Fundamentals of Insurance - Practice Exam LATEST UPDATE

Fundamentals of Insurance - Practice Exam 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 system - ✔✔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. Th e result of a loss - ✔✔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 were - ✔✔b. Restoring the insured's to the same financial position as they were immediately prior to the loss Property insurance contra cts 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 insured - ✔✔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 Risk - ✔✔d. Transfer of Risk In a contract of insurance, consideration means: a. The exchang e 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 underwriter - ✔✔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 Ltd - ✔✔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 I nterest, Indemnity, Utmost Good Faith d. Insurable Interest, Indemnity, Genuine Intention - ✔✔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 es sential principle of insurance contracts. This principle is: a. Legality of Object b. Utmost good faith c. Insurable Interest d. Indemnity - ✔✔b. Utmost good faith To bind a risk means: a. That the broker has committed an insurer to provide a contract o f 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 policy - ✔✔a. That the broker has committed an insurer to provide a contract of insurance on the subject matter under discussion