AMF Damage Insurance cheat sheet

Damage insurance indemnifies a person for loss, damage, or liability; it is distinct from insurance of persons, which pays a stipulated sum on a life or health event.

The indemnity principle caps recovery at the insured's actual financial loss; betterment is not covered, and subrogation transfers the insured's recovery rights against the wrongdoer to the insurer.

Insurable interest requires a pecuniary relationship between the insured and the insured object at the time of loss; absence of it voids the indemnity claim.

Utmost good faith imposes reciprocal duties of disclosure and representation; the insured must reveal facts a reasonable insurer would consider material to underwriting.

A material misrepresentation or concealment lets the insurer seek nullity of the policy or a proportionate reduction of indemnity, depending on the applicable statute and the insured's good or bad faith.

The insurer's duty to defend is broader than the duty to indemnify: defence is triggered by allegations potentially within coverage, even if the claim ultimately proves unfounded.

In Quebec, the Civil Code of Québec and the Act respecting the distribution of financial products and services govern contracts and distribution; federally, OSFI supervises solvency of insurers.

Rating factors must be actuarially justified and non-discriminatory; insurers file policy forms and rates with regulators and must issue a compliant policy wording.

Claims handling deadlines and interest rules are statutory: an insurer that delays or refuses indemnity without valid reason may owe additional damages and, in some provinces, penal interest.

Property policies cover direct physical damage to insured property plus indirect losses such as business interruption; perils are either named-peril or all-risk (open peril) wordings.

Replacement cost pays the cost to repair or replace with new property of like kind and quality; actual cash value deducts depreciation and betterment from that amount.

Coinsurance clauses require the insured to carry limits at a stated percentage of value; indemnity is reduced by the ratio of carried limit to required limit when underinsured.

Average (proportional) clauses apply a similar reduction whenever the insured limit is below the value of the property at the time of loss.

A deductible is subtracted before applying coinsurance or average calculations; a franchise (franchise deductible) is waived entirely if the loss exceeds the threshold.

Standard exclusions typically include wear and tear, gradual deterioration, faulty workmanship, intentional acts, and by-laws or ordinance losses unless endorsed.

Business interruption indemnity equals gross earnings or profits lost during the period of restoration, plus continuing fixed expenses, subject to a stated indemnity period.

Mortgage clauses protect the lender's interest by requiring notice of cancellation and loss payment to the mortgagee to the extent of its interest.

Subrogation in property insurance lets the insurer pursue a negligent third party after paying the claim; the insured must not waive recovery rights before or after loss.

Third-party liability insurance covers the insured's legal obligation to pay damages for bodily injury or property damage caused to others by an occurrence or accident.

Coverage is triggered by the allegations in the claim, not merely by the outcome; the duty to defend attaches when allegations fall potentially within the insuring agreement.

Occurrence-based policies respond to injury or damage that happens during the policy period, regardless of when the claim is made; claims-made policies respond to claims first made during the period.

The insuring agreement usually covers compensatory damages, defence costs, and sometimes punitive damages where insurable by law; fines and penalties are generally excluded.

Exclusions commonly include intentional acts, contractual liability assumed by the insured, damage to the insured's own property, and pollution unless endorsed.

Aggregate limits cap total payments per policy period, while per-occurrence limits cap each single loss; defence costs may be inside or outside the limit as stated.

Additional insureds and waivers of subrogation are granted by endorsement to satisfy contractual risk-transfer requirements in leases and construction contracts.

Professional liability (errors and omissions) responds to negligent acts, errors, or omissions in rendering professional services, often on a claims-made basis with a retroactive date.

Directors and officers liability protects individuals for wrongful acts in their management capacity; the corporate entity may be covered by separate Side A/B/C structures.

Every jurisdiction mandates third-party liability coverage for bodily injury and property damage caused to others by the insured vehicle.

The standard automobile policy form is defined by provincial statute or regulation; mandatory coverages and minimum limits vary by province.

Section A third-party liability pays damages the insured is legally liable to pay, up to the policy limit, and includes defence costs.

Section B accident benefits provide no-fault medical, rehabilitation, and income-replacement benefits to the insured and passengers regardless of fault.

Section C covers direct and accidental loss or damage to the insured vehicle, including collision, comprehensive, and specified perils, subject to deductible and actual cash value or replacement cost.

Uninsured and underinsured motorist coverage responds when the at-fault driver lacks insurance or has insufficient limits.

Rating is based on territory, vehicle use, driver class, claims history, and vehicle symbol or rate group; a driving record with convictions or at-fault claims increases premium.

The facility association or residual market provides coverage for drivers who cannot obtain insurance in the voluntary market.

A total loss settlement compares actual cash value with the cost of repair; the insurer may take salvage, and the insured may retain it by paying its salvage value.

