AIC ACTUAL EXAM QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS); AGRADE
1) Your insured, a sole proprietor, purchased a building valued at $1
million. The insurance policy has a coinsurance clause based on the
replacement cost value of 90%. Contrary to your advice, your insured
insures the building for only $500,000. He suffers a windstorm loss
totalling $150,000. How much will the insurer pay?
a) $75,000
b)$83,333
c)$150,000
d) $93,755 - correct answer- b
10) A marine insurance policy provides coverage for
a) the hull and cargo
b)the hull only
c) cargo only
d) property damage to third parties only, not the vessel itself - correct
answer- a
,100) Which of the following is NOT an activity in which the Insurance
Bureau of Canada (IBC) is involved?
a) Developing advisory model policy wordings for use by the industry
b)Handling claims with a high standard of ethics and claims arbitration
c) Providing insurance crime-related investigative services
d) Advocating industry positions with consumers, government,
members, and other stakeholders - correct answer- b
11) Statutory conditions which are found in all fire policies
a) impose obligations on both the insured and the insurer
b)specify the coverages provided
c) state the rights of a third party
d) are not expressly required by law - correct answer- a
12) Actual cash value (ACV) is understood as the cost of replacing
property, less any depreciation to it. Most insurers expand their
definition to recognize that a fair estimate of depreciation at the time of
loss depends on which of the following factors?
a) The property's physical condition
b)The property's resale value
,c) The property's obsolescence
d) All of the above - correct answer- d
13) A "mortgagee" is defined as a person or organization that lends
money to someone to buy property. The mortgagee under a mortgage
clause on a property insurance policy has certain rights and obligations.
Which of the following is a right of the mortgagee?
a) The right to share in the loss payment, as long as the insured owes
something on the mortgage
b)The right to share in the loss payment, unless the mortgagor neglects
the property
c) The right to share in the loss payment, unless occupation of the
premises is for purposes more hazardous than those permitted by the
policy
d) All of the above - correct answer- a
14) In anticipation of building an addition to his home, which you insure
under a homeowner package policy for $320,000, your client purchases
and stores on his property $4,000 worth of lumber. A serious windstorm
strikes the area and your insured's lumber pile is destroyed. What
coverage would be available under your policy?
a) None. The lumber is not yet part of the building
b)The lumber would be fully covered under Coverage A—Dwelling
Building
, c) The loss would be paid under the 10% extension of Coverage C—
Personal Property for property outside the building
d) None. The policy excludes damage to property in the open caused by
windstorm - correct answer- b
15) Motorized vehicles are excluded under Coverage C—Personal
Property of a homeowner policy. Coverage is provided as an exception
to the exclusion for which of the following?
a) Mobility scooter
b)Lawn mower
c) Child's motorized toy car up to a maximum speed of 10 kilometres per
hour
d) All of the above - correct answer- d
16) Stamp and coin collections are best insured by a/an
a) Personal articles floater
b)Fine arts floater
c) Homeowner package policy (Comprehensive Form)
d) Homeowner package policy (Basic Form) - correct answer- a
17) Under the Definitions section of a homeowners form, "data
problem" is defined as
ANSWERS (VERIFIED ANSWERS); AGRADE
1) Your insured, a sole proprietor, purchased a building valued at $1
million. The insurance policy has a coinsurance clause based on the
replacement cost value of 90%. Contrary to your advice, your insured
insures the building for only $500,000. He suffers a windstorm loss
totalling $150,000. How much will the insurer pay?
a) $75,000
b)$83,333
c)$150,000
d) $93,755 - correct answer- b
10) A marine insurance policy provides coverage for
a) the hull and cargo
b)the hull only
c) cargo only
d) property damage to third parties only, not the vessel itself - correct
answer- a
,100) Which of the following is NOT an activity in which the Insurance
Bureau of Canada (IBC) is involved?
a) Developing advisory model policy wordings for use by the industry
b)Handling claims with a high standard of ethics and claims arbitration
c) Providing insurance crime-related investigative services
d) Advocating industry positions with consumers, government,
members, and other stakeholders - correct answer- b
11) Statutory conditions which are found in all fire policies
a) impose obligations on both the insured and the insurer
b)specify the coverages provided
c) state the rights of a third party
d) are not expressly required by law - correct answer- a
12) Actual cash value (ACV) is understood as the cost of replacing
property, less any depreciation to it. Most insurers expand their
definition to recognize that a fair estimate of depreciation at the time of
loss depends on which of the following factors?
a) The property's physical condition
b)The property's resale value
,c) The property's obsolescence
d) All of the above - correct answer- d
13) A "mortgagee" is defined as a person or organization that lends
money to someone to buy property. The mortgagee under a mortgage
clause on a property insurance policy has certain rights and obligations.
Which of the following is a right of the mortgagee?
a) The right to share in the loss payment, as long as the insured owes
something on the mortgage
b)The right to share in the loss payment, unless the mortgagor neglects
the property
c) The right to share in the loss payment, unless occupation of the
premises is for purposes more hazardous than those permitted by the
policy
d) All of the above - correct answer- a
14) In anticipation of building an addition to his home, which you insure
under a homeowner package policy for $320,000, your client purchases
and stores on his property $4,000 worth of lumber. A serious windstorm
strikes the area and your insured's lumber pile is destroyed. What
coverage would be available under your policy?
a) None. The lumber is not yet part of the building
b)The lumber would be fully covered under Coverage A—Dwelling
Building
, c) The loss would be paid under the 10% extension of Coverage C—
Personal Property for property outside the building
d) None. The policy excludes damage to property in the open caused by
windstorm - correct answer- b
15) Motorized vehicles are excluded under Coverage C—Personal
Property of a homeowner policy. Coverage is provided as an exception
to the exclusion for which of the following?
a) Mobility scooter
b)Lawn mower
c) Child's motorized toy car up to a maximum speed of 10 kilometres per
hour
d) All of the above - correct answer- d
16) Stamp and coin collections are best insured by a/an
a) Personal articles floater
b)Fine arts floater
c) Homeowner package policy (Comprehensive Form)
d) Homeowner package policy (Basic Form) - correct answer- a
17) Under the Definitions section of a homeowners form, "data
problem" is defined as
