FUNDAMENTALS OF INSURANCE (BC) ACTUAL AND PREP EXAM 2026
LATEST 130 QUESTIONS AND CORRECT ANSWERS PERFECT FOR HIGH
PASSMARK
Insurance plays an important role in managing financial risk. The main purpose of Insurance is to:
A. Enable the consumer to obtain loan or mortgage.
B. Provide employment and investment capital.
C. Allow spread of risk.
D. Reduce losses through loss prevention and loss reduction. - correct answer -C. Allow spread of risk.
When the insurer terminates an insurance policy, ALL of the following conditions apply, EXCEPT one.
Pick the exception:
A. The insured is entitled to 15 days' written notice of termination sent by registered mail of 5 days'
written notice personally delivered.
B. The refund due to the insured shall be calculated on a short rate basis.
C. Unless otherwise stated, the refund shall accompany the notice of termination.
D. The refund shall be in the form of money, postal or express company money order or cheque payable
at par. - correct answer -B. The refund due to the insured shall be calculated on a short rate basis.
The major function of insurance is to:
A. Reduce the cost of losses.
B. Share the losses of the few among many.
C. Safeguard the interest of the mortgagees
D. Serve as the basis of the existing credit system. - correct answer -B. Share the losses of the few among
many.
Under the policy of "fire" insurance, the insurer would be obligated to pay the following loss only:
A. Fire damage caused to appliance following a sudden power surge.
B. Fire damage to insured buildings occurring during a rebellion.
C. Damage to insured property due to radioactive contamination.
,D. Loss of property caused by a process involving the application of heat. - correct answer -B. Fire
damage to insured buildings occurring during a rebellion.
A lawsuit alleging damage to a neighbouring property during excavation work was filed against the
property owner and the contractor. All of the following statements regarding the legal liability for
injury or property damage arising out of the work performed by a contractor are true. Except one.
a. the owner will not be held legally liable if the owner hired a contractor having the necessary expertise
in performing the work
b. the owner will not be legally liable if the work is considered reasonable
c. the owner and contractor will share the liability if the work was dangerous
d. the owner will always be held liable for injury or property damage resulting from the work performed
by the contractor. - correct answer -d. the owner will always be held liable for injury or property damage
resulting from the work performed by the contractor.
Civil law, also called private law, is the body of law that addresses disputes between individuals and
other legal entities. Civil law is divided into two branches, contract law and tort law. Civil law defines
a tort as:
a. a failure to meet obligations under a contract
b. a private wrong or injury other than a breach of contract.
c. a criminal wring that must be punished.
d. a failure to exercise that degree of care, which an ordinary person with reasonable prudence would
under the same circumstances. - correct answer -b. a private wrong or injury other than a breach of
contract.
Most liability policies provide coverage on an occurrence basis. All of the following statememts,
except one, correctly describes what the policy covers. Select the statement which is incorrect.
a. the amount of insurance stated on the policy is the maximum amount payable for all occurrences,
which happened during the policy period.
b. the policy covers bodily injury or property damage resulting from an accident.
c. the policy covers bodily injury or property damage caused by an exposure to a harmful condition over
a long period of time.
d. the amount of insurance stated on the policy is available for each occurrences during the policy
period. - correct answer -a. the amount of insurance stated on the policy is the maximum amount
payable for all occurrences, which happened during the policy period.
,All home owners forms insure the personal liability of the insured arising out of:
a. the insured's private actions anywhere in the world and business related actions in north America
only
b. the insured's action as private citizen anywhere in the world
c. the insured's private and business actions anywhere in the world
d. the insured;s private actions in Canada and USA - correct answer -b. the insured's action as private
citizen anywhere in the world
All Homeowners and Habitational package policies include liability insurance. Coverage E would respond
to all of the following instances, except 1.
a. bodily injury or property damage caused by the insured arising out a personal non-business activity.
b. bodily injury suffered by a resident employee as a direct result of the insured's negligence.
c. fire damage to a cottage rented by the insured when a burning log rolled out of a fire place.
d. property damage to a third party resulting from the personal actions of a named insured who does
not reside at the insured premises. - correct answer -d. property damage to a third party resulting from
the personal actions of a named insured who does not reside at the insured premises.
