Statutory conditions are set out in the insurance

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Statutory Conditions are set out in the Insurance Acts, to provide insureds with a consistent approach , to having their claims settled, and binding both the insured and insurer to certain rights and obligations established in the Acts . In Quebec , General Conditions found in a section of the Civil Code of Quebec , are added to to insurance policies. These conditions serve a similar purpose to the Statutory Conditions in common law provinces and territories.
CIP 011 Study 6 Insurance as a contract: The Insurance Policy What are the legal requirements of insurance contract formation? In common law and under the Civil code of Quebec an offer is made by one party and acceptance is made by another. Both offer and acceptance must contain all the terms of the contract. Consideration is evidence that the parties intended to be bound by the agreement. This means there must be: - a contract price ie money or its equivalent offered
CIP 011 Study 6 Insurance as a contract: The Insurance Policy Certain additional elements are necessary to form a valid Insurance contract under both common law and the Civil Code of Quebec. Insurable Interest ie where parties stand to lose financially by loss or damage of property. Eg a bank holding a mortgage on a property.
CIP 011 Study 6 Insurance as a contract: The Insurance Policy Indemnity ie insurers restoring their insured claimants to the same financial position they were in, immediately prior to them suffering a loss.
CIP 011 Study 6 Insurance as a contract: The Insurance Policy The basis of settlement on insurance contracts vary depending on the type of policy, and indemnity is based on the method used to calculate the indemnity. Physical damage to automobiles claims, are settled on an Actual Cash value basis (ACV), where depreciation of the vehicle is applied in the settlement. On many residential property policies, claims are settled on a Replacement Cost basis. This means that the insurer pays the cost of replacing the building without any reduction for depreciation .
CIP 011 Study 6 Insurance as a contract: The Insurance Policy Valued contracts -This is a calculation based on a predetermined amount agreed upon by the insurer and the insured. Polices of Compensation –The policy specifies that a stated amount is payable on the occurrence of the event insured against. Eg Life insurance policies.
CIP 011 Study 6 Insurance as a contract: The Insurance Policy What principles are used to facilitate the claims settlement process for both insured and insurer. Salvage ie the portion of undamaged property left after a total loss has been paid. It belongs to the insurer and helps to reduce their loss. Subrogation ie where an insurer who has paid a claim has legal right of action against a responsible third party. The insurer may bring action for recovery in the name of the insured.
CIP 011 Study 6 Insurance as a contract: The Insurance Policy Contribution ie where more than one insurance policy covers the same loss. In this situation, an insured can only recover an amount equal to the loss, a rateable proportion from each insurer.

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