PIPEDAis the federal Canadian privacy legislation governing how private-sector organizations—including insurance companies, brokers, and adjusters—collect, use, and disclosepersonal informationduring commercial activities. Its full and correct name is:

Personal Information Protection and Electronic Documents Act

PIPEDA sets out requirements for informed consent, accuracy, safeguarding of data, client access rights, and limitations on secondary use of personal information. Insurance operations rely heavily on personal data, so compliance is mandatory.

Options A, B, and C are fictitious and have no connection to Canadian insurance regulation or privacy law.

Thus, the correct answer isD.

AGuaranteed Replacement Cost (GRC)clause is a special provision in homeowners’ insurance that ensures the insurer will pay thefull cost to rebuild or repairthe dwellingeven if the loss exceeds the stated policy limit, provided all policy conditions are met (such as insuring to value and notifying the insurer of changes to the building).

This clause protects homeowners from unexpected increases in construction costs due to inflation, labour shortages, or material price spikes. The insurer guarantees complete reconstruction of the home, not merely up to policy limits.

Option A is not a recognized policy clause.

Option B (total replacement cost clause) is not the standard industry term.

Option C (pure restitution clause) does not exist in homeowners insurance terminology.

The only accurate clause that obligates the insurer to pay above policy limits is theGuaranteed Replacement Cost clause.

The Facility Association is the Canadian automobile insurance mechanism designed to ensure that high-risk drivers, who cannot obtain insurance in the voluntary market, are still able to secure the legally required automobile insurance coverage. All auto insurers in participating provinces must be members, and losses and premiums in the pool are shared among them according to market share.

Option B, “Substandard Group,” is not an official Canadian mechanism. Option C does not refer to any recognized underwriting pool for high-risk auto insurance. Option D is not an actual insurance entity.

Only the Facility Association accurately represents the mandatory pooling arrangement for high-risk drivers.

Under theCivil Code of Québec, a valid contract requires four essential elements:

Capacity– Parties must be legally capable of contracting.

Cause– The reason or purpose each party has for contracting.

Consent– Agreement must be free and informed, without error, fear, or fraud.

Object of the contract– The subject matter of the agreement must be sufficiently defined and lawful.

These elements mirror common-law principles but differ in terminology. Option D is close but inaccurate—“acceptance” is part of consent, and “subject” is a less precise term than “object.” Options A and B include incorrect or irrelevant components.

Thus, the correct answer reflecting Quebec civil law requirements isC.

In Canadian insurance law,statutory conditionsapply differently depending on the class of insurance:

Fire insurance policiescontainStatutory Conditionsunder provincial Insurance Acts.

Accident & sickness policiescontainStatutory Conditionsspecific to health and travel insurance.

Automobile insuranceincludesStatutory ConditionsorGeneral Conditions(depending on the province).

The table shown in your image lists headings:

A: Rights of examination,B: Action,C: Prohibited use by insured.

These correspond directly to statutory condition categories found infire insuranceandaccident & sickness insurance, not automobile.

The correct ordering is:

A = Fire,B = Accident & Sickness,C = Automobile.

This matches optionB.

With a guaranteed replacement cost policy, the insurer agrees to pay the full cost of replacing the damaged or destroyed property (subject to conditions), even if that amount approaches or, in some forms, exceeds the stated limit. Here, the total replacement cost of the loss is $500,000.

However, some furniture is salvageable and valued at $4,000. Since Dominika elects to keep this salvage, she is effectively retaining part of the value of the damaged property. To maintain the principle of indemnity and avoid overpayment, the insurer deducts the salvage value from the total amount they would otherwise pay.

Step-by-step:

Replacement cost of loss: $500,000

Less salvage value retained by insured: $4,000

Subtotal: $496,000

Less deductible: $1,000

Net settlement: $495,000

Therefore, Dominika will recover $495,000, making Option A correct.

Risk mitigation refers to reducing the frequency or severity of potential losses. A first-time homeowner can mitigate risk by taking proactive measures such as installing smoke alarms, securing doors and windows, maintaining the property, or eliminating hazards. These actions directly decrease the homeowner’s volume of risk by reducing the probability of a loss or limiting its potential impact.

Option A—purchasing insurance—is not risk mitigation; it is risk transfer, where the financial consequences of loss are shifted to an insurer. Insurance does not reduce the likelihood of loss; it only provides compensation after loss.

Option B is the opposite of mitigation.

Option D is irrelevant to risk management.

Thus, the correct answer is C: Decrease their volume of risk.