Considerations in Loss Settlements
A: This must be provided to the insured within the first 60-days of a reported loss and if returned to the insurer properly completed, the insurer has 60-days to respond (pay) or the insured can sue.
Q: What is: the proof of loss form?
(See page 8-4 of the textbook).
A: A release form.
Q: What is the form the insurer will ask a TP claimant to sign when a settlement is reached.
By signing, the claimant agrees not to ask for more money later in exchange for the agreed payout. Once the release is signed, the claim is officially wrapped up and can be closed.
(See page 8-15 of the textbook). N.B.: release forms are also used in Accident Benefits settlements (Section B).
A: On this document, the person suing explains what happened and asks for compensation.
Q: What is: a Statement of Claim (SOC)?
(See page 8-17 of the textbook).
A. These are the five (5) different types of deductibles.
Q: What are:
. Straight DED (applies to most personal insurance policies).
. Disappearing DED (DED is reduced or waived for n losses that exceed a certain threshold. Over time, the insured’s responsibility for deductibles decreases).
. Aggregate DED (Once the insured reaches the DED limit, any further claims are covered without a deductible (unless stated otherwise in the policy). Common in commercial risks).
. Franchise DED (If the loss is below the DED, the insured covers it. If the loss exceeds the DED, the insurer pays the full amount, with no deduction).
. Special Limits / Specified Property (DED is applied first, then the limit is applied).
(See page 8-6 of the textbook).
A: Once this happens, the insured no longer needs to comply with policy conditions.
Q: What is: deny their claim.
E.g., the insured doesn't need to submit a POL or participate in an EUO. (See page 8-14 of the textbook).
A: Costs charged by a lawyer to a client.
Q: What are: solicitor-client costs?
Fees – Either a fixed rate, an hourly charge, or a contingency fee (where the lawyer takes a percentage of the money won in the lawsuit).
Disbursements – Out-of-pocket expenses like court fees, expert witnesses, surveys, and photos.
(See page 8-22 of the textbook).
A: If one policy is more specific (covering a particular item), it takes priority over general insurance. If both policies are specific or general, the insurers share the payout based on a set formula.
Q: What is: overlapping property insurance?
E.g., you have two insurance policies covering your jewelry:
1. A standard homeowner's policy that covers personal belongings in general, including jewelry, furniture, and electronics.
2. A separate jewelry insurance policy that specifically covers your diamond ring for a set value.
If your diamond ring gets stolen, the specific policy (the jewelry insurance) takes priority over the general policy (homeowners' insurance).
That means the jewelry policy pays first, and if there’s still a shortfall, the homeowner's policy might cover the remaining amount—but only up to its limits.
The IBC Agreement of Guiding Principles help insurers quickly determine primary coverage and apply formulas to make claims easier to settle. (See pages 8-7 to 8-10 of the textbook).
A: Salvage
Q: What is: damaged property that still has some value after a loss.
(See page 8-13 of the textbook).
A: With this type of court system, lawyers are not usually needed, and cases are of a limited monetary amount.
Q: What is: Small Claims Court?
- The limit varies depending on the province.
- Limits on small claims courts are increased periodically in most jurisdictions.
- In this environment, pleadings are reduced or eliminated, and cases take less time to try.
- Lawyers are not usually needed.
- Some provinces even restrict when lawyers can appear.
(See page 8-21 of the textbook).
A. These are examples of vendor/supplier additional costs considerations.
Q: What are:
. Did the contractor underprice the job at the estimate stage to secure the job?
. Was there a change in the scope of the damage?
. Was there hidden damage that was not initially seen?
. Should the hidden damage have been anticipated?
. Did some items not respond to repairs or cleaning, and replacements were required?
(See page 8-7 of the textbook).
A: After this passes, a lawsuit will not usually be permitted to proceed.
Q: What is: the limitation period?
Limitation periods are created by statute, regulation, and contract. (See page 8-15 of the textbook).
A: In common law, the defendant files "this" to announce their intent to defend against an action.
Q: What is: an Appearance?
Once the defendant files an appearance, the plaintiff (the person suing) must submit their statement of claim within a set timeframe if they haven’t already done so. In many jurisdictions, filing an appearance is only required when the court wouldn’t normally have jurisdiction over the case.
(See page 8-18 of the textbook).
A: This may cause the insurer to pay twice for the same loss.
Q: What is: miss adding a loss payee to a settlement cheque?
If a policy lists an additional loss payee or a mortgagee, their name must be included on the payment, alongside the insured. (See page 8-10 of the textbook).
A: A new approach to the prior 6-year limitation period from the time of loss, whether known or not.
Q: What is: the Discoverability Rule?
Under the discoverability rule, the limitation period is shorter but does not start to run until the plaintiff “discovers” the situation that led to the claim. (See page 8-15 of the textbook).
A: The written statements of fact and of the law filed by the parties to a lawsuit.
Q: What are: pleadings?
When someone files a lawsuit, both sides need to understand the facts and the boundaries of the case. This is done through pleadings, which are legal documents outlining the claims and defenses.
(See page 8-17 of the textbook).