AIC Questions And Answers With Complete Solutions
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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers a
17) Under the Definitions section of a homeowners form, "data
problem" is defined as
a) ability to receive data
b)ability to transmit data
c) erasure, destruction, or misinterpretation of data
d) all of the above Correct Answers c
18)Under a Homeowners Basic Form, the named peril "water
damage" excludes loss or damage caused by freezing in an
unheated portion of the building during the normal heating
season if the insured is away for more than
a) 24 hours
b)one week
c) three consecutive days
d) four consecutive days Correct Answers d
19) Which of the following losses would be covered under the
refrigerator or freezer food extension of coverage?
a) Food spoilage in the refrigerator because the insured's child
pulls the power cord out of the electrical outlet and it goes
unobserved for a period of time
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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers 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 Answers a
17) Under the Definitions section of a homeowners form, "data
problem" is defined as
a) ability to receive data
b)ability to transmit data
c) erasure, destruction, or misinterpretation of data
d) all of the above Correct Answers c
18)Under a Homeowners Basic Form, the named peril "water
damage" excludes loss or damage caused by freezing in an
unheated portion of the building during the normal heating
season if the insured is away for more than
a) 24 hours
b)one week
c) three consecutive days
d) four consecutive days Correct Answers d
19) Which of the following losses would be covered under the
refrigerator or freezer food extension of coverage?
a) Food spoilage in the refrigerator because the insured's child
pulls the power cord out of the electrical outlet and it goes
unobserved for a period of time
