Fundamentals of Insurance (BC) Questions with 100% Correct Answers | Latest Version 2024 | Verified

Fundamentals of Insurance (BC) Questions with 100% Correct Answers | Latest Version 2024 | Verified Insurance plays an important role in managing financial risk. The main purpose of Insurance is to: A. Enable the consumer to obtain loan or mortgage. B. Provide employment and investment capital. C. Allow spread of risk. D. Reduce losses through loss prevention and loss reduction. - C. Allow spread of risk. 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 5 days' written notice personally delivered. B. The refund due to 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. - B. The refund due to the insured shall be calculated on a short rate basis. The major function of insurance is to: A. Reduce the cost of losses. B. Share the losses of the few among many. C. Safeguard the interest of the mortgagees D. Serve as the basis of the existing credit system. - B. Share the losses of the few among many. Under the policy 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 of property caused by a process involving the application of heat. - B. Fire damage to insured buildings occurring during a rebellion. Generally, all of the following, except one, are seen to be "incompetent" or lacking the legal capacity to contract. Pick the exception: A. A corporation. B. A child. C. A trade name. D. A senile person. - A. A corporation. If a burning log rolls out of your clients fireplace grate across the hearth and onto the rug in front, the loss to the rug is considered to be the result of a(n): A. Direct fire. B. Indirect fire C. Friendly fire D. Hostile fire - D. Hostile fire Statutory Condition Five: Termination, sets out the provisions for cancellation of a contract of insurance that must be compiled with by the insured and the insurer. All of the following provisions regarding termination by the insurer are true, except one. Select the exception: A. When written notice of the termination is sent by registered mail, the insurer must give the insured 15 days' notice starting the day after the letter is received by the insured's post office. B. When written notice of termination is sent hand-delivered, the insurer must give the insured 15 days' notice starting on the date the letter was registered by the insurer's post office. C. When written notice of termination is sent hand delivered, the insurer must give the insured 5 days' notice. D. When the insured is entitled to a premium refund, the amount of the refund is calculated on pro- rate (per diem) basis. - B. When written notice of termination is sent hand-delivered, the insurer must give the insured 15 days' notice starting on the date the letter was registered by the insurer's post office. The Insurance Act provides that a Waiver of Term or Condition of an insurance contract is: A. Permitted to be made by the insurance broker as long as it is in favour of the insured. B. Not binding, unless it is in writing and under the signature of a person authorized by the insurer. C. Valid only when signed by both the insurer and the insured. D. Bonding when even provided orally. - B. Not binding, unless it is in writing and under the signature of a person authorized by the insurer. One of the elements that determines whether a contact is legally enforceable or not is the "legal capacity of the parties". In all of the following contracts, except one, are the parties considered to have "legal capacity". Select the one that does not meet this element. A. An insurance contract issued in the name of Marry Poppin d.b.a. Little People Day Care Centre. B. A lease agreement naming the tenant as the "No Risk Denied Insurance Corporation". C. A building contract showing the General Contractor as Bricks and Mortar Inc. D. An invoice for merchandise shipped to the order of Mandy's Souvenir and Gift Shop. - D. An invoice for merchandise shipped to the order of Mandy's Souvenir and Gift Shop. Risk selection is based on the Underwriter's assessment of the hazards pertaining to the risk that has been submitted for insurance. An underwriter must determine whether or not there is a potential Moral Hazard. The following does not apply as a condition indicating the presence of a Moral Hazard: A. The moral character of the applicant for insurance. B. The financial condition of the applicant for insurance. C. The physical condition of the premises which may cause a loss to occur. D. The indifference to loss of the applicant for insurance. - C. The physical condition of the premises which may cause a loss to occur.