Chapter 1 Section 1 Part 5

Question 1

explain purpose of insurance (dealing with fraud)

Answer 1

not deliberate, past losses (accidental, future)

Question 2

peril (definition)

Answer 2

cause of loss

Question 3

three examples of direct loss

Answer 3

• electrical freezer motor malfunctions
• apartment destroyed by fire
• business destroyed by windstorm

Question 4

Three examples of indirect loss

Answer 4

• electrical freezer malfunctions; food in freezer
• apartment destroyed by fire; rent
• business destroyed by windstorm; profits

Question 5

factors considered when determining amount to pay insured in event of insured loss (property) (3)

Answer 5

• insurable interest (property)
• actual cash value (of property)
• limit of insurance

Question 6

which of three factors (to be considered when determining amount to be paid to insured) will be paid to insured?

Answer 6

least

Question 7

actual cash value (definition, 2)

Answer 7

• new/replacement cost
• at time of loss
• less depreciation

Question 8

Three factors considered when calculating depreciation

Answer 8

condition
life expectancy, normal
resale value

Question 9

replacement cost (definition, 2)

Answer 9

• repair/replacement cost
• lost, damaged property
• with new, of like kind, quality
• less depreciation

Question 10

valued basis (3)

Answer 10

both insured, insurer
agree at time policy issued
cash value of property

Question 11

property that may be insured on valued basis (2 examples)

Answer 11

old jewellery

antiques

Question 12

contract (definition, 2)

Answer 12

agreement between 2+ persons

creates obligation to do or not do thing