Level 1 Fundamentals of Insurance Practice (Fundamentals
of Insurance Practice) Complete Exam Questions with
Correct Answers
Introduction
This document contains a comprehensive collection of
multiple-choice exam questions with the correct answers for
the Level 1 Fundamentals of Insurance Practice course. It
covers key topics including insurance principles, property
insurance, liability insurance, underwriting, commercial
insurance, homeowners insurance, automobile insurance,
travel insurance, policy conditions, claims, and risk
management. The material is suitable for exam preparation
and revision, providing a broad overview of the concepts and
question styles commonly tested. It serves as a complete
practice resource for students preparing for the Fundamentals
of Insurance Practice examination.
Exam Questions and Answers
Your clients own a furniture store. The railing on the steps
leading down to the basement level of their store is in need of
repair. Also, two steps have rotten and great care must be
taken by persons using the stairs not to fall through. These
stairs constitute a:
a. Peril.
b. Moral hazard.
c. Physical hazard.
d. Material change. --- correct precise answer ---c
,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 even when provided orally. --- correct precise
answer ---b
One of the elements that determines whether a contract 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 which 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. --- correct precise answer ---d
Under a policy of insurance, a "deductible" is:
a. Payable by the insureds only if they are responsible for the
loss.
,b. Payable by the insureds only when the insurer disputes the
amount of its liability for the loss.
c. The amount the insured is required to absorb for each loss
before receiving any payment from the insurer
d. The responsibility of the broker --- correct precise answer -
--c
The insurance meaning given to "risk refers to the:
a. Chance of financial loss to which the object of insurance
may be exposed.
b. Subject of insurance.
c. Potential for a peril to occur. --- correct precise answer ---a
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 ---
correct precise answer ---b
A warranty is a:
a. Promise by the broker to remit premiums to the insurer in
accordance with the terms stated in the Agency Agreement
, b. Guarantee of insureds that certain facts are truly as they
are represented to be and that they will remain so.
c. Piece of paper similar to an Endorsement which makes
changes to the policy.
d. Promise by the insurer to make payment of all claims
submitted to it within a 21 day period. --- correct precise
answer ---b
Which of the following statements is true when a Standard
Mortgage Clause is attached to a policy?
a. The insurer could be called upon to pay a loss to the
mortgagee, even though the insured violated a policy or other
condition.
b. The insurer can reduce coverage at any time at the request
of the insured, even though the insured violated a policy of
other condition.
c. The insurer may cancel the policy at any time by providing
the mortgagee with seven days' notice by registered mail.
d. Neither the insured nor the insurer may cancel the policy
until the mortgage has been paid off. --- correct precise
answer ---a
Insurers are fiduciaries and, therefore, must comply with
government regulations that set out the fiduciary
responsibility in terms of handling the monies paid by
insureds. Under these regulations insurers are required to...
a. Report to the Superintendent the income earned from
premium investments.
of Insurance Practice) Complete Exam Questions with
Correct Answers
Introduction
This document contains a comprehensive collection of
multiple-choice exam questions with the correct answers for
the Level 1 Fundamentals of Insurance Practice course. It
covers key topics including insurance principles, property
insurance, liability insurance, underwriting, commercial
insurance, homeowners insurance, automobile insurance,
travel insurance, policy conditions, claims, and risk
management. The material is suitable for exam preparation
and revision, providing a broad overview of the concepts and
question styles commonly tested. It serves as a complete
practice resource for students preparing for the Fundamentals
of Insurance Practice examination.
Exam Questions and Answers
Your clients own a furniture store. The railing on the steps
leading down to the basement level of their store is in need of
repair. Also, two steps have rotten and great care must be
taken by persons using the stairs not to fall through. These
stairs constitute a:
a. Peril.
b. Moral hazard.
c. Physical hazard.
d. Material change. --- correct precise answer ---c
,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 even when provided orally. --- correct precise
answer ---b
One of the elements that determines whether a contract 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 which 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. --- correct precise answer ---d
Under a policy of insurance, a "deductible" is:
a. Payable by the insureds only if they are responsible for the
loss.
,b. Payable by the insureds only when the insurer disputes the
amount of its liability for the loss.
c. The amount the insured is required to absorb for each loss
before receiving any payment from the insurer
d. The responsibility of the broker --- correct precise answer -
--c
The insurance meaning given to "risk refers to the:
a. Chance of financial loss to which the object of insurance
may be exposed.
b. Subject of insurance.
c. Potential for a peril to occur. --- correct precise answer ---a
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 ---
correct precise answer ---b
A warranty is a:
a. Promise by the broker to remit premiums to the insurer in
accordance with the terms stated in the Agency Agreement
, b. Guarantee of insureds that certain facts are truly as they
are represented to be and that they will remain so.
c. Piece of paper similar to an Endorsement which makes
changes to the policy.
d. Promise by the insurer to make payment of all claims
submitted to it within a 21 day period. --- correct precise
answer ---b
Which of the following statements is true when a Standard
Mortgage Clause is attached to a policy?
a. The insurer could be called upon to pay a loss to the
mortgagee, even though the insured violated a policy or other
condition.
b. The insurer can reduce coverage at any time at the request
of the insured, even though the insured violated a policy of
other condition.
c. The insurer may cancel the policy at any time by providing
the mortgagee with seven days' notice by registered mail.
d. Neither the insured nor the insurer may cancel the policy
until the mortgage has been paid off. --- correct precise
answer ---a
Insurers are fiduciaries and, therefore, must comply with
government regulations that set out the fiduciary
responsibility in terms of handling the monies paid by
insureds. Under these regulations insurers are required to...
a. Report to the Superintendent the income earned from
premium investments.
