Question 1

To win his action in negligence against a professional person,the plaintiff must prove,among other things,that the defendant's conduct was below an acceptable standard of care.Which of the following is the legal standard of care demanded of a professional person?

Accepted Answer

The legal standard of care demanded of a professional person is that they act as may reasonably be expected of the normally skilled professional of that type. This means that the standard of care is not that the professional acts to the very best of their ability, but rather that they act within the bounds of what would be considered reasonable for someone with their level of expertise and training. The other answer choices, while potentially desirable qualities in a professional, do not accurately reflect the legal standard of care expected in a negligence action.

Question 2

In most Canadian jurisdictions,________ can be obtained on an individual basis with an insurance corporation,but it is more often acquired by businesses as part of an employee benefits package.

Accepted Answer

Disability insurance is often acquired as part of an employee benefits package by businesses. It can also be obtained on an individual basis with an insurance corporation. Property insurance, business interruption insurance, liability insurance, and professional liability insurance can also be obtained on an individual or business basis, but the question specifically mentions that it is "more often acquired by businesses as part of an employee benefits package."

Question 3

Business interruption insurance is designed to cover which of the following situations?

Accepted Answer

Business interruption insurance is designed to cover losses of income due to unexpected events, such as natural disasters or accidents, that force the business to halt its operations temporarily. In this case, the insurance coverage pays revenue losses caused by the restaurant being closed down for several months due to fire damage. Options A and E are incorrect because they relate to property damage and liability insurance, respectively. Option B is incorrect because it pertains to life insurance or key person insurance, not business interruption insurance. Option D is incorrect because it refers to disability insurance, which provides income replacement for employees who become unable to work due to an illness or injury.

Question 4

Often,a business suffering a loss from a fire will have insurance to cover the property damage,but there will be nothing to cover the revenue losses the business suffers during the period it is closed down for repairs.What form of insurance will cover the latter issue?

Accepted Answer

Business interruption insurance is the type of insurance that covers the revenue losses suffered by a business when it is shut down for repairs due to fire or any other unexpected event. This type of insurance provides coverage for loss of income, additional expenses, and other costs associated with the temporary shutdown of a business. It is important for businesses to have this type of insurance to ensure that they can continue to operate even in the face of unforeseen circumstances such as fires.

Question 5

Jack works as a financial-planning consultant for Adco Ltd.,a company that provides financial advice to its clients.At a three-martini lunch with Benson,one of Adco's clients,and Carson,a friend of Benson's,Jack mistakenly advised Benson to buy shares of Moose Jaw Mining because he thought that Adco had investigated the prospects of the company.In fact,Adco had investigated Goose Jaw Mining and was recommending it to its clients.As it turned out,Benson ignored Jack's advice but Carson bought a lot of Moose Jaw shares and lost all of his money when the mining operation went broke.Which one of the following statements accurately describes Carson's legal situation?

Accepted Answer

Jack, as a financial-planning consultant, owed a duty of care to Carson. He breached this duty by giving incorrect advice, which led to Carson's loss. However, there was no contractual relationship between Carson and Jack, so Carson cannot sue on that basis. Vicarious liability is not applicable here as the mistake was not made while Jack was carrying out his duties for Adco. Finally, the fact that Jack was under the influence of alcohol does not absolve him of liability for his actions. Therefore, E is the best choice.

Question 6

An employee prepared an appraisal of a property for his real-estate development company.The employee had been told that the appraisal would be used by the company to attract a potential investor,Mr.Jones,for the company's client,Mr.Lee.Because the appraiser carelessly forgot to check the recent changes in the zoning by-laws,the appraisal was not accurate.Mr.Jones was misled about the value of the land and suffered a financial loss of $200,000.On these facts,which of the following is true?

Accepted Answer

The scenario describes a situation where the employee (appraiser) was negligent in his duties which resulted in Mr. Jones suffering a financial loss. As a result, Mr. Jones can take legal action against the appraiser and sue for compensation. To win the case, he needs to prove that the appraiser owed him a duty of care, which he breached by failing to check recent changes in zoning laws, and that the financial loss was a foreseeable consequence of his reliance on the inaccurate appraisal. Therefore, option E is the correct answer.

Question 7

Which one of the following explains the effect of a co-insurance clause?

Accepted Answer

A co-insurance clause provides for the insured to assume part of the responsibility for any loss. Under this clause, the insured is required to carry insurance equal to a specified percentage of the value of the insured property. If the insured fails to meet this requirement at the time of a loss, then the insured shares in the loss by paying a proportionate amount of the loss.

Question 8

In which one of the following would Joe be able to collect the entire amount of insurance claimed?

Accepted Answer

The answer of In which one of the following would...

Question 9

________ provides only a benefit upon death,and the premiums are lower than whole life insurance,which provides coverage in the event of death as well as investment potential and retirement income.

Accepted Answer

Term insurance provides a benefit only upon death, and is generally more affordable than whole life insurance which includes investment features and retirement income. Liability, health, and property insurance are different types of insurance that provide coverage for events other than death. "Death insurance" is not a commonly used term.

Question 10

Which of the following statements does not describe the standard expected of experts?

Accepted Answer

The statement "Common practice always sets the appropriate standard" does not describe the standard expected of experts. While common practice may be considered, it is not the only factor in determining the standard of care for a particular profession. Standards of care are also influenced by research, technology, and other factors, and may evolve over time.

Question 11

Which of the following is not an appropriate matter for insurance coverage?

