AIC General Insurance Level 1 Cheat Sheet

Use this independent reference to tighten recall for the Alberta Insurance Council General Insurance Level 1 exam. It supplements current GLQP instruction from an approved educator; it does not provide GLQP certification or replace official AIC material.

1. Read the tables first. They compress the concepts most likely to appear in scenario questions.
2. Pause on decision rules. AIC L1 questions often test what you should do next, not just definitions.
3. Drill weak areas immediately. After each section, use independent companion practice to confirm whether you can apply the concept.
4. Use current official wording. Reconcile limits, timelines, forms, statutory wording, and licensing rules with your approved GLQP materials and AIC.

Quick Table

Indemnity Decision Rule

Ask:

1. What was the insured’s financial position before the loss?
2. What is the covered damage?
3. What limits, deductibles, exclusions, and valuation clauses apply?
4. Would the proposed payment create a profit?

If the answer creates a windfall, re-check indemnity, limits, other insurance, and valuation.

Proximate Cause Trap

The proximate cause is not always the first event or the last event. It is the dominant cause that sets the chain of events in motion, unless an excluded cause interrupts the chain.

Example reasoning pattern:

• Windstorm damages roof.
• Rain enters through the storm-created opening.
• Interior water damage follows.

The analysis should focus on the dominant covered peril and any policy wording that modifies water damage coverage.

Insurance Contract Distinctions

Material Change vs New Information

Coinsurance

Premium and Ratio Formulas

Common Property Perils

Common Property Exclusions

Named Perils, Broad, and Comprehensive

Common Property Perils

Common Property Exclusions

Habitational Coverage Parts

Condo-Specific Traps

Auto Physical Damage Options

Common Auto Endorsement Concepts

Auto Scenario Decision Table

Commercial General Liability

Commercial Liability Exclusions to Recognize

Negligence Essentials

To establish negligence, look for:

If one element is missing, negligence may fail.

Liability Coverage Concepts

Occurrence vs Claims-Made

Liability Traps

• Liability insurance does not cover every bad outcome; there must be covered legal liability.
• Intentional injury is usually excluded.
• Contractual liability may be limited unless specifically covered.
• Professional services often require professional liability coverage, not just CGL.
• Automobile liability is usually handled by auto coverage, not general liability.
• Pollution, cyber, employment practices, and directors/officers exposures may need specialized coverage.
• Defence may be broader than indemnity, depending on allegations and wording.

Commercial Property

Business Interruption Trap

Business interruption usually requires:

1. Covered physical loss or damage,
2. To covered property or qualifying property,
3. By an insured peril,
4. Causing interruption of business,
5. During the indemnity period, subject to wording.

No covered property damage often means no business interruption coverage, unless a specific extension applies.

Commercial General Liability

Claims Settlement Concepts

Claims Workflow

    flowchart TD
	    A[Loss occurs] --> B[Insured gives prompt notice]
	    B --> C[Insurer confirms policy and loss facts]
	    C --> D{Covered peril and property?}
	    D -->|No or uncertain| E[Reservation of rights / coverage review]
	    D -->|Yes| F[Adjust amount of loss]
	    E --> G{Coverage accepted?}
	    G -->|No| H[Denial with reasons]
	    G -->|Yes| F
	    F --> I[Apply valuation, limits, deductible, conditions]
	    I --> J[Settle claim]
	    J --> K[Subrogation / salvage if applicable]

Duties After Loss

Claims Workflow

    flowchart TD
	A[Loss occurs] --> B[Check policy period and insured]
	B --> C[Identify damaged property or liability exposure]
	C --> D[Find possible insuring agreement]
	D --> E[Check exclusions and conditions]
	E --> F[Apply limits, deductibles, valuation, endorsements]
	F --> G[Consider other insurance, subrogation, contribution]
	G --> H[Determine likely coverage response]

Claim Settlement Trap

A covered loss can still be reduced or denied because of:

• Exclusion
• Breach of condition
• Insufficient limit
• Deductible
• Co-insurance penalty
• Depreciation
• Failure to meet replacement cost conditions
• Lack of insurable interest
• Fraud or intentional loss
• Late notice that prejudices the insurer

Conduct Red Flags

Pure Risk vs Speculative Risk

Insurance is mainly designed for fortuitous pure risks, not business gambles or intentional losses.

Binder vs Policy

Material Change

A material change is a change in risk that would influence a reasonable insurer’s decision to continue coverage, change terms, or change premium.

Common examples:

• Change in occupancy or use
• Vacancy or extended unoccupancy
• Business activity added to personal premises
• Renovations or structural changes
• New drivers or vehicle use changes
• Prior losses or risk conditions not previously disclosed

Exam decision rule: if the insurer would likely care, the client should disclose it promptly.

Common Conduct Scenarios

Authority Trap

Do not assume a producer can bind every risk. Authority may be limited by:

• Licence level
• Agency/brokerage procedures
• Insurer contract
• Underwriting guidelines
• Type of risk
• Required approvals

In scenario questions, the safest answer is often: do not promise coverage until authority is confirmed.

Common Rating Factors

Material Misrepresentation Trap

If a fact would have influenced the insurer’s decision, it is likely material. Exam questions often hide material facts in casual client comments.

Examples:

• “The basement suite is rented, but only sometimes.”
• “I use the pickup for deliveries after work.”
• “The building is empty while we wait for permits.”
• “We had a small fire but did not claim.”

Co-Insurance Formula

Co-insurance requires the insured to carry a minimum amount of insurance compared with the required value. If underinsured, the claim may be reduced.

Then apply the policy limit and deductible as required by the wording.

Co-Insurance Exam Steps

1. Determine the value of property at time of loss.
2. Multiply by the co-insurance percentage to find required insurance.
3. Compare insurance carried to required insurance.
4. If carried is less than required, apply the penalty formula.
5. Apply the limit and deductible.

Common mistake: applying the deductible before the co-insurance calculation when the wording or formula expects the reverse.

Homeowners Coverage Sections

Habitational Traps

• Business property and business liability may be limited or excluded.
• Roomers, boarders, short-term rentals, or tenants can materially change the risk.
• Detached structures used for business may not be covered as expected.
• Jewellery, bicycles, collectibles, money, and watercraft often have special limits.
• Water damage is wording-sensitive; do not assume every water loss is covered.
• Vacancy is not the same as temporary absence.
• Condo owners need to understand unit improvements, deductible assessments, and corporation insurance gaps.

Physical Damage Decision Table

Common Auto Endorsement Topics

Auto Exam Traps

• Do not treat collision and comprehensive as interchangeable.
• Do not assume a personal auto policy covers all business use.
• A vehicle used for delivery, rideshare, commercial hauling, or regular business operations may require disclosure and different coverage.
• A driver may have permission to use a vehicle but still be outside policy terms depending on wording and facts.
• Physical damage coverage is usually optional in many contexts; liability-related coverage and statutory requirements are separate issues.
• Non-owned vehicle coverage is not automatic for every situation; check endorsements and definitions.
• Excluded drivers, unauthorized use, impaired driving, racing, and illegal use can change the answer.

Trap: Not every mistake creates waiver or estoppel. Look for knowledge, conduct, reliance, and prejudice.

Representation vs Warranty

Void vs Voidable