FNSR2101 Introduction to Insurance: Comprehensive Assignment Solution

This assignment solution provides a comprehensive overview of key concepts in Introduction to Insurance, covering various aspects such as identifying insurable and non-insurable risks, including scenarios like rusting structures, genetic defects, and obsolescence of computers. It explores the advantages of insurance in society, detailing its role in protecting wealth, removing social evils, and providing security. The solution delves into physical hazards in fast-food industries and the concept of reinsurance, offering examples of how insurance companies share risks and increase capacity. It further analyzes contract breaches, ownership issues, and the role of alarm systems in insurance claims, as well as the importance of disclosing material facts. The assignment also addresses mortgage loans, industrial property policies, and standard mortgage clauses. The document provides detailed answers to various questions related to insurance, including the application of statutory conditions, loss payee relationships, and policy termination provisions. The solution also explores the Insurance Bureau of Canada and its services.

Running head: INTRODUCTION INSURANCE
Introduction Insurance
Name of the student:
Name of the university:
Author notes:

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INTRODUCTION INSURANCE
Table of Contents
Part1...........................................................................................................................................2
Answer to question1...............................................................................................................2
Answer to question 2..............................................................................................................3
Answer to question 3..............................................................................................................4
Answer to question 4..............................................................................................................5
Part 2..........................................................................................................................................5
Answer to question no 5:........................................................................................................5
Answer to question no 6:........................................................................................................6
Answer to question 7:.............................................................................................................6
Answer to question 8:.............................................................................................................6
Part 3..........................................................................................................................................7
Answer to question 9:.............................................................................................................7
Answer to question 10:...............................................................................................................8
Answer to question 11:...........................................................................................................8
Answer to question 12:...........................................................................................................9
Reference:..................................................................................................................................9

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Part1.
Answer to question1.
An insured event generally occurs when an insurer is required to pay a claim. But
sometimes it is considered as a risk to the insurance company if the company needs to pay an
amount, which is more than the claimed value. For example, concerning life insurance policy,
the insurance risk is like the possibility of insured party will die before his premiums amount
is equal or exceed the benefits of death.
Here, providing some scenarios which indicating whether or not any insurable Risk is
existing.
a) In case of Rusting of an unprotected structure: Generally the insurance company do
not cover any insurance relating to rusting for an unprotected structure.
Reason: Rust is generally considered under normal wear and tear of an instrument. So
there is no certain incident relating to insurance risk for an insurance company.
However, if rust is due to an incident and repair was done correctly or any water
damage that occurred due to floods or hurricane winds or waters then its need to
check the comprehensive insurance policy.
b) The Genetic defect affects 9 out of 10 newborn males: Usually, an insurance
company may face a situation of insurance risk that may occur due to an uncertain
death of a deceased person, who is suffering some genetic disorders.
Reason: According to the new implicated laws in Canada, an insurance company
needs to cover insurance policies for those peoples who are suffering any genetic
disorders. So in that case insurance company may need to pay some certain amount of
claim to the insurer in case of uncertain death.

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c) Developing of Cancer: For the purpose of developing the condition of a cancer
patients can be done through the chemotherapy, and such therapy is also covered
under insurance policy. So in such situation the insurance company may face a
situation of insurance risk.
Reason: During the period of chemotherapy the patients may collapsed due to
unconditional event, in such situation if the patient not paid the insured amount as
premium then it’s consider as insurance risk to the company as they have to pay the
claimed amount to the insurer in that moment.
d) Eventual Obsolescence of a personal computer: The personal property generally
covered under insurance policy. In case of personal computer, it’s also covered with
such policy and for such normally calculated premium amount needs to be paid by the
insurer. As it covered under the policy the insurance company may face some
situation of insurance risk.
Reason: In case the insured property obsolescence the insurance company have to
pay the claimed amount. But sometime the company faced the situation of insurance
risk if the amount of claim is more than the amount paid as premium.
e) Losing money at the casino: Losing money in casino is one type of gambling and
there are some certain policy which is called gambling insurance. Therefore in case of
gambling the insurance company may face a situation of insurance risk.
Reason: In case the losing amount in casino is more than the amount of premium paid
for this gambling, the insurance company faced the situation of insurance risk.
Answer to question 2.
In today’s society the insurance consider as one of the important elements to secure
any functions performed by human towards the society. Such advantages are given below;

