Fundamentals of Insurance (BC) Questions
with 100% Correct Answers | Latest Version
2024 | Verified
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. - ✔✔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. - ✔✔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. - ✔✔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. - ✔✔B. Fire damage to insured
buildings occurring during a rebellion.
Generally, all of the following, except one, are seen to be "incompetent" or lacking the legal capacity to
contract. Pick the exception:
A. A corporation.
B. A child.
C. A trade name.
D. A senile person. - ✔✔A. A corporation.
If a burning log rolls out of your clients fireplace grate across the hearth and onto the rug in front, the
loss to the rug is considered to be the result of a(n):
A. Direct fire.
B. Indirect fire
C. Friendly fire
D. Hostile fire - ✔✔D. Hostile fire
Statutory Condition Five: Termination, sets out the provisions for cancellation of a contract of insurance
that must be compiled with by the insured and the insurer. All of the following provisions regarding
termination by the insurer are true, except one. Select the exception:
A. When written notice of the termination is sent by registered mail, the insurer must give the insured 15
days' notice starting the day after the letter is received by the insured's post office.
B. When written notice of termination is sent hand-delivered, the insurer must give the insured 15 days'
notice starting on the date the letter was registered by the insurer's post office.
,C. When written notice of termination is sent hand delivered, the insurer must give the insured 5 days'
notice.
D. When the insured is entitled to a premium refund, the amount of the refund is calculated on pro- rate
(per diem) basis. - ✔✔B. When written notice of termination is sent hand-delivered, the insurer must
give the insured 15 days' notice starting on the date the letter was registered by the insurer's post office.
The Insurance Act provides that a Waiver of Term or Condition of an insurance contract is:
A. Permitted to be made by the insurance broker as long as it is in favour of the insured.
B. Not binding, unless it is in writing and under the signature of a person authorized by the insurer.
C. Valid only when signed by both the insurer and the insured.
D. Bonding when even provided orally. - ✔✔B. Not binding, unless it is in writing and under the signature
of a person authorized by the insurer.
One of the elements that determines whether a contact is legally enforceable or not is the "legal
capacity of the parties". In all of the following contracts, except one, are the parties considered to have
"legal capacity". Select the one that does not meet this element.
A. An insurance contract issued in the name of Marry Poppin d.b.a. Little People Day Care Centre.
B. A lease agreement naming the tenant as the "No Risk Denied Insurance Corporation".
C. A building contract showing the General Contractor as Bricks and Mortar Inc.
D. An invoice for merchandise shipped to the order of Mandy's Souvenir and Gift Shop. - ✔✔D. An
invoice for merchandise shipped to the order of Mandy's Souvenir and Gift Shop.
Risk selection is based on the Underwriter's assessment of the hazards pertaining to the risk that has
been submitted for insurance. An underwriter must determine whether or not there is a potential Moral
Hazard. The following does not apply as a condition indicating the presence of a Moral Hazard:
A. The moral character of the applicant for insurance.
B. The financial condition of the applicant for insurance.
C. The physical condition of the premises which may cause a loss to occur.
, D. The indifference to loss of the applicant for insurance. - ✔✔C. The physical condition of the premises
which may cause a loss to occur.
A warranty is a:
A. Promise by the broker to remit premiums to the insurer in accordance with the terms stated in the
Agency Agreement.
B. Guarantee of insureds that certain facts are truly as they are represented to be and that they will
remain so.
C. Piece of paper similar to an Endorsement which maked changes to the policy.
D. Promise by the insurer to make payment of all claims submitted to it within a 21 day period. - ✔✔B.
Guarantee of insureds that certain facts are truly as they are represented to be and that they will remain
so.
All Homeowners Policies contain the section "Extensions of Coverage". All of the following losses are
covered under this section, except one. Pick the exception:
A. Damage to personal property during transportation to the insured's new principal residence located in
Sydney, Nova Scotia, which is to be occupied by the insured within the next 10 days.
B. The cost of repair the "tear out" damage to the insured's driveway that was necessarily caused to
replace the ruptured water main.
C. The cost to replace the insured's freezer food that was spoiled as a result of a power failure caused by
lightening.
D. Loss of the insured's indoor trees and plants due to exposure to extreme temperatures after a severe
storm damaged part of the roof. - ✔✔B. The cost of repair the "tear out" damage to the insured's
driveway that was necessarily caused to replace the ruptured water main.
The Basis of Claim Payment is the same for all Homeowners Forms. All of these statements regarding the
Basis of Claim Payment are true, except one. Pick the EXCEPTION:
A. Dwelling Building and Detached Private Structures are covered on a Replacement Cost Basis.
B. Personal Property is insured for Replacement Cost except electronic media and books of account,
which are subject to a special basis of settlement.
with 100% Correct Answers | Latest Version
2024 | Verified
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. - ✔✔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. - ✔✔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. - ✔✔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. - ✔✔B. Fire damage to insured
buildings occurring during a rebellion.
