Fundamentals Of Insurance - Self Exam Questions with Verified Answers 2025

Fundamentals Of Insurance - Self Exam
Questions with Verified Answers 2025
MainApurposeAofAInsuranceA-ACORRECTAANSWERA-AllowAtheAspreadAofArisk



DefinitionAofAInsuranceA-ACORRECTAANSWERA--
Payment'sAmadeAonlyAwhenAaAcertainAperilAhasAdamagedAtheAinsuredAobject

-Payment'sAlimitedAtoAactualAamountAofAloss,AnoAmoreAandAnoAless

-There'sAnoApaymentAforAlossesAthatAareAdeliberatelyAcausedAbyAanAinsured.



FiveAimportantApointsAtoAtheAdefinitionAofAinsurance:A-ACORRECTAANSWERA--SpreadAofARisk

-BasisAofACreditASystem

-EliminatesAWorry/EncouragesAEntrepreneurship

-LossAPreventionAandALossAReduction

-SourceAofAEmploymentAandAInvestmentACapital



FiveAimportantApointsAasAtheyArelateAtoAtheAdefinitionAofAinsurance:A-ACORRECTAANSWERA--
ProvidesAaAmeansAofAshiftingAone'sAfinancialAresponsibilityAforAlossAtoAanotherAparty

-PaymentAmadeAonlyAinAtheAeventAofAtheAhappeningAofAaAcertainAriskAorAperil

-PaymentArestrictedAtoAamountArequiredAtoAindemnifyAinsured

-CoversAlossesAtoAwhichAtheAobjectAofAinsuranceA'may'AbeAexposed

-IndemnityAcanAbeAinAtheAformAofAmoneyAorAotherAthingAofAvalue



ThreeAtypesAofAinsuranceAincludedAwithinAtheAbroadAareaAofA'PropertyAandACasualtyAInsurance':A-
ACORRECTAANSWERA--AutoAInsurance



-PropertyAInsurance

-LiabilityAInsurance



TwoAmajorAtypesAofAinsurers:

,PrivateAInsurersA-ACORRECTAANSWERA-StockACompanies
A



-operateAviaAprivateAfundsAorApublicAsaleAofAstock

-mainAgoalAtoAgenerateAprofitAforAshareholdersA(owners)



MutualACompanies

-ownedAbyAitsApolicyAholders

-mainAgoalAtoAprovideAinsuranceAtoAitsApolicyAholdersAatAasAlowAaAcostAasApossible

-profitsAreturnedAtoApolicyAviaAdividendsAorArateAadjustments



TwoAmajorAtypesAofAinsurers:

GovernmentAInsurersA-ACORRECTAANSWERA--MedicalAinsurance
A



-employmentAinsurance

-workers'Acompensation

-mandatoryAautoAinsuranceA(Sask,ABC,AMBAandAQC)



ThreeAmethodsAusedAbyAinsurersAtoAsellAtheirAproducts:

DirectAWritingASystemA-ACORRECTAANSWERA--SalaryAorAcommissionAfromAemployerA(insurer)
A



-InsurerAownsAallAbusiness

-InsurerAperformsAadministrativeAfunctions



ThreeAmethodsAusedAbyAinsurersAtoAsellAtheirAproducts:

IndependentABrokerageASystemA-ACORRECTAANSWERA--EarnAcommissionsAfromAinsurers
A



-BrokerageAownsAallAbusiness

-ProvidesAclientAservicesAforApolicyAholders



ThreeAmethodsAusedAbyAinsurersAtoAsellAtheirAproducts:

AgencyASystemA-ACORRECTAANSWERA--PaidAcommissions/bonusesAbyAinsurers
A



-AgentsAownAtheirAbusiness

,MostAcommonAinsuranceAdistributionAmethodAinACanada:A-ACORRECTAANSWERA--
IndependentABrokerageASystem