Accepted Answer

Insurance typically does not cover intentional wrongful acts committed by the insured, such as theft. Insurance is designed to protect against unforeseen losses or damages, not deliberate actions.

Question 12

Where a person owns a half interest in a house valued at $200,000 and has insurance on that property in the amount of $400,000,if the house burns down,causing a loss of $100,000,how much will that person collect?

Accepted Answer

The person owns a half interest in the house valued at $200,000, which means their share is $100,000. The insurance policy is for $400,000 but that is more than the value of the house so the policy is likely to be a replacement value policy. Therefore, the person's claim will be limited to the actual loss of $100,000 and they will receive half of that amount, which is $50,000.

Question 13

In Heitsman v.Canadian Premier Life Insurance Co.,an insurance company denied coverage on the basis of an ambiguous exclusion of liability clause.What did the Court find?

Accepted Answer

The Court applied the contra proferentum rule, which means that any ambiguity in a contract is interpreted against the party that drafted it. Therefore, the exclusion was narrowly interpreted in favour of the insured.

Question 14

________ is the type of insurance most closely associated with torts.

Accepted Answer

Liability insurance is specifically designed to protect individuals or businesses from the costs of a lawsuit in the event that they are found legally responsible (liable) for causing harm or damage to someone else. This type of insurance is closely associated with torts, which are civil wrongs that cause harm or injury to someone else and result in legal liability for the person who committed the wrongful act. Liability insurance can provide coverage for both bodily injury and property damage claims, and can protect individuals or businesses in various types of situations where legal liability may arise, such as accidents, product defects, or professional errors and omissions.

Question 15

In which of the following situations will the insured be able to collect the entire amount of the insurance claimed?

Accepted Answer

In option C, Joe took out a $50,000 policy against loss to the house, and the value of the house was also $50,000. Therefore, Joe will be able to collect the entire amount of the insurance claimed, which is $50,000. In options A, B, D, and E, the insured is claiming more than the actual value of the item or property lost, and therefore, they will not be able to collect the entire amount of the insurance claimed.

Question 16

Property insurance should correspond to the actual value of the property for all of the following reasons except

Accepted Answer

The answer of Property insurance should correspond to the actual...

Question 17

A recent innovation in the insurance industry is ________ where several types of liability are bundled together,allowing the insured higher limits of coverage for a more economical premium.

Accepted Answer

This describes umbrella liability insurance, which combines different types of liability coverage and provides higher limits at a lower cost compared to purchasing separate policies.

Question 18

Joe entered a store and approached a display of china.He was examining an extremely valuable vase and carelessly dropped it,destroying it.Which of the following is correct with respect to his liability?

Accepted Answer

Joe is liable for the damage he caused to the valuable vase. If the store has insurance coverage, the insurance may pay the store for the loss, but they may also pursue Joe for repayment by suing him for negligence. Therefore, even if the store has insurance coverage, Joe is not absolved of his liability.

Question 19

In which one of the following would Joe be able to collect the entire amount of insurance claimed?

Accepted Answer

The answer of In which one of the following would...

Question 20

Jones bought insurance on a house when it was being used as his residential dwelling.He subsequently rented out the building to three members of a motorcycle gang.The insurance company was not notified of the change.What would be the result if the house is destroyed by fire?

Accepted Answer

When Jones rented out the home to the motorcycle gang, it became a commercial property and a different type of insurance policy is required. Jones' failure to notify the insurance company of this change would void the policy, and the insurance company would not have to pay for any damages caused by the fire.

Quiz 5: Negligence,Professional Liability,and Insurance

To win his action in negligence against a professional person,the plaintiff must prove,among other things,that the defendant's conduct was below an acceptable standard of care.Which of the following is the legal standard of care demanded of a professional person?

In most Canadian jurisdictions,________ can be obtained on an individual basis with an insurance corporation,but it is more often acquired by businesses as part of an employee benefits package.

Business interruption insurance is designed to cover which of the following situations?

Often,a business suffering a loss from a fire will have insurance to cover the property damage,but there will be nothing to cover the revenue losses the business suffers during the period it is closed down for repairs.What form of insurance will cover the latter issue?

Which one of the following explains the effect of a co-insurance clause?

In which one of the following would Joe be able to collect the entire amount of insurance claimed?

________ provides only a benefit upon death,and the premiums are lower than whole life insurance,which provides coverage in the event of death as well as investment potential and retirement income.

Which of the following statements does not describe the standard expected of experts?

Which of the following is not an appropriate matter for insurance coverage?

Where a person owns a half interest in a house valued at $200,000 and has insurance on that property in the amount of $400,000,if the house burns down,causing a loss of $100,000,how much will that person collect?

In Heitsman v.Canadian Premier Life Insurance Co.,an insurance company denied coverage on the basis of an ambiguous exclusion of liability clause.What did the Court find?

________ is the type of insurance most closely associated with torts.

In which of the following situations will the insured be able to collect the entire amount of the insurance claimed?

Property insurance should correspond to the actual value of the property for all of the following reasons except

A recent innovation in the insurance industry is ________ where several types of liability are bundled together,allowing the insured higher limits of coverage for a more economical premium.

Joe entered a store and approached a display of china.He was examining an extremely valuable vase and carelessly dropped it,destroying it.Which of the following is correct with respect to his liability?

In which one of the following would Joe be able to collect the entire amount of insurance claimed?

Jones bought insurance on a house when it was being used as his residential dwelling.He subsequently rented out the building to three members of a motorcycle gang.The insurance company was not notified of the change.What would be the result if the house is destroyed by fire?