🧾 Claims Handling, Adjusting and Errors and Omissions Exposure

1. What is the first step in the claims process after a loss occurs?

1. Payment of the deductible over to the insurer concerned
2. Notice to the insurer by or on behalf of the insured
3. Retention of a lawyer by the insured
4. Repair of the damage to the property

The statutory conditions imported by the Insurance Act require notice forthwith, and everything else in the process follows from that first report.

2. Who investigates and settles claims on behalf of an insurer?

1. The policyholder, who negotiates directly with the third party and sends the insurer the bill
2. The broker, who holds the delegated authority to settle claims under the agency agreement
3. The regulator, which reviews the file before the insurer may make an offer to the claimant
4. A licensed adjuster, employed by the insurer or retained independently

Adjusters are licensed under the Insurance Act, and a broker who takes over the adjustment of a loss for a fee may require the same licence.

3. What is a claim reserve?

1. The deductible the insured must contribute before the insurer releases any payment
2. The amount already paid on the file, which the insurer reports to the broker each month
3. The insurer's estimate of the ultimate cost of a claim, set aside as a liability
4. The policy limit, which the insurer must hold in cash until the file is closed

Source: RIBO Blueprint, claims handling; Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Reserving is an accounting exercise rather than a coverage decision, though a large reserve does attract attention at renewal.

4. Why does an insurer investigate a claim even where liability appears obvious?

1. Because RIBO requires an investigation of each claim before it is settled
2. To delay payment until the reserve has been approved at the insurer's head office
3. To find a reason to deny, which is why every reported loss is investigated before any payment is released
4. To confirm coverage, quantify the loss and identify subrogation opportunities

Source: RIBO Blueprint, claims handling; Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Recovering from a responsible third party keeps the cost with the wrongdoer, which benefits the pool and ultimately the client's renewal terms.

5. What is salvage in a claims context?

1. The insured's deductible, retained by the insurer when the claim is settled in the insured's favour
2. The insurer's investigation cost, which is set against whatever amount it finally pays out
3. The value recovered from damaged property, which reduces the net cost of the claim
4. The cost of debris removal following the loss at the insured premises

Source: RIBO Blueprint, claims handling; Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Indemnity means the insured is restored rather than enriched, so a client cannot both be paid in full and keep property that retains value.

6. Subrogation in a claims context means:

1. The insurer cancels the policy
2. The insured recovers the deductible from the insurer
3. The insurer steps into the insured's rights to recover from the party responsible
4. The insured assigns the policy

Source: RIBO Blueprint, claims handling; Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). The insured must not prejudice those rights, which is why a pre-loss waiver of subrogation has to be disclosed to the insurer before it is signed.

7. An insured recovers their deductible when the insurer subrogates successfully. Why?

1. Insurers refund deductibles automatically
2. The deductible is part of the loss the insured bore and is usually included in the recovery
3. Deductibles are never recoverable
4. The deductible is paid by the third party directly

Source: RIBO Blueprint, claims handling; Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Practice varies by insurer and by the size of the recovery, so this is worth confirming for a client rather than promising.

8. What is the purpose of an examination under oath in a claims investigation?

1. To obtain the insured's sworn evidence about the loss where the policy permits it
2. To determine the premium that ought properly to have been charged for the risk in question
3. To settle the claim on terms the insured has agreed to under oath
4. To transfer the claim to another insurer that also covered the loss

Source: RIBO Blueprint, claims handling; Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). It is a contractual right rather than a criminal process, and an insured who refuses to participate risks losing the benefit of the coverage.

9. A claim is closed without payment. What does this mean?

1. The policy was cancelled before the loss the insured had reported occurred
2. The claim was fraudulent, which is the only basis on which a file may be closed without payment
3. The claim will be reopened automatically once further information arrives
4. The insurer determined that nothing was payable, whether for coverage or quantum reasons

Source: RIBO Blueprint, claims handling; Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Closed claims still form part of a client's loss history, which is why a broker should discuss with a client whether a marginal loss is worth reporting.

10. Why does the timing of a claim report matter beyond the policy conditions?

1. Late reports transfer the claim to another insurer
2. Late reports increase the premium automatically
3. Evidence deteriorates and witnesses become harder to find, weakening both coverage and defence
4. Timing affects only the deductible

Source: RIBO Blueprint, claims handling; Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Prompt investigation protects the insured as much as the insurer, which is the argument a broker should make to a client who wants to wait and see.

11. Under the statutory conditions, a proof of loss must generally be delivered within:

1. One year of the loss
2. 30 days of the loss
3. 60 days of the loss
4. 90 days of the loss

Section 148 of the Insurance Act imports this requirement, and the document is the insured's sworn statement of what was lost and what it was worth.

12. Once a complete proof of loss is delivered, the loss is generally payable within:

1. 90 days
2. 30 days
3. 60 days
4. Two years

Source: Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). The condition sets a clear timetable, and an insurer that misses it without explanation invites a complaint and possibly a bad faith allegation.

