. swings, tree house, sprinklers
3. Materials & supplies nearby: used in construction or repairs (not for new home building)
4. Outdoor swimming pool + attached equipment: in or above ground (ie. hot tubs)
5. Building fixtures temporarily removed: for repair/seasonal storage (up to 10% of dwelling limit)
6. Outdoor Plants: 5% of dwelling limit ≤ $500 per plant.
a. Covers: Fire, Lightning, Explosion, Impact, Riot, Vandalism (excludes: windstorm & hail)
Coverage B – Detached Private Structures = separated from main building (fence/power line = OK)
1. +10% of Coverage A
Coverage C – Personal Property = on premises + off premises + student’s

2. +70-90% of Coverage A
1. On Premises Coverage: only covers “usual” property (stuff normally found in homes)
a. Personal property = stuff owned or used by insureds or for building maintenance
b. Property of others while on premises
i. Excludes property belonging to roomers & boarders
2. Off Premises Coverage: global coverage if temporarily off premises (i.e. not kept @ cottage)
3. Personal Property in Storage: covered if in a secure storage facility for ≤ 30 days
a. Can extend theft-only coverage beyond 30 days
4. Property of Students: covered if living away from home for school (subject to limits)
5. Tenant Improvements = Personal Property
6. Personal Property Excluded:
a. Motorized Vehicles + Equipment (ie. golf cart, car, ATV): except “domestic” vehicles (ie.
lawnmowers, wheelchairs) & watercraft
i. Equipment = CD player, TV, radio powered by vehicle (not “parts” like spark plugs)
b. Aircraft + Equipment
c. Campers, Trailers + Equipment
7. Special Limits of Insurance for: theft & all perils
a. Property Damaged by Any Insured Peril: payment is restricted
i. Business property: $2000 max (includes books of account & tools)
ii. Student’s Property (when temporarily away from home): $2500 max
iii. Garden Tractors & Accessories: $5000 max
iv. Watercraft & Accessories: $1000 max
1. + only covers losses caused by specified perils or (attempted) theft
v. Money or Bullion: $500 max (money = money in current use)
vi. Securities: $2000 max
vii. Computer Software: $2500 max
viii. Spare Car Parts: $1000 max
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ix. Pets: $500 if caused by a specified peril (excl. impact by air/landcraft)
b. Property Damaged by non-Specified Peril (SP): Specified Perils are listed on policy but there
are 11 common ones: fire, lighting, explosion, smoke due to sudden and faulty operation of a
heating/cooking unit, falling object, impact by craft, riot, vandalism, water damage,
windstorm/hail, property in transit
i. Jewellery, watches, furs: $2000 max
ii. Card collections: $1000 max
iii. Manuscripts & stamps: $1000 max
iv. Bicycles & equipment: $500 each max
v. Coins/coin collection: $500 max (numismatics)
vi. Personal property of student away from home: $2500 max
Coverage D – Additional Living Expenses: covers additional living expenses & lost rental income
1. Additional Living Expenses: covers extra expenses to maintain normal standards of living due to
necessary relocation after home damaged by insured peril (ie. lodging, transport, meals, kennel)
2. Fair Rental Value: pays lost rental income + continuing costs for reasonable time it takes to repair
a. Pays ≤ 2 weeks when civil order denies access OR orders mass evacuation due to accident in
Canada or US (excludes: flood, earthquake, war, terrorism, nuclear/radioactive things)
3 types of Homeowners insurance: basic, broad & comprehensive (they share same terms, definitions, etc.)
Homeowners Basic (Named Perils) Form Coverages: can be applied to Tenant & Condo Owners too
o Aka. Fire & EC (Extended Coverages) on top of the Statutory Fire coverage minus theft
o Often used to insure dilapidated properties where better coverage isn’t offered
1. Fire or Lightning: extends coverage to lightning damage to electrical devices
2. Explosion: covers domestic boilers (excludes: water hammer = explosion caused by built-up
pressure in blocked pipes)
3. Smoke: from malfunctioning furnace or cooking appliance
4. Windstorm or Hail: interior is covered if hole created by the same occurrence
a. Excludes: damage to antennas or accumulation of snow, flood, wind driven water/ice
5. Impact by Vehicle: excludes damage to pets or by insured/employee operated vehicle
6. Falling Object: covers damage to structures (only covers coincidental damage to personal property)
7. Theft & Damage During Theft: excludes pets, scams, under construction, vacant, portions not
occupied by insured
8. Riot
9. Vandalism or Malicious Acts: excludes damage by insured or during theft/construction/vacancy
10. Water Damage by sudden and accidental escape of water (i.e. pipe, water main, appliance, domestic
water container if not by freezing or the insured, A/C, sprinkler) & water entering through opening
created by a Specified Peril other than Water Damage
a. Doesn’t Cover:
i. Under construction or vacant buildings (even if permission granted)
ii. Sewer back-up (i.e. from sump, septic tank, sewer, downspout, eavestrough, etc.)
iii. Continuous seepage of water/leakage (ie. leaking water pipe)
iv. “Flooding”: flood, overflow of water table, surface/ground waters, etc.
1. Surface water = OK if from water main or outdoor domestic water container
v. Damage to systems from which water escaped (i.e. plumbing, pool, appliance, main)
vi. By freezing inside dwelling when insured away for > 4 days during the heating
season (unless water is drained & shut off or someone checks daily or temperature
monitoring alarm installed)
vii. Ice build-up or waterborne objects
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11. Glass Breakage: of building glass by accident or earth movement (building glass ≠ glass objects)
a. Excludes: course of construction & vacant buildings
12. Transportation: personal property + fixtures being transported or temporarily off-premises
13. Electricity: damage to electrical devices by “power surges”/fluctuations
Exclusions: the generally uninsurable things like war +

1. Buildings for Business Use: without permission from insurer (farming = business too)
2. Illegal Property: ie. stolen, smuggled, not registered, for illegal purpose
3. Dwelling Vacant > 30 days (vacant = occupants have left with no intention to return)
4. Criminal/Intentional Acts by Insured or his agent (including failure to act)
5. Property On Display at Fair/Expo/Exhibition: because risky
6. Application of Heat (ie. clothes damaged in a dryer): resultant damage is covered
7. Release of Fuel Oil (i.e. spill from an oil furnace)
Homeowners Broad Form: covers property for named perils (like Basic) & buildings for all risk
Homeowners Comprehensive Form = Broad Form + Property for ALL RISKS

1. Exclusions: on top of the coverage/exclusions above…
a. Water Damage: same coverage as Basic Form
b. Snow/Land-slides or “earth movement” (resulting fire/explosion is covered)
c. Wear and tear / mechanical breakdown / defect / corrosion
d. Settling/expansion/etc. of building (all accidental breaking of building glass is insured)
e. Sporting equipment due to use
f. Property being worked on if result of work (resultant damage is covered)
g. Caused by birds, vermin, insects (building glass is insured, ie. against bird strikes)
h. For CAIB 1 Students:
i. Cost of making good faulty materials/workmanship
ii. Smoke from industrial operations
iii. Unless caused by Specified Perils: animals OR breakage/scratching of fragile objects
i. Outdoor Antenna by windstorm, hail, collapse, weight of ice/snow/sleet
j. Evidence of debt or title
k. Damage to Pets (unless caused by Specified Perils other than impact by air/landcraft)
l. Property lawfully seized (unless destroyed to prevent fire from spreading)
m. Scratching/chipping or breakage of fragile personal property
i. OK if caused by SP, car/watercraft/aircraft accident, (attempted) theft
n. Cost of fixing faulty material or workmanship
o. Nuclear Incident (resulting fire, lightning, explosion of natural/coal/manufactured gas=OK)
p. Smoke from industrial operations (i.e. agricultural smudging)
q. (Attempted) Theft
i. @ other locations you own/rent/occupy unless: it’s a student residence OR while
you’re temporarily living there
ii. From part of the dwelling rented to others if caused by tenant, their employee or
their household
r. Fraud/scam
s. Damage arising out of bylaws, laws, regulations, etc. that prevents property from being
reinstated the property to pre-loss state (aka. by-law costs)
t. Data & losses caused by Data Problem (resultant fire, explosion, smoke, water damage=OK)
u. Building/property for marijuana or other controlled substance
v. Asbestos-related losses
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2. Advantages: insures all losses not specifically excluded. IE: insures…
a. Damage to building/contents by weight of snow, ice, collapse (excl. outdoor antennae)
b. Smoke damage from fireplace + the Basic Form smoke coverage
c. Damage to dwelling from impact by vehicle driven by “insured”
d. Mysterious Disappearance of jewellery (i.e. jewellery that falls down a drain)
Underwriting Homeowners Forms: coverages are based on replacement cost value

1. Replacement Values of Dwelling Buildings: using evaluation guide to set basic limit
2. Coverage A – Dwelling Building: replacement value
3. Coverage B – Detached Private Structures: + 10% of Coverage A
4. Coverage C – Personal Property: +70-90% of Coverage A
5. Coverage D – Additional Living Expenses: + 20% of Coverage A
6. Coverage E – Personal Liability: $1MM
7. Coverage F – Voluntary Medical Payments: $1000 per person (no deductible)
8. Coverage G – Voluntary Property Damage Payments: $500 per occurrence (no deductible)
9. Coverage H – Voluntary Compensation for Residential Employees: as per schedule
10. Single Limit Policies = A-D limits combined into 1
Endorsements: can add additional coverage for:

1. Watercraft
2. Antiques/Art
3. Coin & stamp collections
4. Jewellery/Furs
5. Personal computer
6. Cameras
7. Musical Instruments, Silverware, “Antenna”, etc.
Other Habitational Forms: condo, tenant’s package, rented dwelling, mobile home & seasonal dwellings
1. Condo Owners Insurance:
a. Condo = building units owned separately but together forming a strata/condo corp.
i. Strata owns & insures original value of building & common elements.
ii. Common Elements = landscaping, parking, hallways, amenities, etc.
b. Unit Owners Policy: covers personal property + additional living expenses +
i. Coverage A1 – The Unit: ≥ $100,000 for the original unit, building fixtures, glass,
permanent outdoor equipment anywhere on the property if:
1. Strata has no insurance or it’s inadequate/ineffective
a. Not for paying the Strata’s deductible
ii. Loss assessment: when the strata’s policy is inadequate to cover loss to collective
property (≤ $10,000 or X% of personal property coverage; usually 100-250%)
1. Inadequate = deductible too big, loss not covered, co-ins, limit too small, etc.
2. Strata may need to assess owners to cover shortfalls
a. Coverage will not pay for Strata’s deductible
3. Deductible Buy-down Coverage: increases loss assessment limit
a. Loss assessment coverage usually limited but strata deductibles can
be as high as $500K so this gives you a “top up”
iii. Unit Additional Protection: covers value of unit when strata’s insurance isn’t enough
1. Strata can’t assess owners if only 1 unit is damaged
iv. Unit Improvements ≤ Coverage A1 limit for upgrades (can buy more ~25% of ‘C’)
1. Upgrades can include: structures & materials/supplies used
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v. Basis of Settlement = same as Homeowners Form (RC)
1. Unit Betterments + Property – Deductible
c. Common Application Questions = similar to homeowners
i. Location
ii. Construction
iii. Claims history
iv. Limits of insurance
2. Tenants Package Forms = property + additional living expenses (Coverage C & D)
a. Covers renters (people who don’t own the residence they occupy)
b. For CAIB 1 Students:
i. Tenant’s personal property will cover: tenant improvements, ≤ $500 for “theft”
damage/vandalism of interior of the building
c. Common Application Questions:
i. Location
ii. Construction
iii. Claims history
iv. Limits of insurance
v. Type of heating
vi. Number of rental units in building
vii. Commercial occupancies (i.e. is it a mixed use building – what are the businesses?)
3. Rented Dwelling: for rental properties (usually ACV only) + lost rental income coverage
a. Usually not offered unless insurer also insures the client’s principle residence
i. Can add on to homeowners or get as a standalone policy
b. May also have restrictions on number of units rented (i.e. 4+) or number of locations. Too
many or short term rentals (i.e. Airbnb) are usually considered Commercial Lines.
i. Underwriters prefer single family rentals or purpose built multi-family buildings
ii. Rooming house = a single family home subdivided into multiple units = high risk
c. Excludes: vandalism & theft – usually Fire & EC coverage only
d. Usually has higher deductibles than owner-occupied dwellings
e. Common Application Questions:
i. Leasing a part of your dwelling, another dwelling, or a unit in a building?
ii. Lease Duration: short term, annual, or longer?
iii. Written leases?
iv. How often does the landlord visit?
v. Who does maintenance?
vi. Do you require tenant insurance? ← provides liability coverage
4. Mobile Home Insurance: dwelling now includes permanent furniture, fixtures & equipment
a. Emergency Removal Expenses: ≤ 5% of dwelling AoI paid for disconnecting power/water &
transportation when necessarily removed
i. No coverage while in transit (i.e. moving damage or stolen by the transporter)
1. ^ insure it as an automobile risk
i. Mobile homes are more susceptible to: fire, windstorm, hail, transportation
ii. Basis of settlement: dwelling = ACV, contents = RC
iii. Tie-downs = straps that protect against windstorms
iv. Dent Clause: no coverage unless exterior siding actually torn or punctured by storm
c. New homes fixed in place may get broad/comprehensive cover + RC. Older ones = NP only.
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5. Secondary Dwelling: for people who own a 2nd dwelling rented to others but can’t get regular
homeowners (i.e. not built for 4 seasons) – can usually be added to your primary home insurance
a. Coverage A – Dwelling = same as above minus plants & fixtures temporarily removed
i. Extensions of Coverage (10% of ‘A’ limit):
1. Fixtures Temporarily Removed for repair/storage
2. Detached Private Structures (if multiple structures, limit = proportion of that
structure vs. the total; if your garage makes up 10% of your total structures’
value, your garage gets 10% of the limit)
3. Fair Rental Value: same as above
b. Coverage C – Personal Property: same as before
i. Extensions of Coverage (10% of ‘C’ limit):
1. Uninsured personal Property of Others
2. Personal Property Temporarily removed (in Canada & continental US only)
3. Additional Living Expenses
c. Special Limits: same limits as above for Business Property, Tractors & Watercraft
d. Insured Perils: usually NP only minus theft, burglary, vandalism, glass breakage, collapse
1. Can be added with precautions (i.e. alarms, professional snow clearing, etc.)
ii. Fire/Lightning: includes damage to electrical devices
iii. Artificial Electricity
iv. Explosion: includes boilers, excludes water hammer
v. Smoke from sudden, unusual, faulty operation of heating/cooking unit on premises
vi. Damage to exterior from Falling Object (excl. earth movement & land/snowslide)
vii. Windstorm/Hail: Excludes damage to…
1. Interior/contents unless hole opened by storm
2. Outdoor antennae & attachments
3. Damage by weight of ice/snow (collapse), waves, flood
4. Fences
viii. Impact by Aircraft/Car (excludes pets)
ix. Riot
x. Water Damage: same as before (under Comprehensive, Tenant, Condo Owners)
xi. Burglary/Robbery (if shown on Dec. Page)
1. Burglary = theft following illegal forcible entry or exit leaving visible marks
a. $500 of the ‘C’ limit goes towards building damage
2. Robbery = theft by (threat of) violence to a person
3. Excludes:
a. Pets
b. While building is under construction or vacant
c. Part of the dwelling rented out if caused by tenant, member of their
household, employee (like before)
4. Special Limits:
a. Money/Bullion: $200 max
b. Jewellery, watches, furs: $1000 max
c. Numismatics: $100 max
d. Manuscripts/stamps: $500 max
e. Silverware: $5000 max
f. Securities: $1000 max
xii. Vandalism/Malicious Acts: Excludes…
1. Seasonal dwelling/structures & its property
2. While under construction or vacant
3. Damage caused by insured
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4. Damage to Building Glass
5. (Attempted) Theft, Burglary or Robbery
6. Damage attributable to tenant, their employee/household/guest
e. Same exclusions as before
f. Note: may also exclude or limit coverage for vacant or unoccupied buildings
i. ↑ Pay a surcharge to add this coverage
g. Outbuildings (i.e. shed, boathouse & fencing) are insured under the dwelling limit up to a %
i. Prorata Distribution Clause: payout = damage × (limit ÷ total outbuilding value)
1. Ex: Property limit = $200K. Outbuilding limit = 10% = $20K. Boathouse =
$15K + Shed = $10K
2. Payout = $15K × ($20K ÷ $25K) = $12K
h. Basis of Claim Payment: Optional ACV or RC on buildings/structures & ACV on contents
i. Same conditions as Homeowners
6. Seasonal Dwellings: similar to Secondary Residence – only occupied part of the year
a. Insured Perils: same 11 as Secondary Residence (Vandalism only if shown on Dec. Page)
b. Basis of Claim Payment: ACV on building, structures & personal property
Endorsements:
1. Personal Articles Coverage: global all risk coverage for high value property
a. Covers: cameras, projectors, firearms, furs, jewellery, watches, silverware, stamps, coins,
musical instruments
b. Special Conditions:
i. Stamps & Coins: $250 per article (i.e. 1 stamp, coin, strip, sheet, etc.)
ii. Newly Acquired Articles: covered for $5000 for 30 days if similar to listed items
iii. Valued Coverage (optional): pays pre-agreed value upon total loss of item
c. No coverage for musical instruments played for a fee (need written permission)
d. No deductible
2. Fine Art Coverage = All Risk
a. Fine Art = paintings/pictures & artistic/rare/historically significant property (i.e. books)
b. Locations Covered = Specified Locations + in transit between Specified Locations
i. + at any other location in Canada & Continental US (10% of limit only) excluding
fairground/expo
c. Exclusions:
i. Wear & tear, deterioration, defect, mechanical breakdown, rust, corrosion, mould,
condensation, contamination, extremes in temperature
ii. Breakage unless caused by Specified Perils (can add via Fine Art Breakage)
iii. Birds, vermin, insects
iv. Loss while being worked on if due to work
d. Newly Acquired Items: 25% of insured limits for 30 days
e. (Un)Packing must be done by competent packers
f. Fine Arts Breakage Coverage: deletes exclusion ii (above)
3. Earthquake: Deductible = a % of insured values & all shocks w/in 7 days = 1 shock
4. Sewer Back-up/Water Escape Coverage: covers water entering dwelling due to accidental escape of
water from: melting of ice/snow on roof, sewer, drain, septic tank, downspout (= aka. waste water)
5. Residence Glass Breakage: removes/reduces deductible on building glass
6. Vacancy Permit: allows dwelling to be vacant for > 30 days
a. Covers: Fire/Lightning, Smoke, Windstorm/Hail, Impact by Air/landcraft not
owned/operated by insured, Explosion, Riot, Falling Object
b. Usually expensive & requires deductible ↑
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7. Personal Computer Coverage = Global & All Risk for listed computer equipment, media, software
a. Excludes: business equipment, cost of gathering data, electronic/magnetic injury (lightning
= OK), loss to irreplaceable media/software
b. Conditions:
i. Newly Acquired Articles: covered for 30 days
1. Equipment = $5000 max
2. Media or Software = $1000 max
c. Basis of Claims Payment: cost to repair/replace OR RC if done in a reasonable time &
property was being used to original purpose
d. Definitions:
i. Personal Computer System = equipment, media, software
ii. Equipment = CPU, monitor, keyboard, printer, etc.
iii. Media = storage device for data (i.e. disks)
iv. Software = programs stored on media
8. Watercraft, Outboard Motor, Trailer & Misc. Equipment Coverage = All Risks
a. Covers: boat + permanently attached equipment, motors, boat trailer, other equipment
i. Canada & Continental US only
ii. Must buy limit = 100% of insured property; $100 deductible (waived on total loss)
b. Excludes: transportation losses & collision with underwater/floating objects
c. Newly Acquired Equipment: covered for 30 days for $5000 max
9. Freezer Food: gives the same coverage as homeowners to seasonal or secondary dwellings
10. Mass Evacuation: same as before but removes the 2 week limitation
11. Home Business Extension: Business = you’re making money from it ≠ if you give them away
a. No standard: depends on business & coverages needed
i. Ranges from home office (no client visits) to small manufacturing
a. Ex: homemade soaps, home-based mechanic, etc.
2. Eligibility depends on operations, income & size of business. Small & no
customer visits are usually OK for the home biz endorsement otherwise… go
to Commercial Lines.
ii. Typical Coverages = Remove exclusion for business use + Add…
1. On/Off premises business property
2. Liability (i.e. products & completed operations)
3. Person Injury Liability
4. Advertising Liability
5. Business interruption & extra expenses
6. Electronic equipment for business
7. Data for business
8. Account receivables
9. Credit card coverage for business
10. Increase the special limits on Money
b. If they bought a personal umbrella liability policy, it will extend to home business
c. Underwriting depends on: business, property values, annual sales, alarms/security
Additional Conditions:
1. Notify Authorities: notify police if losses due to criminal acts
2. No Benefit to Bailee: cannot release a bailee of liability
3. Pair & Set/Parts: see above
4. Sue & Labour: insured must take reasonable steps to recover lost property
a. Insurer will pay pro-rate for related expenses
5. Basis of Settlement: ACV unless stated otherwise
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6. Subrogation: discussed later
Commercial Property Insurance