Your client is considering hiring a contractor to perform renovations to a building. She would share in
any liability for injury or damage caused by such contractor in all of the following instances, except one.
a. when the work being contracted is inherently dangerous
b. when she supplies "blue prints" and leaves the contractor to his own resources to arrive at the
desired results.
c. when she supplies defective machinery or equipment form which injury or damage arises.
d. when she provides on site direction and on-going supervision of work. - correct answer -b. when she
supplies "blue prints" and leaves the contractor to his own resources to arrive at the desired results.
The personal injury liability coverage, in the commercial general liability would respond to all of the
following torts, except one.
a. negligence
b. false arrest
c. libel or slander
, d. wrongful entry or eviction - correct answer -a. negligence
The personal liability coverages, provided on homeowners forms are designed to insure:
a. the legal liability for private citizens for their actions.
b. the legal liability for insureds arising out of their business pursuits.
c. the legal liability of insureds arising out of the operation of all owned and non-owned automobiles.
d. all exposures for which an insured might be legally liable. - correct answer -a. the legal liability for
private citizens for their actions.
Homeowners forms covers the insured's legal liability for loss or damage to rented or leased premises
from all of the following losses, except 1.
a. fire
b. explosion
c. smoke from a fireplace
d. water damage - correct answer -c. smoke from a fireplace
The professional liability exposure of insurance brokers is only insured under a policy of:
a. personal liability insurance
b. commercial general liability insurance
c. Malpractice insurance.
d. errors and omissions insurance. - correct answer -d. errors and omissions insurance.
In the event of an occurrence, claim or action, the insured under a liability policy must do of the
following, except one.
a. provide the insurer with prompt notification of any accident or occurrence which may lead to a claim.
b. immediately forward to the insurer copies of any legal paper received.
c. make such voluntary payments on behalf of the insurer as are required interim to satisfy the plaintiff.
d. assist the insurer in in the investigation, settlement or defence of the claim or action - correct answer
-c. make such voluntary payments on behalf of the insurer as are required interim to satisfy the plaintiff.
LATEST 130 QUESTIONS AND CORRECT ANSWERS PERFECT FOR HIGH
PASSMARK
Insurance plays an important role in managing financial risk. The main purpose of Insurance is to:
A. Enable the consumer to obtain loan or mortgage.
B. Provide employment and investment capital.
C. Allow spread of risk.
D. Reduce losses through loss prevention and loss reduction. - correct answer -C. Allow spread of risk.
When the insurer terminates an insurance policy, ALL of the following conditions apply, EXCEPT one.
Pick the exception:
A. The insured is entitled to 15 days' written notice of termination sent by registered mail of 5 days'
written notice personally delivered.
B. The refund due to the insured shall be calculated on a short rate basis.
C. Unless otherwise stated, the refund shall accompany the notice of termination.
D. The refund shall be in the form of money, postal or express company money order or cheque payable
at par. - correct answer -B. The refund due to the insured shall be calculated on a short rate basis.
The major function of insurance is to:
A. Reduce the cost of losses.
B. Share the losses of the few among many.
C. Safeguard the interest of the mortgagees
D. Serve as the basis of the existing credit system. - correct answer -B. Share the losses of the few among
many.
Under the policy of "fire" insurance, the insurer would be obligated to pay the following loss only:
A. Fire damage caused to appliance following a sudden power surge.
B. Fire damage to insured buildings occurring during a rebellion.
C. Damage to insured property due to radioactive contamination.
,D. Loss of property caused by a process involving the application of heat. - correct answer -B. Fire
damage to insured buildings occurring during a rebellion.
A lawsuit alleging damage to a neighbouring property during excavation work was filed against the
property owner and the contractor. All of the following statements regarding the legal liability for
injury or property damage arising out of the work performed by a contractor are true. Except one.
a. the owner will not be held legally liable if the owner hired a contractor having the necessary expertise
in performing the work
b. the owner will not be legally liable if the work is considered reasonable
c. the owner and contractor will share the liability if the work was dangerous
d. the owner will always be held liable for injury or property damage resulting from the work performed
by the contractor. - correct answer -d. the owner will always be held liable for injury or property damage
resulting from the work performed by the contractor.
