Fundamentals of Insurance - Practice Exam | 97 Questions
And Verified Answers
The major function of insurance is:
a. To reduce the cost of the losses
b. To share the losses of the few among the many
c. The safeguard the interest of mortgages
d. To serve as a basis of existing credit systemANSWERS-b. To share the losses of the
few among the many
A peril if best defined as:
a. The chance of a loss
b. The occurrence of a loss
c. The cause of a loss
d. The result of a lossANSWERS-c. The cause of a loss
Indemnify means:
a. Returning the premium of the insured
b. Restoring the insured's to the same financial position as they were in immediately
prior to the loss
c. Paying the insured's the face amount of the policy
d. Restoring the insured's to the same financial position as they wereANSWERS-b.
Restoring the insured's to the same financial position as they were immediately prior to
the loss
Property insurance contracts are designed to pay for loss or damage arising out of the
happening of a specific event. Only the following statement regarding the events
insured by property insurance contract is correct:
a. The event must be a future event and it must be accidental
b. The event may happen with the co-operation of the insured
c. The event may happen with the intent of the insured
d. The event may occur accidentally or be caused deliberately by the
insuredANSWERS-a. The event must be must be a future event and it must be
accidental
The following is the most practical way in which to deal with risk:
a. Avoidance of Risk
b. Retention of Risk
c. Controlling of Risk
d. Transfer of RiskANSWERS-d. Transfer of Risk
,In a contract of insurance, consideration means:
a. The exchange of something of value parties
b. The amount the insurance can collect in event of a claim
c. The object of insurance
d. The reviewing of the details of the risk to be insured by an underwriterANSWERS-a.
The exchange of something of value between parties
Which of the following would be correct legal name of the insured in a contact of
insurance:
a. The corner store
b. John's Corner Store
c. J.D.'s Corner Store
d. The Corner Store LtdANSWERS-d. The Corner Store Ltd
All contracts require that five elements be present if the contract is to be enforceable by
law. An insurance contract is enforceable only if it contains the following three additional
interest:
a. Insurable Interest, Utmost Good Faith
b. Insurable Interest, Consideration, Indemnity
c. Insurable Interest, Indemnity, Utmost Good Faith
d. Insurable Interest, Indemnity, Genuine IntentionANSWERS-c. Insurable Interest,
Indemnity, Utmost Good Faith
If your clients do not advise the insurer of previous losses when required to do so, they
have violated an essential principle of insurance contracts. This principle is:
a. Legality of Object
b. Utmost good faith
c. Insurable Interest
d. IndemnityANSWERS-b. Utmost good faith
To bind a risk means:
a. That the broker has committed an insurer to provide a contract of insurance on the
subject matter under discussion
b. Finding a company willing to give a quote on a risk
c. Getting underwriting information from a client
d. Automatically renewing an existing policyANSWERS-a. That the broker has
committed an insurer to provide a contract of insurance on the subject matter under
discussion
, The property and casualty insurance compensation corporation (PACICC) was formed
for this purpose:
a. To have all insurers share in the payment of claims arising out of a single catastrophe
b. To spread the costs of suspected fraudulent claims amongst all insurers
c. To provide consumers with insurance protection in the event of an insurer insolvency
d. To monitor the solvency of federally licensed insurersANSWERS-c. To provide
consumers with insurance protection in the event of an insurer insolvency
Insurance brokers have a fiduciary responsibility to their clients. The following statement
best summarizes the extent of the broker's fiduciary responsibility:
a. The commission for the policy is considered to be fully earned
b. The total commission earned is returned to the insured
c. The unearned portion of the commission is returned to the insured
d. The commission, less 50%, is required to be returned to the insuredANSWERS-c.
The unearned portion of the commission is returned to the insured
Under the terms of the Insurance Act, property which is necessarily removed to prevent
further damage is covered at the new location:
a. For seven days or until the policy expires
b. For seven days, but only if a removal permit is attached to the policy
c. For a reasonable time
d. Until the original location is repairedANSWERS-a. For seven days or until the policy
expires
Subrogation refers to:
a. The amount the insurance company receives from a person who is legally
responsible for loss
b. The right of the insurance company to recover payments made under the policy from
another person who is legally responsible for the loss
c. The right of the insurance to take over the salvage after the claim has been made
d. The right of the insured's to collect the amount of their loss from either the insurer or
the person responsibleANSWERS-b. The right of the insurance company to recover
payments made under the policy from another person who is legally responsible for the
loss
Every policy of "Fire" insurance:
a. Usually covers fire, smoke, and specific types of explosions
b. Is required by law to cover fire, windstorm, and lightening
c. Covers fire, explosion, and windstorm
And Verified Answers
The major function of insurance is:
a. To reduce the cost of the losses
b. To share the losses of the few among the many
c. The safeguard the interest of mortgages
d. To serve as a basis of existing credit systemANSWERS-b. To share the losses of the
few among the many
A peril if best defined as:
a. The chance of a loss
b. The occurrence of a loss
c. The cause of a loss
d. The result of a lossANSWERS-c. The cause of a loss
Indemnify means:
a. Returning the premium of the insured
b. Restoring the insured's to the same financial position as they were in immediately
prior to the loss
c. Paying the insured's the face amount of the policy
d. Restoring the insured's to the same financial position as they wereANSWERS-b.