Life insurance pays a stipulated death benefit rather than indemnifying a loss; it is not subject to the indemnity principle or subrogation.

Insurable interest in life insurance must exist at the time the contract is formed; a person may insure their own life and, with consent, the life of another.

Beneficiary designations are revocable or irrevocable; an irrevocable designation cannot be changed without the beneficiary's consent and takes priority over the estate.

Disability insurance replaces a percentage of earned income, typically 60 to 85 percent, and is governed by definitions of total and partial disability and an elimination period.

Critical illness insurance pays a lump sum on diagnosis of a covered condition after a survival period, and is distinct from disability income coverage.

Accident and sickness (A&S) policies are generally individual or group contracts that pay benefits for medical expenses or income replacement.

Group life and health plans are underwritten at the group level; eligibility, waiting periods, and coordination of benefits with provincial health plans affect the amount paid.

Suicide exclusions, incontestability periods, and grace periods are standard contract provisions that limit or defer insurer liability in life and health coverage.

The representative must act with honesty, integrity, and competence, place the client's interest first, and disclose any conflict of interest in writing.

A needs analysis must document the client's situation, objectives, and recommended coverage; the recommendation must be justified and the client's instructions recorded.

Full disclosure to the insurer is required: the representative must accurately transmit material information and never misrepresent coverage to close a sale.

Confidentiality protects client information; disclosure is permitted only with consent or where required by law or a regulator.

Commissions and remuneration must be disclosed on request, and the representative must not accept undisclosed inducements that could bias advice.

Continuing education hours and licensing renewal are mandatory; a representative must not practice with a suspended or lapsed licence.

Complaints must be handled promptly and escalated to the insurer and the regulatory authority (for example, the AMF in Quebec) when unresolved.

Records must be retained for the period required by regulation and be accurate, complete, and retrievable for audit or client access.

Underwriting assesses physical, moral, and morale hazards; physical hazards are tangible conditions, moral hazards involve dishonest intent, and morale hazards involve carelessness.

Risk management uses avoidance, reduction, retention, and transfer; insurance is a transfer mechanism and is not appropriate for every exposure.

A loss must be reported promptly; the insured must cooperate with the investigation, mitigate further damage, and preserve evidence and documentation.

The adjuster determines coverage, investigates the loss, quantifies the indemnity, and negotiates settlement within policy terms and authority.

Proof of loss is a formal sworn statement of the claim amount; inaccurate proof of loss can void coverage or reduce the indemnity.

Salvage and subrogation recoveries reduce the net cost of a claim to the insurer and may affect the insured's deductible or premium history.

Premium is earned over the policy term; cancellation rules and short-rate or pro-rata refunds are set by statute and policy conditions.

Reinsurance transfers risk from the primary insurer to a reinsurer and does not change the insured's rights under the original policy.

A policy is a contract of adhesion; ambiguity in wording is construed against the insurer, but clear exclusions are enforced as written.

Policy structure: declarations, insuring agreement, conditions, exclusions, and definitions; endorsed wording prevails over printed wording where they conflict.

The insurer may cancel for non-payment, misrepresentation, or material change in risk, subject to statutory notice periods.

The insured must comply with conditions precedent such as notice, proof of loss, and cooperation; breach can bar recovery.

Statutory conditions are deemed part of the policy and override inconsistent policy wording; they set minimum rights for both parties.

Waiver and estoppel can prevent an insurer from relying on a breach if it has led the insured to believe coverage continues.

A material change in risk, such as vacancy or a new business use, must be disclosed and may require an endorsement or void coverage.

Consumer protection law prohibits unfair or abusive clauses and requires plain-language disclosure of key terms and costs.

In Quebec, the Autorité des marchés financiers (AMF) licenses representatives and firms, supervises solvency and market conduct, and enforces the distribution act.

The distribution act requires certification by discipline and level; damage insurance representatives must hold the appropriate certificate and comply with the code of ethics.

Tied selling, coercive practices, and unauthorized practice are prohibited; representatives must act within the scope of their licence and registration.

Advertising and representations must be accurate, not misleading, and must not disparage competitors or guarantee results.

Suitability and know-your-client obligations apply to recommendations; the representative must match products to the client's needs and risk tolerance.

Insurer solvency is monitored through capital adequacy and periodic reporting; policyholders have priority rights under liquidation and guarantee funds where established.

Market conduct reviews examine disclosure, claims handling, complaint resolution, and record retention; sanctions include fines, suspension, and licence revocation.

Homeowner policies combine property coverage on the dwelling and contents with personal liability, voluntary medical payments, and voluntary property damage coverage.

Personal liability coverage responds to the insured's legal liability as an occupant, tenant, or homeowner; it usually excludes business activities and automobile liability.

