Fundamentals Of Insurance (BC) – Questions And
Accurate Answers
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.
Correct Answer - 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. Correct Answer -
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. Correct Answer
- 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. Correct Answer - 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. Correct Answer - 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 Correct Answer - 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. Correct
Answer - 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. Correct Answer - 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. Correct Answer - 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. Correct
Answer - C. The physical condition of the premises which may
cause a loss to occur.
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 maked changes
to the policy.
Accurate Answers
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.
Correct Answer - 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. Correct Answer -
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. Correct Answer
- 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. Correct Answer - 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. Correct Answer - 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 Correct Answer - 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. Correct
Answer - 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. Correct Answer - 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. Correct Answer - 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. Correct
Answer - C. The physical condition of the premises which may
cause a loss to occur.
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 maked changes
to the policy.
