Chapter 2 Study Guide and Checkpoints

Question 1

identify the five mounting losses of liability insurers of the 1980s

I.D.E.A.L

Answer 1

1. Disproportionately high court awards in the united states
2. Environmental disasters
3. Aviation disasters
4. Inadequate assessment of potentially dangerous risks
5. Latent bodily injury claims

Question 2

identify the five sections of the IBC 2100

Answer 2

1. Coverages
2. Who is an insured
3. Limits of Insurance
4. CGL Conditions
5. Definitions

Question 3

Identify the four coverages of section 1 of the IBC 2100

Answer 3

A Bodily injury and property damage liability
B personal injury and advertising injury liability
C medical payments
D tenants legal liability

Question 4

identify the eight key features of Insuring Agreement I

Answer 4

1. coverage provided for bodily injury and property damage only
2. payment made only for those sums that the insured becomes legally obligated to pay
3. Insurer liable for payments of compensatory damages only
4. coverage is provided only for losses which occurred during the policy period.
5. Injury or damage must be caused by an occurrence
6. loss or damage must take place in the coverage territory
7. insurer’s right and duty to defend any action
8. insurer reserves the right to investigate any claim and settle any claims or action at its discretion

Question 5

identify the three terms containing the definition of bodily injury

Answer 5

1. bodily injury
2. sickness
3. death

Question 6

briefly explain the two key coverages included under the definition of PROPERTY DAMAGE

Answer 6

1. Physical injury to tangible property, including all resulting loss of use of that property
2. Loss of use of tangible property that is not physically injured

Question 7

Who decides those sums that the insured becomes legally obligated to pay?

Answer 7

Only the courts

Question 8

identify the three types of liability that may be faced by business owners

Answer 8

1. tort liability
2. certain contractual liabilities
3. statutory liability

Question 9

Briefly explain what is meant by COMPENSATORY DAMAGES

Answer 9

These damages are intended to attach, as nearly as possible, a dollar value to the injury or damage for which the insured is legally obligated.

Question 10

identify which policy would respond to a claim for bodily injury that occurred 10 years ago.
would it be the current policy or the policy that was in effect 10 years ago

Answer 10

The policy that would respond would be the one in effect at that time.

Question 11

define OCCURENCE

Answer 11

Occurrence means an accident including continuous or repeated exposure to substantially the same general harmful conditions

Question 12

identify the coverage territory of the IBC 2100

Answer 12

1. Canada
2. USA
3. USA territories and possessions

Question 13

identify where suit for any product liability claims must be brought

Answer 13

Canada or the USA

Question 14

insurer must defend an action for which coverage is provided by the policy even if the allegations are groundless false or fraudulent. true or false

Answer 14

TRUE - Duty to Defend

Question 15

the insurers right and duty to defend ends when the coverage limits have been expended to pay the claim. .true or false

Answer 15

TRUE - gotta watch out for those limits

Question 16

Insurer can settle any claim or action at its discretion. true or false

Answer 16

TRUE

Question 17

“Bodily injury” or “property damage” expected or intended from the insureds standpoint is excluded except in a very specific instance. identify the specific instance where intentionally caused injury or damage would be covered.

Answer 17

Use of REASONABLE FORCE to PROTECT PERSONS or PROPERTY

Question 18

Although there is generally no coverage under the policy for damages assumed by the insured under contractor agreements, there are however certain types of day-to-day business contracts that are incidental to the affairs of an insurer,and consequently are covered.
Identify any five such contracts automatically insured

Answer 18

1. A lease of Premises
2. A sidetrack Agreement
3. An elevator maintenance agreement
4. An easement or license agreement re: private railroad crossings at grade
5. indemnification of municipality as required by ordinance

Question 19

are these contracts required to be in writing?

Answer 19

They are NOT but usually will be.

Question 20

will the policy respond to pay any premiums that the insured fails to pay for workers compensation plans or similar?

Answer 20

No. The policy won’t respond if the insured doesn’t pay their workers comp or CPP.

Question 21

will the policy generally respond to pay for injuries to employees were injured in the course of their employment?

Answer 21

No. That is for workers compensation.

Question 22

there are instances when workers compensation will not respond for injured employees identify when the policy will provide contingent employers liability coverage

Answer 22

1. When Liability is assumed under an INSURED CONTRACT
2. employees on whose behalf contributions are made by or required to be made by the insured under the provisions of any workers compensation law

Question 23

identify the two possible solutions for employers whose employees do not automatically fall under the workers compensation act

Answer 23

1. Purchase EMPLOYERS LIABILITY COVERAGE
   (this is like Voluntary Compensation Endorsement)
2. Enroll all employees under the provincial workers compensation plan

Question 24

define automobile

Answer 24

A land motor vehicle, trailer, or semi trailer that is required by law to be insured under a contract evidence by a motor vehicle liability policy, or any vehicle insured under such a contract including any attachments scenery or equipment

Question 25

identify two instances when they would be coverage for watercraft under the ibc 2100

Answer 25

1. Any watercraft while ashore on owned or rented premises 2. non-owned watercraft that is less than 8 metres long and which is not being used to carry persons or property for a charge

Question 26

Does Personal and Advertising Injury Liability respond to claims alleging bodily injury?

