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Fundamentals Of Insurance (BC) 117 Q&A/
2024-2025.
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. - Answer: C. Allow
spread of risk.
When the insurer terminates an insurance policy, ALL of the following conditions
apply, EXCEPT one. Pick the exception:
Page 1 of 54
,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. - 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. - 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. -
Answer: B. Fire damage to insured buildings occurring during a rebellion.
Page 2 of 54
,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. - Answer: 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 - Answer: 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.
Page 3 of 54
, 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. - Answer: 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. - Answer: 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.
Page 4 of 54
Fundamentals Of Insurance (BC) 117 Q&A/
2024-2025.
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. - Answer: C. Allow
spread of risk.
When the insurer terminates an insurance policy, ALL of the following conditions
apply, EXCEPT one. Pick the exception:
Page 1 of 54
,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. - 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. - 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. -
Answer: B. Fire damage to insured buildings occurring during a rebellion.
Page 2 of 54
,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. - Answer: 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 - Answer: 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.
Page 3 of 54
, 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. - Answer: 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. - Answer: 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.
Page 4 of 54
