LEVEL 1 FUNDAMENTALS OF INSURANCE PRACTICE EXAM QUESTIONS WITH CORRECT ANSWERS 2025

LEVEL 1 FUNDAMENTALS OF INSURANCE
PRACTICE EXAM QUESTIONS WITH
CORRECT ANSWERS 2025
YourFclientFhasFmadeFapplicationFforF"appraisal".FTheFintentFofFtheFappraisalFprocessFisFtoFsettleFtheFdisput
eFbetweenFyourFclientFandFtheFinsurerFregardingFthe:

a.FAmountFofFtheFsettlementFbeingFoffered

b.FDenialFofFinsuranceFcoverageFunderFtheFpolicy

c.FRightFofFtheFinsuredFtoFpurchaseFtheFsalvageFafterFanFinsuredFloss

d.FPremiumFchargedFtoFcoveragesFbeingFprovidedFbyFtheFinsurerF-FcorrectFanswer-a



AnFindifferentFattitudeFtowardsFlossesFbecauseFofFtheFpresenceFofFinsuranceFindicatesFtheFpresenceFof:

a.FGrossFnegligence

b.FPhysicalFhazard

c.FAFmaterialFchange

d.FMoralFhazardF-FcorrectFanswer-d



InsurableFinterestFmeansFthe:

a.FInterestFgainedFonFmoneyFinFaFbank

b.FInterestFpayableFonFaFloan

c.FPersonalFinterestFpeopleFhaveFinFsomethingFtheyFexpectFtoFinherit

d.FFinancialFinterestFaFpersonFhasFinFsomethingFofFvalueF-FcorrectFanswer-d



EveryFpolicyFofF"fire"Finsurance:

a.FUsuallyFcoversFfire,Fsmoke,FandFspecifiedFtypesFofFexplosions

b.FIsFrequiredFbyFlawFtoFcoverFfire,Fwindstorm,FandFlightning

c.FCovers,Ffire,Fexplosion,FandFwindstorm

d.FIsFrequiredFbyFlawFtoFcoverFatFleastFfire,Flightning,FandFspecifiedFtypesFofFexplosionsF-FcorrectFanswer-d

,YourFclient'sFinsuranceFpolicyFwasFcancelledFforFnon-
paymentFofFpremium.F6FdaysFafterFtheFnoticeFofFterminationFwasFmailed,FyourFclientFhadFaFloss.

a.FTheFlossFwouldFnotFbeFcoveredFbecauseFnoFpremiumsFhadFbeenFpaid

b.FTheFmailingFofFtheFnoticeFautomaticallyFcancelsFtheFpolicyFafterF5Fdays

c.FTheFlossFisFcoveredFbecauseF15Fdays'FnoticeFmustFbeFgivenFbyFregisteredFmail

d.FTheFlossFwouldFbeFcoveredFbutFonlyFinFproportionFtoFtheFtimeFtheFpolicyFwasFinFeffect.F-FcorrectFanswer-
c



UnderFaFpolicyFofF"fire"Finsurance,FtheFinsurerFmustFmakeFpaymentFforFaFlossFwithin:

a.F75FdaysFafterFcompletionFofFtheFproofFofFloss.

b.F90FdaysFafterFcompletionFofFtheFproofFofFloss.

c.F60FdaysFafterFtheFcompletionFofFtheFproofFofFlossFunlessFtheFcontractFprovidesFforFaFshorterFperiod.

d.FOneFyearFfromFtheFdateFtheFlossFoccurred.F-FcorrectFanswer-c



EveryFpropertyFinsuranceFpolicyFdescribesFtheFmethodFusedFtoFpayFclaims.FNormallyFtheFinsurerFwillFpayFth
eFlesserFofFthreeFamountsFinFtheFeventFofFaFclaim.FOneFfactorFwhichFdoesFnotFenterFintoFthisFcalculationsFisF
the:

a.FActualFcashFvalueFofFtheFproperty.

b.FOriginalFcostFofFtheFproperty.

c.FInsured'sFinterestFinFtheFproperty.

d.FPolicyFlimit.F-FcorrectFanswer-b



YourFclientFrecentlyFhadFaFburglary.FInFtheFdocumentsFfiledFwithFtheFinsuranceFcompany,FsheFmadeFaFclaimF
forFaF$1,200FtelevisionFsetFsheFneverFhad.FThisFisFa:

a.FBreachFofFwarranty

b.FFraud

c.FMisrepresentation

d.FMaterialFchangeF-FcorrectFanswer-b



ItFcanFbeFsaidFthatFtheFconceptFofFinsuranceFisFbasedFonFsharing,FwhichFisFtheFfundamentalFprincipleFofFaFfu
nctioningFsociety.FInsuranceFisFanFundertakingFthat:

, a.FSpreadsFtheFriskFofFlossFamongFmanyFpeople

b.FObtainsFfinancingFforFaFriskyFcapitalFventure

c.FProtectsFoneselfFagainstFlossFdueFtoFbankruptcy

d.FPreventsFtheFhappeningFofFcertainFtypesFofFlossesF-FcorrectFanswer-a



WhenFtheFinsurerFterminatesFanFinsuranceFpolicy,FallFofFtheFfollowingFconditionsFapply,FexceptFone.FPickFth
eFException:

a.FTheFinsuredFisFentitledFtoF15Fdays'FwrittenFnoticeFofFterminationFsentFbyFregisteredFmailFofFfiveFdays'Fwrit
tenFnoticeFpersonallyFdelivered.

b.FTheFrefundFdueFtheFinsuredFshallFbeFcalculatedFonFaFshortFrateFbasis

c.FUnlessFotherwiseFstated,FtheFrefundFshallFaccompanyFtheFnoticeFofFtermination.

d.FTheFrefundFshallFbeFinFtheFformFofFmoney,FpostalForFexpressFcompanyFmoneyForderForFchequeFpayableFa
tFpar.F-FcorrectFanswer-b



TheFmajorFfunctionFofFinsuranceFisFto:

a.FReduceFtheFcostFofFlosses.

b.FShareFtheFlossesFofFtheFfewFamongFtheFmany.

c.FSafeguardFtheFinterestFofFmortgagees.

d.FServeFasFtheFbasisFofFexistingFcreditFsystem.F-FcorrectFanswer-b



UnderFaFpolicyFofF"fire"Finsurance,FtheFinsurerFwouldFbeFobligatedFtoFpayFtheFfollowingFlossFonly:

a.FFireFdamageFcausedFtoFapplianceFfollowingFaFsuddenFpowerFsurge

b.FFireFdamageFtoFinsuredFbuildingsFoccurringFduringFaFrebellion.

c.FDamageFtoFinsuredFpropertyFdueFtoFradioactiveFcontamination.

d.FLossFtoFpropertyFcausedFbyFaFprocessFinvolvingFtheFapplicationFofFheat.F-FcorrectFanswer-b



PropertyFpoliciesFcontainFtwoFtypesFofFexclusionsF-
FoneFforFpropertyFexcludedFandFoneFforFperilsFexcluded.FAllFofFtheFfollowingFpropertyFitemsFareFnormallyFex

cludedFbyFpropertyFpolicies,FexceptFone.FPickFtheFexception:

a.FAutomobiles