Fundamentals Of Insurance BC – Questions With
Applicable Solutions
What is the major function of insurance? Correct Answer - to
allow the spread of risk
What are the five important functions of insurance? Correct
Answer - 1) insurance is the shifting of financial responsibility
for a loss
2) payment will be made only in the event of an insured risk
3) the amount of payment is restricted to the amount required to
indemnify the insured
4) insurance covers losses the object may be exposed to
5) the indemnity can be in the form of money or repair/replacement
What are the three main types of insurance included in broad
insurance (property and casualty) Correct Answer - Auto
insurance
property insurance
liability insurance
(Also known as general insurance)
Identify the two major types of insurers Correct Answer - 1)
private insurers
2)government insurers
define how stock companies work compared to mutual companies
Correct Answer - Stock companies exist to turn a profit
Mutual companies exist to provide lower insurance rates for its
policy holders
, What type of insurance involves government insurers Correct
Answer - Mandatory auto insurance, such as ICBC
identify the two methods of distributing insurance and how the
differentiate Correct Answer - Direct Writing System
-represent products provided by one company exclusively
Independent brokerage
-represent more than one insurance company
Chapter 2 Correct Answer -
Define the 3 categories of risk Correct Answer - Personal
Property
Liability
Identify the 4 options for dealing with risk Correct Answer - 1)
avoidance of risk
2) controlling of risk
3) retention of risk
4) transfer of risk
What are the two types of risk? Which is insurable? Correct
Answer - 1) Pure Risk
2) speculative risk
Only Pure risk is insurable as there is no chance for financial gain
Define an insurance contract Correct Answer - an agreement
between two or more parties which is enforceable by law
What are the five elements required to be present in all contracts
Correct Answer - 1) agreement; an offer made, and accepted
2) consideration; exchange of value between parties
Applicable Solutions
What is the major function of insurance? Correct Answer - to
allow the spread of risk
What are the five important functions of insurance? Correct
Answer - 1) insurance is the shifting of financial responsibility
for a loss
2) payment will be made only in the event of an insured risk
3) the amount of payment is restricted to the amount required to
indemnify the insured
4) insurance covers losses the object may be exposed to
5) the indemnity can be in the form of money or repair/replacement
What are the three main types of insurance included in broad
insurance (property and casualty) Correct Answer - Auto
insurance
property insurance
liability insurance
(Also known as general insurance)
Identify the two major types of insurers Correct Answer - 1)
private insurers
2)government insurers
define how stock companies work compared to mutual companies
Correct Answer - Stock companies exist to turn a profit
Mutual companies exist to provide lower insurance rates for its
policy holders
, What type of insurance involves government insurers Correct
Answer - Mandatory auto insurance, such as ICBC
identify the two methods of distributing insurance and how the
differentiate Correct Answer - Direct Writing System
-represent products provided by one company exclusively
Independent brokerage
-represent more than one insurance company
Chapter 2 Correct Answer -
Define the 3 categories of risk Correct Answer - Personal
Property
Liability
Identify the 4 options for dealing with risk Correct Answer - 1)
avoidance of risk
2) controlling of risk
3) retention of risk
4) transfer of risk
What are the two types of risk? Which is insurable? Correct
Answer - 1) Pure Risk
2) speculative risk
Only Pure risk is insurable as there is no chance for financial gain
Define an insurance contract Correct Answer - an agreement
between two or more parties which is enforceable by law
What are the five elements required to be present in all contracts
Correct Answer - 1) agreement; an offer made, and accepted
2) consideration; exchange of value between parties
