FUNDAMENTALS OF INSURANCE EXAM
QUESTIONS WITH 100% CORRECT
ANSWERS
RISK - ✔✔IS THE CHANCE OF FINANCIAL LOSS
PERIL - ✔✔IS THE CAISE OF FINANCIAL LOSS FOR EXAMPLE- FIRE WATER AND
EARTHQUAKE
WHAT IS THE MAIN PURPOSE OF INSURANCE - ✔✔IS TO ALLOW THE SPREAD OF
RISK
INDEMNITY - ✔✔MEANS RESTORING THE INSUREDS TO THE SAM FINANCIAL
POSITION AS THEY WERE IN IMMEDIATELY PRIOR TO THE LOSS.
WHOSE OPTION IS TO OF HOW THEY WANT TO SETTLE A CLAIM? - ✔✔THE
INSURER
INSURANCE INDEMNIFIES - ✔✔FUTURE AND ACCIDENTAL LOSSES ONLY, NOT
THE PLANNED LOSSES
DIRECT WRITERS - ✔✔IN THIS METHOD PRODUCERS ARE EMPLOYEES OF THE
INSURER. THEY ARE PAID REMUNERIATION BY THE WAY OF SALARY. INSURER
OWNS CUSTOMER FILES
1|Page
©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
,INDEPENDANT BROKERAGES - ✔✔THEY ARE SELF EMPLOYED, THEY ARE NOT
EMPLOYEES OF THE INSURANCE COMPANY THEY REPRESENT. THEY ARE PAID
COMMISSION. THE CUSTOMER FILES ARE OWNED BY THE BROKERAGE
PURE RISK - ✔✔THERE IS ONY A CHANDE OF FINANCIAL LOSS WITH NO CHANCE
OF PROFITING FROM IT FOR EXAMPLE, FIRE LOSS
SPECULATIVE RISK - ✔✔THERE IS A CHANCE OF FINANCIAL LOSS AS WEL AS A
CHANCE OF FINANCIAL GAIN
WHAT ARE THE 4 WAYS OF LIVING WITH RISK - ✔✔AVOIDANCE OF RISK-
ACTING LIKE ITS NOT THERE
CONTROLLING OF RISK- GETTING THINGS INSTALLED TO LESSON THE RISK
RETENTION OF RISK- SAVING MONEY TO DEAL WITH RISKS AS THEY COME
TRANSFER OF RISK- PURCHASING INSURANCE
CONTRACT - ✔✔IS A LEGAL PROMISE MADE BY TWO OR MORE PARTIES WHICH
CAN BE ENFORCED THROUGH THE COURT OF LAW
WHAT ARE THE FIVE ELEMENT OF A CONTRACT - ✔✔AGREEMENT
CONSIDERATION
LEGALITY OF OBJECT
LEGAL CAPACITY OF PARTIES
2|Page
©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
,GENUINE INTENTION
THE AGREEMENT OF AN INSURANCE CONTRACT - ✔✔WHEN BOTH PARTIES
AGREE ON PARTICULAR POINT
CONSIDERATION OF AN INSURANCE CONTRACT - ✔✔AN EXCHANGE OF
SOMETHING OF VALUE BETWEEN THE PARTIES TO A CONTRACT
LEGALITY OF OBJECT - ✔✔FOR WHICH A CONTRACT IS WRITTEN SHOULD BE
LEGAL OBJECT
LEGAL CAPACITY OF PARTIES - ✔✔ALL PARTIES TO CONTRACT SHOULD HAVE
LEGAL CAPACITY TO ENTER INTO A CONTRACT
GENUINE INTENTION - ✔✔NO INFLUENCE OR VIOLENCE IS USED ON EITHER
PARTY TO ENTER INTO A CONTRACT
BINDER - ✔✔THE BROKER HAS COMMITTED AN INSURER TO A CONTRACT OF
INSURANCE ON ANY RISK
ENDORSEMENT - ✔✔IT MEANS TO CHANGE THE TERMS AND CONDITIONS OF
AN EXISTING INSURANCE POLICY
RIDER - ✔✔THE COVERAGE OF AN ADDITIONAL PERIL OVER AND ABOVE THE
EXISTING PERILS COVERED IN THE POLICY
3|Page
©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
, WHAT DOES THE FEDERAL GOVERNMENT DO - ✔✔IT MONITORS THE FINANCIAL
HEALTH OF FEDERALLY LICENSED INSURERS
WHAT DOES INSOLVENT MEAN - ✔✔THOSE WHO ARE NOT ABLE TO PAY ALL
INSURED LOSSES
WHAT DOES SOLVENT MEAN - ✔✔THOSE WHO ARE ABLE TO PAY ALL INSURED
LOSSES
WHAT HAPPENS WHNE AN INSURED BECOMES INSOLVENT - ✔✔THE PROPERTY
AND CAUSALITY INSURANCE COMPENSATION CORPORATION TAKES OVER THE
BUSINESS AND PAYS THE LOSSES
WHAT DOES THE PROVINCIAL GOVERNMENT DO - ✔✔THRY APPROVE THE
CONTENT OF INSURANCE CONTRACTS
IT LICENSES THE INSURERS OPERATING WITHIN THE PROVINCE INCLUDING
FEDERALLY LICENSED INSURER
IT ALSO MONITORS THE FINANCIAL HEALTH OF THE INSURERS WHICH OPERATE
IN THE PROVINCE ONLY
WHAT IS A FIDUCIARY - ✔✔SOMEONE THATNHANDELS SOMEONE ELSES
MONEY
WHO ARE FIDUCIARIES - ✔✔INSURERS AND BROKERS
4|Page
©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
QUESTIONS WITH 100% CORRECT
ANSWERS
RISK - ✔✔IS THE CHANCE OF FINANCIAL LOSS
PERIL - ✔✔IS THE CAISE OF FINANCIAL LOSS FOR EXAMPLE- FIRE WATER AND
EARTHQUAKE
WHAT IS THE MAIN PURPOSE OF INSURANCE - ✔✔IS TO ALLOW THE SPREAD OF
RISK
INDEMNITY - ✔✔MEANS RESTORING THE INSUREDS TO THE SAM FINANCIAL
POSITION AS THEY WERE IN IMMEDIATELY PRIOR TO THE LOSS.