Commercial Property = owned/used by business while on premises (3 types: building, stock, equipment)
Lots of different policies available (floaters, E&O, CGL, property) that can be purchased alone, combined, or in
pre-made small business package policies with common coverage for certain risks (i.e. a drywaller’s package).
Large companies use custom (aka manuscript) policies.
2 Policy Forms: named perils & broad form

1. Named Perils: covers only perils listed (FSWILLER)
a. Fire
b. Smoke damage due to sudden and faulty operation of a stationary furnace (NOT a
heating/cooking device)
c. Windstorm & hail
d. Impact by vehicles
e. Lightning: including damage to electrical devices
f. Leakage from fire protective equipment
g. Explosion: of natural, coal, or manufactured gas & boilers and pressure vessels ≤ 15 PSI
h. Riot or malicious acts
2. Broad Form: insures all risks not excluded. Ex Covers:
a. Vehicle impact caused by insured(s) or employees
b. (Attempted) Theft: including property damage by theft
c. Water damage due to freezing or rupturing of pipes. Excludes: flood, seepage, sewer-backup
d. Collapse of building: except due to earthquake or faulty/improper work/materials/design
e. All sources of smoke damage (excluding industrial operations like agricultural smudging)
Premiums charged are related to coverage: total rate per $100 = fire rate + loading (for additional perils)
1. Fire Rate: basic rate to cover fire, lightning and explosion
a. Factors that affect Fire Rate:
i. Building construction: concrete is cheaper to insure than wood frame
ii. Claims history: of the type of business and history of applicant (last 5 yrs)
iii. Protection: against fire
1. Public protection: from outside sources (ie. distance to fire hydrant/hall,
accessibility, water supply, etc.)
2. Private protection: installed by applicant
a. Get a discount if you have sprinklers or alarms
iv. Occupancy: type of business done by insured & others nearby
v. Location: area, distance from other buildings and their characteristics (ie. high crime
area or construction/occupancy of others)
b. Total Rate (aka. fire rate + loading) x Building Value = Premium
2. Underwriting Information: COPE
a. Construction: materials, age, size, storeys, types of heating, electricals, etc.
b. Occupancy
c. Protection
d. Exposure: chance of loss from nearby risks (i.e if near water or bomb factory) ← like Location
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3. Common Clauses:
a. Description of Property Insured:
i. Building: building described on declaration page including…
1. Fixed structures: related to building (ie. metal fence, sign, bike stands)
2. Permanent fixtures: (ie. A/C units, carpet, light fixtures, bathroom fixtures)
3. Additions and extensions: connected to building (ie. walkways, canopies)
4. Materials & equipment on premises: for maintenance and normal repairs
5. Decorative indoor plants
ii. Stock = merchandise usual to the business (normally sold in that type of biz) +
1. Packaging & advertising materials: (ie. catalogues, boxes, grocery bags)
2. Similar property of others: in the care of insured where insured is legally liable
or required to insure by contract
iii. Equipment: contents usual to the business + similar property of others + tenant
improvements
iv. Newly acquired buildings & their contents are covered for a certain time
b. Co-insurance Clause: must purchase a minimum limit of insurance based on a % of values
i. Applies to each of the 3 types of property separately
ii. Waiver of Coinsurance: coinsurance only applies to partial losses ≥ 2% of AoI and $5000
1. If the insured experiences a total loss (loss greater than the policy limit) or a loss
that is less than 2% of the policy limit or $5000, then there is no need to apply
the coinsurance formula when calculating the payout. The insured would just
get the value of the loss up to the policy limit.
iii. Adjuster determines:
1. ACV of property
2. Amount of loss & Limit purchased
3. Coinsurance %
4. Amount of settlement = penalized if didn’t meet co-insurance requirement
a. Settlement = (Did/Should) x Loss Amount ← penalty formula used
b. EX: If the insured has $1,000,000 worth or stuff and the insurer sets a
coinsurance requirement of 80%, the insured must insure at least
$800,000. If the insured only bought a $400,000 limit of insurance, a
coinsurance penalty pay apply to reduce the amount of settlement. The
calculation is as follows on a $100,000 loss: settlement =
($400,000/$800,000) * $100,000 = $50,000
iv. Stated Amount of Coinsurance = an alternative to coinsurance
1. Insured files a Statement of Values @ start & maintain it throughout policy term
2. If limit reduced to < the Statement, policy reverts to original coins. % or 100%
c. Subrogation Clause: can sue responsible party to recover claims paid
i. Will not subrogate fellow insured(s)
ii. If the net amount recovered (after costs) is not enough to fully cover the loss, amount is
divided between the insurer & insured based on % of loss borne
iii. Insured cannot release anyone of liability (insurer will still sue)
d. Reinstatement Clause: original amount of insurance is reinstated after loss is paid
e. Debris Removal: use remainder of limit (left after rebuild) to pay for removal of debris
f. Property Protection Systems: discounts if alarm, sprinklers, etc. installed
i. Conditions: insured must notify insurer immediately of any known interruption/defect
of protection system & of any cancellation of monitoring/maintenance/police services
ii. If Conditions are Breached:
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1. Reduce coverage: ie. eliminate theft coverage until system repaired
2. Charge additional premium: because higher risk
3. Cancel the policy: if breach was intentional (some biz requires protection)
Other Commercial Property Forms:

1. Property Away From Insured Premises: in transit & at temporary location (in CA/US only) = covered
a. In Transit: if locked from start to end including incidental stops
i. Locked Vehicle Warranty: fully enclosed metal compartment, locked doors/windows
and visible signs of forceful entry
1. Common carriers are excluded from complying with this warranty
2. Violation VOIDs all coverage
b. Temporary Locations: covers property in care, custody and control of a bailee for hire at a
location not “controlled” by insured
i. Bailee for Hire = repair, service, storage or @ a carrier’s depot
2. Glass Insurance: covers accidental damage by anyone, earth movement or thieves (these perils are
normally excluded by regular commercial property insurance)
a. Excludes: fire, war, nuclear hazard (fire is covered elsewhere)
i. Scratching & vandalism can be covered for an additional premium
b. Costs of temporary repairs may be covered
c. Rating depends on: size, number, type, geography, decorations, height above ground,
inside/outside, stationary?
3. Valuable Papers & Records: covers cost to recreate if stored properly when not in use
a. Valuable papers: documents, records, drawings, books, maps, etc. (not money or securities)
b. Must be stored in the described receptacle when not in use/closed (ie. safe or fireproof filing
cabinet)
4. Boiler & Machinery Policy (Mechanical Breakdown) covers: aka Equipment Breakdown Insurance (EBI)
a. Building damage from explosion of boilers & pressure vessels > 15 PSI “controlled” by insured
b. Electrical or Mechanical Breakdown: (ie. boilers, A/C, pumps, etc.)
i. For CAIB 1: = breakdown of an electrical/working mechanism
c. Insurer inspects objects before and during policy period (accident prevention)
i. Suspends policy if dangerous condition found (reinstate after repairs)
d. Business Interruption also available
e. Covers the equipment itself and other insured property (i.e. building, stock, property in custody)
5. Contractor’s Insurance:
a. Builder’s Risk – Broad Form: bought by building owner or general contractor to insure buildings
in CoC
i. Covers… named perils or broad form
1. Materials on site owned by insured & forming part of the finished project
2. Landscaping & temporary buildings (ie. scaffolding, trailers, forms)
ii. Excludes… tools and equipment or cost of making good faulty materials, workmanship
or design (resultant damage is covered)
1. Tools and equipment is covered by contractors equipment floater
iii. Limit of Insurance = completed value of the construction
iv. Policy Period: ends when occupied or unattended for > 30 consecutive days
b. Contractor’s Equipment Floater: covers movable equipment “owned” by insured (ie. backhoes,
loaders, power and hand tools). Some may require auto insurance license plate for coverage.
i. Broad form or named perils coverage in Canada & US only
ii. Schedule large and expensive items. Small items are insured on a blanket basis.
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c. Installation Floater for specialized contractors: covers property…
1. In transit to job site
2. At job site awaiting installation
3. During installation until accepted or insured’s interest ceases (ie. general
contractor assumes control)
i. Excludes: tools & equipment (sometimes) or cost of making good improper […]
d. Tool floater: blanket named-perils coverage for small tools (locked vehicle warranty may apply)
6. Crime Insurance: 3 types: burglary, robbery, theft (rmbr: commercial policies have some theft coverage)
a. Burglary/robbery damage to building: also covers vandalism
b. Burglary: mercantile & safe
i. Mercantile Stock Burglary covers: theft from closed premises if visible signs of force
used (includes damage to other property during burglary)
ii. Safe Burglary covers: theft of valuable property from safe if force used to enter safe or
to remove it from premises (includes incidental damage)
c. Inside/Outside Robbery Insurance: covers money, securities or valuable property when…
i. Taken by actual or threatened force to custodian
1. Custodian = someone allowed to have control of property
ii. Custodian witnessed property being taken
iii. Taken from a custodian killed or rendered unconscious or kidnapped
iv. Theft from display window during business hours
v. Theft from custodian’s home or a night safe
d. Money & Securities = a broader robbery insurance that covers:
i. Destruction, disappearance, or unlawful removal (including robbery or theft) of money
and securities from the premises or bank or while outside in the custodian’s care (i.e. at
their home or when carried by armoured courier)
e. Securities insurance: loss to securities in a leased safe deposit box at the named bank vault or
while temporarily outside the box (money is excluded)
i. Lesees’ safe-deposit box burglary & robbery: covers burglary of the box + robbery inside
vault or bank
f. Theft = taking without the owners’ consent (broadest)
i. Broad Form covers theft of stock and equipment. Money and securities must be added
1. Money and Securities policy covers:
a. Actual destruction – by fire
b. Disappearance – disappearance not attributable to theft
c. Illegal removal – any unlawful taking of money & securities
g. Church Theft: covers theft of money, securities and property + damage to premises
h. Employee Theft/Fidelity Insurance: necessary because employee theft is serious & can go
undiscovered for a long time
i. 3D Policy (aka. Comprehensive Dishonesty, Disappearance & Destruction): comprehensive crime
coverage under 1 form. The policy is continuous until cancelled – no fixed policy term
i. 5 Insuring Agreements to pick from: (& 48 Endorsements to amend coverage)
1. Employee Dishonesty (Form A & B options): loss of money, securities or other
property by employee
2. Loss Inside Premises
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3. Loss Outside Premises
4. Money Orders & Counterfeit Paper Currency: good faith acceptance of
counterfeit USD/CAD or money order not honoured upon presentation
5. Depositors Forgery: forgery or alteration of your cheques/instruments
j. Coverage always evolves so things like EFT, cyber, or fraud losses can now be covered
7. Business Interruption Insurance: restores lost income if caused by insured perils up to the level the
business would have earned if the loss hadn’t occurred (insured perils = same as property insurance)
a. Coverage starts on the date of loss for up to 12 months (even past the policy period)
i. Pays lost net profits + expenses that continue during a biz int (continuing expense)
ii. Will cover necessary expenses if proven to reduce amount of loss
b. Types of Business Interruption Insurance: replace income and/or pays extra expenses
i. Earnings Form: pay until property (should have been) repaired or 12 months
1. ↑ best if the business recovers immediate after reopening
2. Insures “gross earnings” = pays reduction in gross earnings ← profits, payroll,
and expenses that continue during an interruption (i.e. debt payments)
3. Coinsurance: 50% or 80%
ii. Profits Form: pay until income restored or 12 months
1. ↑ best if it takes some time for business to ramp up and customers to return
2. Coinsurance: 100%
iii. Extra Expenses Insurance: pay extra expenses needed to maintain normal business
1. Doesn’t need to prove that it reduced amount of loss anymore
c. Rental Income coverage: same as what we discussed in the Personal Lines section of the course
i. Period of indemnity is the same as the Earnings Form
8. Accounts Receivable = All Risk coverage
a. Pays for: reconstructing accounts receivables, amounts uncollectable, extra collection expenses,
interest on loans taken out to finance the business while awaiting collection
9. Electronic Data Processing (EDP): All Risk coverage for Hardware (computer equipment), Software
(data/media) & Extra Expenses incurred to rent outside services (i.e. renting servers)
10. Cyber: covers liability for cyber attack related damages & recovery
a. 3 types of cyber risk: deliberate hack (ransom ware), unintentional breach (losing a laptop),
operational risk (not installing software updates on time)
b. Direct losses: ransom payments, data recovery, fraudulent EFTs, liability
c. Indirect losses: extra expenses, professional fees (i.e. forensics), business interruption, loss of
competitive advantage (i.e. if IP leaked), reputational damage, loss of future opportunities
d. Insurers can also pay for things like incident response planning, crisis management,
copyright/trademark infringement, defamation, service interruptions, unintentional
transmission of viruses, etc.
e. Coverages:
i. First Party: pays for damages/costs the business sustains (i.e. data recovery)
ii. 3rd Party: cyber liability to clients, etc. for leaked data if result of act or omission
1. Specialized cyber directors & officers insurance available for shareholder
lawsuits resulting from cyber risk (i.e. Equifax cyber incident of 2017)
f. Risk management: have disaster recovery/continuity plans and cyber security (i.e firewall)
11. Office Equipment Floater: All Risk coverage for office equipment, in transit, accounts receivables,
valuable papers & extra expenses. Used for biz w/ no stock (i.e. lawyers, accountants, dentists, etc.)
12. Jeweller’s & Furrier’s Blocks: necessary because standard policies have limits on these valuable items
a. Coverage & premium depends on: stock type/value, location, security systems, loss history
i. Includes coverage for customers’ goods
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13. Marine Insurance: covers the “hull” (aka vessel), cargo & liability (aka protection & indemnity coverage)
14. Commercial Package Policy: includes coverage for property + liability, crime, biz int, etc. bundled into 1
a. Small Business Package: for small contractors, retail stores, salons, dentists, doctors, etc.
i. Each insurer has a different package so you can’t just swap one for the other
15. Surety Bonds:
a. Surety = 1 entity guaranteeing that another will perform an obligation (i.e. vouching for them)
b. Surety Bonds ≠ Insurance: surety is…
i. 3-party contract
ii. Does not anticipate losses & premiums not based on estimation of future losses
iii. Insured needs to reimburse surety
iv. Written binding only + needs to be signed by principal & surety
v. Infinite length & non-cancellable (ends when obligations are met)
vi. Can’t increase the limit (even for an additional premium)
c. Characteristics:
i. 3 party contract
1. Principal: the person primarily responsible for performing obligation
2. Obligee: the party the principal is obligated to
3. Surety: the one who pays money or does something if principal fails
ii. No losses expected: like a loan, surety won’t guarantee someone they think will fail
iii. Principal is liable to surety: to repay surety if they fail to perform their obligation
iv. Bond premium = service fee for surety’s expenses/qualification fees
v. Bond penalty (aka limit) = amount the surety will pay if principal defaults
vi. Indeterminate length & non-cancellable: ends when the principal has finished the job
vii. Written contract only & must have Surety’s seal (no oral binding)
d. Construction Bonds:
i. Bid Bond: guarantees contractor will enter contract @ bid price & do the job
1. Project owner is assured the contractor is qualified & bidding in good faith
2. Contractors who withdraw their bid prior to acceptance also forfeit the bond
a. Can be due to error in judgement or calculation (i.e. cost errors)
3. Surety’s Consent (used instead of or in addition to bid bond): surety promises to
issue future bonding if the contractor wins the job (i.e. a performance bond)
4. Penalty = usually 10% of contract price. Surety will pay for costs related to re-
tendering the project & the difference between the new & old winning bids
ii. Performance bond (most common): guarantees performance of work as per contract +
that faulty work will be corrected if discovered w/in 1 yr of completion
1. Penalty = usually 50-100% of the contract price
iii. Labour & Materials bond: guarantees suppliers are paid for work
1. Penalty = same limit as performance bond (usually issued together)
e. Misc. Bonds:
i. Fiduciary bonds: guarantees the faithful performance of their duties
1. Fiduciary = one with special position of trust in handing affairs/$$ of others
a. IE: court appointed administrators, guardians, trustees, executors, etc.
ii. Customs & Excise bond: guarantees payment of taxes/import duties
iii. License & Permit bonds: some business may need to be licensed & follow regulations to
ensure public safety/welfare (i.e. realtors, plumbers, electricians, etc.)
16. Farm Insurance = both habitational & commercial (covered under 1 policy but separate wordings)
a. Dwelling/personal property coverage/endorsements = same as habitational forms
i. Owner may live in town or have multiple dwellings they use or rent out
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b. Farm Liability = business & personal liability
i. 2 Parts:
1. Personal Liability: global coverage for personal acts (like homeowners) +
a. Tenant legal liability, voluntary medical & property damage
2. Premises liability: covers farm activities
ii. Farmer’s Limited Pollution Liability available covers sudden and accidental spills +
government-required clean up
c. Farm Buildings & Contents coverage ranges from Fire & EC to All Risk
i. Farm Buildings = barn, workshops, storage buildings (i.e. for machinery or granary)
1. A dual purpose building is considered farm building (i.e. if garage stores private
vehicle & farm tractors)
ii. Commercial RC coverage is available
1. EC perils are different for the dwelling vs farm portions.
a. Dwelling/Contents get falling object and water escape coverage &
better explosion coverage
b. Different windstorm coverage
iii. Rebuilding Clause – Deferred Payment (for Outbuildings): get 50% of the amount
payable upfront, then remaining 50% if building is repaired/replaced w/in 9 months of
loss & w/in 200 ft & used for same purpose
1. Often, farmers choose not to rebuild the same type of building once destroyed
d. Farm Contents = blanket coverage + scheduled coverage for high-value items (i.e. welders)
e. Farm Machinery/Equipment: insures all tools, etc. usually to farms (excl. vehicles subject to
registration)
i. Coverage can be: Scheduled/Blanket, Named Perils/All Risk, for Newly Acquired/Non-
owned Equipment
ii. 80% coinsurance + All Risk coverage
iii. Schedule large/valuable items, rest is blanket
f. Custom Farming = “contract farming”. Using your machinery away from your farm for
compensation
i. Exclusions: all the usual equipment ones + electrical currents, mechanical breakdown,
tires/tubes unless caused by certain perils, property in (or in transit to) custom farming
unless permissions given
g. Farm Livestock: insured for N.P., subject to coinsurance, theft & per-animal limit may apply
i. Coverage options: limited mortality (NP), enhanced, or full mortality
1. Scheduled (by type of animal) or blanket
2. Power interruption & overheat causing death is covered
h. Farm Produce = stuff listed on Dec. Page + feed, fertilizers, pesticides, milk, eggs & agricultural
products
i. Coverage = Named Perils OR All Risk & subject to coinsurance
1. Dairy farms need milk contamination coverage (milk itself + liability)
ii. Exclusions: tobacco, flax, lumber, standing (aka. unharvested) crops
1. Can get extensions for standing crops (w/ per-acre limit), refrigerated crops,
extremes in temperature
i. Misc. Coverage: Farm Earnings (aka. biz int), Game/Exotic livestock, Embryo/Semen
i. Farm Earnings: lost income + extra expenses (i.e. to rent a place to re-house animals)
j. Underwriting Farm: must have a written application w/ diagram of distance between buildings
i. Need pictures for: vacant property, buildings older than X or insured under RC, open-
side structures insured against windstorm/hail
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ii. Ask: age & condition of buildings + standard q’s like heat, electrical, plumbing, roof, etc.
iii. Back-up generator or power interruption alarm? Products like milk or veges could spoil
or animals could die (lack of heating or ventilation) if power went out.
iv. Understand features & primary/secondary operations (i.e. grow grapes + make wine)
v. Business interruption from loss of a stud animal or crop?
vi. Special exposures: water bodies on site could have flood & liability risks
Basics of Legal Liability