Civil law, also called private law, is the body of law that addresses disputes between individuals and
other legal entities. Civil law is divided into two branches, contract law and tort law. Civil law defines
a tort as:
a. a failure to meet obligations under a contract
b. a private wrong or injury other than a breach of contract.
c. a criminal wring that must be punished.
d. a failure to exercise that degree of care, which an ordinary person with reasonable prudence would
under the same circumstances. - correct answer -b. a private wrong or injury other than a breach of
contract.
Most liability policies provide coverage on an occurrence basis. All of the following statememts,
except one, correctly describes what the policy covers. Select the statement which is incorrect.
a. the amount of insurance stated on the policy is the maximum amount payable for all occurrences,
which happened during the policy period.
b. the policy covers bodily injury or property damage resulting from an accident.
c. the policy covers bodily injury or property damage caused by an exposure to a harmful condition over
a long period of time.
d. the amount of insurance stated on the policy is available for each occurrences during the policy
period. - correct answer -a. the amount of insurance stated on the policy is the maximum amount
payable for all occurrences, which happened during the policy period.
,All home owners forms insure the personal liability of the insured arising out of:
a. the insured's private actions anywhere in the world and business related actions in north America
only
b. the insured's action as private citizen anywhere in the world
c. the insured's private and business actions anywhere in the world
d. the insured;s private actions in Canada and USA - correct answer -b. the insured's action as private
citizen anywhere in the world
All Homeowners and Habitational package policies include liability insurance. Coverage E would respond
to all of the following instances, except 1.
a. bodily injury or property damage caused by the insured arising out a personal non-business activity.
b. bodily injury suffered by a resident employee as a direct result of the insured's negligence.
c. fire damage to a cottage rented by the insured when a burning log rolled out of a fire place.
d. property damage to a third party resulting from the personal actions of a named insured who does
not reside at the insured premises. - correct answer -d. property damage to a third party resulting from
the personal actions of a named insured who does not reside at the insured premises.
Your client is considering hiring a contractor to perform renovations to a building. She would share in
any liability for injury or damage caused by such contractor in all of the following instances, except one.
a. when the work being contracted is inherently dangerous
b. when she supplies "blue prints" and leaves the contractor to his own resources to arrive at the
desired results.
c. when she supplies defective machinery or equipment form which injury or damage arises.
d. when she provides on site direction and on-going supervision of work. - correct answer -b. when she
supplies "blue prints" and leaves the contractor to his own resources to arrive at the desired results.
The personal injury liability coverage, in the commercial general liability would respond to all of the
following torts, except one.
a. negligence
b. false arrest
c. libel or slander
, d. wrongful entry or eviction - correct answer -a. negligence
The personal liability coverages, provided on homeowners forms are designed to insure:
a. the legal liability for private citizens for their actions.
b. the legal liability for insureds arising out of their business pursuits.
c. the legal liability of insureds arising out of the operation of all owned and non-owned automobiles.
d. all exposures for which an insured might be legally liable. - correct answer -a. the legal liability for
private citizens for their actions.
Homeowners forms covers the insured's legal liability for loss or damage to rented or leased premises
from all of the following losses, except 1.
a. fire
b. explosion
c. smoke from a fireplace
d. water damage - correct answer -c. smoke from a fireplace
The professional liability exposure of insurance brokers is only insured under a policy of:
a. personal liability insurance
b. commercial general liability insurance
c. Malpractice insurance.
d. errors and omissions insurance. - correct answer -d. errors and omissions insurance.
In the event of an occurrence, claim or action, the insured under a liability policy must do of the
following, except one.
a. provide the insurer with prompt notification of any accident or occurrence which may lead to a claim.
b. immediately forward to the insurer copies of any legal paper received.
c. make such voluntary payments on behalf of the insurer as are required interim to satisfy the plaintiff.
d. assist the insurer in in the investigation, settlement or defence of the claim or action - correct answer
-c. make such voluntary payments on behalf of the insurer as are required interim to satisfy the plaintiff.