Generally, all of the following, except one, are seen to be "incompetent" or lacking the legal capacity to
contract. Pick the exception:
A. A corporation.
B. A child.
C. A trade name.
D. A senile person. - ✔✔A. A corporation.
If a burning log rolls out of your clients fireplace grate across the hearth and onto the rug in front, the
loss to the rug is considered to be the result of a(n):
A. Direct fire.
B. Indirect fire
C. Friendly fire
D. Hostile fire - ✔✔D. Hostile fire
Statutory Condition Five: Termination, sets out the provisions for cancellation of a contract of insurance
that must be compiled with by the insured and the insurer. All of the following provisions regarding
termination by the insurer are true, except one. Select the exception:
A. When written notice of the termination is sent by registered mail, the insurer must give the insured 15
days' notice starting the day after the letter is received by the insured's post office.
B. When written notice of termination is sent hand-delivered, the insurer must give the insured 15 days'
notice starting on the date the letter was registered by the insurer's post office.
,C. When written notice of termination is sent hand delivered, the insurer must give the insured 5 days'
notice.
D. When the insured is entitled to a premium refund, the amount of the refund is calculated on pro- rate
(per diem) basis. - ✔✔B. When written notice of termination is sent hand-delivered, the insurer must
give the insured 15 days' notice starting on the date the letter was registered by the insurer's post office.
The Insurance Act provides that a Waiver of Term or Condition of an insurance contract is:
A. Permitted to be made by the insurance broker as long as it is in favour of the insured.
B. Not binding, unless it is in writing and under the signature of a person authorized by the insurer.
C. Valid only when signed by both the insurer and the insured.
D. Bonding when even provided orally. - ✔✔B. Not binding, unless it is in writing and under the signature
of a person authorized by the insurer.
One of the elements that determines whether a contact is legally enforceable or not is the "legal
capacity of the parties". In all of the following contracts, except one, are the parties considered to have
"legal capacity". Select the one that does not meet this element.
A. An insurance contract issued in the name of Marry Poppin d.b.a. Little People Day Care Centre.
B. A lease agreement naming the tenant as the "No Risk Denied Insurance Corporation".
C. A building contract showing the General Contractor as Bricks and Mortar Inc.
D. An invoice for merchandise shipped to the order of Mandy's Souvenir and Gift Shop. - ✔✔D. An
invoice for merchandise shipped to the order of Mandy's Souvenir and Gift Shop.
Risk selection is based on the Underwriter's assessment of the hazards pertaining to the risk that has
been submitted for insurance. An underwriter must determine whether or not there is a potential Moral
Hazard. The following does not apply as a condition indicating the presence of a Moral Hazard:
A. The moral character of the applicant for insurance.
B. The financial condition of the applicant for insurance.
C. The physical condition of the premises which may cause a loss to occur.
, D. The indifference to loss of the applicant for insurance. - ✔✔C. The physical condition of the premises
which may cause a loss to occur.
A warranty is a:
A. Promise by the broker to remit premiums to the insurer in accordance with the terms stated in the
Agency Agreement.
B. Guarantee of insureds that certain facts are truly as they are represented to be and that they will
remain so.
C. Piece of paper similar to an Endorsement which maked changes to the policy.
D. Promise by the insurer to make payment of all claims submitted to it within a 21 day period. - ✔✔B.
Guarantee of insureds that certain facts are truly as they are represented to be and that they will remain
so.
All Homeowners Policies contain the section "Extensions of Coverage". All of the following losses are
covered under this section, except one. Pick the exception:
A. Damage to personal property during transportation to the insured's new principal residence located in
Sydney, Nova Scotia, which is to be occupied by the insured within the next 10 days.
B. The cost of repair the "tear out" damage to the insured's driveway that was necessarily caused to
replace the ruptured water main.
C. The cost to replace the insured's freezer food that was spoiled as a result of a power failure caused by
lightening.
D. Loss of the insured's indoor trees and plants due to exposure to extreme temperatures after a severe
storm damaged part of the roof. - ✔✔B. The cost of repair the "tear out" damage to the insured's
driveway that was necessarily caused to replace the ruptured water main.
The Basis of Claim Payment is the same for all Homeowners Forms. All of these statements regarding the
Basis of Claim Payment are true, except one. Pick the EXCEPTION:
A. Dwelling Building and Detached Private Structures are covered on a Replacement Cost Basis.
B. Personal Property is insured for Replacement Cost except electronic media and books of account,
which are subject to a special basis of settlement.