Laws are designed to establish standards of conduct
2 types of legal system: criminal & private law (social & private)
1. Criminal law = not insured
a. Addresses wrongs against society by punishing the wrongdoer
2. Civil law: addresses disputes between parties by compensating the wronged party
3. Quebec uses the Civil Code – they look at the Code to see how it applies to the situation and decides
For CAIB 1 Students: Courts of Law: Small Claims, County/District, and Supreme Courts
Common Law: based on precedence

1. Doctrine/Rule of precedence: follows previous rulings in similar cases (creates a standard of conduct)
Statute Law = written law (created by legislation (bills) to regulate certain activities). Supersedes common law.
2 branches civil law: contract law & tort law ← 2 ways you can be liable
1. Contract law: enforces contracts. Remedies breach of contract by enforcing performance
2. Tort law:
a. Tort = private wrong other than breach of contract that causes damage
i. Ex: Negligence, trespass, nuisance, defamation, false arrest, invasion of privacy
1. Private Nuisance = substantial and unreasonable interference with someones
rights to enjoy their property
2. Public Nuisance = nuisance to many people (only the attorney general can allege
this on behalf of the public)
3. Defamation = false or derogatory statements that damage someone’s character,
reputation or business
a. Libel: written defamation
b. Slander: spoken defamation
ii. 3 elements of a tort: legal duty owed, legal duty breached, damages directly resulted
b. Types of torts: intentional tort, unintentional tort
i. Unintentional tort = caused by carelessness
ii. Intentional torts are not insured (i.e. if a reasonable person would expect harm from it)
iii. Strict Liability: person is automatically responsible if: doing hazardous activity, allowing
the spread of an intentionally started fire or reasonable act in unreasonable setting
1. Rylands v Fletcher: if you bring something dangerous onto the premises, you’re
liability if it escapes and harms others
c. Tortfeasor = someone who commits a wrong against an innocent party
i. Joint tortfeasor = 2+ people acting together to cause damage
d. For CAIB 1 Students:
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i. Assumed guilty if: statutory liability, strict liability, Res Ipsa Loquitur (insured has
exclusive control over the cause of the loss)
Negligence = carelessness = failure to use the care of a reasonable and prudent person given the circumstances
- IE: acting in a way you shouldn’t have or failed to act when you should have
- Plaintiff must prove duty owed and duty breached by negligence
o Foreseeability: defendant not negligent if outcome wasn’t reasonably foreseeable
▪ Ex: If you leave a candle on at home and a burglar breaks in and knocks the candle over
causing a fire, you may not be liable because a burglar knocking over the candle was
“unforeseeable”
o Insurer will find and pay for a lawyer
For CAIB 1 Students:

1. Liability policies can insure: bodily injury, personal injury (i.e. humiliation/mental anguish), property
damage, direct financial loss (i.e. lost income). Breach of contract coverage is limited.
Important legal precedents:

1. Ownership of property:
a. Different Common Law duties owed to difference types of people entering your premises
i. Trespasser: someone who enters without the occupier’s permission
1. Duty owed: no traps or intentional harm
ii. Licensee: someone entering for their own purpose with permission from occupier
1. Duty owed: warn of any hazards known to occupier that they would not expect
iii. Invitee: invited in for benefit of the occupier (i.e. for business purposes)
1. Duty owed: protect against dangers known or might reasonably discover
iv. Children: are protected by law (lack the judgement necessary to avoid risk)
1. Duty owed: premises must be safe from ALL dangers (take reasonable steps)
2. Attractive Nuisance: certain premises are attractive to children and may
encourage them to trespass (i.e. construction sites). You must take steps to
protect kids and you owe them the same duty as someone invited in.
v. In BC, AB, ON & NS: under the Occupiers Liability Act, licensee + invitee = “visitor”
1. Common Duty: make sure they’re reasonably safe for the purpose of their visit
b. Persons outside the premises: make sure nothing “leaks out” (i.e. safe for people to pass by)
i. Duty owed: related to use and maintenance of the building (ie. cant release toxic fumes)
c. Risk Management: put up no trespassing signs, cap wells, fence pools and trampolines, etc.
2. Liability of Landlord: liable when incorrectly warrants fitness for a particular use or conceal an adverse
condition
a. Landlord is also liable when:
i. Renting furnished premises (assumed fit for purpose)
ii. Landlord agrees to maintain premises but fails after reasonable notice given
iii. Common areas (i.e. if a tenant trips on an uneven carpet in the hallway)
iv. Didn’t stop tenant’s illegal activity that caused loss to neighbours (even Airbnb noise)
b. Legal duty: keep the premises in good repair
3. Liability of Tenant to Landlord:
a. In tort law: liable for damages caused by negligence
b. In contract law: for liability assumed by tenant in the lease agreement
4. Liability for children: kids are responsible unless you can prove lack of understanding of consequences
a. Parents are generally not liable unless:
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i. Fails to supervise the child
ii. Damage caused by dangerous thing given to child by parents
iii. Child acting on authority of parents
iv. Child working at parents business (if damage results from duties given to child)
5. Liability of Bailee for Hire: Tort law requires ordinary care. Liable when duty breached by negligence
a. + Contractual liability
b. Bailee for hire = one who has temporary custody of property of others for purpose other than
sale and is compensated
6. Employer’s Liability for Employees: employers are vicariously liable for employee torts while in course of
their duties
a. Employers are vicariously liable for employee torts while in course of their duties.
i. Not liable when employees:
1. Delegate their duties without employer’s consent
2. On a frolic of their own = unauthorized time away for own business
3. Unauthorized use of employer’s property
b. Employer’s liability for employee injuries: legal duty established in Workers Compensation Act
i. WCA = no fault basis (no need to prove negligence and can’t sue if accepted)
1. If WCA doesn’t cover injury, employee can sue
ii. If no WCA, can manually enrol or buy “employers liability rider”
7. Liability for Independent Contractors: generally not liable for contractor negligence except when…
a. Work is inherently dangerous (i.e. dynamiting a tree stump)
b. Insured supplies defective material or equipment
c. Insured controls the work
d. Work must be reasonable & insured must have been careful in selecting contractor
e. For CAIB 1 Students: also when work creates a nuisance OR breach of statutory obligation
8. Liability for animals: domestic animals & “wild” animals (Dangerous Dogs Act may mandate insurance)
a. Domestic animals: owner is liable on the first bite
b. Wild animals: strictly liable for any damage
c. Owners are responsible for supervising the animal and liability for its actions
i. Ontario Dog Owners Liability Act: owners are strictly liable for dog bits/attacks
9. Joint Liability = multiple parties act negligently together
a. When liability is unequal, the law holds each party fully responsible (paying 100% as if they
acted alone encourages them to go 50-50) and defendants sort it out later
10. Host Liquor Liability: business or party host can be liable for damage caused by a drunk person on
premises or after they leave – don’t let them leave drunk
a. Social hosts have less responsibility than commercial hosts (w/ liquor license). Did you know
they were drunk and were planning to do dangerous things after (ie. driving)?
b. Commercial host’s common duty to protect drunk patrons.
i. Serving practices to ensure people aren’t over served alcohol
11. Communicable Disease Liability: liability for transmitting diseases (i.e. COVID-19)
a. Host or business could be liable if they host a gathering and people get sick. Not covered!
i. Can get it on commercial policies but it’ll be expensive
12. Farm Liability = business (farm buildings, products, vehicles, etc.) + personal (home, hobbies, etc.)
a. Special exposures: pick your own fruits, corn mazes, demonstrations, events, water bodies, etc.
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Basics of Liability Insurance Policies
Insuring Agreement: pays legally obligated compensation to 3rd parties for losses in policy period & territory
1. Insures bodily injury and property damage:
a. Bodily injury defn: injury, sickness, death
i. Bodily injury from external source (physical)
ii. Sickness: manifests internally
iii. Death resulting directly from the above
b. Property damage: physical injury to tangible property including loss of use to undmged property
2. Payment only when legally liable: determined by courts
3. 3rd party coverage only: payments only to parties not named on policy
4. Pay compensatory damage only: not normative/nominal or punitive/exemplary damages
a. Compensatory damage = meant to compensate the wronged party for injury

c. Special damages = to compensate the plaintiff for out-of-pocket expenses (wages, medical, etc.)
d. General damages = unquantifiable damages (pain & suffering, loss of future earning, shock, etc.)
e. Punative damages = meant to punish the defendant (not insured)
5. Coverage provided on occurrence basis: the policy in force at the time the loss occurred is the one that
pays
a. Ex: if there was a chemical leak that started in 2008 but was not discovered or a claim was not
brought until 2018, the 2008 policy will pay (if the policy is occurrence based)
b. Occurrence = accident including long-term exposure
i. Accident = sudden and unexpected, occurs at a particular point in time (IE: car crash)
1. If a liability policy is written on an “accident” basis, it’s more restrictive
ii. Continuous exposure = occurs over a long period of time
1. i.e. Exposed to contaminated baby powder for years
iii. Limits of insurance applies per occurrence
1. Aggregate limit = max for all claims during policy period
2. Split limits = separate limits for per-person injury, injury of all ppl & property
c. Some policies (i.e. E&O) are often written on a claims-made basis: the policy is triggered when
the claim is made (this can be different from the time the incident occurred)
i. It can cover losses that occurred before the policy started if the claim was made after
Duties in the event of an occurrence or claim: insured must cooperate (PALAC)

1. Prompt notice to insurer of any occurrence that might lead to a claim
a. Time, place, circumstance, witness info
2. Assist in investigation, settlement or defense
3. Legal papers must be immediately forwarded to insurer (has time limit to respond)
4. Authorize insurer to obtain info (police reports, etc.)
5. Can’t make voluntary payment other than first aid (except at own cost)
6. For CAIB 1 Students: another way of wording the above…
a. Prompt Notice of Accident or Occurrence: see #1 above
b. Cooperation: help with legal action & forward documents (see #2, 3 & 4 above)
c. Unauthorized Settlements: see #5 above
d. Action Against Us: cannot sue insurer unless: within 1 yr & you’ve complied w/ all policy terms
7. If there’s more than 1 policy, the other is considered primary and this one will only pay when limits on
the other have been exceeded
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Supplementary Payments = cost of defense + expenses of insured to assist + court costs + interest payable
o Paid on top of limit of insurance
1. Reasonable expenses incurred by insured for cooperating with insurer (i.e. lost wages ≤ $100/day)
2. Emergency medical expenses: paid by insured due to insured occurrence
3. Court costs assessed against insured = courts may require insured to pay court costs (i.e. if you lose)
4. Bond premiums: i.e. for appeal bonds or bonds to release attachments valued ≤ AoI if you apply
5. Interest payable on amounts ≤ limit: plaintiff doesn’t get paid until after Right of Appeal has passed so
interest accrues in the meantime
Different liability policies exist for different activities (i.e. for business, aircraft, professional liability, etc.)
Liability Insurance Policies

Coverage I – Loss Assessment (for Condo Owners): pays amounts assessed against owners if Strata’s liability
insurance is inadequate (excluding deductible)
- Limit = 250% of Coverage A1 (unless Dec. Page says higher)
Personal liability coverage is included in your habitational forms (i.e. tenants, condos, mobile home, etc.)
1. Coverage E – personal liability = $1,000,000 limit
2. Coverage F – voluntary medical payments = $1000
3. Coverage G – voluntary payment for damage to property = $500
4. Coverage H – voluntary compensation for residence employees = as per schedule
5. Note: no deductible on these coverages & limits vary by insurer
Definitions:
1. Persons insured = same as Section 1 property coverages (insured + household)
a. + legal representative/housemate after death, residence employees using insured “vehicles” for
work (i.e. mower), parties legally liable for loss caused by owned & insured watercraft/pet
2. Premises insured = all premises described on policy (including spousal/seasonal dwellings) & …
a. Temporary residence rented for no longer than 90 days (ie. hotels or rented vacation homes)
i. Student’s rented premises can be ≥ 90 days (i.e. dorm room)
ii. Can endorse if staying longer
b. Premises in Canada intended to be principal residence of insured(s) for up to 30 days (or until
policy end/switch)
c. Land in Canada where contractor is building a 1-3 family residence to be occupied by insured
d. Vacant land in Canada owned or rented by insured (excluding farmland)
e. Family cemetery plots
Coverage E – Personal Liability: global coverage for liability arising out of private activities
1. For CAIB 1 Students: comes with homeowners, tenants & mobile home policies
2. Supplementary payments are covered (i.e. defense costs – see previous sections)
3. Exclusions:
a. Damage to “own” property (belonging to, used, occupied or leased)
b. Damage to property of others in the care, custody and control of insured
i. But… Named Perils form covers property of others when caused by: fire, explosion,
water or smoke (excluding smoke from a fireplace)
ii. Ex: No coverage if you accidentally damage property you borrow/store for a friend
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1. But… if you’re BBQ’ing & burn down the rented cabin, that’s covered (FIRE)
c. Damage to property/fixtures from work done on them by/on behalf of insured
d. Injury to insured & anyone residing in insured’s household (excluding residence employees)
e. Actions of named insured not residing at premises (living in a care facility = OK)
f. When insured voluntarily assumes liability (i.e. by contract) except…

i. Assumed in contract in relation to insured’s premises
1. Ex: if your recently repaired fence falls on someone and you’ve contractually
indemnified the contractor you hired to repair it
ii. Insured would have been liable anyways
4. Also covers:
a. Premises liability related to ownership or use of the premises + contractual liability related to
the premises of others
b. Tenants legal liability with Named Perils or Broad Form options (see 3b above)
c. Employers liability for residence employees injured in the course of work
i. Liability imposed by workers comp statutes are excluded
Coverage F – Voluntary Medical Payments: pays reasonable medical expenses of person accidentally injured.
- Payments limited to amount stated on policy ($1000) and 1 year from date of accident
o Excludes expenses covered elsewhere & vehicle liability
- Voluntary = no fault benefit
Coverage G – Voluntary Payments for Damage to Property