Scheduled endorsements cover high-value items such as jewellery, fine art, or collectibles, often without deductible and on a valued basis.

A tenant policy covers contents and liability but not the building; the landlord insures the structure and may require a certificate of insurance.

Water damage, sewer backup, and overland flooding are separate exposures with distinct endorsements and limits; standard policies exclude or cap them.

Vacancy and unoccupancy increase risk and may suspend or reduce coverage after a stated number of days.

A personal umbrella policy provides excess liability above auto and homeowner limits and may drop down for uncovered claims, subject to a self-insured retention.

Identity theft, home business, and rental income exposures require endorsements; undisclosed business use can void the claim.

Fault determination in automobile claims follows statutory rules or a fault charter; fault affects accident benefits, deductible recovery, and premium rating.

Direct compensation property damage (DCPD) pays the insured's vehicle damage from the at-fault insurer without waiting for the third party, where the province uses that system.

Accident benefit schedules set maximum weekly income replacement, medical/rehabilitation limits, and death benefits; amounts are indexed and vary by province.

The insurer must give written notice of a claim decision, and the insured can dispute through internal review, arbitration, or the regulator.

Liability claims require proof of negligence, causation, and quantifiable damages; contributory negligence reduces recovery proportionally.

Reserves are set for reported and incurred-but-not-reported claims; reserve adequacy is reviewed by actuaries and regulators.

Fraud indicators include late reporting, inconsistent statements, staged accidents, and exaggerated injuries; suspected fraud must be investigated and reported.

Salvage, subrogation, and third-party recoveries are pursued to reduce loss costs and are recorded against the claim file.

Premium equals rate times exposure base; exposure bases include sales, payroll, vehicle count, or property value depending on the line.

Loss ratio equals incurred losses divided by earned premium; combined ratio equals loss ratio plus expense ratio, and a ratio above 100 percent indicates an underwriting loss.

Written premium is recognized when the policy is issued; earned premium is recognized over the policy term as coverage is provided.

IBNR reserves cover claims incurred but not yet reported; development factors project ultimate losses from reported amounts.

Rate-making requires credibility of data, trend factors, and expense loading; rates must be neither inadequate nor excessive nor unfairly discriminatory.

Investment income offsets underwriting results; the operating ratio combines the combined ratio with investment income to measure overall profitability.

Reinsurance affects net retained risk and capital requirements; ceded premium and recoveries are reported separately from gross amounts.

Commercial property policies may use blanket limits across locations, reporting forms, or agreed-value clauses for unique risks.

Equipment breakdown coverage responds to accidental breakdown of boilers, machinery, and electrical equipment, which standard property policies exclude.

Crime coverage includes employee dishonesty, forgery, robbery, and computer fraud; each has distinct definitions and limits.

Builders risk covers property under construction, including materials and temporary works, and typically terminates at occupancy or completion.

Cyber insurance covers data breach response, network interruption, and privacy liability; sublimits and exclusions for infrastructure failure apply.

Business interruption requires a period of restoration and proof of continuing expenses and lost profits; extra expense coverage pays costs to resume operations.

Boiler and machinery, inland marine, and difference-in-conditions policies fill gaps left by standard property forms.

Environmental liability covers pollution conditions on or off site and is usually written on a claims-made basis with a retroactive date.

Underwriters must rate on objective, actuarially supported criteria and cannot use prohibited grounds such as race, religion, or disability without justification.

Claims adjusters must investigate both favourable and unfavourable facts and must not deny a claim without a documented coverage basis.

A conflict of interest arises when a representative's personal interest could influence advice; it must be disclosed and, where necessary, the client referred elsewhere.

Confidentiality extends to medical and financial information obtained during underwriting and claims; access is limited to those with a need to know.

Misrepresentation by the insured must be assessed for materiality and intent; the representative must not coach clients to conceal facts.

Complaint handling requires a written record, timely response, and escalation to the insurer's complaint officer and then the regulator.

Penalties for unethical conduct include discipline by the regulator, licence suspension, fines, and civil liability for damages.

The application, declarations, and any endorsements form the contract; the insured must verify accuracy and report changes promptly.

Binders provide temporary coverage pending policy issuance and are subject to the terms of the eventual policy.

Renewal requires re-underwriting where the risk has changed; the insurer must give statutory notice of non-renewal or premium change.

Endorsements amend coverage mid-term and must be dated, signed, and attached; conflicting endorsements are resolved by specific over general wording.

Certificates of insurance evidence coverage but do not amend the policy or create rights for third parties.

Cancellation by the insured may trigger short-rate refunds; cancellation by the insurer for non-payment is pro-rata in many jurisdictions.

Claims history and loss runs support renewal rating and must be provided on request to the insured or broker.