RIBO Claims Management and Handling 2 — Questions and Answers
Question 1: Under the Ontario Insurance Act's Statutory Conditions, within how many days must an insured submit a Proof of Loss after a property loss?
- 30 days
- 60 days (Correct answer)
- 90 days
- 120 days
Correct answer: 60 days
The Ontario Insurance Act Statutory Conditions require an insured to deliver a Proof of Loss to the insurer within 60 days of a loss, unless the insurer grants an extension.
Question 2: What does the designation 'without prejudice' mean in claims correspondence?
- The insurer is admitting liability and offering to settle the claim
- Statements made cannot be used as evidence of liability or admission in legal proceedings (Correct answer)
- The claim has been denied without any further right of review by the insured
- The insurer is waiving its right to conduct any further investigation of the loss
Correct answer: Statements made cannot be used as evidence of liability or admission in legal proceedings
'Without prejudice' protects settlement negotiations by ensuring neither party's statements can be used against them as admissions in court.
Question 3: What is an 'ex gratia' payment in the context of insurance claims?
- A payment made to comply with a court judgment against the insurer
- A voluntary goodwill payment by the insurer when there is no contractual obligation to pay (Correct answer)
- A special payment made to cover the insured's legal defense costs
- A refund of earned premiums issued when a policy is cancelled mid-term
Correct answer: A voluntary goodwill payment by the insurer when there is no contractual obligation to pay
An ex gratia payment is made voluntarily by the insurer as a goodwill gesture even though the policy does not technically obligate them to pay the claim.
Question 4: What is 'salvage' in the context of property insurance claims?
- The cost incurred to clean up a property following an insured loss
- The remaining value of damaged property that the insurer takes ownership of after paying a total loss claim (Correct answer)
- Temporary repair costs incurred to prevent additional damage after a loss
- The deductible amount the insured must pay on a total loss settlement
Correct answer: The remaining value of damaged property that the insurer takes ownership of after paying a total loss claim
After paying a total loss claim, the insurer acquires salvage rights—ownership of the remaining damaged property—to partially recover their claim payment.
Question 5: What is the insurer's 'duty to defend' under a commercial liability insurance policy?
- The obligation to pay all judgments rendered against the insured regardless of coverage
- The obligation to provide and fund a legal defense for any claim that potentially falls within policy coverage (Correct answer)
- The requirement to proactively notify the insured of all potential third-party claims
- The duty to settle all liability claims before the matter proceeds to trial
Correct answer: The obligation to provide and fund a legal defense for any claim that potentially falls within policy coverage
The duty to defend is broader than the duty to indemnify—the insurer must defend the insured against any claim that could potentially be covered, even if coverage is ultimately denied.
Question 6: What is the purpose of a 'reservation of rights' letter issued by an insurer?
- A letter formally confirming that the insurer will provide full coverage for the claim
- A notice that the insurer will defend or investigate the claim while preserving its right to deny coverage later (Correct answer)
- A document requesting additional premium from the insured due to an increased risk exposure
- A notice to the insured that the policy will be cancelled at the next renewal date
Correct answer: A notice that the insurer will defend or investigate the claim while preserving its right to deny coverage later
A reservation of rights letter allows the insurer to assist with a claim or defense without waiving its right to deny coverage if the claim is ultimately determined to be excluded.
Question 7: Under the Ontario Insurance Act's Statutory Conditions, what is the limitation period for an insured to commence legal action against a property insurer?
- One year from the date the loss occurred (Correct answer)
- Two years from the date the loss occurred
- One year from the date the insurer formally denies the claim
- Two years from the date the insurer formally denies the claim
Correct answer: One year from the date the loss occurred
The Statutory Conditions in the Ontario Insurance Act set a one-year limitation period from the date of loss for commencing legal action against a property insurer.
RIBO Claims Management and Handling 2
Under the Ontario Insurance Act's Statutory Conditions, within how many days must an insured submit a Proof of Loss after a property loss?