Fundamentals Of Insurance BC – Questions With
Apposite Solutions
Insurance plays an important role in managing financial risk. The
main purpose of insrance is to: Correct Answer - Allow spread
of risk
The definition of insurance in the Insurance Act includes all of the
following important points, except one. Pick the exception:
Correct Answer - The indemnity must always be in the form of a
sum of money: no other method is permitted by law.
The majority of insurance companies use independent brokers to
sell their insurance policies to the public . Which of the following
statements does NOT apply to this system of distribution ? Correct
Answer - Independent brokers are employees of the insurance
companies they represent
When dealing with financial risk a person has several options
available. In your opinion, which of the following is the best option
for most people? Correct Answer - Transfer of risk
Risk as the "chance of financial loss" can be classified as either
speculative or pure. Which of the following best describes the
meaning of pure risk? Correct Answer - There is only the
chance of financial loss with no chance of profiting from it
A contract is legally enforceable only when all legal elements are
present. Only an insurance contract contains the following element.
Correct Answer - Indemnity
,"Consideration" is required of all parties to a contract. Consideration
means: Correct Answer - An exchange of something of value
between the parties
Legal capacity of the parties is an important element to a contract.
Only the following party has legal capacity to enter into a contract of
insurance. Correct Answer - Mario Montana Sportswear Ltd.
Insurance brokers are often asked to provide a binder to the
insured. A binder is: Correct Answer - When a broker has
committed an insurer to a contract of insurance on a risk.
All changes to an existing insurance policy must be in writing. Which
document does the insurer issue when both the insurer and insured
have agreed to a change in the terms of the policy. Correct Answer
- An endorsement
In Canada the General Insurance Industry is strictly regulated by
federal and provincial statutes. The provincial Government
performs all of the following functions, except one. Pick the
exception: Correct Answer - Establishing premium levels of
insurance contracts
The financial solvency of insurers is a crucial matter. Solvency refers
to: Correct Answer - The ability of an insurer to pay all insured
losses
Both, insurance companies and brokers are considered fiduciaries.
Under the Insurance Act the fiduciary responsibility of a broker
requires that: Correct Answer - Unearned commissions are
held in trust to be available should the policy be terminated before
expiry.
, The Insurance Act determines when a contract of insurance takes
effect. Coverage commences at: Correct Answer - 12:01 am
standard time at the address of the named insured
The removal clause requires the insurer to extend coverage to
another location where the insured property is kept, even if this
location is not stated on the policy. Only one of the following
situations would qualify for this coverage: Correct Answer -
The insured moved personal property to a storage facility to protect
it from loss because of an encroaching forest fire
When the insurer has indemnified the insured for a loss caused by a
third party, the insurer has a legal right to recovery from that party.
This legal process is referred to as: Correct Answer -
Subrogation
The Insurance Act provides that a policy insuring the peril of "fire"
must also include coverage for: Correct Answer - Explosion of
natural, coal or manufactured gas and lightning, excluding damage
to electrical appliances and devices
Only one of the following statements regarding Statutory Condition
No. 1 - Misrepresentation is correct Correct Answer -
Statements made by the applicant, which lead the insurer to believe
that the risk is better than it actually is, are considered
misrepresentation.
All of the following statements regarding the Statutory Conditions
are true, except one. Pick the exception: Correct Answer - As
long as the insured reports a Material Change promptly, the insurer
rarely charges an additional premium
Your client has requested the termination of his insurance policy.
You advise your client of the provisions of Statutory Condition No. -
Apposite Solutions
Insurance plays an important role in managing financial risk. The
main purpose of insrance is to: Correct Answer - Allow spread
of risk
The definition of insurance in the Insurance Act includes all of the
following important points, except one. Pick the exception:
Correct Answer - The indemnity must always be in the form of a
sum of money: no other method is permitted by law.
The majority of insurance companies use independent brokers to
sell their insurance policies to the public . Which of the following
statements does NOT apply to this system of distribution ? Correct
Answer - Independent brokers are employees of the insurance
companies they represent
When dealing with financial risk a person has several options
available. In your opinion, which of the following is the best option
for most people? Correct Answer - Transfer of risk
Risk as the "chance of financial loss" can be classified as either
speculative or pure. Which of the following best describes the
meaning of pure risk? Correct Answer - There is only the
chance of financial loss with no chance of profiting from it
A contract is legally enforceable only when all legal elements are
present. Only an insurance contract contains the following element.
Correct Answer - Indemnity
,"Consideration" is required of all parties to a contract. Consideration
means: Correct Answer - An exchange of something of value
between the parties
Legal capacity of the parties is an important element to a contract.
Only the following party has legal capacity to enter into a contract of
insurance. Correct Answer - Mario Montana Sportswear Ltd.
Insurance brokers are often asked to provide a binder to the
insured. A binder is: Correct Answer - When a broker has
committed an insurer to a contract of insurance on a risk.
All changes to an existing insurance policy must be in writing. Which
document does the insurer issue when both the insurer and insured
have agreed to a change in the terms of the policy. Correct Answer
- An endorsement
In Canada the General Insurance Industry is strictly regulated by
federal and provincial statutes. The provincial Government
performs all of the following functions, except one. Pick the
exception: Correct Answer - Establishing premium levels of
insurance contracts
The financial solvency of insurers is a crucial matter. Solvency refers
to: Correct Answer - The ability of an insurer to pay all insured
losses
Both, insurance companies and brokers are considered fiduciaries.
Under the Insurance Act the fiduciary responsibility of a broker
requires that: Correct Answer - Unearned commissions are
held in trust to be available should the policy be terminated before
expiry.
, The Insurance Act determines when a contract of insurance takes
effect. Coverage commences at: Correct Answer - 12:01 am
standard time at the address of the named insured
The removal clause requires the insurer to extend coverage to
another location where the insured property is kept, even if this
location is not stated on the policy. Only one of the following
situations would qualify for this coverage: Correct Answer -
The insured moved personal property to a storage facility to protect
it from loss because of an encroaching forest fire
When the insurer has indemnified the insured for a loss caused by a
third party, the insurer has a legal right to recovery from that party.
This legal process is referred to as: Correct Answer -
Subrogation
The Insurance Act provides that a policy insuring the peril of "fire"
must also include coverage for: Correct Answer - Explosion of
natural, coal or manufactured gas and lightning, excluding damage
to electrical appliances and devices
Only one of the following statements regarding Statutory Condition
No. 1 - Misrepresentation is correct Correct Answer -
Statements made by the applicant, which lead the insurer to believe
that the risk is better than it actually is, are considered
misrepresentation.
All of the following statements regarding the Statutory Conditions
are true, except one. Pick the exception: Correct Answer - As
long as the insured reports a Material Change promptly, the insurer
rarely charges an additional premium
Your client has requested the termination of his insurance policy.
You advise your client of the provisions of Statutory Condition No. -
