Chapter 8 Endorsements Key Point Questions

Card Set Information

Author:
Hirose187
ID:
264838
Filename:
Chapter 8 Endorsements Key Point Questions
Updated:
2014-03-27 15:57:11
Tags:
Chapter Endorsements Key Point Questions
Folders:

Description:
Chapter 8 Endorsements Key Point Questions
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user Hirose187 on FreezingBlue Flashcards. What would you like to do?


  1. What is an endorsement?
    Endorsement: are attachments to a policy which vary the terms of the contract.

    - An endorsement overrides any provision in the policy which is inconsistent with it, unless a stipulation to the contrary is embodied therein.

    - An endorsement can broaden, restrict, or alter coverage; in other words, it can make almost any change agreed upon between insured and insurer, subject to the provisions of The Insurance Act and Regulations.
  2. How do Basic Autopac and Optional Autopac deal with changes that would be addressed by the use of endorsements under an automobile policy?
    Endorsements are not issued for vehicles insured by the basic Autopac or by Optional Autopac. Insured, amended registrations and, where necessary, new license plates are issued.

    ex: 1) if an individual purchases a substitute automobile of the same type and it is used for the same purposes as the one for which it was substituted, a new registration is issued. The difference is premium is calculated at the time of the change and pro-rated for the remainder of the policy term. The license plates are transferred to the substitute auto.

    2) Taxis have different insurance requirements and different plates. Accordingly, if an insured wished to change the use from private passenger to taxi (assuming the regulatory requirements have been satisfied) it is necessary to cancel and return the old plates and apply for new ones.
  3. Does the SRE department use endorsements?
    Yes, endorsements issed by SRE are those approved for use by private insurers.
  4. When might an endorsement be required to give permission to drive other automobiles?
    Drive Other Automobiles(MSEF 2)

    The purpose of this endorsement is to expand on the definition of insured person for the purose of 3rd party liability when operating a non-owned or other automobile. The standard wording restricts coverage to named insured and spouse only. This endorsement allows drivers that are listed on the endorsement to have the benefit of Third Party Liability coverage while operating other automobiles or non-owned automobiles. It amends the definition of automobile in the General Provisions of the policy.
  5. What coverage is available to an individual who drives government-owned automobiles, and how is it effected?
    The insured may have his or her Owner's Policy endorsed to provide coverage against liability imposed by law or assumed under contract or agreement for loss or damage arising from one of the perils insured against. The perils are specified in the endorsement and are the same as those set out in the Owner's Policy.

    The following special conditions apply to this endorsement:

    - No more than 1 automobile owned by the government is in the care of the insured at one time.

    - Coverage under this endorsement is subject to a limit per occurrence under the physical damage section
  6. Give an example of one situation that requires an endorsement giving permission to use the automobile for a particular purpose.
    a) 1 endorsement is designed to counter, in part at least, the effect of one of the "Excluded Uses" under the General Provisions, Definitions and Exclusions of the Owner's Policy. Permission is granted to carry specific types of explosives, and coverage is granted for specific sections of the policy while the explosives are being carried. Rating and coverage under this endorsement is based on the explosive or incendiary power of the type of explosive to be carried.

    b) Another endorsement similar to the one above grants permission for the carriage of radioactive materials.
  7. What coverage can be acquired for loss resulting from conversion by someone in lawful possession of the automobile?
    Endorsement brings coverage back in if lessee steals vehicle. Policy must have coverage for theft.

    If a lessee disappears with the vehicle, a policy with this endorsement will pay the loss, assuming theft is otherwise covered under the policy. Coverage is subject to a deductible.
  8. When is a school bus endorsement necessary, and what functions does it perform?
    It sets a 3rd Party Liability limit on a per person basis rather than on an aggregate basis, although an aggregate can be specified. It performs the following functions:

    a) Gives permission to use the automobile to carry passengers for compensation or hire for school purposes only

    b) Provides specific coverage and separate limits for passenger hazard in addition to the Third Party Liability limits - the coverage for passengers is provided by the endorsement as long as the bus is being used for school purposes, otherwise the coverage does not apply.

    c) It makes provision for insuring the insured's legal liability for loss of or damage to property of passengers in the school bus
  9. You wish to operate your automobile as a taxi. How do you ensure that you have proper coverage?
    1 Endorsement is required for risks such as taxis; private buses used to transport employees; hotel, golf, and country club buses; car pools which do not qualify under the General Exclusions of the Owner's Policy; and other uses where permission to carry passengers for compensation or hire is required, and which would not qualify for 1 of the other specifically designed endorsements that we are about to discuss.
  10. How does the standard automobile policy deal with vehicles used for carrying explosives?
    a) 1 endorsement is designed to counter, in part at least, the effect of one of the "Excluded Uses" under the General Provisions, Definitions and Exclusions of the Owner's Policy. Permission is granted to carry specific types of explosives, and coverage is granted for specific sections of the policy while the explosives are being carried. Rating and coverage under this endorsement is based on the explosive or incendiary power of the type of explosive to be carried.
  11. As an Underwriter, what exposure would you want to exclude when insuring an amphibious vehicle?
    The water risk would be insurable under another form of policy, therefore, an endorsement is attached to the policy excluding coverage for the marine use of the vehicle.
  12. What is the purpose of the Property Damage Reimbursement endorsement and how does it operate?
    An insured may wish to have a 3rd party liability property damage deductible or it may also be imposed at the insurer's request to minimize small property damage claims for which the named insured may be responsible.