1. Covers: Damage Unintentionally caused to others and insured isn’t legally liable OR Intentionally caused
by insured person under 12 y/o
2. Exclusions:
a. Damage to property “owned” by insured or his tenant
b. Limited coverage for property of others in insured’s care (aka. property insured under Section 1)
c. Loss of use, disappearance or theft (direct damage only)
Coverage H – Voluntary Compensation for Residence Employees: limited to occasional residence employees
o Residence employees = a hired cleaner, landscaper, pool cleaner, etc.
- Permanent Residence Employees covered if named on policy
- Voluntary = can’t sue if you take the $ (Coverage E will pay if injury caused by insured’s negligence)
- Pay for:
1. Loss of life (+ funeral expenses)
2. Injury benefits (weekly indemnity)
3. Medical expenses
4. Temporary/permanent total disability
Special limitations on personal liability: injury/damage for the following = covered but limited
1. Damage arising out of watercraft & motorized vehicles owned by insured if:
a. Watercraft with outboard motor ≤ 16 HP (12 kW)
b. Watercraft with any other type of motor ≤ 50 HP (38kW)
c. Non-motorized boat ≤ 8 meters long (26 ft)
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i. New watercraft are automatically covered for 30 days from purchase date regardless of
size, then must be insured properly
ii. Can buy separate coverage for watercraft described in A-C if more is needed
d. Domestic vehicles ≤ 25 HP (domestic vehicles = lawn mowers, snowblowers, garden tractors)
e. Motorized golf carts while on golf course
f. Motorized wheelchairs > 2 wheels and designed for disabled people
2. Damage arising out of “vehicles” not owned by insured: damage to the craft itself isn’t covered
a. Any watercraft
b. Self-propelled land/amphibious vehicles not subject to registration & for non-public road use
3. Uses of watercraft and motorized vehicles NOT insured (basically: for business purposes)
a. Carrying passengers for compensation
b. For business purposes (ie. used in landscaping business)
c. Race or speed test
d. Rented to others
e. Used without owners consent (ie. stolen)
4. Business or Business property: normally insured under CGL except injury resulting from:
a. Personal actions of insured in course of business but not directly related to your business
i. ie. in a company-sponsored golf tournament
b. Occasional rental of insured’s residence (i.e. renting your place out while you’re on vacation)
c. Rental of units in a 2-3 family residence if insured(s) lives in 1 unit (≤ 2 people per unit)
d. Rental of space in residence to others for occasional office/school/studio use
e. Rental of ≤ 3 parking spaces
f. Part-time business of someone under 21 y/o
5. Trailers: only when not attached to register-able motor vehicle (auto insurance covers if attached)
Exclusions applicable to all personal liability policies: no coverage for

1. Regular business activities or unauthorized business use of premises (incl. workers compensation)
2. Professional services: rendering or failing to render (get professional liability)
3. Intentional damage or criminal act by insured
4. (Failure to prevent) Abuse or corporal punishment
5. Transmission of disease by insured (i.e. AIDS)
6. Ownership/use of aircraft or airport: and all related activities (sold separately)
7. War, invasion, rebellion, etc.
8. Losses required to be insured under a Nuclear Energy Liability policy
9. Liability from watercraft, motorized vehicle, trailer (except as stated above)
10. (Counter) Terrorism
11. Data Exclusion: same as in Homeowners Comprehensive
12. Asbestos, Corrosion, Fungi, Rot
13. Structures/Property used for marijuana or controlled substances
Liability Insurance for Business:

1. Liability Exposures of Business: similar to the exposures described above
a. Business premises: related to condition of premises (rmbr: duty of care of occupiers to visitors)
b. Business operations: work performed by business (either on or off premises)
i. ie. during installation @ customer’s house or moving stock on premises
c. Products: made, sold or distributed (ie. food sold by business consumed away from premises)
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d. Completed operations: finished work put to use, causing injury/damage
e. Personal injury: to personal character or business reputation (injury other than bodily injury)
i. Libel, slander, discrimination, invasion of privacy, false arrest, copyright, etc. Basically,
some statement that violates someone’s rights
f. Tenants legal liability: for the portion they occupy (i.e. repaying landlord for damage)
g. Medical payments: for people injured on premises on a voluntary basis (like Homeowners)
h. Contractual liability
i. Non-owned automobile: liability from vehicles you don’t own, lease, borrow, rent for business
purposes (i.e. pizza employee delivers using their own car)
2. Commercial General Liability (CGL) = enough protection for most businesses, it also insures:
i. Blanket contractual liability = those assumed under contract (i.e. lease, side track
agreement)
ii. Liability for activities of contractors
iii. Contingent employers’ liability = if claim arises from an injured employee covered under
Workers’ Compensation law
b. Policy Sections:
i. Insureds: basically, anyone named on the policy for their described business activities
1. Individuals (i.e. sole proprietors) are insured along with their spouse
2. Partnerships & JVs include members & spouses
3. Corporations are insured alongside officers, directors & shareholders
4. Employees while in the course of their duties except:
a. Covered by workers compensation
b. While providing professional health-care (need special underwriting if
you have nurses or other medical professionals on staff)
c. Employing injuring their coworker
ii. Coverages: 4 sections:
1. A – Bodily Injury & Property Damage: covers compensatory damages to 3rd
parties for liability arising out of: premises, operations, products, or completed
operations
a. Property damage pays for: damage + loss of use (+ related damage)
2. B – Personal Injury & Advertising Liability
3. C – Medical Payments: similar to homeowners – no fault coverage for bodily
injury
4. D – Tenants Legal Liability: similar coverage to homeowners
5. Aggregate limits apply
iii. Exclusions: non-standard & can be covered via endorsements
1. Advertising/Broadcasting/Publishing liability not covered ← get special policy
2. Employee Injuries: get contingent employers liability or workers comp.
3. Pollution: hostile fire pollution & bodily injury still covered though
4. Professional Liability: (see below)
5. Property in Care/Custody/Control: covered by the property policy
6. Vehicles (Land/Water/Air): with exceptions, get a specialized policy
a. Small non-owned watercraft not used for hire = OK
iv. Contractual Liability: leases, finance agreements and other contracts usually make
insureds liable for that property & liability arising from it. CGL covers leases,
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sidetrack/easement/elevator maintenance agreements, municipal indemnification
required by ordinance, and other contracts assuming the tort liability of others.
v. Limits of Insurance: $2M is typical but quote the highest and let them choose
1. Factors to consider:
a. Effect of loss on insured & owners
b. Probability of loss
c. Past court awards
d. Value of property the client is responsible for
e. Financial statements
vi. Claims Handling & Supplementary Payments: are usually covered in excess of limits
1. Insurer handles the claims & defense after you report it
3. CGL Endorsements:
a. Product liability: extends to cover property damage caused by defect existing @ the time the
product was sold/transferred
b. Limited environmental liability: covers sudden & accidental escape of pollutants
c. Employers’ bodily injury liability: covers employer’s liability for employees injured during work
but not covered by Workers Comp
4. Special liability insurance for professionals: CGL doesn’t insure this
a. Professionals = anyone with specialized knowledge/training (has a higher standard duty of care)
i. 2 major classes: health care & consultant
1. Health Care Professionals: deals with medical conditions
a. Malpractice liability insurance: insures legal liability for rendering or
failure to render proper professional services
2. Advice Professionals (consultants): clients depend on their accurate advice (ie.
insurance brokers, accountants, engineers, etc.)
a. Errors and omissions insurance: for rendering or failing to render proper
professional services
b. Underwriting: professional training, experience, claims history
i. Usually insured on claims made basis
c. If you’re part of a professional association (i.e. nurse or lawyer) they probably provide this
5. Garage liability insurance: for businesses that sell, repair, install, transport or operating vehicles (owned
or not) ← (bodily injury & property damage not insured by CGL) (i.e. body shop or valet)
a. Standard Garage Automobile Policy insures: (Section A) 3rd party liability & (Section B) legal
liability for damage to customers car in your care, custody or control (due to negligence)
i. Ex: customer injured on premises, improper work/parts used, etc.
6. Umbrella liability insurance: additional liability on top of existing liability insurance
a. Must have primary liability policies in place to be eligible. Individuals & Business can buy.
b. 2 Coverages:
i. Financial Shortfall: when primary policy’s limits have been exceeded (underinsured)
ii. Drop-down coverage when loss is excluded by primary policy (ie. for strict liability) if not
also excluded by Umbrella
c. Self-Insured Retention (SIR) = deductible for umbrella policies when claim excluded by primary
i. For business umbrella only, personal umbrellas have a low deductible
d. Drop-down feature: when annual aggregate limit of the primary policy has passed, Umbrella will
pay excess w/ no SIR
e. Coverage examples: watercraft liability, non-owned aircraft, advertising, employers liability, etc.
7. Excess liability insurance: like umbrella but only covers excess of existing insurance under the same
terms (aka. following form because it follows the wordings on the specified underlying policy)
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8. Legal Expense Insurance: pays for legal help if you have a dispute
Accident & Sickness / Travel Insurance

Disability = inability to work due to accident or sickness (can be mental or physical)
Worker’s Compensation Plan: gives these benefits if necessary (benefits are no fault)
1. Health care costs on top of provincial health plan (MSP)
2. Rehab programs (medical & vocational)
3. Lost earnings from missing work or if disabled
4. Death benefit (paid to dependents) + funeral expenses
5. Payment starts on day of disability and lasts for various periods of time (depends on coverage chosen)
2 types of accident & sickness contracts: individual & group plan/policy

- Key Terms:
o Benefit period = period where insurance is payable (52 weeks, until 65 y/o, etc.)
o Elimination period = period of self-insurance (pay short disabilities by yourself instead of
claiming it) (longer = lower premiums)
1. Individual insurance:
a. Bought by: self-employed, people without a group plan, high income employees, people seeking
better coverage
b. Disability income policy: provides monthly income during period of disability (insurer may set
max)
i. Disability = inability to work in either:
1. Any occupation reasonably qualified for
2. Regular occupation
3. Own occupation = the broadest definition of disability in these policies
a. Pays even while you’re working another job
c. Premiums determined by: claims cost + operating expenses + investment earnings
i. Claims costs = policy type + personal info + types of benefits
1. Personal info: age, sex, occupation, personal history (i.e. medical)
2. Types of benefits: benefit period, elimination period, defn of disability
a. Benefit period: ranges from 1 year to 65 y/o (longer period = more $$)
b. Elimination period: shorter = more expensive because number of claims
are higher (like a deductible)
c. Definition of disability: own occupation policies have higher claim costs
ii. Policy type: depends on options (i.e. non-cancellable, guaranteed renewal, etc.)
iii. Operating expenses = insurer’s cost of doing business
iv. Investment earnings: insurer will invest a portion of premiums, rate of return influences
amount charged to clients (higher returns = cheaper insurance)
d. Characteristics:
i. Application is part of the contract (any amendments must be signed off)
ii. Insurable interest required: otherwise VOID (i.e. can’t buy insurance on a stranger’s life)
1. A person has insurable interest in their own life & …
a. Immediate family: spouse, child, grandchild
b. Employee (i.e. key employee of business)
c. Any person they have financial interest in
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d. Anyone you depend on for support (incl. education)
iii. Unpaid premium: insurer deducts unpaid premiums from payout
iv. Incontestability: can’t change application after 2 years (application = part of policy)
1. Fraudulent statements can void the policy
2. Misstatement of age: will adjust premiums/benefits
2. Group insurance = weekly indemnity & long term disability
a. Bought by employer to cover employees & ends when employment ends
b. Weekly indemnity: short term coverage & short elimination/benefits period (13-52 weeks)
c. Long term disability: starts after weekly indemnity, ends @ 65 y/o (you choose the benefit
period)
i. Options:
1. Dental plan: routine maintenance + orthodontics
2. Major medical (extended health care): pays expenses not covered in health care
plans
a. May have deductible or limit (i.e. lifetime max)
b. IE: prescription drugs, vision care, private hospital rooms, ambulance,
nursing, prosthetics, etc.
3. Accidental death and dismemberment: same as individual policy
3. Why accident & sickness insurance?

a. Loss of health
b. Loss of earnings
c. Peace of mind
d. Loss of insurability: disability sometimes makes future insurance impossible
e. Loss of assets
f. Loss of prestige & credit rating
Travel Insurance: for travels beyond home province (no provincial health plan outside)
1. Policy term: single trip (≤ 180 days each) or annual (unlimited trips, 30→180 days each)
2. Individual or family coverage
3. Rating: premiums depend on:
a. Individual or family
b. Single or annual
c. Age & health
d. # of trips insured
e. Duration
f. Policy limits
g. Area of travel
4. No standardized policy: unlike homeowners forms
5. Coverage territory = stated on the policy (i.e. North America only, when 500km from home, etc.)
6. Accident, illness & emergency: most policies cover accident & illness
a. Accident = unforeseeable & unintended occurrence beyond insured’s control
b. Emergency = sudden and unforeseen occurrence & requires immediate attention
c. Some policies will list the emergency expenses covered
7. Dependent children [unmarried < 20 y/o (26 if @ college) OR any age if disabled (mentally/physically)]
8. Pre-existing condition coverage isn’t automatic (i.e. for heart conditions)
a. Might cover if under control for 3-6 months (depending on condition, unstable conditions = NO)
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9. Coverage generally available for all emergency costs (including prescriptions & air ambulance,
medical/dental treatment, hospital, etc.)
10. Incidental coverage: most policies have limited coverage for…
a. Trip interruption/cancellation (i.e. reimbursement of non-refundable travel expenses if one of
the designated group is sick or dies)
b. Pre-paid travel fees
c. Legal council
d. Hotel convalescence
e. Return of the dead/car
f. Lost passport/tickets/baggage
g. Some cover accidental death & dismemberment too
11. Excludes issues arising from:
a. Pregnancy related issues within 8 weeks of expected due date (i.e. miscarriage/childbirth)
b. (Attempted) Suicide
c. (Attempted) Criminal act
d. Alcohol or drug misuse/disease
e. War
f. From hazardous activity (i.e. professional sports)
g. Covered by workers compensation
h. AIDS
12. All policies are subject to provincial statutory conditions (like A&S)
Broker/Agent Skills
Documentation: log who you talked to, when, what was discussed (take notes during), and action items
- Best practice: record every interaction
Communication Skills: use Active Listening and build rapport with clients: listen, interpret, ask questions to
clarify, confirm if you’re not sure (i.e. so you’re saying… ), pay attention to non-verbal cues (tone, vocab, speed)
- Know why they want to buy a certain type of insurance so you can ask the right questions
- Adjust your communications based on their background and knowledge-level
- Be clear & avoid jargon
- Understand expectations around service, pricing, etc.
- Building Rapport In-person:
o Matching: match their body postures, tone, manner of speech, etc.
o Mirroring: perform similar actions as your client. Don’t mirror too many things or match them
too fast or it will look weird
o Communicate the way they want to – are they formal or casual? T-shirt or suit?
- Communicating by Video Chat: it’s like a phone call with the benefits of an in-person conversation
o Let’s you pick up non-verbal cues
o Downsides: lag, privacy/security issues, takes more mental energy (need to take turns talking,
you see your own video, etc.)
- Communicating by Phone: no visual cues to use so active listening is much more important also hard to
build trust and get personal information over the phone
o Pay attention to phone manners and etiquette
o Document the conversation
o Honour any commitments you make
o Be professional & courteous in all communications (use their name, etc.)
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o The same vocal tips for in-person conversations apply – smile, even if they can’t see it
- Be clear with clients (i.e. what you’ll be doing for them) and insurers (prompt and complete information)
- In tricky situations like claims adjusting, respond to & acknowledge their feelings/emotions. Empathy!
o Rephrase questions, give them time to think/process emotions, let them vent
- Delivering bad news: Warn them that bad news is coming but lead with good news (if possible)
o Manage expectations around coverage, etc.
o Phrase things in a positive way
▪ i.e. “You will be getting coverage for 75% of the loss” vs “You will not get full coverage”
o Find ways to help but let them know what the guidelines/process is (i.e. for claim denials)
Selling Skills: meet your clients’ needs with products (the right type of insurance) and advice (risk management)
- Secret: know your client, know your products (read the policy wordings) and connect the 2
- Prospecting:
o Advertising: advertise the brokerage to win walk-in business
o Cold calling: calling people who don’t know you (be careful of privacy and CASL laws)
o Digital marketing: online ads, digital marketing, search engine marketing, online application
forms, etc.
o Expiry dates: contact current/former clients close to renewal date to try to win their business
o Referrals: happy clients refer their friends, family, and business associates – these have a high
closing rate
o Upsell/cross-sell: upsell them additional coverage or cross-sell other products
- Process:
o Needs Analysis: ask open ended questions to uncover their needs and exposures
o Recommend: match that to the products (wordings can be customized)
▪ Know the wordings and pros/cons of competing products
o Close the Sale: ask questions that lead to a close (i.e. “when do you need this policy effective
by?”)
Regulations & Professionalism