WHOSE OPTION IS TO OF HOW THEY WANT TO SETTLE A CLAIM? - ✔✔THE
INSURER
INSURANCE INDEMNIFIES - ✔✔FUTURE AND ACCIDENTAL LOSSES ONLY, NOT
THE PLANNED LOSSES
DIRECT WRITERS - ✔✔IN THIS METHOD PRODUCERS ARE EMPLOYEES OF THE
INSURER. THEY ARE PAID REMUNERIATION BY THE WAY OF SALARY. INSURER
OWNS CUSTOMER FILES
1|Page
©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
,INDEPENDANT BROKERAGES - ✔✔THEY ARE SELF EMPLOYED, THEY ARE NOT
EMPLOYEES OF THE INSURANCE COMPANY THEY REPRESENT. THEY ARE PAID
COMMISSION. THE CUSTOMER FILES ARE OWNED BY THE BROKERAGE
PURE RISK - ✔✔THERE IS ONY A CHANDE OF FINANCIAL LOSS WITH NO CHANCE
OF PROFITING FROM IT FOR EXAMPLE, FIRE LOSS
SPECULATIVE RISK - ✔✔THERE IS A CHANCE OF FINANCIAL LOSS AS WEL AS A
CHANCE OF FINANCIAL GAIN
WHAT ARE THE 4 WAYS OF LIVING WITH RISK - ✔✔AVOIDANCE OF RISK-
ACTING LIKE ITS NOT THERE
CONTROLLING OF RISK- GETTING THINGS INSTALLED TO LESSON THE RISK
RETENTION OF RISK- SAVING MONEY TO DEAL WITH RISKS AS THEY COME
TRANSFER OF RISK- PURCHASING INSURANCE
CONTRACT - ✔✔IS A LEGAL PROMISE MADE BY TWO OR MORE PARTIES WHICH
CAN BE ENFORCED THROUGH THE COURT OF LAW
WHAT ARE THE FIVE ELEMENT OF A CONTRACT - ✔✔AGREEMENT
CONSIDERATION
LEGALITY OF OBJECT
LEGAL CAPACITY OF PARTIES
2|Page
©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
,GENUINE INTENTION
THE AGREEMENT OF AN INSURANCE CONTRACT - ✔✔WHEN BOTH PARTIES
AGREE ON PARTICULAR POINT
CONSIDERATION OF AN INSURANCE CONTRACT - ✔✔AN EXCHANGE OF
SOMETHING OF VALUE BETWEEN THE PARTIES TO A CONTRACT
LEGALITY OF OBJECT - ✔✔FOR WHICH A CONTRACT IS WRITTEN SHOULD BE
LEGAL OBJECT
LEGAL CAPACITY OF PARTIES - ✔✔ALL PARTIES TO CONTRACT SHOULD HAVE
LEGAL CAPACITY TO ENTER INTO A CONTRACT
GENUINE INTENTION - ✔✔NO INFLUENCE OR VIOLENCE IS USED ON EITHER
PARTY TO ENTER INTO A CONTRACT
BINDER - ✔✔THE BROKER HAS COMMITTED AN INSURER TO A CONTRACT OF
INSURANCE ON ANY RISK
ENDORSEMENT - ✔✔IT MEANS TO CHANGE THE TERMS AND CONDITIONS OF
AN EXISTING INSURANCE POLICY
RIDER - ✔✔THE COVERAGE OF AN ADDITIONAL PERIL OVER AND ABOVE THE
EXISTING PERILS COVERED IN THE POLICY
3|Page
©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
, WHAT DOES THE FEDERAL GOVERNMENT DO - ✔✔IT MONITORS THE FINANCIAL
HEALTH OF FEDERALLY LICENSED INSURERS
WHAT DOES INSOLVENT MEAN - ✔✔THOSE WHO ARE NOT ABLE TO PAY ALL
INSURED LOSSES
WHAT DOES SOLVENT MEAN - ✔✔THOSE WHO ARE ABLE TO PAY ALL INSURED
LOSSES
WHAT HAPPENS WHNE AN INSURED BECOMES INSOLVENT - ✔✔THE PROPERTY
AND CAUSALITY INSURANCE COMPENSATION CORPORATION TAKES OVER THE
BUSINESS AND PAYS THE LOSSES
WHAT DOES THE PROVINCIAL GOVERNMENT DO - ✔✔THRY APPROVE THE
CONTENT OF INSURANCE CONTRACTS
IT LICENSES THE INSURERS OPERATING WITHIN THE PROVINCE INCLUDING
FEDERALLY LICENSED INSURER
IT ALSO MONITORS THE FINANCIAL HEALTH OF THE INSURERS WHICH OPERATE
IN THE PROVINCE ONLY
WHAT IS A FIDUCIARY - ✔✔SOMEONE THATNHANDELS SOMEONE ELSES
MONEY
WHO ARE FIDUCIARIES - ✔✔INSURERS AND BROKERS
4|Page
©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025.