    When it is attached to a policy, the insured agrees to reimburse the insurer the sum stated in the endorsement or the amount of the loss, whichever is less.

    Irrespective of the amount of the loss, it must be reported to the insurer in accordance with the Statutory Conditions. The insurer will investigate, settle and pay the loss in the usual way. The insured will then reimburse the insurer for its outlay or the sum stated on the endorsement. The endorsement does not authorize insureds to settle claims on their own.

    It is mainly used when heavy vehicles such as trucks are insured.
  13. When might you need to restrict glass coverage in the Comprehensive sub-section of your automobile policy?
    Where gravel roads are common, the incidence of glass claims is high. Insurers offer reduced premiums when this endorsement is used to limit glass cover under comprehensive to specified perils which do not include damage caused by gravel and stones. Sometimes underwriters may insist on this endorsement if an insured makes frequent glass claims.
  14. How should you deal with the insurance on an automobile that you do not drive from October to May?
    An endorsement is available to provide for suspension of coverage at any time of the year. This may occur when an insured wishes to park a favourite automobile for the winter or an insured takes an extended vacation and will not be operating his or her vehicle. This endorsement suspends coverage in relation to the use or operation of the described, new acquired and temporary substitute automobile.

    However, it maintains coverage in full force for liabilities arising from the "ownership" of a described automobile while it is parked and struck by another insured automobile and also maintains coverage for operations of other automobiles (non-owned) as well as Accident Benefits coverage while named insured, spouse and dependents, and listed drivers are injured as occupants of a non-owned automobile or struck by an uninsured non-owned automobile.

    The suspended policy will remain in force for primary liability insurance, in the event the insured is driving a non-owned uninsured vehicle, and as excess insurance, if he drives an insured vehicle. As for Accident Benefits, the policy will be primary where there is no other insurance.

    Another endorsement is available to reinstate coverage.
  15. What would a Limitation of Amount (MSEF 19) endorsement be used?
    This endorsement was designed to limit the settlement on an automobile, specifically in cases where the ACV exceeds the rating valuesused in automobile rating manuals. The ACV should be calculated using all attached equipment to the vehicle. Attached equipment constitutes a part of the automobile and is therefore under all sections of the Owner's Policy. This endorsement restricts settlements to the lesser of ACV and the amount listed on the endorsement.

    In Manitoba, this endorsement is not required for private passenger automobiles as they have physical damage cover under Autopac. Consequently, the endorsement is used for commercial vehicles not eligible for physical damage coverage through Autopac.
  16. What coverage does the Owner's Policy provide for damage to property of passengers? How can this be extended?
    The Owner's Policy excludes liability for damage to the property of passengers. Some risksĀ  such as taxis and public buses may require coverage for legal liability for damage to such property due to conditions in their license requirements. An endorsement is available with a specified limit of liability for property of passengers.
  17. Compare the 2 types of mortgage endorsements available for use with an automobile policy.
    There are 2 different endorsements:

    a standard one, not subject to an additional premium

    a broad one, subject to an additional premium

    a) The Lienholder Protection endorsement is designed to protect the interest of the lienholder, mortgage or assignee (as the case may be) in the following ways:

    1) If the damage to the automobile covered by the physical damage section of the policy is not repaired, or the lost or damaged parts are not replaced, the loss will be payable - as their interests may appear - to both the mortgagee and the insured

    2) The insurer agrees to notify the mortgagee, in writing, of cancellation of the policy, giving 15 days' notice. This obligation does not extend beyond the expiration date of the policy

    Then, there is provision in the endorsement to note the coverage which the insured has under the physical damage section of the policy. In practice, where a mortgage endorsement is used, the mortgagees are not provided with a copy of the entire policy since they have no interest in the other coverages which the insured may have.



    b) The coverage under the second endorsement is considerably broader than the coverage under the endorsement just discussed, hence, an additional premium is charged

    As with the other endorsement, there is provision to pay the lienholder in the event that loss or damage is not repaired, and there is provision to notify the lienholder, subject to 15 days' notice, of cancellation of the policy. However, the endorsement also provides protection for the lienholder in that a breach of a condition by the insured, or a misrepresentation in the application, or fraud by the insured in making a claim will not invalidate protection as far as the lienholder is concerned.