Answer 26

Sort of. Covers PERSONAL INJURY which includes consequential bodily injury

Question 27

identify the five coverage is provided under the personal and advertising injury

Answer 27

1. False arrest, detention or imprisonment 2. Malicious prosecution 3. Wrongful entry into or eviction of a person from a room dwelling a premises that the person occupies 4. Defamation/libel/slander 5. Oral or written publication of material that violates a person's right of privacy

Question 28

define FALSE IMPRISONMENT

Answer 28

holding someone without lawful justification in a place against their will

Question 29

define false arrest

Answer 29

False arrest includes a false imprisonment but contains the additional feature of detaining the victims with the INTENTION that they may be turned over to the POLICE for prosecution

Question 30

identify the two conditions to be present in malicious prosecution

Answer 30

1. the complainant was arrested and later released and 2. evidence provided reveal the person making the complaint did not have an honest belief that a crime has been committed but was guided by other improper motive such as a desire to harass or humiliate the victim

Question 31

Who would be a prospect who may be charged with wrongful entry or eviction

Answer 31

A landlord

Question 32

define defamation

Answer 32

statement that causes unjustified injury to the reputation of another person and which results in the loss to that person of the esteem confidence respect and goodwill of a considerable part of the community. There must be a PUBLICATION

Question 33

slander

Answer 33

SPOKEN defamation

Question 34

Libel

Answer 34

WRITTEN defamation

Question 35

identify four activities that constitute an advertising liability exposure and are not covered under this section of the policy

Answer 35

1. Publishing material KNOWN to be false is not insured 2. Publication which occurred prior to the policy period 3. Results in deliberate breaking of the law 4. When the liability is ASSUMED

Question 36

five types of expenses that would be paid under coverage C

Answer 36

1. immediate first aid 2. ambulance charges 3. funeral expenses 4. dental services 5. x-rays

Question 37

3 reasons other than goodwill to include no-fault medical payments in the ibc 2100

Answer 37

1. reduced chance of permanent disability 2. potential for claims alleging negligence is reduced 3. A legal confrontation with the victim over such expenses is avoided

Question 38

give me four persons excluded under coverage C

Answer 38

1. The insured(s) 2. The insureds EMPLOYEES 3. other persons working on behalf of the insured or tenant of the insured 4. any person who is practicing, instructing, or participating in athletics

Question 39

two ways in which tenants legal liability to the owner can be established

Answer 39

1. Tort Liability ( if the tenants negligence results in loss or damage to rented property there is a legal obligation to compensate the owner for the loss) 2. Contractual Liability - tenants agree to assume liabilities and contract would not otherwise be imposed upon them by law

Question 40

how to calculate the minimum limit of tenants legal liability of tenant should purchase

Answer 40

it should have as a minimum be no less than the value of the building or portion of the building occupied by the insured

Question 41

6 exclusions to section A, C and D

Answer 41

1. Asbestos 2. Fungi or Spores 3. Nuclear Energy Liability 4. Pollution Liability 5. Terrorism 6. War Risks

Question 42

Four instances where pollution damage is excluded

Answer 42

1. on the insured's premises 2. at any waste disposal site used for, or by the insured or others 3. while being transported or disposed as waste by or for an insured under the policy 4. at any work site when brought onto the site by the insured

Question 43

Four additional types of claims related expenses that are addressed under supplementary payments

Answer 43

1. Insurers Costs (reconstruct the accident) 2. The cost of bonds to release attachments 3. Reasonable Expenses Incurred 4. all costs tax against the insured in any interest accruing after entry of judgment upon that part of the judgment which is within the applicable in its of insurance (court costs / interest on amount of judgement)

Question 44

two kinds of costs addressed under "costs taxed against the insured"

Answer 44

1. Court Costs | 2. Interest on amount of the judgement

Question 45

when the interest on the amount of judgment is calculated

Answer 45

Commencing from the date of the judgement until the insurer has paid, offered to pay, or deposited in court the part of the judgement that is within the limit of insurance.

Question 46

when the interest on the amount of judgment any restriction as to amount

Answer 46

Restricted to "that part of the judgment which is within the applicable limit of insurance"

Question 47

are supplementary payments included or in addition to the limit of the policy?