13. An action on a property policy in Ontario must generally be commenced within:

1. Six months
2. One year from the date of the loss
3. Two years
4. Six years

Ontario aligned the insurance limitation period with the Limitations Act, 2002, and a client sitting on a disputed claim should be warned about the deadline.

14. The appraisal process resolves disagreements about:

1. Who caused the loss and how it came about
2. Whether the loss is covered
3. The amount of the loss
4. The premium payable

Source: Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Each party appoints an appraiser and the appraisers appoint an umpire, and the award binds on quantum only.

15. What must an insured do to mitigate a loss?

1. Nothing at all until the adjuster has arrived and inspected the site
2. Complete all of the necessary repairs before presenting any claim of any kind under the policy
3. Take reasonable steps to prevent further damage, the cost of which is generally recoverable
4. Dispose of the damaged property immediately so the site is cleared

Source: Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Boarding a broken window or extracting standing water protects both parties, and the salvage condition expects the insured to act rather than wait.

16. Why should an insured not dispose of damaged property before the adjuster inspects it?

1. Disposal increases the deductible applied to the loss that is claimed once the property is gone
2. Disposal is illegal until such time as the insurer has released the property
3. The insurer has a right to examine the property and to deal with salvage
4. Disposal voids the policy from the date the property was thrown out

Source: Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Photographs and an inventory taken before anything is moved are the practical compromise where health or safety requires immediate removal.

17. How is a replacement cost claim normally settled where the insured has not yet repaired?

1. In full immediately, since replacement cost is a valued basis that does not depend on the work being done
2. On an actual cash value basis, with the balance paid once repair or replacement occurs
3. Not at all, because replacement cost coverage lapses if the repair is not started within the policy term
4. At the policy limit, which is the agreed measure of replacement cost for the described property

Source: Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). The holdback exists because replacement cost is conditional on replacement actually taking place, and clients should be told this before a loss.

18. An insured's contents claim is questioned because no receipts exist. What is the position?

1. Receipts are the only acceptable proof of a contents loss under the statutory conditions
2. The insurer must accept the insured's word, since the sworn proof of loss is conclusive as to the contents lost
3. The claim is automatically denied where no receipts can be produced for the items
4. The onus of proving the loss rests with the insured, though other evidence such as photographs may be accepted

Source: Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Encouraging clients to keep a photographic inventory off site is advice that costs nothing and repeatedly proves its worth.

19. What is an emergency or advance payment on a property claim?

1. A payment made in error which the insurer afterwards recovers back from the insured
2. An early payment to fund immediate needs, applied against the eventual settlement
3. An additional payment above the limit, made where the loss is severe
4. A payment of the deductible made by the insurer on the insured's behalf after a loss

Source: Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Requesting one early for a displaced family or an interrupted business is one of the most useful things a broker can do in the first days of a claim.

20. A restoration contractor asks the insured to sign a direction to pay. What should the broker explain?

1. It is required by the insurer before a restoration firm may attend the site
2. It is a formality with no legal effect at all, since the insurer pays the insured in any event once the work is done
3. It transfers the claim to the contractor, who then deals with the insurer alone
4. It authorises payment directly to the contractor, and the scope and cost should be understood before signing

Source: Insurance Act, R.S.O. 1990, c. I.8, s. 148 (statutory conditions). Open-ended authorisations signed in the stress of a loss are a recurring source of disputes about scope and price.

21. Notice of an intention to claim accident benefits must reach the insurer within:

1. 30 days of the accident, the same period the Schedule allows for returning the completed application
2. 7 days of the accident or as soon as practicable
3. 14 days of the accident, or later if a health practitioner confirms the claimant was unable to report
4. 60 days of the accident, which is the outside limit where the claimant was hospitalised throughout

The SABS, O. Reg. 34/10 sets the timetable, and the completed application must then follow within thirty days of receiving the forms.

22. Disputes about entitlement to accident benefits are decided by:

1. RIBO
2. The Ontario Superior Court of Justice
3. The General Insurance OmbudService
4. The Licence Appeal Tribunal

Since 2016 the tribunal has exclusive jurisdiction over disputes under O. Reg. 34/10, replacing the previous mediation and arbitration route.

23. A not-at-fault Ontario collision damages an insured's vehicle. Which coverage handles the repair?

1. Collision coverage under Section 7
2. Direct compensation property damage under Section 6 of OAP 1
3. Third party liability under Section 3
4. Uninsured automobile coverage

Section 263 of the Insurance Act sends the claim to the insured's own insurer, in proportion to the degree of non-fault under O. Reg. 668/90.

24. Why is a police report useful in an automobile claim?

1. It replaces the claim form the insured would otherwise complete
2. It determines fault conclusively, binding each of the insurers to its conclusion
3. It sets the deductible payable on the insured's own vehicle damage
4. It records the facts adjusters use when applying the Fault Determination Rules

Fault for first party purposes is decided under O. Reg. 668/90 rather than by the police, but the underlying facts still come largely from the report.