Restoring the insured's to the same financial position as they were immediately prior to
the loss
Property insurance contracts are designed to pay for loss or damage arising out of the
happening of a specific event. Only the following statement regarding the events
insured by property insurance contract is correct:
a. The event must be a future event and it must be accidental
b. The event may happen with the co-operation of the insured
c. The event may happen with the intent of the insured
d. The event may occur accidentally or be caused deliberately by the
insuredANSWERS-a. The event must be must be a future event and it must be
accidental
The following is the most practical way in which to deal with risk:
a. Avoidance of Risk
b. Retention of Risk
c. Controlling of Risk
d. Transfer of RiskANSWERS-d. Transfer of Risk
,In a contract of insurance, consideration means:
a. The exchange of something of value parties
b. The amount the insurance can collect in event of a claim
c. The object of insurance
d. The reviewing of the details of the risk to be insured by an underwriterANSWERS-a.
The exchange of something of value between parties
Which of the following would be correct legal name of the insured in a contact of
insurance:
a. The corner store
b. John's Corner Store
c. J.D.'s Corner Store
d. The Corner Store LtdANSWERS-d. The Corner Store Ltd
All contracts require that five elements be present if the contract is to be enforceable by
law. An insurance contract is enforceable only if it contains the following three additional
interest:
a. Insurable Interest, Utmost Good Faith
b. Insurable Interest, Consideration, Indemnity
c. Insurable Interest, Indemnity, Utmost Good Faith
d. Insurable Interest, Indemnity, Genuine IntentionANSWERS-c. Insurable Interest,
Indemnity, Utmost Good Faith
If your clients do not advise the insurer of previous losses when required to do so, they
have violated an essential principle of insurance contracts. This principle is:
a. Legality of Object
b. Utmost good faith
c. Insurable Interest
d. IndemnityANSWERS-b. Utmost good faith
To bind a risk means:
a. That the broker has committed an insurer to provide a contract of insurance on the
subject matter under discussion
b. Finding a company willing to give a quote on a risk
c. Getting underwriting information from a client
d. Automatically renewing an existing policyANSWERS-a. That the broker has
committed an insurer to provide a contract of insurance on the subject matter under
discussion
, The property and casualty insurance compensation corporation (PACICC) was formed
for this purpose:
a. To have all insurers share in the payment of claims arising out of a single catastrophe
b. To spread the costs of suspected fraudulent claims amongst all insurers
c. To provide consumers with insurance protection in the event of an insurer insolvency
d. To monitor the solvency of federally licensed insurersANSWERS-c. To provide
consumers with insurance protection in the event of an insurer insolvency
Insurance brokers have a fiduciary responsibility to their clients. The following statement
best summarizes the extent of the broker's fiduciary responsibility:
a. The commission for the policy is considered to be fully earned
b. The total commission earned is returned to the insured
c. The unearned portion of the commission is returned to the insured
d. The commission, less 50%, is required to be returned to the insuredANSWERS-c.
The unearned portion of the commission is returned to the insured
Under the terms of the Insurance Act, property which is necessarily removed to prevent
further damage is covered at the new location:
a. For seven days or until the policy expires
b. For seven days, but only if a removal permit is attached to the policy
c. For a reasonable time
d. Until the original location is repairedANSWERS-a. For seven days or until the policy
expires
Subrogation refers to:
a. The amount the insurance company receives from a person who is legally
responsible for loss
b. The right of the insurance company to recover payments made under the policy from
another person who is legally responsible for the loss
c. The right of the insurance to take over the salvage after the claim has been made
d. The right of the insured's to collect the amount of their loss from either the insurer or
the person responsibleANSWERS-b. The right of the insurance company to recover
payments made under the policy from another person who is legally responsible for the
loss
Every policy of "Fire" insurance:
a. Usually covers fire, smoke, and specific types of explosions
b. Is required by law to cover fire, windstorm, and lightening
c. Covers fire, explosion, and windstorm
