Deck 28: Insurance

Question 1

Vida was found guilty of arson after deliberately setting fire to his failing restaurant in order to claim the insurance proceeds.What is the legal principle that prevents him from profiting from his crime?

A) the duty to disclose
B) subrogation principle
C) the forfeiture rule
D) the indemnity rule

Answer 1

C

Question 2

Why is an insured entitled to collect only the amount of the actual loss incurred from its insurance coverage?

A) Contracts of indemnity prevent profiting from an insured against event.
B) A bank is entitled to an indemnity contribution on a prorated basis.
C) Insurance coverage typically covers a minimum portion of the value of property.
D) A bank may be entitled to an interest in the proceeds for a secured loss.

Answer 2

A

Question 3

In what case did the Supreme Court of Canada hold that an insurer could not deny coverage on the basis of the insured's alleged breach of the duty to disclose because the risk issue was rectified by the insured before the loss occurred?
B)& P.(N.R.)269 at 301

A) Royal Bank of Canada v.State Farm Fire and Casualty Co.[2005] 1 S.C.R.799
B) Triple Five Corp.v.Simcoe & Erie Group (1994),AFF'D [1997] 5 W.W.R.1 (C.A.)
C) Lucena v.Caufurd (1806),2
D) Marche v.Halifax Insurance Co.[2005] 1 S.C.R.47

Answer 3

D

Question 4

What is the effect of the Genetic Non Discrimination Act on insurers?

A) Insurers are required to ensure the privacy of the results of genetic testing.
B) Insurers are permitted to request genetic testing for life and disability insurance.
C) Insurers are prohibited from requiring a person to take a genetic test or to reveal the results of one.
D) Insurers are required to share the results of genetic testing with authorities upon request.

Question 5

Which of the following is provided for by statute with respect to life insurance?

A) The beneficiaries must contribute to the payment of the premium on a prorated basis.
B) Anyone can insure the life of a person who gives written consent to the contract.
C) It requires a coinsurance clause that prevents coverage for less than its value.
D) Life insurance contracts may require the payment of deductibles on loss.

Question 6

Jasmine is discussing an alteration to her current business insurance coverage.Which of the following will her insurer most likely recommend to Jasmine for this purpose?

A) additional policy
B) rider
C) new policy
D) endorsement

Question 7

What is the primary value of insurance to business enterprise?

A) It removes all tort and contract liability risk.
B) It provides a means to shift risk away from the business to an insurer.
C) It shields directors and officers from personal liability.
D) It imposes a duty of utmost good faith on the business enterprise.

Question 8

Upon which of the following qualifications being met on an ongoing basis is insurance protection dependent?

A) the worthiness of the insured
B) the financial health of the insurer
C) the insured's need for insurable protection
D) the payment of insurance premiums

Question 9

An insured has noted on its insurance application that its restaurant has a wood fireplace,but it has omitted to comment that occasionally escaped sparks can cause a fire risk.Why would the insured be considered as having complied with its duty to disclose?

A) The insured has to be in a position to fully assess the risk.
B) The insurer has been candid and forthcoming.
C) The insurer is expected to be worldly wise.
D) The insured has to show personal judgement.

Question 10

Allowing people to insure property that they have no real interest in may lead to the intentional destruction of the property.To which rule does this rationale apply?

A) life insurance rule
B) indemnity rule
C) coinsurance rule
D) insurable interest rule

Question 11

What type of insurance would provide payment in circumstances where the insured is held legally responsible for causing the loss or damage to a third party?

A) business interruption insurance
B) property insurance
C) life and disability insurance
D) liability insurance

Question 12

When an insurer compensates an insured,it has the right to sue a wrongdoer to recover that compensation.What is the legal term for this right?

A) third party rider
B) third party endorsement
C) forfeiture
D) subrogation

Question 13

What is the purpose of a deductible in the context of an insurance policy?

A) Risk of loss is shared between the insurer and insured.
B) Certain types of losses are excluded from coverage.
C) The insurer is entitled to deduct defence costs from its payout to the insured.
D) The amount of the insurance proceeds is reduced if the insured is partly at fault.

Question 14

Which term refers to a clause that alters or adds coverage to a standard insurance policy?

A) a coinsurance clause
B) an endorsement
C) an exclusion clause
D) a rider

Question 15

What is the name given to the rule that prevents an insured from collecting on insurance when the loss has resulted from the insured's willful misconduct?

A) third party endorsement
B) forfeiture rule
C) subrogation
D) third party rider

Question 16

Which of the following is a distinguishing characteristic of a duty to disclose?

A) It is applicable to the point in time the insurance application is made.
B) It is considered by law to be an insured's ongoing obligation.
C) It requires the prompt,oral communication of material changes to the insurer.
D) Compliance automatically adjusts the policy coverage.

