©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:54PM.
Level 1 Fundamentals of Insurance Practice
Exam Questions And Answers 2025 Update.
Your client has made application for "appraisal". The intent of the appraisal process is to settle
the dispute between your client and the insurer regarding the:
a. Amount of the settlement being offered
b. Denial of insurance coverage under the policy
c. Right of the insured to purchase the salvage after an insured loss
d. Premium charged to coverages being provided by the insurer - Answer✔a
An indifferent attitude towards losses because of the presence of insurance indicates the
presence of:
a. Gross negligence
b. Physical hazard
c. A material change
d. Moral hazard - Answer✔d
Insurable interest means the:
a. Interest gained on money in a bank
b. Interest payable on a loan
c. Personal interest people have in something they expect to inherit
d. Financial interest a person has in something of value - Answer✔d
Every policy of "fire" insurance:
a. Usually covers fire, smoke, and specified types of explosions
b. Is required by law to cover fire, windstorm, and lightning
c. Covers, fire, explosion, and windstorm
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,©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:54PM.
d. Is required by law to cover at least fire, lightning, and specified types of explosions -
Answer✔d
Your client's insurance policy was cancelled for non-payment of premium. 6 days after the
notice of termination was mailed, your client had a loss.
a. The loss would not be covered because no premiums had been paid
b. The mailing of the notice automatically cancels the policy after 5 days
c. The loss is covered because 15 days' notice must be given by registered mail
d. The loss would be covered but only in proportion to the time the policy was in effect. -
Answer✔c
Under a policy of "fire" insurance, the insurer must make payment for a loss within:
a. 75 days after completion of the proof of loss.
b. 90 days after completion of the proof of loss.
c. 60 days after the completion of the proof of loss unless the contract provides for a shorter
period.
d. One year from the date the loss occurred. - Answer✔c
Every property insurance policy describes the method used to pay claims. Normally the insurer
will pay the lesser of three amounts in the event of a claim. One factor which does not enter
into this calculations is the:
a. Actual cash value of the property.
b. Original cost of the property.
c. Insured's interest in the property.
d. Policy limit. - Answer✔b
Your client recently had a burglary. In the documents filed with the insurance company, she
made a claim for a $1,200 television set she never had. This is a:
a. Breach of warranty
b. Fraud
c. Misrepresentation
d. Material change - Answer✔b
It can be said that the concept of insurance is based on sharing, which is the fundamental
principle of a functioning society. Insurance is an undertaking that:
a. Spreads the risk of loss among many people
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, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:54PM.
b. Obtains financing for a risky capital venture
c. Protects oneself against loss due to bankruptcy
d. Prevents the happening of certain types of losses - Answer✔a
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 five
days' written notice personally delivered.
b. The refund due 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. - Answer✔b
The major function of insurance is to:
a. Reduce the cost of losses.
b. Share the losses of the few among the many.
c. Safeguard the interest of mortgagees.
d. Serve as the basis of existing credit system. - Answer✔b
Under a 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 to property caused by a process involving the application of heat. - Answer✔b
Property policies contain two types of exclusions - one for property excluded and one for perils
excluded. All of the following property items are normally excluded by property policies, except
one. Pick the exception:
a. Automobiles
b. Yard maintenance equipment.
c. Money and securities.
d. Property which has been vacant for more than 30 consecutive days. - Answer✔b
"Indemnity" means:
a. Returning the premium to the insureds.
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Level 1 Fundamentals of Insurance Practice
Exam Questions And Answers 2025 Update.
Your client has made application for "appraisal". The intent of the appraisal process is to settle
the dispute between your client and the insurer regarding the:
a. Amount of the settlement being offered
b. Denial of insurance coverage under the policy
c. Right of the insured to purchase the salvage after an insured loss
d. Premium charged to coverages being provided by the insurer - Answer✔a
An indifferent attitude towards losses because of the presence of insurance indicates the
presence of:
a. Gross negligence
b. Physical hazard
c. A material change
d. Moral hazard - Answer✔d
Insurable interest means the:
a. Interest gained on money in a bank
b. Interest payable on a loan
c. Personal interest people have in something they expect to inherit
d. Financial interest a person has in something of value - Answer✔d
Every policy of "fire" insurance:
a. Usually covers fire, smoke, and specified types of explosions
b. Is required by law to cover fire, windstorm, and lightning
c. Covers, fire, explosion, and windstorm
1
,©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:54PM.
d. Is required by law to cover at least fire, lightning, and specified types of explosions -
Answer✔d
Your client's insurance policy was cancelled for non-payment of premium. 6 days after the
notice of termination was mailed, your client had a loss.
a. The loss would not be covered because no premiums had been paid
b. The mailing of the notice automatically cancels the policy after 5 days
c. The loss is covered because 15 days' notice must be given by registered mail
d. The loss would be covered but only in proportion to the time the policy was in effect. -
Answer✔c
Under a policy of "fire" insurance, the insurer must make payment for a loss within:
a. 75 days after completion of the proof of loss.
b. 90 days after completion of the proof of loss.
c. 60 days after the completion of the proof of loss unless the contract provides for a shorter
period.
d. One year from the date the loss occurred. - Answer✔c
Every property insurance policy describes the method used to pay claims. Normally the insurer
will pay the lesser of three amounts in the event of a claim. One factor which does not enter
into this calculations is the:
a. Actual cash value of the property.
b. Original cost of the property.
c. Insured's interest in the property.
d. Policy limit. - Answer✔b
Your client recently had a burglary. In the documents filed with the insurance company, she
made a claim for a $1,200 television set she never had. This is a:
a. Breach of warranty
b. Fraud
c. Misrepresentation
d. Material change - Answer✔b
It can be said that the concept of insurance is based on sharing, which is the fundamental
principle of a functioning society. Insurance is an undertaking that:
a. Spreads the risk of loss among many people
2
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 12:54PM.
b. Obtains financing for a risky capital venture
c. Protects oneself against loss due to bankruptcy
d. Prevents the happening of certain types of losses - Answer✔a
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 five
days' written notice personally delivered.
b. The refund due 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. - Answer✔b
The major function of insurance is to:
a. Reduce the cost of losses.
b. Share the losses of the few among the many.
c. Safeguard the interest of mortgagees.
d. Serve as the basis of existing credit system. - Answer✔b
Under a 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 to property caused by a process involving the application of heat. - Answer✔b
Property policies contain two types of exclusions - one for property excluded and one for perils
excluded. All of the following property items are normally excluded by property policies, except
one. Pick the exception:
a. Automobiles
b. Yard maintenance equipment.
c. Money and securities.
d. Property which has been vacant for more than 30 consecutive days. - Answer✔b
"Indemnity" means:
a. Returning the premium to the insureds.
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