Comprehensive Assignment: FNSR2101 Introduction to Insurance

This document presents a comprehensive solution to an insurance assignment for the FNSR2101 course, covering various aspects of insurance principles. Part I addresses insurable and non-insurable risks, providing examples such as rusting structures, genetic defects, cancer, computer obsolescence, and casino losses. Part II delves into contract validity, exploring scenarios of advertising as an invitation to treat and the liabilities of vehicle operation insurance. It also examines burglary insurance and the legal positions of insurers regarding policy coverage and exclusions. Part III addresses loss payee relationships, policy termination, and the coinsurance formula through case studies and scenarios. The assignment also includes a discussion on the Insurance Bureau of Canada's activities and their role in business insurance and risk management. The solution demonstrates an understanding of insurance concepts and their practical applications, along with relevant references.

Running Head: INSURANCE 1
INSURANCE

Running Head: INSURANCE
Table of Contents
Part I............................................................................................................................................................3
Question 1...................................................................................................................................................3
Question 2...................................................................................................................................................4
Question 3...................................................................................................................................................4
Question 4...................................................................................................................................................5
PART II.........................................................................................................................................................5
Question 5...................................................................................................................................................5
Question 6...................................................................................................................................................5
Question 7...................................................................................................................................................6
Question 8...................................................................................................................................................6
Part III.........................................................................................................................................................6
Question 9...................................................................................................................................................6
Question 10.................................................................................................................................................7
Question 11.................................................................................................................................................7
Question 12.................................................................................................................................................7
References...................................................................................................................................................9

Running Head: INSURANCE
Part I
Question 1
A
The rusting of an unprotected structure is an incurable risk. The parameters in case of the
insurance of the property and the loss can be recovered. Hence it is the insurable risk.
B
A genetic defect affecting the new born males in the family is a disease that cannot be insured.
Though it is an insurable risk but to the extent of the primary stage. The insurance companies
cover those risks that can be recovered and are measurable. Hence, it can be concluded as the
non-insurable risk (Christensen, Hayward, Gay, Cielocha & Binion, 2015).
C
The developing of the cancer is an enormous disease that cannot be insured as it comes under the
category of the non- controllable disease. In the case of the cancer the future premiums are not
waived and therefore it comes under the category of the non-insurable risk.
D
The eventual obsolescence of a personal computer can be insured with the assistance of the
Oriental Insurance Company limited. The Electronic Equipment Insurance covers the correct loss
or damage and its data carrying media. The cost of the rebuilding the damage of the computer
can be recovered (Martin, et al 2016).

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E
Losing money at Casino comes under the activity of the speculation. It is the process
based on the factor of the luck and the instincts for the calculative instincts. There is a two way
process which can lead to success or failure as well hence, the same is not covered in the
insurable risk.
Question 2
There are several benefits of the insurance to the society and the same have been listed below.
 The insurance helps in protecting the overall security of the society.
 The equitable distribution of the loss is also one of the transparent factors of the
insurance policy.
 The discrimination and the social evils are also removed with the help of the insurance
policy.
 The society becomes peaceful and safe with the presence of the insurance policy.
 The penetration of the risk is eliminated with the help of the insurance.
Question 3
The physical hazard is defined as a factor, or the circumstance, that can cause harm with or
without contract. They can be classified as the occupational hazard or the environmental hazard.
The physical hazards are a common source of the injuries in many industries and perhaps they
are unavoidable in certain and industries in case of the construction and mining. The few

Running Head: INSURANCE
examples of the physical hazard are exposure to unguarded or unprotected electrical equipment
(Healy, 2017).
Question 4
The two noteworthy advantages that are recorded in this task are to expand the ability to
compose the business though to keep up a save of risk balance.
Since reinsurance grows the ensuring furthest reaches of a basic underwriter, the basic back up
plan can sell approaches that ordinarily it would not recognize in light of the way that beyond
what many would consider possible is over the security net supplier's support confine it builds
the limit of the safety net provider. In the second circumstance when the arrangement is being
sold by the backup plan as stipulated by the unmerited piece of the premium is moved to the hold
or the obligation account and the equivalent can't be utilized for paying the costs.
PART II
Question 5
In the case of the Brown and John Smith, the contract is not a valid contract at all. The
advertising is treated as invitation to treat. The ad has been running for ten days, however, the
acceptance was not received from the john smith for providing the ad for worth $300. Hence, it
cannot be treated as the valid contract (Swaminathan, 2018).
Question 6
In case of the operation of the vehicle, it is compulsory for the actual owner and the operator to
be registered for the purpose of the insurance. The mistake has happened from both the ends as
the client violated the policy of the full disclosure and the broker did not make any efforts in

