Insurance Types and Terms

• Study notes on insurance are below:

Compulsory vs. Optional Coverages

• Compulsory coverage is mandated by law, exemplified by basic auto liability insurance.
• Optional coverage provides additional protection, selected by the insured, like collision coverage.

Auto Insurance Terms

• "No Fault" insurance pays for losses regardless of who is at fault.
• Auto liability insurance covers damages and injuries to third parties.

Liability Types

• Strict liability holds parties liable without proof of negligence, though some defenses may exist.
• Absolute liability imposes liability without defenses or exceptions.

Negligence

• Negligence is the failure to exercise reasonable care, leading to damage or injury.

Life Insurance Overview

• Term insurance offers coverage for a specific period and has no cash value.
• Permanent insurance provides lifetime coverage and accumulates cash value.
• Key differences between term and permanent insurance include cost, duration, and cash value accumulation.

Determining Insurance Needs

• The capital retention approach aims to preserve initial capital, using returns for living expenses, ideal for indefinite wealth maintenance for beneficiaries.
• The income approach replaces income for dependents, suitable for directly replacing lost income.
• The expense approach calculates expenses to determine the necessary coverage amount.

Commercial Insurance

• Occurrence policies cover claims for incidents occurring during the policy period, regardless of when the claim is filed.
• Claims-made policies cover claims only if they are made during the active policy period, even if the incident occurred earlier.
• Under a franchise policy, the insurer pays the full claim if the loss exceeds a certain amount.
• Claims payment involves documentation, verification, evaluation, and settlement.

Deductibles

• A straight deductible is a fixed amount per individual loss.
• An aggregate deductible limits the total amount the insured pays in a policy period.
• A per occurrence deductible applies each time an incident occurs.
• A yearly deductible is a cumulative deductible per policy year.

Government Insurance

• The Canada Health Act is based on the principles of public administration, comprehensiveness, universality, portability, and accessibility.
• Workers' compensation covers workplace injuries.
• Canada Pension Plan (CPP) provides retirement and disability benefits.

Travel Insurance

• Out of country coverage insures medical emergencies outside of the home country.

Life Insurance Approaches (Revisited)

• Capital retention approach preserves wealth, allowing beneficiaries to live off investment returns.
• Income approach replaces lost income for dependents.
• Expense approach covers anticipated future expenses.

Beneficiaries

• A contingent beneficiary receives benefits if the primary beneficiary is deceased.
• A secondary beneficiary is next in line after the primary.
• An irrevocable beneficiary cannot be changed without their consent.

Claims Adjuster Role

• Claims adjusters investigate, evaluate, negotiate, and settle insurance claims.

Agents vs. Brokers

• Agents represent insurance companies and sell their products.
• Brokers represent clients and secure optimal coverage across different insurers.

Homeowners Insurance

• Key factors in homeowners insurance include property value, location and environment, type and age of home, claim history, and coverage types (fire, flood, theft).

Specialty Lines

• Malpractice insurance covers professionals against negligence claims.
• Directors & Officers (D&O) insurance protects corporate leaders from wrongful acts claims.

Surety Bonds

• Surety bonds guarantee fulfillment of contractual obligations and provide financial security for principals.

Group Insurance

• Group health insurance is provided by employers and is cost-effective due to pooled risk.