The Insurance Act: the main piece of legislation governing insurance here in Canada. Each province has their
own version. Insurance businesses are also subject to the same regulations all businesses have.
1. Administration is the responsibility of the Superintendent of Insurance
a. In BC: Superintendent of Financial Institutions
b. In ON: Commissioner
c. In BC, AB, SK & MB: licencing, complaint handling, trade practices & disciplinary issues are
handled by Insurance Councils
d. In ON: Registered Insurance Brokers of Ontario Act (RIBO) governs brokers (started in 1981)
e. In BC, AB, SK & MB: Insurance Councils handle admin functions (i.e. licensing, complaints, broker
discipline, by-laws/regulations of trade practices)
i. Can appeal decisions to the Superintendent of Insurance
2. Licensing: either handled by provincial regulator or self-regulating organization
a. Qualifications: need to know insurance & the rules that regulate us
i. Must be licensed: good character & reputation + pass an exam
ii. Must be sponsored by a brokerage/insurer
iii. 3 Step Licensing (in BC & ON):
1. Level 1: Can sell general insurance but restricted to brokerage office & must be
supervised by Level 2+ broker.
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a. Exception: they are allowed to go to car dealerships to transact auto
insurance
2. Level 2: Can sell general insurance inside or outside the brokerage but cannot
own or manage a brokerage. Must be supervised by a Level 3.
a. In ON: 2 types of Level 2 – unrestricted technical only & unrestricted
(management/technical) ← instead of Level 3 in ON
3. Level 3: Can manage/own a brokerage
b. Class of License: All Classes (aka Other Than Life) cannot sell other types of insurance.
i. Ex: In ON, additional license needed to sell travel insurance
c. License Jurisdiction: need license in province you do business in

i. If you insure property in another province, get it countersigned by a licensed broker in
that province & pay them a cut of the commissions
d. License Term = usually 1 yr. Every province has unique renewal requirements
i. BC – 2yrs
ii. SK – 5 yrs, subject to annual validation
iii. ON – 1 yr
iv. NS – 3 yrs
v. Sometimes need CE credits to validate/renew license (# varies by province, know yours)
1. CE courses are offered by insurers, Designation courses (i.e. CAIB), or other
approved education providers (i.e. PNC Learning)
e. Must maintain high ethics or license terminated
1. Ethics = your moral duties to others
ii. License may be revoked for: (basically: use good judgement & skills)
1. Misrepresentation, fraud, dishonesty: be honest with clients & insurers
2. Contravenes any Act (i.e. Insurance Act, etc.)
a. Rebates are illegal in most provinces (inducements of value)
3. Unreasonable failure to remit premiums to insurer as required by Agency
Agreement
4. Misuse of trust funds
5. Places insurance with unlicensed insurers without complying with applicable
legislation
6. Incompetent or untrustworthy to transact in their licensed insurance business
3 Fundamentals Principles of Conduct:

a. Prioritize Client’s Interest: over your own
i. Duty to Clients:
1. Provide your services in a competent way (i.e. take CE courses)
2. Provide the most suitable coverage
3. Keep information confidential
4. Don’t take advantage of their lack of knowledge
5. Don’t be swayed by financial gain (i.e. if one product pays a higher commission)
6. Don’t speak poorly of others (i.e. competitors)
ii. Duty to Insurers:
1. Be honest
2. Disclose all material facts
3. Follow the Agency/Brokerage Agreement
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b. Offer the Most Suitable Product: to your clients (NOT the one that pays you the best
commission)
c. Disclose (Potential) Conflicts of Interest
Ethical Requirements:
1. Do your job in a competent and trustworthy way
2. Pay insurers their premiums (per the Agency/Brokerage Agreement)
3. Comply with Insurance Acts & other regulations
4. Comply with applicable legislation when placing business with an unlicensed insurer
Insurance Councils/RIBO: enact by-laws/regulations regarding the ethical conduct of brokers (code of
conduct/ethics) on top of other regulations/rules (i.e. Privacy Act & other provincial legislation)
1. Brokers must meet the following standards/benchmarks:
a. Integrity:
i. Conduct which does not meet this standard include:
1. Criminal conviction
2. Misappropriating of client money: this $$ is “held in trust”, remember?
3. Taking advantage of a client’s inexperience/lack of knowledge
4. Failing to be 100% open and honest
b. Competence: brokers must
i. Give competent guidance: apply your knowledge in the best interest of clients
ii. Understand insurance (principles, practices, etc.)
iii. Should not act beyond your knowledge: ask them to see another broker if necessary
c. Quality of Service: be detailed, diligent and efficient
i. Don’t fail to… act in a way a prudent and competent broker wouldn’t
1. Return calls / give sufficient notice (i.e. of non-renewal or term changes)
2. Inform clients of coverage changes (i.e. premium changes or other material info)
3. Offer the right insurance: there are unreasonable gaps in coverage
d. Maintain Professional Integrity: be professional, have good customer service & report any
breaches of insurance regulations
i. Do not be abusive, offensive or unprofessional with people (clients, insurers, adjusters,
etc.)
e. Confidentiality: cannot share client info with other people, even their spouse (know your Privacy
Acts)
f. Advising Clients: must be honest with advice (no tied selling), they depend on your advice as an
expert
i. Give complete/clear recommendations & why. Give details so clients make informed
decision.
ii. If you’re recommending an insurer, to the prejudice of the client, due to some bonus,
disclose!
iii. Don’t…
1. Give sweeping assurances: Ex: everything is covered
2. Misleading clients about the reason for re-marketing: especially when the new
policy is much more expensive
3. Failing to advise clients of important policy terms (i.e. conditions/warranties)
g. Fee Disclosure: cannot charge any fees in excess of premiums unless clearly started in writing w/
reason
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i. Broker must justify fee when requested (i.e. “this is a binder/risk management service
fee”)
h. Encouraging Public Respect: enhance public image of the industry/broker as professional &
independent
1. I.e. give advice & education the public on insurance & risk management
ii. Don’t destroy public confidence
Professional Associations: most brokers are members of their provincial broker’s association
- Enhance professional image of members = higher standards of conduct than legally required
- Code of Conduct: commit to deal fairly and professionally with clients, insurers & fellow brokers
(basically: act honourably)
Trust Fund Regulations:
o Premiums charged = commission (earned by broker) + net premium (belongs to insurer)
▪ Commission = a % of premium (varies by insurer & class of business)
- Most provinces: separate trust fund not required (can use premiums for operations) (RISKY!)
- Ontario: must keep premiums at in a separate account @ an approved bank & keep record of
transactions & can only take out earned premiums (can’t touch net premiums – hold those in trust)
2 Accounts: premiums go into a Trust Account first, then from there: net premiums go to insurer OR refunds go
to clients & commissions go to Operating Account to pay for brokerage expenses
o Putting commissions into trust account protects it from the brokerage’s creditors
For Ontario Students:

- RIB Act: https://www.ontario.ca/laws/statute/90r19
- Ontario By-Laws: https://www.ontario.ca/laws/regulation/900991
- RIBO Code of Conduct, etc.: http://www.ribo.com/broker-resources/legislation/
Errors and Omissions (E&O): sometimes mistakes or misunderstandings happen

1. Defending claims: communication, documentation, and staying in scope (i.e. brokerage agreement) =
best defense
a. Communication: be clear and if you can’t help them, let them know asap so they can take action
b. Documentation = keep records of: who, when, what, and actions taken afterwards
i. Sign & date your notes, confirm in writing afterwards (i.e. have them confirm when
declining certain coverages recommended), provide clear instructions to insurers
c. Staying in Scope = follow the Brokerage Agreement and refer them to colleagues or others (i.e.
lawyers) if the question is outside your competency
Client Services:
1. Advice: clients trust you to be knowledgeable and give good advice in assessing risk & selecting
appropriate insurance coverage and insurer
i. I.e. recommend limits of insurance required based on cost calculators or past lawsuits or
suggest additional coverages
a. Explain coverages & exclusions
b. Suggest alternatives or additional coverages where applicable
c. Explain the process of placing insurance & review the docs together
d. Help with claims: explain the process and keep them updated
e. Answer questions promptly
f. Document EVERYTHING
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2. Accurate Processes: an efficient office leads to good client service & more trust
i. Return calls quickly, contact clients well ahead of renewals, etc.
a. Accounting: know your account receivables/payables, trust/operating account control &
expense/budget controls.
ii. Direct Bill = preferred by most insurers (esp. personal & auto policies)
1. Broker Bill may lead to financial problems is collections practices aren’t tight
a. Be strict on collections policies – cancel if they don’t pay in time
iii. Broker Management System (BMS) has CRM & other back-end functions (accounting)
1. Can generate all kinds of reports such as: profit-loss, AR/AP, business
breakdown by class/insurer, client account statements, etc.
b. Office Processes: return client correspondences promptly + have good follow-up routines
3. Capacity & Coverage: what types of business/insurance can you write/offer?
a. Select insurers to contract with that fit your clients needs (commercial accounts need more)
i. Can give each enough business? They might have minimum requirements.
4. Claims Handling: insurance only has a use when claims occur so you need to know how your office &
insurer is handling them by asking insurers for a claims survey or surveying clients directly online, by
mail or phone (can ask open-ended questions) depending on level of rapport with clients
a. Ex Survey Questions: was the brokerage/insurer helpful? Are you satisfied with the settlement?
Was it resolved in a timely manner? Anything else you’d like to discuss (leave blank space)?
i. If any issues come up during the survey, address promptly
5. Complaints Handling: use active listening, clarify, record their comments, gather information, and
reassure them that those issues will be addressed
a. If you can answer them immediately, do so. Otherwise, follow up with the insurer promptly
b. Document everything per the standards (who, what, when, etc.)
c. Clients can find help through:
i. Insurer’s own complaints handling procedures (policy docs may include this info)
ii. Insurance Bureau of Canada (IBC) Consumer Information Centre’s national hotline
iii. Ombudsman: employed by insurers/regulators in some provinces to answer questions
and resolve claims complaints
iv. General Insurance Ombudsman: if insureds aren’t satisfied with the insurer’s final
answer, they can go here for help
Adjusters: fair and responsible conduct. Be fair, honest, and diligent in policy interpretations
- Canadian Independent Adjusters’ Association (CIAA): represents independent adjusters to gov, industry
& public to encourage cooperation and good relationships
▪ Firms and individuals can join
o Provides professional development & education
o Establishes a code of ethics and fair practices to set standards for adjusting claims
- Provincial Adjuster Associations: has their own separate but similar code of ethics (i.e. promote public
confidence in insurance & no fraud/deception)
- Licensing: independent adjusters need to be licensed in their province of work (exam + work experience)
▪ Company adjusters are exempt from licensing except in QC, NB & NFL. In QC…
• Chambre de L’assurance de Dommages overseas adjuster training & discipline
• Autorite des Marches Financiers (AMF) handles certification/licensing
Personal Information Protection & Electronic Documents Act (PIPEDA): governs collection/use of personal info
o Some provinces have their own variations
o Every province has an Ombudsman responsible for overseeing privacy laws
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- Basically: only collect necessary & relevant info, use it only for the purpose you collected it for, and keep
it in strict confidence
- Personal Information = information about an identifiable person Ex:
o Age, name, ID, income, ethnicity, blood type, DNA
o Records like employee files, credit, medical, disputes, financials, intentions (i.e. to change jobs
or buy something)
o Can even be subjective information like opinions or social status
- Confidentiality: only disclose information as necessary (i.e. to underwriters) or if court demands

o Each insurer appoints a privacy officer to ensure info is handled & disclosed properly via privacy
policy
- Privacy Breach Response:
• Breach = personal info is collected, used or disclosed in violation of privacy laws
▪ Step 1) Contain & assess harm reduction measures
▪ Step 2) Evaluate the risks: depends on type of info leaked, cause of breach, people
affected, collateral damage (i.e. risk to public safety if addresses were leaked)
▪ Step 3) Who needs to be notified?
▪ Step 4) Prevention: take steps to prevent future leaks
o Cyber Liability Insurance can help cover: legal defense, damages, notification, etc.
- Digital Privacy Act: protects Canadians from private companies by imposing mandatory breach
notification to the federal Office of the Privacy Commissioner + individuals if it poses significant harm
o Instead of going to court, the Office can enter into agreements with violating companies to help
make them PIPEDA compliant
Insuring Automobiles
3 Types of Automobile Insurance Coverage:
1. 3rd Party Liability
2. Accident Benefits: personal injury (no-fault)
3. Loss of or Damage to Insured Automobile
Auto Insurance is different in all provinces
2 Types of Insurers: private & government (compulsory)

1. Government Insurers (compulsory): in BC, SK, MB
a. Coverages Differ by Province: coverage can be modified (i.e. increase 3rd party liability or
decrease deductibles).
i. BC: 3rd Party Liability: $200,000 ; Accident Benefits: Included ; Physical Dmg: Optional
ii. MB: same ; same ; $400 Deductible
iii. SK: same ; same ; $700 Deductible
b. Private insurers compete for excess coverages only. Ex:
i. 3rd Party Limits ↑
ii. Physical Damage ↑ OR Deductible ↓
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iii. Accident Benefits ↑
iv. Excess coverages done as separate policy (use SEF’s to modify)
v. QC government handles personal injury coverage. Private insurers sell the rest.
2. Private Insurers: for Alberta, Ontario & Atlantic provinces
a. Coverage provided by SPF No. 1 Standard Auto Policy (Owner’s Form)
i. Ontario uses OAP No. 1 Ontario Automobile Policy (Owner’s Policy)
b. Optional Coverages provided by Standard Endorsement Forms (SEF’s)
i. Ontario uses OCPF
c. Facility Associations: insures those that are denied coverage for being “substandard” risks.
i. Ensures coverage is available to all (nobody is denied coverage)
ii. All private insurers are part of this & share in the results
iii. A drivers is moved out of the FA once they qualify for coverage in normal markets
No Fault Insurance: covers the injured person regardless of fault (no need for tort or subrogating the responsible
party).
- 2 Types: pure & threshold
o Pure no fault: removes right of legal action. Everyone claims their own insurance company
▪ MB & QC use pure no fault
o Threshold no fault: no legal action until past a certain threshold for $$ or severity of injury
▪ Ex: can sue for pain & suffering if past a certain $$ value
▪ Ex: can sue if a person dies or sustains serious disfigurement/impairment
- In SK: can choose Modified No Fault or Tort:
o Modified No Fault: claim from government insurer but can sue if amounts paid weren’t enough
▪ Ex: the maximum income benefit in SK = $61,139/yr + inflation)
Application Form: to get info for underwriting, rate setting & issuing of policy. Must be completed fully.
- Owner’s Form SAF 1 (SAF = standard application form) (OAF 1 in Ontario)
- 1 policy can insure multiple cars
- If compulsory government insurer: the insurance policy = registration & proof of insurance
- If private insurer: will issue separate documents
Information Required: must send original copy signed by named insured (especially when application was taken
over the phone or from someone other than the Named Insured); application is part of the contract
1. Name & Address
a. Needed for pulling drivers abstract (make sure you have the right person)
b. Territory of use is related to loss potential (must clarify if car isn’t being used primarily near
address)
i. Ex: 3rd party liability risk in cities is higher than in rural areas
c. Must include contact # & lessor’s name & address if leased
2. Description of Automobile: make, model, year, manufacturer, VIN, etc. (i.e. number of cylinders & body
type, modifications, carrying passengers or radioactive/explosive materials?, # cars in household)
a. Needed for rating physical damage coverage (car price↑ = premiums↑ for physical damage)
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i. Expensive or custom cars are expensive to repair
1. Custom cars are typically driven by young males = EXPENSIVE Insurance
(especially if modifications weren’t done by professionals)
b. To help with claim payment, must also provide:
i. Name & Address of Lessor/Lienholder (if applicable)
ii. Purchased new or used? Include date & value of car + equipment.
3. List of all drivers (in household or business): people not named on policy but can also drive.
a. Need:
i. Name (as shown on license) & # of years licensed
ii. % of use
b. A regular user that isn’t listed will be denied coverage.
c. Certificate of driver training required (i.e. licensing or drivers training course documents)
4. Declaration of Ownership: if applicant ≠ registered & actual owner
a. Need info on both people because an owner w/ poor history might insure the car under
someone else’s name to save money.
5. Policy Period: starts @ application time & ends @ 12:01am Standard Time @ insured’s address.
a. Period usually < 12 months (3m – 2 yrs is available)
6. Insuring Agreements chosen: coverages, limits, premiums, minimum retained premiums, endorsements.
a. Minimum Retained Premiums: the minimum amount the insurer keeps upon cancellation
b. 3 Coverage Sections:
i. Section A – 3rd Party Liability
ii. Section B – Accident Benefits
iii. Section C – Loss of or Damage to Insured Automobile (own damage)
c. 1 application handles ≤ 3 cars + 1 occasional driver
d. Premium = estimate & subject to insurer’s confirmation
7. Physical or Mental Impairment: note anything that might affect safe driving
a. Ex:
i. Frequent fainting/dizziness or Epilepsy or Nervous Disorders
ii. Heart problems/Diabetes
iii. Depression
iv. Vision or hearing problems
b. Insurer can reject coverage or add restrictions as a result
i. I.e. can exclude losses caused by a driver w/ glaucoma
8. Driver History: screen out undesirable drivers (via convictions & claims)
a. Conviction History (last 3 yrs): description & date
i. Ex: DUI, speeding, etc.
b. Accident & Claims History (last 6 yrs): for all autos used by all listed drivers
i. Ex:
1. At Fault Accidents caused by applicant/other users
2. Not At Fault Accidents
3. Claims for other damage: fire, hail, theft, etc.
ii. Show: vehicle, driver, date, type of claim, amount of payment & other descriptions
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c. Drivers can get insurance discounts if they have been accident-free. Know the discount rating
program for your province.
9. License History (past 6 yrs): suspensions, cancellations, lapses, etc. of all listed drivers
a. Provide everything you know (if you don’t “know” it’s OK)
10. Insurance History (past 3 yrs): insurer, policy # & expiry date of most recent insurer + cancellation
a. Give details if cancelled, declined or refused renewal: they might contact them for details
b. Any claims of listed drivers denied for misrepresentation
c. Any auto insurance fraud of listed drivers (no 3yr time limit)
d. Only need to provide what you “know”
11. Use of Automobile:
a. Primary usage: pleasure or business?
i. Work use = more risky = more money
b. Is it used for commutes? What’s the 1-way distance?
i. Commute = driving to work, school, or park-n-ride
ii. Long commute = more risky = more expensive
c. Annual driving distance
12. Business Use:
a. Notify if biz use falls into:
i. Rented or leased to others
ii. Used for carrying passengers/goods for $$ (i.e. taxis, busses, moving van, livestock
truck)
iii. Used for carrying explosives or radioactive material
b. Owners Forms excludes the above uses. Need to endorse or pay more
13. False Statement: need to warn your clients
a. Applicant verifies they’re not unsafe to drive due to: disability, addiction & will notify Ministry if
they later become unsafe
b. Generally, right to recover = forfeit if:
i. False description of the automobile to the prejudice of the insurer
1. Ex: if you told them you had a cheaper model than you actually do (C300 vs C63
AMG)
ii. Intentionally misrepresent a risk or fail to disclose a material fact
1. Ex: previous accidents, use of vehicle, prior refusals
iii. Breach policy terms (i.e. using the vehicle to carry explosives without permission)
iv. Fraud: Ex: tries to claim a loss they deliberately caused
v. Wilfully makes a false statement during a claim:
1. Willfully = they intended to deceive the insurer
2. Ex: alcohol use, amount of loss, driver identity, etc.
3. Insureds warrant that all of their statements are true & automatically gives
permission to insurer to check (i.e. w/ DMV, previous insurers, etc.)
c. Application forms usually have additional questions on the back:
i. Additional Information/Explanation: drivers, fuel type, car mods, # of cars in the
household, car pool use? (may require special endorsements)
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ii. Commercially Rated Vehicles: must provide additional information in a Commercial
Vehicle Supplement (CVS) like:
1. Use
2. Type
3. Distance (radius of operation)
4. Type of attached equipment (& who owns it)
iii. Broker’s Report:
1. Does the broker know the applicant?
2. New business?
3. Bound?
4. Premium Paid Upfront? How much?
5. Loyalty (other Insurance w/ same insurer)
6. Special Circumstances?
14. Rating Info (for broker use): writes down driving class, record, surcharges, vehicle value, coverage rate
group, location, territory, discounts
15. Remarks: lets applicant add more details
16. Method of Payment: payment plan & interest, estimated premium & total cost, PST
Underwriting: poor driving/insurance history = send them to the FA for coverage