Running Head: INSURANCE
taking care of the due diligence. Hence, the liability occurs on part of both the parties. As a
position of the underwriter, the issues that shall be considered are the liability is accounted for
both the parties and the settlement shall be done on the mutual basis (Peterse, et al 2017).
Question 7
Burglary insurance typically offers the protection against the damage caused by the burglary or
housebreaking. The policy also covers the damages caused to the premises by the burglars and it
is different from the theft insurance policy. In the present case Mr. White’s store shall be put on
the alarm and the coverage will not apply. The ABV cannot be forced to honor the claim as the
alarms if cannot protect the risk, can reduce the risk.
Question 8
The legal position of the insurer is that he shall clarify the facts to the insured that the policy
does not cover the loss on the vehicle by the fire, theft in certain cases. The staff adjuster should
have informed the insured before the vehicle has been taken for the repairs. If the policy does not
apply to the loss it should have been determined in the policy clearly. Legally the insured must
be clarified of all the inclusions and exclusions of the policy (Gay, et al 2015).
Part III
Question 9
Mortgagee is termed as the party that is selling in the process of the mortgage. The parties that
are entitled to the sell are the banks, savings as well as the association of the loan. There are
certain terms and conditions defined in the clause of the Mortgage which is presented below.
The mortgage law is applied to the dealer of the commercial property declarations. If the

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multiple lenders are included in the policy, they are being covered in the order of the association.
The mortgage clause covers the lender presented in the policy for the loss of the damage caused
to the building or the structure.
Question 10
The law of the termination states that the first name insured has the right to cancel the policy
through the mail or through the delivery of the notice to the insurer. The condition of the
termination is that the mail shall be delivered before the date of the cancellation. In this scenario,
the valid termination has not been taken place.
Question 11
Building replacement value 3000000
Coinsurance 90%
Amount of the insurance 2250000
Amount of the loss 600000
Actual amount of the insurance 2700000
Coinsurance Value of Loss * Amount of the Carried
Insurance
Amount of the required insurance
Value of the coinsurance 500000
In this particular section the owner covers $500000 co insurance penalty due to the less
amount of the insurance retained as per the risk. The value of the actual amount of the insurance
is $2700000 whereas the amount actually listed in the insurance is $600000. Hence, the co-
insurance amount is $500000.

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Question 12
The insurance bureau of Canada is involved in the activities such as the Business Insurance
Coverage, risk management, business crime, and crisis management and the emergency
preparedness (Duncan, et al 2017).

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References
Christensen, S. T., Hayward, G., Gay, C. E., Cielocha, S., & Binion, T. (2015). U.S. Patent No.
9,141,996. Washington, DC: U.S. Patent and Trademark Office.
Duncan, W. D., Hyde, R. A., Kare, J. T., & Pan, T. S. (2017). U.S. Patent Application No.
15/223,684.
Gay, C. E., Christensen, S. T., Hayward, G., Cielocha, S., & Binion, T. (2015). U.S. Patent No.
9,105,066. Washington, DC: U.S. Patent and Trademark Office.
Healy, J. J., Rodgers, K., Gonzales, R., Dohner, R. K., Brown, C. M., & Medina III, R.
(2017). U.S. Patent No. 9,727,920. Washington, DC: U.S. Patent and Trademark Office.
Martin, B. I., Deyo, R. A., Lurie, J. D., Carey, T. S., Tosteson, A. N., & Mirza, S. K. (2016).
Effects of a commercial insurance policy restriction on lumbar fusion in North Carolina
and the implications for national adoption. Spine, 41(11), 647.
Matter Money, (2018). Reinsurance. Retrieved from
https://thismatter.com/money/insurance/reinsurance.htm
Peterse, E. F., Meester, R. G., Gini, A., Doubeni, C. A., Anderson, D. S., Berger, F. G., &
Lansdorp-Vogelaar, I. (2017). Value of waiving coinsurance for colorectal cancer
screening in Medicare beneficiaries. Health Affairs, 36(12), 2151-2159.
Swaminathan, S. (2018). De-inventing the Wheel: Liquidated Damages, Penalties and the Indian
Contract Act, 1872. The Chinese Journal of Comparative Law, 6(1), 103-127.

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