Question 17

Which of the following is an implication of the utmost good faith nature of insurance contracts?

A) the insurer may subrogate
B) the insured has a duty to disclose
C) the insurer is a fiduciary to the insured
D) the insured is a fiduciary to the insurer

Question 18

What is the purpose of the requirement of an insurable interest?

A) to ensure that property may only be insured by its owner
B) to discourage an insured from intentionally destroying property in order to make an insurance claim
C) to prevent insureds from underinsuring their property
D) to permit the insurer to recover from the wrongdoer

Question 19

Under which level of government jurisdiction do insurance policies fall?

A) provincial jurisdiction
B) federal jurisdiction
C) executive jurisdiction
D) municipal jurisdiction

Question 20

Which type of insurance system emphasizes providing accident benefits without regard to the victim's fault?

A) tort based liability system
B) no fault system
C) co insurance
D) disability insurance

Question 21

What type of insurance product would a business that produces and sells pesticides most likely require?

A) injury and property damage insurance coverage
B) business interruption,environmental injury,and property insurance coverage
C) financial loss and personal injury insurance coverage
D) comprehensive,environmental,and personal injury insurance coverage

Question 22

Why would the owners of a successful business operation carry life insurance on the lives of its shareholders?

A) to ensure that the business doesn't suffer financial loss from business interruption
B) to offset any deficiency in the value demanded for the deceased's shares
C) to offset the challenging costs of buying out a deceased shareholder's shares
D) to comply with the law's mandatory life insurance pertaining to shareholders

Question 23

What does an insurance adjuster do?

A) sells insurance products
B) evaluates risk
C) investigates and evaluates insurance claims
D) determines premiums

Question 24

What was the basis for the court's award of punitive damages in Whiten v Pilot Insurance Co,2002 SCC 18 [2002] 1 SCR 595?

A) breach of duty to disclose
B) breach of contract
C) breach of the insurer's duty of good faith
D) fraud

Question 25

Which type of insurance is intended to compensate a business enterprise for liabilities incurred during the course of its business?

A) errors and omissions insurance
B) comprehensive general liability insurance
C) all risks property insurance
D) business interruption loss insurance

Question 26

Which of the following is a problem that may be addressed by directors and officers obtaining separate coverage or a further layer of insurance coverage independently from the corporation?

A) the rescission of D&O liability coverage
B) the cancellation of D&O liability coverage
C) exhausting D&O coverage
D) exclusions in D&O coverage

Question 27

Which of the following is protected by collision coverage?

A) loss or damage to the insured's vehicle itself
B) loss or injury to third parties
C) coverage against injury or death of a third party
D) loss or injury to the insured and to third parties

Question 28

What insurance concern is raised by the ability of genetic testing to reveal information about the genetic susceptibility to illness and disease of individuals applying for life and disability insurance?

A) Insurance will become too costly to insurers unless they have access to genetic testing.
B) Genetic testing is invasive and will breach individual privacy if it becomes mandatory.
C) Failure to disclose may result in the insurance contract being voided,yet disclosure may result in denial of coverage or higher premiums.
D) False positive results will lead to inaccurate assessments of risk.

Question 29

What is the name often given to the type of insurance coverage that requires an insurer to compensate for the loss of profits?

A) an all risk policy
B) comprehensive risk insurance
C) a casualty policy
D) environmental impairment insurance

Question 30

Which of the following would occupiers' liability insurance protection strongly support?

A) payment where the insured is held legally responsible for causing loss to a third party
B) payment in the event of loss to the insured caused by a fire that is unintentional
C) payment in the event of loss to the insured caused by a fire that is started intentionally
D) payment when the insured causes damage to the property of a third party

Question 31

Who would most likely provide advice and assistance in assessing risks from a review of a business's operations?

A) insurance advisor
B) insurance broker
C) insurance agent
D) insurance adjuster

Question 32

What options must a business owner decide upon when considering property insurance?

A) getting coverage for replacement value or actual cash value
B) getting coverage for the various forms of perils that are insurable by law
C) negotiating a non cancellation or severability clause
D) negotiating to remove the exclusion clauses that fall within the intent of the policy

Question 33

Which of the following liability risks would be adequately managed by errors and omissions insurance?

A) liabilities arising from the performance of obligations of corporate directors and officers
B) liabilities arising from negligence in the provision of professional services
C) the insured's portion of the loss that is insured against out of his or her own assets
D) the cost of the environmental cleanup of the insured's property arising from business activities

Question 34

What three general categories do insurance policies fall into?

A) auto,life,and property
B) liability,property,and disability
C) all risks,commercial,property
D) fire,life,auto

Question 35

How does comprehensive general liability (CGL)insurance differ from automobile liability insurance?