25. An insured's vehicle is declared a total loss. How is settlement usually calculated?

1. On the replacement cost of a new vehicle of the same make and model
2. On the original purchase price that the insured paid for the vehicle when it was new
3. On the outstanding balance of the loan secured against the vehicle
4. On actual cash value at the time of loss, unless an endorsement changes the basis

OPCF 43 removes the depreciation deduction on a qualifying new vehicle, and OPCF 19 fixes a stated amount for a specialty vehicle.

26. An insured owes more on a car loan than the vehicle's actual cash value after a total loss. What is the exposure?

1. The lender absorbs the difference, which it writes off against the security
2. The insurer must pay off the loan balance, since the lender's interest has been noted on the policy
3. The shortfall falls on the insured unless a lender or lease endorsement or gap product responds
4. The claim is denied, because the vehicle was worth less than the amount owed

Source: OAP 1; Fault Determination Rules, O. Reg. 668/90; Statutory Accident Benefits Schedule, O. Reg. 34/10. Raising this at the point of purchase gives the client a real choice, whereas discovering it after a write-off produces a complaint.

27. What does an insured need in order to claim uninsured automobile property damage in Ontario?

1. Identification of the owner or driver of the other vehicle
2. A police charge laid against the driver of the other vehicle
3. A witness statement taken at the scene of the collision by an attending officer
4. A repair estimate only, prepared by an approved shop

R.R.O. 1990, Reg. 676 requires identification for property damage, so a true hit and run must be claimed under Collision or All Perils.

28. Why should an insured avoid admitting fault at the scene of a collision?

1. Admissions transfer the claim to the Fund, which then recovers from the driver
2. Admissions of that kind are illegal under the Highway Traffic Act and carry a penalty for the driver who makes one
3. Admissions increase the deductible the insured must contribute to the claim
4. First party fault is determined under the Fault Determination Rules, and admissions can prejudice the insurer

Cooperation is required by the policy but admissions are not, and O. Reg. 668/90 will decide the outcome on the facts.

29. An insured receives a statement of claim. What should they do first?

1. File a defence themselves within whatever time the rules of the court may allow
2. Report it to the insurer immediately without responding to the plaintiff
3. Contact the plaintiff to negotiate a settlement before replying to the pleading
4. Wait for the trial date before troubling the insurer with it

Source: the conditions of the standard Canadian commercial general liability form. Deadlines to defend are short, and the policy conditions prohibit voluntary payments and admissions that could prejudice the insurer.

30. When does an insurer's duty to defend arise?

1. Only if the claim is within the limit
2. Only after liability is established
3. Where the allegations in the pleadings could, if proven, fall within coverage
4. Only if the insured requests it

Source: the conditions of the standard Canadian commercial general liability form. Because the duty is triggered by the allegations rather than the facts, an insurer often defends under a reservation of rights while coverage is examined.

31. What is a reservation of rights letter?

1. A settlement offer made on terms the insured must accept within a stated period
2. A denial of the claim, issued before the insurer has completed any investigation of the reported loss
3. An admission of coverage that the insurer may withdraw once the file has been adjusted and closed
4. Notice that the insurer will investigate or defend without admitting that the policy responds

Source: the conditions of the standard Canadian commercial general liability form. Where the reservation creates a genuine conflict, an insured may become entitled to independent counsel, and a broker should make sure the client understands the letter.

32. Who normally controls settlement of a liability claim?

1. The insured, who may accept or refuse any offer because the defence is conducted in their name
2. The insurer, subject to any consent to settle clause in the policy
3. The plaintiff, whose acceptance binds the insurer once the offer falls within the policy limit
4. The broker, acting on the client's written authority once the adjuster has reserved its position

Source: the conditions of the standard Canadian commercial general liability form. Professional liability wordings often add a consent requirement because reputation matters to the insured, and that clause usually caps the insurer's exposure if consent is unreasonably withheld.

33. An insured settles a liability claim privately without telling the insurer. What is the consequence?

1. The claim is closed favourably
2. The insurer must reimburse the payment
3. The voluntary payment condition may be breached, jeopardising coverage
4. The deductible is waived

Source: the conditions of the standard Canadian commercial general liability form. Settling privately can concede liability the insurer would have contested, which is precisely what the condition is designed to prevent.

34. Why does an insured have a duty to cooperate in a liability claim?

1. The defence depends on the insured's evidence, documents and attendance
2. Cooperation reduces the premium
3. Cooperation is required by RIBO
4. Cooperation determines the limit

Source: the conditions of the standard Canadian commercial general liability form. An insured who disappears can lose the benefit of the coverage entirely, which is a consequence worth explaining at the outset of a claim.

35. The duty of good faith in a claim requires an insurer to:

1. Settle only after trial, which is the point at which the amount owing is fixed
2. Pay every claim that is presented, leaving any question of coverage to be argued afterwards
3. Deny doubtful claims so that the remaining policyholders are not asked to fund them through their own premiums
4. Investigate fairly, decide within a reasonable time and give reasons for its decision

Source: the insurer's duty of good faith (Whiten v. Pilot Insurance Co.) and the Insurance Act, R.S.O. 1990, c. I.8. Canadian courts have developed this duty considerably, and Whiten v. Pilot Insurance Co. remains the leading authority on its breach.