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1. Provide protection to wealth of society: through the using of various policies the
insurance company generally try to protect the wealth of the society. With the Life
insurance it provide protection from the loss of human wealth. Other general policies
also provide protection against loss due to theft, fire, accident or other natural
calamity.
2. Removal of social evils: providing proper insurance policy to remove the social evils
that are meant to suffering. With such proper policies the insurance company
generally protect the interest of society.
3. Perpetuate standard of living: through the insurance policy the company rescues to
many people who are suffering misfortunes. The insurance company provide them
some high returns so that they are able to maintain high standard of living.
4. Security benefits relating to social: Insurance policies provide some social benefit
through the policies for old peoples and those who are suffering some disabilities.
With such generally company reduced the burden of such peoples.
5. Distribution of losses equally: through the insurance the company generally distribute
the losses in equally so that it not make any burden for suffered peoples.
Answer to question 3.
A physical hazard is defined as a factor that may harm the body without any physical
touches. Such hazards like any unhealthy issues that make negative impacts to the human
beings. In case of fast-food industry, the hazards which may reason to illness for a human
being due to consuming unhealthy products. Some of those physical hazards that generally
occur in fast-food industries are given below;
Unhealthy Food: Often stale food left unsold might be used unethically to make profit which
can harm people eating it.

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Infected serving equipment: Unhygienic utensils that are used to serve food can lead to
causing diseases.
Sharp elements used in kitchen: Fast handling of cutting equipment’s like knives can cause
major or minor cuts.
Slippery floors: Sometimes due to water leakages causing the floors slippery which is
consider as one of the hazards issues.
Dangerous equipment and machineries: In fast food chains, accidents might occur with
equipment’s, such as cylinders
Heavy lifting injuries: In fast working conditions moving around heavy loads by individuals
can result in injuries.
Risk due to crowded workspace: Hot food is served in high demand situation and
sometimes minor accidents happen.
Chemical elements causes burning: Handling inflammable things are part of the trade and
mishandling can lead to injuries.
Answer to question 4.
A reinsurance is generally occurred when several insurance companies are intend to
share their risk through purchasing the insurance policies from the other insurer in case of
limiting their own loss due to disasters.
An example of reinsurance is that an automobile insurer sells an insurance of $100000
at a premium of $500 per annum. The automobile insurer goes to another insurer and
reinsures its insurance on the automobile to the tune of $90000 at a premium of $300 per
annum. Thus the automobile insurer has hedged its business risk to the tune of $ 90000 and is
only facing a risk of $10000 on the insurance (Soederberg,2015).

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Increase the Insurer capacity to write business: Following the above mentioned examples
the insurer through the reinsuring procedures can able to increase the capacity of his personal
business. Using the reinsurance policy an insurer can shift his burden to another insurance
company.in such way the policies increase the capacity of an individual insurer (Sarkar,
2014).
To maintain a proper reserve/liability balance: followed the above example in case of
mention the balance of liability reinsurance policy is an effective way. Through such policy
the insurer try to reduce his obligation towards an insurance objects. Here as per as example
the insurer will liable for only $10000 as he already transfer the balance amount of insurance
policy to another insurance company (Weber, 2017).
Part 2.
Answer to question no 5:
As per the question it can be found that there has been breach of contract because
John Smith was supposed to give the ad on newspaper for sale price of the television
for $500 but the ad was given in the newspaper for $300 and the ad continued for 10
days at same price of $300 but instead it should have been quoted for $500. This
means that Robert Brown on accepting the contract will be in a loss due to breach of
contract from John Smith’s side. This is because he accepted to the terms of the
contract with John Smith as per ad at $300 but he was asked to agree for $500.
Therefore the contract has not been formed as per acceptance of Robert Brown
because there was a loss and miscommunication as a result of breach of contract
(Henderson, 2015).

