Fundamentals of Insurance Practice Exam-2024. Questions with Correct and Verified Answers. LATEST 2024 UPDATE GUARANTEED A+

1) Your client has made application for “appraisal”. The intent of the appraisal process is to settle the dispute between your client and the insurer regarding a. Amount of the settlement being offered b. Denial of insurance coverage under the policy c. Right of the insured to purchase the salvage after an insured loss d. Premium charged to coverages being provided by the insurer 2) An indifferent attitude towards losses because of the presence of insurance indicates the presence of a. Gross negligence b. Physical hazard c. A material change d. A moral hazard 3) Insurable interest means the a. Interest gained on money in a bank b. Interest payable on a loan c. Personal interest people have in something they expect to inherit d. Financial interest a person has in something of value 4) Every policy of “fire” insurance a. Usually covers fire, smoke, and specified types of explosions b. Is required by law to cover fire, windstorm and lightning c. Covers fire, explosion and windstorm d. Is required by law to cover at least fire, lightning, and specified types of explosions 5) Your client’s insurance policy was cancelled for non-payment of premium. 6 days after the notice of termination waas mailed, your client had a loss a. The loss would not be covered because no premiums had been paid b. The mailing of the notice automatically cancels the policy after 5 days c. The loss is covered because 15 days’ notice must be given by registered mail d. The loss would be covered but only in proportion to the time the policy was in effect 6) Under a policy of “fire” insurance, the insurer must make payment for a loss within a. 75 days after completion of the proof of loss b. 90 days after complketion of the proof of loss c. 60 days after the completion of the proof of loss unless the contract provides for a shorter period d. One year from the date the loss occurred 7) Every property insurance policy describes the method used to pay claims. Normally the insurer will pay the lesser of three amounts in the event of a claim. One factor which does not enter into this calculation is the a. Actual cash value of the property b. Original cost of the property c. Insured’s interest in the property d. Policy limit 8) Your client recently had a burglary. In the documents filed with the insuracne company, she made a claim for a $1200 television set she never had. This is a a. Breach of warranty b. Fraud c. Misrepresentation d. Material change 9) It can be said that the concept of insurance is based on sharing, which is the fundamental principle of a funtioning society. Insurance is an undertaking that a. Spreads the risk of loss among many people b. Obtains financing for a risky capital venture c. Protects oneself against loss due to bankruptcy d. Prevents the happening of certain types of losses 10) 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 five days’ written notice personally delivered b. The refund due 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 11) The major function of insurance is to a. Reduce the cost of losses b. Share the losses of the few among the many c. Safeguard the interest of mortgagees d. Serve as the basis of existing credit system 12) Under a polcy 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 to property caused by a process involving the application of heat 13) Property policies contain two types of exclusions – one for property excluded and one for perils excluded. All of the following property items are normally excluded by property policies except one. Pick the exception a. Automobiles b. Yard maintenance equipment c. Money and securities d. Property which has been vacant for more than 30 consecutive days 14) “indemnity” means a. Returning the premium to the insureds b. Restoring the insureds to the same financial position as they were in immediately prior to the loss c. Paying the insureds the face amount of the policy d. Restoring the insureds to the same financial position as they were in at the inception date of the policy 15) When an insured knowingly fails to reveal all material information when applying for insurance and there is a subsequent loss under the policy, the insurer a. Must pay the insured’s claim b. Must continue the policy until expiry, but may choose not to renew it c. May void the policy only if it is able to show that the misrepresentation was directly linked to the loss d. May sue the insured for misrepresentation 16) In the following case, the insurer must give its consent to the transfer of an existing insurance contract when a. The insureds sell their home and the new owners want to continue the existing policy b. There has been a change in title to the insured property after the death of the insured c. There has been an authorized assignment under the Bankruptcy Act d. The insured becomes insane and title to the insured property is given to another by order of the court 17) A physical hazard is a. A type of peril b. The same as a moral hazard c. A condition relating to the premises which cause a peril to occur d. The possibility of a loss due to the character of the insured 18) Statutory conditions found in all policies of “fire” insurance a. Outline the duties and responsibilities of the insured and insurer b. Specify the coverage provided c. State the rights of thirds parties d. Are not expressly required by law