    The lienholder agrees to the following:

    a) If the insured does not pay premiums, the liendholder will pay them on demand.

    b) When a material change comes to the attention of the lienholder, the lienholder will notify the insurer within 15 days of the change, and pay on demand any additional premium arising from it.

    c) If the lienholder knows of a misrepresentation or other breach of policy conditions, the lienholder will notify the insurer within 15 days of learning of it.

    If the insurer pays the lienholder because of the provisions of this endorsement, where the insured would not otherwise have been paid, the insurer gains the right of recovery against the insured.
  18. What coverage does the Transportation Replacement (MSEF 20) endorsement provide?
    Additional Agreement of Insurer #2 of the policy provides coverage for loss of use of the automobile by theft up to a maximum amount per day and an overall maximum. The coverage is built in and no additional premium is charged.

    If a higher limit per day or per occurence is desired, an endorsement is available. Loss of use arising out of other perils covered by the by the physical damage section of the policy may also be covered with this endorsement. The insured may choose a limit per day and per occurence, or the insurer may have standard limits. The limits are stated in the endorsement and are subject to the policy deductible. An additional premium isĀ charged.
  19. What are the provisions of the Suspension of Coverage endorsement and when would you use it?
    Occasions arise when an insured wishes to suspend coverage for a given period of time.

    An endorsement is available to provide for suspension of coverage at any time of the year. This may occur when an insured wishes to park a favourite automobile for the winter or an insured takes an extended vacation and will not be operating their vehicle. This endorsement suspends coverage in relation to the use or operation of the described, Newly Acquired and temporary substitute automobile.

    However, it maintains coverage in full force for liabilities arising from the "ownership" of a described automobile while it is parked and struck by another insured automobile and also maintains coverage for operations of other automobiles (non-owned) as well as Accidents Benefits coverage while named insured, spouse and dependents, and listed drivers are injured as occupants of a non-owned automobile or struck by an uninsured non-owned automobile.

    The suspended policy will remain in force for primary liability insurance, in the event the insured is driving a non-owned uninsured vehicle, and as excess insurance, if he drives an insured vehicle. As for Accident Benefits, the policy will be primary where there is no other insurance.

    Another endorsement is available to reinstate coverage.
  20. What are the provisions of the endorsement used to add coverage against liability for damage to a non-owned automobile in your care, custody, or control?
    The purpose of this endorsement is to provide legal liability protection for physical damage to a non-owned automobile (not to be confused with a "temporary substitute automobile") for the named insured and the spouse of the named insured.
  21. What endorsement is necessary when insuring motorized recreational vehicles under an automobile policy?
    When motorized recreational vehicles - snowmobiles, dirt bikes, ATVs, etc. - are covered under an automobile policy, an endorsement is required to waive compliance with the Statutory Condition pertaining to qualification and age of the operator of the vehicle while it is being operated off the highway.

    This type of vehicle normally operated off the highway and often by under-age and unlicensed operators. Special laws exist pertaining to the use and operation of recereational vehicles. "Recreational vehicle" and "public highway" are defined in the endorsement.
  22. What is covered and what is not covered by the Emergency Road Service endorsement?
    This endorsement provides up to a stated amount of coverage for each time the insured automobile is disabled and requires emergency road service. It does not apply to cost of parts or supplies, oil, gasoline, batteries, or tires.
  23. What is the purpose of the Family Protection Endorsement(MSEF 44)?
    It was designed to protect innocent victims who suffer serious injury or death as a result of the negligence of an inadequately insured motorist. Where defined insured persons cannot make full recovery from such a motorist the insurer will pay the shortfall under the insured's own policy.
  24. What changes can be made by using the Alteration endorsement?
    It is often necessary to amend, add, delete, or restrict coverage on a policy or restrict coverage on a policy or make changes relating to the vehicle(s) insured. The following changes can be made with this one endorsement:

    - Change of name or address of insured

    - Substitution of automobile

    - Addition of automobile

    - Deletion of automobile

    - Change in coverage or limits

    - Addition of coverage

    - Deletion of coverage

    - Change in rating classification
  25. How would you insure an antique automobile?
    Antique cars have full ACV coverage to a value of $50,000 through Autopac if they have a regular passenger plate. The value can be increased by stating the value to be insured and paying an appropriate additional premium, however, the amount paid is limited to the ACV, even if the insured declares a higher value. Appraisals are recommended in case there is a loss, and insureds are encouraged to keep all bills and have pictures.

    For cars registered as antiques, there is no coverage under Autopac. An agreed value policy available under SRE if a certificate of appraisal is obtained from a recognized antique club.

What would you like to do?

Home > Flashcards > Print Preview