ThreeAmajorAcategoriesAofAinsuranceAneeds:A-ACORRECTAANSWERA--Personal

-Property

-LiabilityARisk



FourAoptionsAanAinsuredAmayAuseAinAdealingAwithArisk:A-ACORRECTAANSWERA--Avoidance

-Controlling

-Retention

-TransferAofARisk



FiveAelementsArequiredAtoAbeApresentAinAallAcontracts:A-ACORRECTAANSWERA--Agreement

-Consideration

-LegalityAofAObject

-LegalACapacityAofAtheAPartiesAtoAContract

-GenuineAIntention



ThreeAadditionalAelementsAuniqueAtoAinsuranceAcontractsAandAmustAbeApresentAifAanAinsuranceAcontractAi
sAtoAbeAenforceableAatAlaw:A-ACORRECTAANSWERA--InsurableAInterest

-UtmostAGoodAFaith

-Indemnity



ThreeAtypesAofAinsuranceAformsAusedAbyAinsurersAtoAmakeAchangesAtoAanAexistingApolicy:

Endorsements/RidersA-ACORRECTAANSWERA--acknowledgeAaAchangeAinAtheAtermsAofAtheAcontracts



ThreeAtypesAofAinsuranceAformsAusedAbyAinsurersAtoAmakeAchangesAtoAanAexistingApolicy:

FloatersA-ACORRECTAANSWERA--provideAcoverageAforApropertyAhavingAaAhighAdegreeAofAmobility

, ThreeAtypesAofAinsuranceAformsAusedAbyAinsurersAtoAmakeAchangesAtoAanAexistingApolicy:

SeparateAPoliciesA-ACORRECTAANSWERA--ProvideAadditionalAcoveragesAneededAbyAinsureds



PCICCAroleAwhenAanAinsurerAbecomesAinsolvent:A-ACORRECTAANSWERA--PaysAallAvalidAclaims

-ChargesAcompaniesAanAassessmentAtoAcoverAtheAtotalAamountAofAclaims



FiduciaryAobligationsAofAinsurersA-ACORRECTAANSWERA--
PremiumsApaidAaren'tAfullyAearnedAuntilAexpiryAofApolicy

-
UnearnedApremiumsAconsideredAtoAbeAheldAinAtrustAtoArefundAtheAinsuredsAinAeventAtheApolicy'sAcancelle
dApriorAtoAexpiryAdate



FiduciaryAobligationsAofAbrokers:A-ACORRECTAANSWERA--
CommissionsAaren'tAfullyAearnedAuntilAexpiryAofApolicy

-ConsideredAtoAbeAheldAinAtrustAtoArefundAtoAinsuredsAinAeventAtheApolicy'sAcancelledApriorAtoAexpiryAdate



TheAprovisionsAofAtheA'RemovalAClause'AcontainedAinApoliciesAofAfireAinsurance:A-ACORRECTAANSWERA--
PropertyAnecessarilyAremovedAinsuredAatAunnamedAlocations

-
AmountAavailableAforAlossAtoApropertyAwhileAatAunnamedAlocationAwillAbeAreducedAbyAamountApaidAforAlos
sAatAnamedAlocation

-ObligationAonAinsurerAtoAextendAcoveragesAatAunnamedAlocationAisAforAlimitedAtimeAonly



ThreeAcoveragesArequiredAtoAbeAprovidedAonAallApoliciesAofAfireAinsurance:A-ACORRECTAANSWERA--Fire

-Lightning

-ExplosionAofANaturalAGas,ACoalAorAManufacturedAGas



PrimaryAroleAofAunderwriters:A-ACORRECTAANSWERA--
ToAselectAthoseArisksAlikelyAtoAbeAmostAprofitableAforAtheAinsurer



ThreeAsourcesAofAinformationAusedAbyAtheAunderwritersAwhenAmakingAaAdecisionAregardingAsuitabilityAofA
aArisk:A-ACORRECTAANSWERA--TheAapplication