AMF Damage Insurance flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Indemnity principle

The insured is restored to approximately the pre-loss financial position, never better off. Recovery is capped at actual loss, and betterment or profit from a loss is not covered.

Utmost good faith

A reciprocal duty requiring the insured to disclose all material facts and the insurer to deal fairly. Breach can allow nullity or reduced indemnity.

Duty to defend

The insurer's obligation to fund defence of claims whose allegations potentially fall within coverage. It is broader than the duty to indemnify and applies even to groundless suits.

Insurable interest

A pecuniary relationship between the insured and the insured object such that loss causes financial harm. It must exist at the time of loss for property claims.

Actual cash value

Replacement cost minus depreciation, reflecting the property's value immediately before loss. It is the default settlement basis in many property policies.

Coinsurance clause

A property condition requiring the insured to carry a limit equal to a stated percentage of value. Falling short reduces the indemnity proportionally.

Business interruption coverage

Pays lost profits and continuing fixed expenses during the period of restoration after an insured property loss, subject to a stated indemnity period and limit.

Mortgage clause

A policy provision protecting a lender's interest by requiring notice of cancellation and payment of loss proceeds to the mortgagee to the extent of its interest.

Occurrence policy

Liability coverage responding to injury or damage that happens during the policy period, regardless of when the claim is later reported.

Claims-made policy

Liability coverage responding to claims first made during the policy period, often subject to a retroactive date before which no coverage applies.

Aggregate limit

The maximum total the insurer will pay for all covered claims during a policy period, distinct from the per-occurrence limit applying to each loss.

Professional liability coverage

Errors and omissions insurance covering negligent acts, errors, or omissions in rendering professional services, commonly written on a claims-made basis with a retroactive date.

Third-party liability coverage

Automobile coverage paying damages the insured is legally liable to pay others for bodily injury or property damage, up to the policy limit, including defence costs.

Accident benefits

No-fault automobile benefits providing medical, rehabilitation, and income replacement payments to the insured and passengers regardless of who caused the accident.

Direct compensation property damage

A system where the insured's own insurer pays for vehicle damage caused by another identified driver, without waiting for the at-fault party.

Facility association

A residual market mechanism providing automobile insurance to drivers who cannot obtain coverage in the voluntary market, often at higher rates.

Beneficiary designation

A clause naming who receives life insurance proceeds. An irrevocable designation cannot be changed without the beneficiary's consent and takes priority over the estate.

Disability income insurance

Replaces a percentage of earned income, typically 60 to 85 percent, during disability after an elimination period, based on total or partial disability definitions.

Critical illness insurance

Pays a lump sum on diagnosis of a covered condition after a survival period, providing funds independent of actual medical expenses incurred.

Incontestability period

A contract period, commonly two years, after which the insurer cannot contest the policy for misrepresentation except for fraud or non-payment of premium.

Conflict of interest

A situation where a representative's personal or financial interest could bias advice. It must be disclosed in writing and managed or the client referred elsewhere.

Needs analysis

A documented review of the client's situation, objectives, and exposures that justifies the recommended coverage and records the client's instructions.

Continuing education requirement

Mandatory professional development hours a licensed representative must complete each renewal cycle to maintain certification and remain current on rules and products.

Confidentiality duty

The obligation to protect client information from unauthorized disclosure, permitting release only with consent or where required by law or a regulator.

Moral hazard

A risk factor involving dishonest intent or character, such as a history of fraudulent claims, which increases the likelihood of a fabricated or exaggerated loss.

Proof of loss

A formal sworn statement detailing the amount and circumstances of a claim. Inaccurate or inflated proof of loss can void coverage or reduce the indemnity.

Subrogation

The insurer's right, after paying a claim, to pursue the negligent third party responsible for the loss, standing in the insured's legal position.

Contract of adhesion

A policy drafted by the insurer and accepted or rejected by the insured. Ambiguity in its wording is generally construed against the insurer.

Statutory conditions

Minimum policy terms imposed by law that are deemed part of the contract and override inconsistent wording, setting rights and duties for both parties.

Material change in risk

A change increasing the risk, such as vacancy or new business use, that must be disclosed and may require an endorsement or void coverage.

AMF

The Autorité des marchés financiers, Quebec's regulator, which licenses representatives and firms, supervises solvency and market conduct, and enforces the distribution act.

Tied selling

A prohibited practice of conditioning the sale of one product on the purchase of another, restricting client choice and contrary to market conduct rules.