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Answer to question no 6:
As per the laws related to insurance the underwriter of risk should predict certain
issues related to the ownership as well as for operation .With respect to ownership the
underwriter should predict with the issue that since the ownership of property has been
transferred to the client’s son why has that not been communicated to him and since not has
been communicated there might be risk involved with this insurance of vehicle owned. He
would not get proper coverage on it. Since he has failed show the change of ownership of
vehicle to the broker then he would not obtain any insurance even. As a result of this issue
benefit of insurance cannot be received. On the other hand with respect to operations he
might predict the issues related to lack of proper documentation, application which has been
delayed as well as insufficient knowledge of insurance (Eckles, Hoyt & Miller, 2014).
Answer to question 7:
The alarm system can be helpful at the time of burglary in terms of business. As per
insurance act ABC Insurance company should have good alarming system but it was found as
per investigation it was found Mr. White did not have so protect his premises. This failure
lead to liability. On the basis of this ABC Insurance Company need not had to pay the
amount if it would had alarm system. The insurance company can only be liable for sum to
get assured if the alarming system in the ABC Company would have been in working
condition. Here ABC Company has to pay the liable sum of insurance for Mr. White
(Castiglionesi et.al.,2014).
Answer to question 8:
Facts about the materials should be made clear to both insurer and the insured. The
insurer keeps the defects of the form confidential and doesn’t inform the insured. Unaware of
this fact, the insured starts to work on the concerned defects. The insured is held responsible

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and has to compensate for the repairs done or for the expenses occurred till now but he/she
doesn’t have to pay the entire insurance money (Bayer, Ferreira &Ross, 2017).
Part 3.
Answer to question 9:
A mortgage loan also introduces to as a mortgagee. It used by purchasers of actual
property to raise funds to buy real estate, or by existing property owners to increase the funds
for specific use any purpose while putting the lien on the property being mortgaged. The loan
is fixed on the borrower's property. That means that a legal device is set in place which
allows the lender to take ownership and sell the secured property to pay off the loan in the
event that the borrows defaults on the loan or otherwise fails to abide by its terms. Mortgage
borrowers can be the persons mortgaging their home or they can be businesses mortgaging
industrial property. The moneylender will typically be a financial institution, such a bank,
union for credit or society building, depending on the country concerned, and the loan
arrangements can be made either directly or indirectly through intermediaries (Alai et.al.,
2014).
When a business owner, purchases an industrial building with a mortgage, the
mortgage holder will likely require the buyer to ensure the building under an industrial
property policy. That includes a standard mortgage clause. This clause protects the mortgage
holder's right to obtain compensation for a loss even if the policyholder has violated terms of
the policy. Many industrial property policies contain a mortgage clause similar to the one
found in the ISO property policy. Entitled Mortgage holders, this clause is located under the

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Additional heading conditions it outlines the obligations the insurer must fulfil if the
mortgaged property is damaged or destroyed (Amromin et.al.,2018).
Answer to question 10:
At any time, an insured may be terminate an insurance policy. Generally, it requires
that the insured express intent to cancel the policy. This may include notifying the insurer in
discontinuing amount of premiums. If the insured stops paying the insurance premiums, the
insurer must provide the insured with notice of its intention to cancel the policy. If the insurer
insured fails to provide advice within the statutory period, the insured may be able to resume
her insurance contract by returning amounts. An insurer is generally limited by statute in its
ability to cancel a policy. Below are the typical situations in which an insurer may cancel a
policy (Baker & Logue, 2017).
The void insurer, conditions in the policy, end of the policy term.
Answer to question 11:
.

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Answer to question 12:
90% of the Canadian property as well as casualty insurance of the market are represented by
all the members companies of Insurance Bureau of Canada. In order to increase in public
understanding about the home auto as well as insurance related to business IBC has been
working hard towards it. With the help of IBC’s five regional customer centres public
understanding is well forecasted through which personnel those are trained with industry and
of relations of government relations tend to fulfil enquiries and understandings of
approximately ten thousands of customers each and every year.

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