- Retiree Discount available if: retired, 65+ y/o or receiving pension, no earned income or work/biz, not
employed for 26 of the last 52 weeks
Certificate of Auto Insurance = confirmation of coverage issued after receiving application but may not be the
same as requested. [Auto insurance contract = Application + Certificate + OAP 1 Policy]
- Certificate is issued on renewals w/ new policy period & if new terms = different from old, insurer must
give broker 45 days’ notice & broker must give client 30 days’ notice (or broker is responsible, E&O!)
- Certificate must disclose rating method: rate class & meaning, chargeable claims, discounts/surcharges,
driving record
Ontario Auto Policy – OAP 1

Financial Services Commission of Ontario (FSCO)
FSCO protects consumers & pension plan members (enforce sound business practices) ← now FSRA
- Arms-length agency of the Ministry of Finance
- Regulator of insurance companies, insurance agents & other “financial” biz: pensions, credit unions,
caisses populaires, co-operatives, loan and trust companies, mortgage brokers in ON
- Activities:
o Insurance Ombudsman
o Automobile Insurance Driver Profiles & Rates Review
o Auto Insurance Accident Benefits Dispute Resolution
o Mediation
o Arbitration
o Pension Plans
o Licensing
o Regulation & Enforcement
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o Financial Services Tribunal
o Motor Vehicle Accident Claims Fund (MVAC)
Insurance Ombudsman: last stop for consumers w/ complaints

- Assists consumers & makes recommendations to the Superintendent of Financial Services if insurer has
broken law
- Consumer complaint process:
o Complain to insurance company
o Request a letter from company stating its final position
o Write to Insurance Ombudsman
o Insurance Ombudsman will review
Automobile Insurance Driver Profiles & Rates Review: insurers must file for proposed changes to
rating/classification systems
- Credit scoring cannot be used for insurance purposes. Ex:
o Quotation
o Auto application
o Processing signed applications
o Offers to renew
- Credit info = any info about a person’s creditworthiness. Ex:
o Occupation
o Place(s) of residence
o Dependants
o Qualifications (education or professional)
o Place(s) of employment
o Income
o Debts
o Debt payment history
o Cost of living estimates
o Assets
Auto Insurance Accident Benefits Dispute Resolutions: helps consumers & insurers settle AB claims
Mediation: mediate AB claims through the FSCO’s Mediation Department (mandatory)
Arbitration: an alternative to court

- Involves: file review, pre-hearings, settlement discussions, neutral discussions
Motor Vehicle Accident Claims Fund (MVAC): ON residents can get AB or sue for $$
- Those w/o policy protection can get AB from MVAC & sue
o MVAC provides AB & liability limits of $200k + some legal expenses
o MVAC will subrogate at-fault driver/owner
Licensing: licenses agents, companies & mortgage brokers
Regulation & Enforcement: governs pensions, credit unions, caisses populaires, co-operatives, loan and trust
companies & mortgage brokers
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General Information – OAP1 (Owner’s Form)
Auto Insurance is mandatory in ON
4 Mandatory Coverages:
1. Liability Coverage (Section 3): for damage the insured causes to other people
a. Minimum $200k limit ($190k to bodily injury & $10k to property damage)
2. Accident Benefits (AB) (Section 4): provides no-fault benefits to insured

a. Schedule of Benefits:
i. Income Replacement (IRP)
ii. Non-Earner Benefit
iii. Caregiver Benefit
iv. Dependent Caregiver Benefit
v. Medical, Rehab & Attendant Care
vi. Other Expenses
vii. Death & Funeral Benefit
viii. Optional Benefits (i.e. increased limits, indexed benefits, etc.)
b. Can purchase additional AB
3. Uninsured Automobile Coverage (UMP) (Section 5): provides coverage when insured & family is injured
by an uninsured automobile
4. Direct Compensation – Property Damage Coverage (DCPD) (Section 6): for loss of use / damage to car &
contents in ON when not @ fault.
4 Optional Coverages:
1. Increase Liability Limits
2. Physical Damage (Loss or Damage Coverages): all perils, specified perils, collision, or comprehensive
3. Optional Accident Benefits Coverages: can increase limits
4. Other Coverage and/or Policy Changes: use Ontario Policy Change Forms (OPCF)
Policies are designed to be easy to understand & written in plain language.
Notice of Accident: insured must report within 7 days of accident if:

- Accident has been reported to police (i.e. for injury, crime or damage > $2000)
- The insured intends to make a claim
- Note: the 7 day reporting is based on best-effort only. OK to be late if in a coma.
Fault Determination Rules: standardized in the Ontario Insurance Act but if the insured disagrees… insured can
take legal action (i.e. get an appraisal to determine true loss amounts)
Motor Vehicle Liability Insurance Certificate: proves “financial responsibility” (insurance coverage for Canada &
US)
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Auto Policy (OAP 1)
https://www.fsco.gov.on.ca/en/auto/autobulletins/archives/Documents/a-07_00-3.pdf
Section 1 – Introduction: defines terms & info applicable to all parts of the policy.
1. Coverage Territory: Canada & US, other listed countries & vessels traveling between those countries.
a. Limits are all in CAD
2. Definitions:
a. Automobile = described automobile + newly acquired automobile + temporary substitute
automobile + “other” automobile + motorized snow vehicles
b. Excluded Driver = those specifically not covered by the policy
i. You can endorse them back on for Accident Benefits ONLY
c. Insured Person: changes from section to section
i. Ex: in Liability, Insured Person = you + anyone who you allow to operate the car
ii. Ex: in Accident Benefits, Insured Person = named insured + their spouse/dependant +
any occupant who was an Ontario resident at some point in the last 60 days + anyone
who had an accident in Ontario
d. Spouse = one of the 2 people who are:
i. Married to each other
ii. Divorced
iii. Common-law spouse: living together > 3 years or some permanent relationship where
they have kids
3. Responsibilities: no coverage if you fail to meet responsibilities (except some AB)
a. Prompt Notice: of any significant change that you become aware of (i.e. change in distance
travelled)
i. Remember: the application is used to rate the policy
b. Legal Operation: do not operate, or let anyone else operate the vehicle unless authorized by law
(i.e. no minors, no unlicensed or suspended drivers)
c. Legal Use: do not use or allow anyone to use car in a race, speed test or illegal trade
4. Rights: regarding disputes over money
i. Payment of Claims: claims paid within 60 days of receiving Proof of Loss
1. Accident Benefits may be paid sooner
2. If claims denied: insurer will notify in writing w/ explanation
3. Proof of Loss = formal statement regarding the details of the claim
a. Events leading up to accident
b. Parties involved
c. Witnesses
d. Damages
e. Amount claimed
f. Other details
ii. Wrong Classification:
1. If it caused you to overpay: they will refund + interest
2. If it caused you to underpay: they must notify you within 60 days and you must
pay additional premium
a. Note: an improper classification caused by misrepresentation not
subject to the 60 day limit
iii. Monthly Payment Option: can finance your premiums over the year + interest
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5. Cancelling Insurance: insured will get a refund
a. When Insured Cancels: short-rate refund = pro-rate – admin fee; subject to minimum retained
premium (MRP)
i. MRP = the insurer will keep at least this much
b. When Insurer Cancels: pro-rate refund; subject to MRP
i. If policy < 60 days old, insurer cant cancel unless reason has been approved by Financial
Services Commission of Ontario (FSCO)
ii. If policy > 60 days old, can only cancel for:
1. Non-payment of premium
2. False particulars of automobile
3. Knowingly misrepresented or withheld required information
4. Material change in risk
iii. Cancellation procedure:
1. For non-payment:
a. 30 days’ notice by registered mail or 10 days if hand delivered
b. Pay by noon the business day before the last day of notice period
c. Cancel on 12:01am of the last day
2. For repeated non-payment or other reasons:
a. 15 days’ notice by mail or 5 days if hand delivered
b. If 3rd strike non-payment: no guarantee of reinstatement
iv. Declination Rules = underwriting guidelines approved by FSCO for declining or cancelling
a policy
v. 3 strike system: first 2 strikes = 30 day/10 day notice; 3 rd strike on the same policy
period = 15/5 & no renewal guarantee
6. Exclusions: who & what we don’t cover
a. General Exclusions: cannot carry explosives, radioactive material or passengers for $$
i. Can endorse those on (explained later)
ii. Carrying passengers for $$ ≠ carpooling, carrying domestic workers, kids to school,
carrying customers or special needs passengers while volunteering
iii. No own-damage or legal liability coverage but… some Accident Benefits coverage
iv. Also, no coverage (except AB) if driven by excluded driver or w/o owners consent
Section 2 – What automobiles are covered: described, new, substitute, other automobiles, trailers
1. Described Automobile = the one shown on your policy
2. Newly Acquired Automobiles: are automatically covered for 14 days (via endorsement) (i.e. for
replacement vehicles after a trade-in)
a. All vehicles must be with the same insurer to get extension
b. New car gets the same coverage as your other cars (i.e. no collision on other cars = no collision
on new car)
c. New car gets the “worst” combination of limits/terms/coverages (i.e. if $1MM liability limit on
Car1 and $2MM on Car2, Car3 only gets the $1MM)
3. Temporary Substitute Automobile = not owned by insured or housemate & used while described car is
out of service (i.e. for breakdown, repairs, servicing, theft, sale or destruction)
a. Temp cars get the following if you have it on your described auto:
i. Liability
ii. Accident Benefits
iii. Uninsured Automobile
iv. Direct Compensation – Property Damage
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b. Your policy’s own-damage coverage is secondary to the temp car’s own insurance.
i. Your insurance could pay the deductible for the temp car
1. Ex: You have a $300 deductible. Your friend has a $4,000 deductible and you
cause $10,000 in damage, you friend would get $6,000 from his insurer and you
would claim the $4,000 on your policy which would pay $3,700.
4. Other Automobiles = cars other than a described auto. Covered when driven by insured or live-in
spouse (get the highest limits of all cars)
a. Other Automobiles get the following if you have it on your described auto:
i. Liability
iii. Uninsured Automobiles
iv. Direct Compensation – Property Damage
v. No own-damage coverage for Other Automobiles (no loss or damage)
b. Other Automobiles Rented or Leased: covers the insured’s liability if they let someone else drive
a car they rent.
i. Covers rented vehicles with a GVW > 4500kg for 7 days if personal use
ii. GVW < 4500kg = no time limit
5. Trailers: used on the described vehicle
a. Covered for…
i. Liability
iii. Uninsured Automobile
b. Trailers owned by the insured but not described on the policy also get DCPD if
i. Attached to a car < 4500kg
ii. Normally attached to a < 4500kg car
iii. Not designed/used for living or commercial purposes
6. If you have multiple vehicles insured on the same policy, they are treated as separate policies (i.e. can
have different limits for each car)
a. If driving a vehicle you don’t own (Other Vehicle), you get the highest liability limit on the policy
b. If you drive a vehicle you don’t own, but have 2+ cars insured by separate insurers, you still get
the highest limit but…
i. % of that limit paid by each insurer = proportional to total insurance limits
1. Ex: If you have $1MM on Car 1 & $250k on Car 2. Car 1’s insurance will pay up
to $1MM ÷ ($1MM + $250k) = 80% of the loss amount. Car 2’s insurance will
pay up to 20%. (limit still = $1MM ← the highest of the 2)
7. Trailers & Towing:
a. Trailers being towed counts as 1 automobile for Liability, AB & UMP payments; but…
b. Separate for Deductibles & DCPD & optional Loss or Damage (own-damage) Coverages
8. Inspection: insurer can inspect @ any reasonable time or else your own-damage coverage can be
cancelled & claims denied
Section 3 – Liability Coverage: when a 3rd party is injured or their property is damaged by insured(s)
1. Who is covered:
a. Named insured
b. Permitted drivers
c. Permitted operators (i.e. rolling down the window or opening the door)
2. What we cover: injuries or property damage to 3rd parties in Canada & the US
a. Pays only what is legally required up to the policy limit but…
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i. Out of pocket expenses are paid for (i.e. first aid, ambulance, etc.)
b. On top of paying compensation, insurer will investigate, negotiate & settle on your behalf.
c. If insured is sued in Canada or US, insurer will defend you in court & pay all costs
i. Court costs, investigation, interest on covered portion, etc.
ii. Insured can pick their own lawyer to defend amounts > coverage limit
d. For accidents outside ON, insurer will honour the minimum limit of that province
i. Ex: if you bought $200k in ON but NS raises their minimum to $500k, you will have
$500k for accidents in NS.
e. Each insured is treated as separate for lawsuits but share the same limit
f. For rented/leased automobiles, the renter’s insurance is primary – it pays first

i. If the renter allows another person to drive, the order is: renter’s insurance, driver’s
insurance, then rental car company’s insurance pays to top up the limit
1. If OAP1 has $300k & Hertz’s policy has $1MM, OAP1 would pay all claims up to
$300k then Hertz’s policy would pay the remaining $700k if needed.
2. If OAP1’s limit > Hertz’s limit, rental company’s policy would never respond.
3. Basically, the insurer agrees to:
a. Handle claims (investigate, negotiate, settle)
b. Pay liable amounts up to policy limit
c. Pay out of pocket expenses (first aid)
d. Pay defense costs
e. Pay court costs assessed against insured
f. Pay any post-judgement interest (on the covered portion)
4. Insureds’ responsibilities: insureds must do these 6 things to get coverage:
a. Notify the insurer of loss within 7 days (in writing)
b. Make a statutory declaration that the insured person was driving
i. Insured person = named insured or someone duly authorized
c. Insured must cooperate: be a witness or with legal action
d. Forward all legal documents entirely
e. Insured must not admit any liability except @ own cost & can’t interfere with any settlement
f. Absolute Liability: if the insurer has to pay money due to Absolute Liability and not because of
the policy, insured must repay.
i. Absolute liability law allows 3rd parties to get insurance money even if insured
invalidates their policy. But… insured will need to pay back the insurance company.
1. Potential violations:
a. Cancellation of policy after the accident occurred
b. Violation of Act or the policy
c. Criminal Code violation
5. Exclusions:
a. The insureds’ own property (rmbr: this section is liability)
b. Contamination of property carried in car
c. Nuclear hazards
i. Nuclear Energy Hazard liability policy covers $200k
6. Laws that limit legal action for auto accidents in ON:
a. Tort Provisions:
i. General Damages (pain & suffering): can sue if threshold is met.
1. Threshold:
a. Death
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b. Permanent/serious disfigurement
c. Permanent/serious impairment of important function (mental, physical,
psychological)
d. Based on fault
ii. Loss of income: no threshold, everyone can recover based on fault
1. 70% of gross income starting 7 days after accident up til trial date
2. After trial, can get up to 100% gross income for future economic loss
iii. General damages: threshold = catastrophic injury
1. For medical, rehab & attendant care
2. Payments exclude damages already covered by other sources (i.e. no-fault
benefits)
iv. Non-economic loss deductible: $36,905/person, $15,000 per Family Law claimant
1. $15,000 deductible for loss of a parent/guardian. “Loss of care, guidance or
companionship”.
b. Limitation Period: must sue within 2 years of accident (w/ in 2 years of denial for denials of AB
coverage)
c. Tort for Economic Losses: can sue for loss of income or earning capacity from bodily injury or
death (see above)
d. Tort for Non-economic Losses (aka pain & suffering): can sue if past threshold
i. 2 types of threshold: verbal & monetary. Ex:
1. Death
2. Permanent/serious disfigurement
3. Permanent/serious impairment of physical, mental or psychological function
ii. Can sue if not at fault & person was
1. Owner of the car
2. Occupant of the car
3. Present at the accident
iii. There is a deductible (see above)
iv. Must make sure the threshold is met before the trial starts via a motion
1. Check for verbal threshold &/or catastrophic injury for healthcare expenses
a. Catastrophic Impairment includes:
i. Paraplegia or worst
ii. Permanent loss of use of both arms (amputation, etc.)
iii. Loss of an arm & a leg
iv. Blind in both eyes
v. Brain impairment based on Insurance Act/SABs rules
vi. > 55% impairment of a person
vii. Mental impairment > Class 4 in 3+ areas OR Class 5 impairment
in 1 such that it precludes useful functioning.
v. Uninsured owner or lessee can’t sue (ie if car was uninsured)
1. Driving without insurance:
a. 1st offense = $5,000-25,000 fine
b. 1+ offense = $10,000-50,000
Section 4 – Accident Benefits Coverage:
1. Can get optional coverage for:
a. Income replacement
b. Caregiver benefits
c. Dependent care benefit
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d. Medical, rehab, attendant care
e. Death and funeral expense
f. Indexation of benefits payable
2. Who is covered?
a. Named insured, spouse & dependents
b. Listed drivers
c. Other people if they don’t have their own car/insurance
d. For accidents outside ON:

i. Named insured, spouse & dependents
ii. Other occupant who was an ON resident at some point in the last 60 days
e. Also covers psychological injury to uninvolved family members (i.e. if relative’s physical injury
traumatized you)
3. Priority of Payments/Claims:
a. Claim own/spouses insurer first
b. Otherwise, insurer of the vehicle
c. Then, insurer of the other involved vehicle
d. From Ontario Motor Vehicle Accident Claims Fund (MVAC) if no car involved was insured
4. Types of benefits:
a. Income Replacement Benefit (IRB): for people impaired by an accident
i. Paid if: the person was employed & w/ in 104 weeks becomes unable to work
(Substantial Inability)
1. If unemployed: still paid if:
a. Employed for 26/52 weeks OR on EI
b. 16+ y/o & excused from school by Education Act
c. w/ in 104 weeks becomes unable to do the job they spent the most
time at
2. No payments:
a. For the first 7 days of disability
b. Beyond 104 weeks unless unable to work in the occupation they are
“trained” for
ii. Amounts paid:
1. First 104 weeks: 70% of gross income up to $400/wk
2. After that: max(70% of gross income up to $400/wk OR $185/wk)
3. IRB pays minus the other loss of income payments you’re eligible for
a. Except for:
i. EI benefits
ii. Sick leave no received but available
iii. WCP not paid because you are suing
4. If IRB > 104 wks, eligibility criteria is raised to: Complete Inability to do the work
you were trained for
5. Self-employment: 70% of the gross income reported to CRA last year
a. Weekly payment = 1/52 of last year’s reported income
b. Cost of Report: insurer will pay $2500 to pay an accountant to prepare
the application for IRB
6. Non-Earner Benefit:
a. Qualifies for payment if:
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i.
Can’t carry on normal life within 104 weeks of accident
ii.
No applicable for other IRB
iii.
Impaired by motor vehicle accident
iv.If they were getting a caregiver benefit, there is no-one they
need to care for anymore
b. Also qualified if meets above + in school or graduated < 1 year prior
c. Benefits not payable for the first 4 weeks
d. Pays < $185/wk for up to 104 weeks
7. Caregiver Benefit:
a. Qualify if you suffer a catastrophic impairment & are an “unpaid, live-in,
primary care-giver”
i. Must suffer impairment within 104 weeks
1. Impaired = “substantially unable” to provide care giving
b. Pays < $250/wk + $50/patient for < 104 weeks unless claimant suffers a
“complete inability” to live a normal life
c. Can endorse for non-catastrophic injury
b. Medical, Rehabilitation & Attendant Care Benefits:
i. Medical benefit: pays for reasonable medical expenses not covered by provincial or
other health plans
1. Ex: hospital, ambulance, medication, physiotherapy, glasses, dentures,
transportation to treatments, mobility devices
ii. Rehabilitation: for medical & “social” rehab costs
1. Ex: life skills, family counselling, employment counselling, financial counselling
iii. Attendant Care Benefit: for in-home or facility attendant
iv. Limits:
1. Minor Injury: $3500 & $0 for attendant care
2. Non-minor/Non-catastrophic Injury: < $65k
3. Catastrophic: $1MM
4. Transportation Expenses are paid according to the Transportation Expenses
Schedule
a. For own car: can claim for < 50km round trip
c. Death & Funeral Benefits:
i. $6000 for Funeral Benefits
ii. Death Benefits: $25k to spouse & $10k to dependents if die w/ in 180 days of accident
or 156 weeks if continuously disabled
1. If no spouse, $25k to legal dependent (on top of $10k)
a. Money shared among dependents
2. If the deceased was a dependent: $10k to guardian
3. Former spouse gets $10k
4. Must outlive insured by 30 days to get $
d. Other Expenses Covered:
i. Lost Education Expenses: < $15k if unable to continue education
1. Education Expenses = textbooks, tuition, room & board
ii. Visitor Expenses: for those who visit the insured during treatment/recovery
1. Pays for 104 weeks unless catastrophic impairment
iii. Housekeeping & Maintenance: if catastrophic impairment of housekeeping
1. $100/wk for < 104 wks unless catastrophic injury
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a. Coverage for non-catastrophic injury can be endorsed
iv. Damage to Clothing, Glasses, Hearing Aid, etc.: replacement cost coverage for misc.
items damaged in an accident
v. Cost of Examination/Reports: $2000/exam (i.e. for approving treatment under AB)
e. Optional Benefits:
i. Optional Income Replacement Benefits: $600, 800 or 1000 ≤ 70% gross weekly earnings
ii. Optional Caregiver, Housekeeping and Home Maintenance Benefits: for non-
catastrophic injury (see above)
1. Coverage if substantial inability to do prior caregiving activities
2. Pays < 104 weeks unless complete inability to carry on normal life
iii. Optional Dependant Care Benefit: pays extra expenses needed for insured to take care
of dependent
1. Paid if insured:
a. Sustained impairment
b. Was employed at the time
c. Not receiving a caregiver benefit
2. Pays < $75/wk + $25/wk for additional dependent < $150/wk
iv. Optional Combined Medical, Rehabilitation and Attendant Care:
1. Non-catastrophic injury basic benefit = $65,000 for 5 yrs
a. Can increase to $130,000
2. Catastrophic injury = $1,000,000 in total
a. Can increase to $3,000,000
v. Increased Death and Funeral: can double the death benefit & increase funeral expenses
to $8k
vi. Optional Indexation Benefit: adjust amounts payable by inflation (CPI)
1. Death & Funeral Benefits are excluded
5. General Exclusions:
a. No IRB/Non-Earner benefit, etc. to driver if:
i. (Should have) Known that the vehicle was uninsured
ii. Drives while illegal (unauthorized by law) or excluded by insurance
iii. (Should have) Known the vehicle was operated without owner’s consent
b. No IRB/Non-Earner Benefit, Educational Expenses, Expenses of Visitors, Housekeeping Benefits
if:
i. Material misrepresentation on the application
ii. Failed to notify the insurer of a material change
iii. Was an occupant that knew the driver was operating w/o owners consent
c. Insurer withholds “IRB” if:
i. Operating auto while impaired
ii. Operating auto while BAC of driver > legal limit
iii. Failed to comply with breath sample
iv. Any other car related criminal offense
v. Insurer withholds $$ if charged, then keeps or pays based on trial outcome

6. Procedures for Claiming Benefits:
a. Step 1: Apply for AB in 7 days of accident.
b. Step 2: 30 days to submit application
c. Step 3: 14 days to fulfill insurer’s request for more info (if necessary)
7. Method of Payment:
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a. Once entitled, insurer pays in 14 days
b. OR
c. Gives denial w/ in 14 days of application or the date the next payment is due (i.e. if disqualified
later)
i. Insured can apply to keep $$ until medical assessment
8. Limitation Period: 2 years to sue insurer (i.e. for unpaid claims amounts)
9. Minor Injury Guidelines: pays ≤ $3500 for minor injury unless Dr. says $3500 isn’t enough due to pre-
existing condition
a. Minor Injury Guideline: sets allowable fees for initial treatment & other goods/services required
i. ^ Dr. can waive these guidelines
b. Minor Injury =
i. Sprain/strain
ii. Whiplash
iii. Contusion
iv. Abrasion
v. Laceration
10. Recovery of Healthcare Expenses – Catastrophic Impairment: can sue for healthcare expenses if damage
> verbal threshold for “catastrophic impairment”
a. Catastrophic Impairment includes:
i. Quadriplegia
ii. Permanent loss of both arms
iii. Permanent loss of an arm & a leg
iv. Total loss of vision in both eyes
v. Brain impairment (defined by Insurance Act & SABS regulations)
vi. > 55% impairment of a whole person
vii. Mental/Behavioural impairment > class 4 in 3 areas or class 5 in 1 area

1. Impairment = something that precludes useful functioning
b. Health Expenses paid here are reduced by:
i. Payments available before trial under AB for healthcare costs
ii. Payments received before trial under any medical, etc. plan
11. “IRB” reduced or eliminated if insured:
a. “Knowingly” operate an uninsured automobile
b. Driving while “illegal”
c. Was an excluded driver
d. Knowingly operate w/o owners consent
e. Material misrepresentation (to induce insurer to issue policy)
f. Failing to notify insurer of any material change
g. Convicted of a driving related criminal offense
Section 5 – Uninsured Automobile Coverage: protects victims of uninsured/un ID’d vehicles

1. Covers bodily injury & property damage
2. Uninsured automobile = owner & driver have no valid insurance
3. Unidentified automobile = owner & driver cannot be ID’d
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1. What is covered:
a. Bodily Injury to You & other Insured Persons
i. Amounts of damages legally entitled to recover < policy limit
1. Rmbr: economic losses = can sue, pain & suffering requires threshold (death,
permanent disfigurement/impairment, etc.)
ii. Coverage acts like a liability policy for the at-fault party
iii. Pays < liability requirement of the accident province ($200k in ON)
b. Death/Bodily Injury to Other:

i. Ex: if insured dies, family can sue for damages caused by loss of that person
c. Certain Property Damage: loss of use & damage to contents only IF the at-fault driver is ID’d &
uninsured
i. Pays < $25k & subject to deductible
2. Bodily Injury or Death claims:
a. Who is covered:
i. Occupants
ii. Named insured & spouse & dependent relatives of either when:
1. An occupant of an uninsured vehicle
a. Rmbr: only if able to sue (i.e. threshold injury)
2. Not in a car but hit by a UMP car
a. Note: automobile = any auto covered under the policy. Ex:
i. Described auto
ii. Temp substitute vehicle
iii. Newly acquired vehicle, etc.
b. Conditions: the claimant must…
i. Provide written notice within 30 days or ASAP (of claim)
ii. Proof of loss in 90 days of accident
iii. Documentary evidence if requested (i.e. doctors’ papers, etc.)
iv. Details of other claimable insurance (aside from life insurance)
c. Accidents involving Unidentified Automobiles:

i. Must notify police w/ in 24 hours (best effort)
ii. Written statement w/ in 30 days of accident (give details)
iii. Must make damaged vehicle available for inspection
3. Property Damage claims:
a. Conditions:
i. Notify insurer within 7 days of accident
ii. Protect car from further damage
iii. Not make repairs beyond what’s necessary for ii) until insurer inspects
iv. Provide all related legal documents
v. Inspect vehicle at any reasonable time
vi. Proof of loss w/ in 90 days
vii. Cannot abandon the wreckage to the insurer
b. Amounts paid = ACV – deductible
i. ACV = original cost – depreciation
ii. Will replace with like kind and quality if cheaper
4. Both Bodily Injury & Property Damage claims: 95% for bodily injury & 5% for property damage if
insufficient limit
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5. Limitations & Exceptions:
a. Payment Limits = the minimum liability limit in accident jurisdiction
b. Insurer doesn’t pay if:
i. There is an auto liability policy to claim from
ii. If there is enough money from an unsatisfied judgement fund to claim from
1. I.e. Ontario Motor Vehicle Accident Claims Fund
iii. Radioactive contamination/materials
iv. First $500 of accidental damage (= deductible)
v. > $25k in damage to automobile or contents in any 1 accident
vi. Damage while driven by excluded person
Section 6 – Direct Compensation – Property Damage

- Covers damage to insured autos, trailers, equipment, contents & loss of use.
- Accident must take place in Ontario & involve another ON licensed vehicle.
- Insures not-at-fault damage to own car (if you’re 100% not at fault, DCPD pays 100% - not collision)
o Suing the at-fault driver takes time & $$ ; DCPD removes small suits from the courtroom
▪ Every insurer pays for their own insured cars = % not @ fault
• Ex: If 2 people crash & fault is 50:50, Mike’s DCPD pays 50% of his car’s damage,
Bob’s DCPD pays for 50% of his cars damage.
o Optional physical damage coverage pays the rest
1. What is covered: loss of use or damage to auto/contents

a. Loss of Use = if I need to rent a car, taxi, bus, etc.
b. DCPD exists because you can’t sue in ON for damage to car alone (rmbr: threshold)
c. DCPD coverage only applies when:
i. Both vehicles insured by ON insurer or if the insurer agrees to DCPD
ii. Accident must take place in ON
d. DCPD pays repair/replacement ≤ ACV – % of deductible = % your insurer is paying for
i. Ex: if $500 deductible & you’re 60% not-at-fault, deductible = $300
ii. Most people can pay a higher premium to drop deductible
e. DCPD only applies to described auto or newly acquired autos (owned by insured & covered
primarily on this policy)
i. For temp vehicles, the owner’s policy always pays first. NOT the “insured’s” (aka the
driver)
2. Amounts paid:
a. Without DCPD & in tort provinces (i.e. Alberta), fault determined by judge
b. In ON, determined by “Fault Determination Rules” (see http://www.e-
laws.gov.on.ca/html/regs/english/elaws_regs_900668_e.htm)
i. If unhappy w/ fault/settlement decision, can sue own insurer. Judge can overturn.
3. Insured(s)’ Responsibilities in case of loss: same as Statutory Condition 6
a. Notify the insurer within 7 days
b. Protect automobile from further damage
c. Not make repairs beyond what’s necessary to protect
d. Insurer can copy all legal docs
e. Insurer can inspect the vehicle
f. Proof of loss w/ in 90 days
g. Insured cannot abandon the wreckage to insurer
i. Insurer owns salvage once pays ACV in full
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Section 7 – Loss or Damage Coverages (Optional): pays owner for damage to own auto/equipment
- If ≤ 25% at fault, insurer can’t raise premiums
1. Covers: loss of use or damage to your automobile in excess of DCPD (see prev.)
a. If DCPD makes payment, section 7 doesn’t apply
b. Insurer can inspect vehicle (usually @ the start of coverage)
c. Coverage options:
i. Specified Perils: covers only: fire, windstorm/hail, falling object, lightning, explosion,
earthquake, riot, theft & accident involving a water/land transport carrying the car (i.e.
sinking, collision, derailment)
ii. Comprehensive = all risk version of Specified Perils (includes falling objects & vandalism)
1. All non-collision damage = covered unless excluded
iii. Collision or Upset: insures tipping or collision w/ another object
1. Collision = hitting an object in contact with ground
a. Collisions with animals are excluded (paid by comprehensive)
2. Upset = car hitting the ground
iv. All Perils = collision + comprehensive
1. Note: unlike comprehensive, theft by housemate & employee is OK
2. Excluded Loss or Damage:
a. Wear & Tear:
i. Damage to tires
ii. Breakdown
iii. Damage from rust, corrosion, wear & tear or explosion inside engine
b. Damage from illegal claim of ownership/disposal, theft by legal possessors (i.e. lessees)
c. Fraud or Scam: i.e. selling a car and the cheque bounces
d. Radioactive contamination
e. Damage to contents other than equipment
i. Equipment = anything fixed to vehicle or provided for use w/ vehicle
1. Ex: bike helmets, child seats, scissor jack
f. Payment for recorded materials ≤ $25 & only covered if in playing device @ the time of loss.
Else… contents
g. Illegal Use = no physical damage coverage for…
i. Operating while intoxicated
ii. If the damaging action lead to a conviction for:
1. Death/harm by criminal negligence
2. Dangerous operation of motor vehicle
3. Failure to stop at accident scene
4. Driving while > 80mg BAC
5. Breath sample refusal
6. Causing bodily harm while driving > 80mg BAC
7. Operating a car while disqualified
8. Use for illegal activity
9. Drives car while not authorized by law
10. If insured allows person under any of the above to operate vehicle
h. Rmbr: theft by housemate or employee is typically excluded (All Perils covered)
3. Deductible = amount insured must pay for losses (currently $500)
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a. Fire & lightning losses have no deductible
b. Insurer pays $$ minus deductible
c. Case Study Ex:
i. If you are 20% not @ fault for accident, DCPD will pay for 20% of your own damage –
20% DCPD deductible.
ii. If you have Collision insurance, Collision will pay for the remaining 80% of damage – 80%
of the Collision deductible.
4. Additional Benefits: the policy covers 4 additional losses

a. General Average: if cargo jettisoned to save the ship, surviving owners will pay for the sacrificed
b. Salvage Charges: pays for expenses necessary to reduce further loss to vehicle (i.e. towing)
c. Fire Department Charges: if they bill you
d. Customs Duties: i.e. for importing “new” parts used in repair of vehicle
i. Ex: car broke down in the US, repaired in the US, the “new” parts you’re bringing back
will be taxed
5. Insurer cant subrogate against those allowed to drive by the insured
a. But can subrogate:
i. Valet/car dealers  they are bailees & have their own insurance
ii. If allowed drivers use it for excluded uses or criminal activities (i.e. if they borrowed
your car to race)
1. Insurer will pay you but will sue your friend.
6. Temporary Substitute Automobiles (TSA) = not owned by insured or housemate & used while own is
unavailable
a. Legally liable physical damage covered by TSA Owner’s Policy if they purchased the optional
coverage.
b. If not & insured is legally liable, insured’s policy will pay.
i. Liability established by law or contract
ii. Insured’s policy pays for owners deductible if its > than insured’s deductible
1. Deductible payment is subject to deductible
2. Ex:
a. Adrian borrows Barb’s car to drive to work while his is in the shop.
b. Barb has a $5000 collision deductible and a $1000 comprehensive
deductible.
c. Adrian has a $500 deductible for collision & comprehensive.
d. If Adrian crashes into a wall causing $10,000 worth of damage, Barb’s
policy would pay $10,000 - $5000 (her collision deductible).
e. Then Adrian’s policy would pay Barb $5000 - $500 so Barb is fully
indemnified
7. Loss of Use Due to Theft of Auto: pays for reasonable expenses for rental, taxi, bus, etc. ≤ $900
a. Payment starts 72 hours after reporting & until claim settles
8. Responsibilities of Insured(s) for damage to auto = same as above (i.e. notify w/in 7 days, etc.)
9. Insurer can choose to repair/replace instead of paying cash for the car
a. If repairing/replacing, notify insured in 7 days
10. Insurer pays up to ACV – deductible
a. ≤ $1500 for aftermarket electronic equipment (i.e. GPS, stereo, etc.)
b. ≤ $25 for recorded material
Section 8 – Statutory Conditions: legal duties of all parties (same as other provinces)
- Breach of conditions = loss of coverage. But… will still get Accident Benefits
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1. Material Change in Risk: must notify insurer of any known material change
a. Material change = anything that increases chance of loss
b. Also…
i. Change in insurable interest (new owner/principle driver)
ii. New mortgage or lien
iii. Other physical damage insurance (concerns re: fraudulent losses)
2. Incorrect Classification = refund premium + interest OR request more $$ (must do w/ in 60 days)
3. Monthly Payments: can pay in monthly instalments (interest rates set by Insurance Act)
4. Authority to Drive: can’t operate until authorized by law (i.e. have a valid license)
a. Also, no racing/speed testing or use in illegal trade/profession
5. Requirements for Loss or Damage to Persons or Property:
a. Insured must:
i. Written notice to insured w/ in 7 days of accident (whatever is reasonable)
1. No notice = loss of coverage
ii. Statutory declaration that damage arose from operation of car by insured(s)
iii. Forward any documents to insurer (i.e. legal docs since they defend you)
b. Insured must not:
i. Voluntarily assume liability except at own cost (impairs defense)
ii. Interfere in any legal proceedings (insurer controls)
c. Insured must cooperate w/ insurer: give evidence, info, witness, etc. (assist in defense when
requested)
6. Requirements for Loss or Damage to Automobile:
a. If it’s covered, the insured must:
i. Give notice in writing with all available information available at the time
ii. Make reasonable efforts to protect the automobile (insurer will pay)
iii. Make Statutory Declaration to insurer w/ in 90 days of loss: place, cause, damage, other
insureds, other insurance, negligence or wilful?
1. Must send proof of loss in 90 days or no $$
b. Extra damage from failure to protect auto = not covered
c. No repairs other than those necessary to protect car (i.e. tire replacement) & no removal of
evidence
i. Until insurer OK’s OR has time to inspect the car
d. Insured must submit to an examination under oath & give relevant documents
e. Insurer liable for ACV (aka. there is depreciation)
i. Factors:
1. Exterior: paint, trim, condition
2. Mechanical condition
3. Mileage
4. Interior: upholstery, trim
5. Equipment/Accessories
6. Tires
7. Other information
ii. Insurers liability for out-of-stock parts = value @ time of loss ≤ MSRP
f. If insurer is repairing/replacing property, notify insured w/ in 7 days
i. Repair/replaces w/ like kind and quality (not always OEM parts)
ii. Disputes are handled by appraisal (i.e. extent/adequacy of repairs/payment)
1. Details in the Insurance Act
g. No Abandonment/Salvage: owner is liable until the insurer pays you out
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i. Abandonment: insured cannot abandon the car to the insurer
ii. Salvage: insurer owns the wreckage after ACV or replacement is made
7. Time Limit: insured must send notices (statute #5 & 6) in 7 days of loss or ASAP (i.e. if seriously injured)
8. Inspection of Automobile: @ any reasonable time (to prevent fraud)
9. Insurer must pay w/ in 60 days of proof of loss
a. If appraisal required, 15 days afterwards
b. Have only 1 year to sue insurer for car damage (2 yrs for bodily injury or property dmg)
10. Insured OR their agent can give notice if justifiable
11. Termination:
a. Remember: the 3-strikes for non-payment
i. Cancellation 1 & 2 = 30/10 (if hand delivered)
1. Pay premiums by noon the next biz day to prevent cancellation
ii. Cancellation 3 = no obligation to stay on even if pay in time
b. Insured can cancel @ any time for short-rate refund
c. If insurer cancels: pro-rata refund
i. 15 days’ notice by mail
ii. 5 days if hand delivered
d. Cancellations start @ 12:01am on the date specified
12. Notice: by hand or registered mail
a. If sending to insurer: to chief agency or provincial head office
b. If to insured: to last known address
13. Accident Benefits still exist even if you violate Statutory Conditions
Endorsements – Ontario Policy Change Forms (OPCF)