Answer 47

In addition to other coverage limits provided by the policy

Question 48

factors calculating premium for premises and operations liability exposure. 4 of them

Answer 48

1. Square footage of the building or occupied by the insured. 2. Occupancy (type of business conducted) 3. Payroll (more employees = more exposure) 4. Location (geo location a facotr)

Question 49

factors calculating premium for products liability exposure

Answer 49

1. Type of product sold 2. Sales volume 3. Territory where they are sold

Question 50

factors calculating premium for completed operations exposure

Answer 50

1. Type of work performed | 2. Gross Receipts - directly related to the amount of work performed

Question 51

factors calculating premium for personal injury exposure

Answer 51

Sames as coverage A

Question 52

Factor calculating premium medical payments exposure

Answer 52

None

Question 53

factor calculating premium for tenants legal liability exposure

Answer 53

35% of the building rate

Question 54

what are the three names a Commercial General Liability policy can be issued

Answer 54

1. individuals 2. partnerships limited liability partnerships and joint ventures or limited liability companies 3. organizations, other than partnerships or joint ventures

Question 55

who are the five persons engaged in the business were also insurance under the policy

Answer 55

1. owners partners spouses directors & officers 2. employees and volunteer workers 3. a non-employee or organization acting as the insured's real estate manager 4. those having temporary custody of property after the death of the insured 5. upon the death of the insured the legal representative appointed to assume control of the business

Question 56

identify when a newly-formed or acquired business would be automatically covered under the existing IBC 2100

Answer 56

The named insured purchases all or a majority interest in an existing corporation or forms in new one during the policy. Coverage is automatically provided unless a separate policy already exists

Question 57

one type of newly-formed business that would not automatically be covered unless specifically st unless specifically statedated in the declarations

Answer 57

A seperate policy already exists for it

Question 58

identify for those newly-formed businesses that are covered the length of time for automatic coverage

Answer 58

1. 90 days or 2. Until expiry of the policy, whatever is sooner

Question 59

define aggregate limit

Answer 59

the most of the policy will pay during the policy. for all claims for which insurance is provided

Question 60

define occurrence limit

Answer 60

this limit represents the maximum to be paid by the insurer and any of one occurrence

Question 61

if an insured goes bankrupt the insurer can avoid its liability under the policy true or false

Answer 61

False

Question 62

all claims will be paid in canadian currency true or false

Answer 62

TRUE

Question 63

verbal changes to the policy are acceptable true or false

Answer 63

FALSE

Question 64

the insurer has no right to the insureds RECORDS. true or false

Answer 64

FALSE

Question 65

legal action against the insurer is allowed

Answer 65

TRUE - "Legal Action against us"

Question 66

premiums may be subject to adjustment true or false

Answer 66

TRUE

Question 67

3 items contained in definition of PRODUCTS

Answer 67

1. Any goods or products 2. Containers of the products 3. Warranties or representations made respecting the fitness, quality, durability, performance or use of such products, including their containers.

Question 68

4 items contained in definition of WORK

Answer 68

1. work or operations by you or on your behalf 2. materials parts or equipment furnished in connection with such work 3. work actually done 4. work performed on behalf the of insured

Question 69

five factors for the insurer to consider when deciding how much insurance is enough

Answer 69

1. the extent previous words made by the courts for similar types of businesses 2. inflation 3. existence of insurance 4. territory of operations 5. ability of the business to absorb certain losses

Question 70

what could happen to a business OWNER if they do not carry adequate limits of insurance to satisfy any damages awarded by the court

Answer 70

they may find their salaries garnished and physical property seized

Question 71

many liability claims against insureds may be fraudulent. two advantages of carrying liability insurance

Answer 71

1. you are provided with the services of professional adjusters who are trained to detect fraudulent claims 2. defense costs are included

Question 72

what are the three theories of determining when an occurrence has occurred

Answer 72

1. exposure theory (injury occurs when person was in physical contact with the harmful substance 2. exposure in residence theory - assumption is made that the disease or other bodily injury continues after the exposure to the hazardous substance has ceased 3. MANIFESTATION THEORY - the injury is assumed to have occurred only when recognized or diagnosed

Question 73

three features of the CLAIMS MADE POLICY in the IBC 2200

Answer 73

1. coverage triggered when claim for damages is made 2. coverage limited by retroactive date (this date will be stated on the policy) 3. reporting period can be extended for an additional premium (this fills in the gap from the retroactive date feature)

Question 74

three instances when the extended reporting. endorsement could be added to the ibc 2200 form

Answer 74

1. going out of business 2. changing from a claims-made to an occurrence form policy 3. replacing a claims-made policy with another insurer

Question 75

two categories of professionals

Answer 75

1. those who administer healthcare or other professional medical services 2. those who give advice and counselling

Question 76

are PROFESSIONAL LIABILITY policies written on occurrence basis or claims-made basis

Answer 76

Claims-Made Basis

Question 77

although the first duty, in common law, by a board of directors is to the company as a whole, identify any three others they also owe a duty to, as established by federal and provincial governments

Answer 77

1. shareholders 2. creditors 3. employees and the public

Question 78

two problems with underlying insurance policies that would encourage a business owner to purchase an umbrella policy

Answer 78

1. inadequate limits | 2. inadequate coverage

Question 79

two purposes achieved by the self-insured retention that is found an umbrella policy. The SIR

Answer 79

1. serves as a deductible for losses not anticipated by the insurer 2. encourages the insured to purchase coverage against obvious liability exposures excluded under the primary policy.