A) CGL insurance protects property,whereas automobile liability insurance protects against liability.
B) CGL insurance is available only to corporations,whereas auto insurance is available to anyone.
C) CGL insurance is optional,whereas auto insurance is mandatory.
D) A CGL insurance policy does not have a deductible,whereas auto insurance incorporates a deductible.

Question 36

What insurance product would protect against loss for injury and property damage related to the operation of a business's vehicles?

A) a product that covers personal injury and negligent property damage
B) a product that covers loss of profit while the vehicle is being repaired
C) a product that offers replacement value
D) a product that covers personal injury

Question 37

What legal consequences might arise if an insurer fails to handle a claim fairly and in a timely manner?

A) a public inquiry into the insurer's conduct
B) a lawsuit by the adjuster against the insurer
C) breach of the insurer's duty of good faith and a punitive damages award
D) double indemnity costs against the adjuster

Question 38

What is the most likely result of malicious acts or acts of vandalism caused by an insured?

A) the denial of coverage by operation of a rider
B) the insured's right of subrogation
C) the insured's right to endorsement
D) the denial of coverage by operation of an exclusion clause

Question 39

Why must an insured avoid acknowledging liability for a loss?

A) because the insurer has a duty to defend
B) because it could jeopardize the insurer's right of subrogation
C) because it may result in increased premiums
D) because it would constitute a breach of the insured's fiduciary duty

Question 40

What is the purpose of directors and officers liability insurance?

A) to extend coverage to include the corporation's liability against security claims
B) to provide coverage that includes a well drafted severability clause
C) to reimburse the corporation for amounts paid to indemnify officers and directors
D) to provide protection over and above indemnification by the corporation

Question 41

The forfeiture rule provides the right of the insurer to recover the amount paid on a claim from a third party that caused the loss.

Question 42

An insurer,the party that purchases the policy of insurance,is required to pay a price for the insurance coverage known as a premium.

Question 43

Manitoba and Quebec both use a no fault system of automobile insurance.

Question 44

Because financing a buyout on the death of one of the shareholders of a company is challenging,that legal risk is typically reduced by shareholder life insurance policies that will provide all or a portion of the financing needed to complete the buyout.

Question 45

An insurance company can deny coverage for non disclosure even if the loss has nothing to do with the matter that was left undisclosed.

Question 46

Some policies,such as fire insurance policies,require the insured to have coverage for a specified minimum portion of the value of the property in order to fully recover from the insurer in the event of a fire.

Question 47

An insurance agent is one who provides advice and assistance to the insured in acquiring insurance.

Question 48

An insurance contract is classified as a contract of indemnity because the insured is not supposed to profit from an insured loss; rather,the insured is meant to come out even.

Question 49

All types of insurance policies are typically written so that the insured is responsible for the first part of the loss,which is paid in the form of a deductible.

Question 50

Comprehensive general liability insurance coverage generally extends only to unintentional torts,rather than intentional torts.

Question 51

A key consequence of the designation of insurance contracts as contracts of the utmost good faith is the imposition on the insured of a duty to disclose.

Question 52

Each province in Canada has an automobile insurance scheme that is based on either a tort based liability system or a no fault liability system for compensating claims for bodily injury or death.

Question 53

The subrogation rule provides that a criminal should not be permitted to profit from a crime.

Question 54

The test for whether the insured has an insurable interest is whether he benefits from its existence and would be prejudiced from its destruction.

Question 55

The purpose of comprehensive general liability insurance (also known as CGL insurance)is to compensate business enterprises in a comprehensive way for any liabilities they incur outside the course of their normal business operations.

Question 56

An endorsement is a clause altering or adding coverage to a standard insurance policy.

Question 57

Errors and omissions insurance typically does not cover investigation costs and legal expenses.

Question 58

An insurer owes the insured a duty of good faith,including a duty to deal with an insured's claim in good faith.

Question 59

An insurance adjuster is one who acts for an insurance company in selling insurance.

Question 60

A duty to disclose exists only at the time of applying for the insurance.

Question 61

Explain the nature and purpose of business interruption loss insurance.

Question 62

Explain the distinction between an insurance broker and an insurance adjuster.

Question 63

Briefly explain why the law places the duty of disclosure on the insured.

Question 64

Identify the test for whether the insured has an insurable interest in the thing being insured,and briefly explain the rationale behind this rule.

Question 65

Genetic tests can revel predisposition to certain cancers,degenerative diseases,metabolic disorders,and other conditions.While information of this sort would be invaluable to insurers,particularly for the purposes of life and disability insurance,disclosing a genetic predisposition to certain conditions could result in the denial of insurance coverage,higher insurance premiums or reduced insurance benefits.How has Canadian law addressed this concern?

Question 66

Explain the extent of coverage provided business interruption insurance.

Question 67

What is the relationship between subrogation and indemnity?