Alberta General License - Level 1 Test
Questions and Correct Answers.
Which type of private insurance company provides the cheapest insurance? - Answer Mutual
companies are owned by their policy holders and not profit oriented.
What is the major function of insurance? - Answer Insurance spreads out the financial
consequences of a risk amongst many parties. The idea is that everyone pays into the pool
every month and claims are paid out from that pool when a member has a loss.
What type of losses do insurance companies pay for? - Answer Insurance pays for accidental
losses only, not intentional ones caused by the insured or ones that are expected to occur.
Is money the only form to payment an insurance company can use? - Answer Indemnity can
come in the form of cash, repair or replacement
When an insurance policy is cancelled by the insurance company, refunds are processed on a
pro-rate basis. Your client paid $2400 in premiums for an annual policy in January. At the end of
June, their policy was cancelled by the insurance company. How much money will be refunded
to your client? - Answer Half the policy was used so the insured is entitled to half of the
premium paid since half the policy remains unused.
What is the fiduciary responsibility of a broker? - Answer Any unearned
premiums/commissions must be held in trust to be returned should the policy be cancelled part
way. If 60% of the policy term has passed, 60% of the premium/comission has been earned.
Which type of fire loss is insurable? - Answer Friendly fire means fire that is contained and
used for beneficial purposes. Once that fire escapes, it become hostile fire.
The Canadian Inter-company Arbitration Agreement exists to: - Answer By encouraging
insurers to go through arbitration, they reduce insurer-insurer lawsuits and thereby lowering
claims costs which can then be passed on the consumers in the form of lower premiums
You are unable to legally insure property in a province in which you are not licensed. True of
false? - Answer You can still license that property as long as you get it countersigned by a
broker licensed in that province/jurisdiction.
Questions and Correct Answers.
Which type of private insurance company provides the cheapest insurance? - Answer Mutual
companies are owned by their policy holders and not profit oriented.
What is the major function of insurance? - Answer Insurance spreads out the financial
consequences of a risk amongst many parties. The idea is that everyone pays into the pool
every month and claims are paid out from that pool when a member has a loss.
What type of losses do insurance companies pay for? - Answer Insurance pays for accidental
losses only, not intentional ones caused by the insured or ones that are expected to occur.
Is money the only form to payment an insurance company can use? - Answer Indemnity can
come in the form of cash, repair or replacement
When an insurance policy is cancelled by the insurance company, refunds are processed on a
pro-rate basis. Your client paid $2400 in premiums for an annual policy in January. At the end of
June, their policy was cancelled by the insurance company. How much money will be refunded
to your client? - Answer Half the policy was used so the insured is entitled to half of the
premium paid since half the policy remains unused.
What is the fiduciary responsibility of a broker? - Answer Any unearned
premiums/commissions must be held in trust to be returned should the policy be cancelled part
way. If 60% of the policy term has passed, 60% of the premium/comission has been earned.
Which type of fire loss is insurable? - Answer Friendly fire means fire that is contained and
used for beneficial purposes. Once that fire escapes, it become hostile fire.
The Canadian Inter-company Arbitration Agreement exists to: - Answer By encouraging
insurers to go through arbitration, they reduce insurer-insurer lawsuits and thereby lowering
claims costs which can then be passed on the consumers in the form of lower premiums
You are unable to legally insure property in a province in which you are not licensed. True of
false? - Answer You can still license that property as long as you get it countersigned by a
broker licensed in that province/jurisdiction.