Tip #1: Anything that needs to be endorsed here is excluded from the original policies under their appropriate
sections
Tip #2: A lot of these names are self-explanatory; don’t spend too much time memorizing these
Ex:
1. OPCF 2 – Providing Coverage When Named Persons Drive Other Automobiles: extends “Other
Automobile” coverage in OAP1 to persons named in the endorsement.
a. Limited to named insured & spouse w/o this endorsement
2. OPCF 3 – Drive Government Automobiles: exempts you from mandatory insurance
3. OPCF 4A – Permission to Carry Explosives: adds back that coverage (rmbr: normally excluded)
4. OPCF 4B – Permission to Carry Radioactive Material: same ass 4A
5. OPCF 5 – Permission to Rent or Lease Automobiles and Extending Coverage to Specified Lessee(s):
covers lessee or those the lessee authorizes to drive
a. Basically: allows lessee to become a named insured ( usually registered owner only)
6. OPCF 5C – Permission to Rent or Lease: lets lessor lease the car out
a. Lessee & those they authorize to drive are covered
b. < 30 days (short term lease only)
7. OPCF 5D – Conversion Coverage (rented or leased automobiles): covers infidelity of the renter
a. Rmbr: Section 7 does not pay for theft, dishonest claim of ownership, etc. by someone who has
legal possession under written agreement
8. OPCF 6A – Permission to Carry Paying Passengers: allows car to carry paying passengers
9. OPCF 6B – School Bus: can use as school bus for compensation
10. OPCF 6C – Public Passenger Vehicles: permits carrying passengers for compensation & sets available
liability limits
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11. OPCF 6D – Driving Training School: permits carrying passengers for compensation for driving school
purposes
12. OPCF 6F – Public Passenger Vehicles – Combined Limits: if carrying passengers for compensation only
13. OPCF 7 – Separate Limits: separates/specifies Section 3 Liability Limits
14. OPCF 8 – Property Damage Reimbursement: makes insured responsible for damage to other people’s
property (under Section 3 Liability Coverage)
15. OPCF 9 – Marine Use Excluded: excludes losses while car is on/in water or during launching/landing
16. OPCF 13C – Restricting Glass Coverage: only to losses caused by perils specified here
17. OPCF 16 – Suspension of Coverage: for a period of time (i.e. if the car is not being driven)
a. ^ This one is asked often on exams!!
18. OPCF 17 – Reinstatement of Coverage: reverses OPCF 16
19. OPCF 19 – Limiting the Amount Paid for Loss or Damages: insurer pays min(limit, ACV) for Section 7
losses
a. Used on high value vehicles, motor homes, ATV’s, etc.
20. OPCF 19A – Agreed Value of Automobiles: insure automobile (Section 7) on a value basis
a. Used for classic or custom cars
b. Note: Know the difference between 19 & 19A
21. OPCF 20 – Coverage for Transportation Replacement: pays reasonable expenses from loss of use
a. Has a per day & per occurrence limit
22. OPCF 21A – Monthly Reporting Basis Fleet (applicable to Ontario licensed automobiles): covers vehicles
leased for ≥ 30 days.
a. Must list vehicles, receipts, mileage, etc. & report to insurer monthly (basically: scheduled
coverage)
23. OPCF 21B – Blanket Fleet Coverage for Ontario Licensed Automobiles: insures fleets on a blanket basis
(all vehicles)
24. OPCF 22 – Damage to Property of Passengers: as if it was the insured’s own
25. OPCF 23A – Lienholder Protection: provides protection from the lender’s ownership share (i.e. they get
their share if claims paid in cash)
a. Lienholders are also notified of any cancellation of policy/physical damage coverage
26. OPCF 23B – Mortgage (Broad Form): better lienholder protection than 23A
27. OPCF 24 – Fire Apparatus: insurer not liable for rescue equipment taken from insured vehicle @ fire
scene
28. OPCF 25A – Alteration: covers a variety of policy changes (written in the available space)
29. OPCF 27 – Liability for Damage to Non-Owned Automobile(s) and Providing Other Coverages When
Insured Persons Drive Other Automobiles: covers damage to non-owned auto’s in the
care/custody/control of the insured (& others named on this endorsement)
a. I.e. a rental vehicle
b. ^ This endorsement is important to know
30. OPCF 27B – Business Operations – Liability for Damage to Non-Owned Automobile(s) in the Insured’s
Care, Custody or Control: for commercial clients with “custody” of other people’s cars
31. OPCF 28 – Reducing Coverage for Named Persons: reduces coverage/limits for loss or damaged caused
by the specified person
32. OPCF 29 – Additional Coverage for Named Person(s): extends coverage to allow a specific person to
operate the insured vehicle
33. OPCF 30 – Removing Coverage for Attached Machinery: insurer won’t pay liability or accident benefits
for damage arising from use/ownership of equipment
a. Buy a CGL
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34. OPCF 31 – Non-owned Equipment: covers non-owned equipment that is normally attached to the auto
35. OPCF 32 – Use of Recreational Vehicles by Unlicensed Operators: lets them drive when not authorized
(licensed) by law
a. I.e. someone < 16 y/o can drive off road
b. Recreational vehicle = snowmobile, ATV, dune buggy, etc.
36. OPCF 35 – Coverage for Emergency Road Service: pays $50 if car disabled
37. OPCF 38 – Agreed Limit for Automobile Electronic Accessories and Equipment: limits amounts paid for
after-market electronics to agreed amounts
a. After-market = not factory installed
38. OPCF 40 – Fire Deductible: makes fire/theft of entire automobile losses subject to deductible (if not
already)
a. Normally added to recreational vehicles
39. OPCF 43 – Removing Deprecation Deduction: pays replacement cost = min(purchase price, MSRP, cost
to replace)
a. Insured must be the original purchaser
40. OPCF 43A – Removing Depreciation Deduction for Specified Lessee(s): same as OPCF 43
41. OPCF 44R – Family Protection Endorsement: insured/family gets same protection as they bought (pays
in excess of UMP under/uninsured)
a. Ex: If I carry $1MM liability & hit by a driver that has $200K, my Family Protection Endorsement
will pay ≤ $800K (i.e. if past threshold & suing)
b. Rmbr: UMP gives $200K if at-fault driver is uninsured
c. ^ Important
42. OPCF 46 – Pre-determined Income from Self-Employment Agreement: set annual income for Accident
Benefits if self-employed
43. OPCF 47 – Agreement Not to Reply on SABS Priority of Payment Rules: added for free if Optional AB is
purchased
a. Can claim AB + Optional Benefits regardless of Priority of Payment rules
44. OPCF 48 – Added Coverage to Offset Tort Deductibles: pays $10K for insured & $5K for Family Law Act
claimant for non-pecuniary damages (i.e. pain & suffering)
The Facility Association

Facility Organization (FA) = group of all insurers who cover sub-standard drivers
- Allows them to reject business while meeting compulsory requirements
- Steps:
o Check underwriting (UW) standards w/ voluntary insurers they rep
o Check FA UW standards to set rate class
o Refer to FA
o Broker collects premium & servicing carrier issues policy
- Ex UW Standards: vehicle type, usage, location, # of drivers, claims history, driving record, etc.
FA ≠ Insurer, they contract members to UW & adjust claims

- Issue a monthly Participation Report to members
Servicing Carriers = appointed by FA & paid to conduct its business.

- Must follow FA rules as per “Plan of Operation and Servicing Carrier contract”
- Adjusts claims according to “Claims Guidelines”
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- Certain UW expenses (i.e. drivers abstracts) & claims expenses are reimbursed
o Eligible expenses laid out in “Plan of Operations” & “Accounting and Statistical Manual”
- Audited biannually to ensure compliance with FA Rules, Regulations & Procedures
o Investigate: claims/UW procedures
- FA guides Servicing Carriers re: rules interpretation
- Sits on committees: Rates & Rules Committee, Actuarial Committee, Claims Committee and Accounting
Committee alongside non-servicing carrier members
FA doesn’t really contact broker. A contract is made between the FA, SC & Broker.
- SC does all the administration: accounting, paying commissions, etc.
- Broker contacts SC if they need guidance
- Broker can contact FA if they want to change SC or if they disagree with SC
Policy Issuance and Claim Settlement:

- FA sends blank applications to SC who send them to brokers
o Each app is numbered
o FA only touches apps for auditing purposes
- SC underwrites, does paperwork (i.e. issue policy) & gives to brokers
o SC also distributes FA Manual of Rates & Rules to brokers
▪ Contains info on risk classification & premium calculation & surcharges
• Rates & Rules Committee develops rules ( comprised of member company
volunteers)
▪ Premiums based on:
• Classification
• Vehicle type
• Industry limits/deductibles
• Surcharges/discounts
▪ FA consulting actuary develops rates > reviewed by Rates & Rules Committee >
approved by FA Board of Directors > approved by provincial regulatory body
- SC makes claim payments using FA cheques drawn from the FA bank account assigned to that Carrier
- FA management prepares financial statements for external auditors
Broker’s Role
1. Determine client needs
2. Survey insurers to find the best “deal” for their client
3. If not, go to FA
a. Send FA application along with rejection letter to SC
b. Rating = done by broke using the manual
- In ON, they leave the FA once qualified for the normal market
- Outside ON, must manually check markets on renewal
- Some brokers have markets others don’t. If you’re forced to go FA, try another broker.
o FA commission rates = lower ≡ incentive to move clients out of FA
▪ No bonuses/incentives either (overrides, special commissions for switching, etc)
- FA policies take more work:
o Must have signed & fully completed applications (incl. binder numbers & binder register)
o Additional forms for motorcycles, commercial, garage policies or public vehicles
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Ontario Automobile Driver’s Policy – OAP 2
OAP 2 is for
1. Drivers who drive someone else’s car but has no insurance of their own OR
2. When owner has no insurance
Similar structure to OAP 1:

- Section 1 – 3rd Party Liability
- Section 2 – Accident Benefits
- Section 3 – Liability for Damage to Non-owned Automobiles: must have legal liability (i.e. it was my fault
or it was stated in the contract)
- Section 4 – Uninsured Automobile Coverage
- Section 5 – General Provisions, Definitions and Exclusions
- Section 6 – Statutory Conditions
Non-owned Automobile =
1. Person in “control” of automobile that is not owned or registered in his name
2. Not operated by but is in the care, custody & control of the insured
3. Automobile includes trailer
a. Trailer + car = 1 vehicle for Section 1, 2, 4
b. Separate vehicles for Section 3 coverage
Rating: tell insurer the details of:

1. Type(s) of vehicles likely to be driven
2. Type of use
3. Any liability assumed under contract
- Insurer will rate based on worst-case scenario (highest exposure)
The Garage Automobile Policy – OAP 4

OAP 4 is for: businesses that operate, deal, repair, store, or park cars
Similar structure to OAP 1:

- Section 1 – 3rd Party Liability
- Section 2 – Accident Benefits
- Section 3 – Uninsured Automobile Coverage
- Section 4 – Direct Compensation – Property Damage
- Section 5 – Loss or Damage to Owned Automobiles
- Section 6 – Liability for Damage to a Customer’s Automobile While in the Care, Custody or Control of the
insured
- Section 7 – General Provisions, Definitions and Exclusions
- Section 8 – Statutory Conditions
Covers liability, AB, UMP, DCPD of owners/partners & full-time employees while driving a business vehicle
(registered in business’ name)
Covers owned & non-owned cars (i.e. customer’s cars): the business is responsible for cars in their “custody”
- Rmbr: OAP 1 on the car won’t cover if driven by garage employees (excluded). OAP 4 fills that gap
79
Standard Policy Forms (SPF) 6, 7, & 8
Standard Non-Owned Automobile Policy SPF 6: for employers held liable for damage caused by employees while
driving their own or non-owned cars (Ex: pizza delivery boy drives his own vehicle for business purposes)
o Can be sold as an extension to CGL
- Rmbr: employers are liable for the torts of their employees while in the course of business
- Non-Owned = not owned, licensed by insured, driver or housemate of either (Ex: car you rent on biz trip)
Excess Automobile Policy SPF 7: adds excess AB + liability coverage for provinces that have government
insurance
- Government policy = primary (it pays first)
- Also pays gov policy’s deductible for physical damage
Lessor’s Contingent Automobile Policy SPF 8: pays lessor’s contingent damages
- Lessor = person leasing the car out (i.e. Toyota Canada)
- Ex: SPF 8 pays if something is wrong with the lessee’s policy (bought the wrong coverage, violated policy
condition, invalidated the policy)
- Pays based on the lessor’s interest in the vehicle
80

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How to use this study guide:

An “=” sign typically indicates a definition.

General (Property & Casualty) Insurance Categories:

Types of Insurers: private & government

Lloyd’s of London: they insure the stuff uninsurable in normal markets

o Proportional Reinsurance: shares all losses/premiums by % split

Government & Insurance Industry Regulations

Provincial Insurers: List of provincial regulators: http://www.ibc.ca/pe/resources/industry-

Contract Law & Insurance Contracts

Dealing with risk: CART

Types of Financial Risk: speculative & pure risk

Elements of ALL Contracts (to be legally enforceable) under Common Law:

Elements special to insurance contracts:

Must meet both types of requirement or VOID ( treated as if it never existed)

The Process of Placing Insurance

Personal Property Insurance – Habitational Forms (wordings provided on exam)

Section 1 – Property Coverages:

Coverage C – Personal Property = on premises + off premises + student’s

Exclusions: the generally uninsurable things like war +

Homeowners Comprehensive Form = Broad Form + Property for ALL RISKS

Underwriting Homeowners Forms: coverages are based on replacement cost value

Endorsements: can add additional coverage for:

Commercial Property Insurance

2 Policy Forms: named perils & broad form

Other Commercial Property Forms:

Basics of Legal Liability

Common Law: based on precedence

For CAIB 1 Students:

Important legal precedents:

b. For CAIB 1 Students:

Duties in the event of an occurrence or claim: insured must cooperate (PALAC)

Liability Insurance Policies

f. When insured voluntarily assumes liability (i.e. by contract) except…

Coverage G – Voluntary Payments for Damage to Property

Exclusions applicable to all personal liability policies: no coverage for

Liability Insurance for Business:

Accident & Sickness / Travel Insurance

2 types of accident & sickness contracts: individual & group plan/policy

3. Why accident & sickness insurance?

Regulations & Professionalism

c. License Jurisdiction: need license in province you do business in

3 Fundamentals Principles of Conduct:

For Ontario Students:

Errors and Omissions (E&O): sometimes mistakes or misunderstandings happen

- Confidentiality: only disclose information as necessary (i.e. to underwriters) or if court demands

Auto Insurance is different in all provinces

2 Types of Insurers: private & government (compulsory)

Underwriting: poor driving/insurance history = send them to the FA for coverage

Ontario Auto Policy – OAP 1

Insurance Ombudsman: last stop for consumers w/ complaints

Mediation: mediate AB claims through the FSCO’s Mediation Department (mandatory)

Arbitration: an alternative to court

Licensing: licenses agents, companies & mortgage brokers

2. Accident Benefits (AB) (Section 4): provides no-fault benefits to insured

Policies are designed to be easy to understand & written in plain language.

Notice of Accident: insured must report within 7 days of accident if:

f. For rented/leased automobiles, the renter’s insurance is primary – it pays first

d. For accidents outside ON:

v. Insurer withholds $$ if charged, then keeps or pays based on trial outcome