Alberta General Insurance Agent
Licensing Exam Questions And Correct
Answers (Verified Answers) Plus
Rationales 2026 Q&A| Instant
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1. Which of the following best describes the principle of indemnity in
insurance?
A. The insurer must pay more than the actual loss
B. The insurer must compensate for the exact amount of the loss
C. The insured can profit from a loss
D. The insurer pays regardless of the loss amount
B. The insurer must compensate for the exact amount of the loss
Rationale: The principle of indemnity ensures that the insured is
restored to their financial position prior to the loss without profiting.
2. In insurance, what does “insurable interest” mean?
A. The insured must benefit financially from the insurance contract
B. The insurer has a financial stake in the insured
C. The insured can claim on any property
D. The insurance covers only personal injury
A. The insured must benefit financially from the insurance
contract
Rationale: Insurable interest ensures that the insured would suffer a
financial loss if the insured event occurs.
3. Which of the following is an example of a peril?
A. Fire
B. Homeowner
C. Policyholder
D. Broker
A. Fire
Rationale: A peril is the cause of a loss, such as fire, theft, or flood.
,4. Which type of insurance covers legal liability for injury to others or
their property?
A. Life insurance
B. Liability insurance
C. Health insurance
D. Property insurance
B. Liability insurance
Rationale: Liability insurance protects the insured against legal
responsibility for injuries or damages caused to others.
5. What is the primary purpose of underwriting in insurance?
A. To market policies to clients
B. To assess and classify risk
C. To invest premiums
D. To settle claims
B. To assess and classify risk
Rationale: Underwriting evaluates risk to determine acceptability and
appropriate premium rates.
6. Which policy provision allows the insured to cancel the policy at any
time?
A. Insuring agreement
B. Termination clause
C. Cancellation clause
D. Exclusion clause
C. Cancellation clause
Rationale: A cancellation clause outlines the rights of either party to
terminate the policy under specified conditions.
7. Which of the following best describes a deductible?
A. Amount the insurer will not cover
B. Amount the insured must pay before coverage applies
C. Total sum insured
D. Premium discount
B. Amount the insured must pay before coverage applies
Rationale: A deductible reduces small claims and aligns the insured
with the risk-sharing principle.
8. Which type of insurance policy pays a fixed sum on the death of the
insured?
A. Term life insurance
, B. Whole life insurance
C. Health insurance
D. Disability insurance
A. Term life insurance
Rationale: Term life insurance provides a death benefit for a specified
term if the insured dies within that period.
9. What is the primary purpose of co-insurance in property insurance?
A. To increase premiums
B. To share risk between multiple insurers
C. To encourage the insured to maintain adequate insurance
D. To reduce liability claims
C. To encourage the insured to maintain adequate insurance
Rationale: Co-insurance requires the insured to carry insurance equal
to a specified percentage of the property value.
10. In insurance contracts, the doctrine of utmost good faith requires:
A. Only the insurer to disclose relevant information
B. Both parties to disclose all material facts
C. Only the insured to disclose material facts
D. That claims are always paid
B. Both parties to disclose all material facts
Rationale: Utmost good faith ensures both insurer and insured act
honestly and disclose material information.
11. What is a “hazard” in insurance terminology?
A. The cause of loss
B. A condition that increases the likelihood or severity of loss
C. The insured property
D. The insured amount
B. A condition that increases the likelihood or severity of loss
Rationale: Hazards may be physical, moral, or morale, and increase
the risk of a covered peril.
12. Which of the following is an example of a moral hazard?
A. Leaving a window open during a storm
B. Submitting fraudulent claims
C. Faulty wiring in a building
D. Poor weather conditions
B. Submitting fraudulent claims
Licensing Exam Questions And Correct
Answers (Verified Answers) Plus
Rationales 2026 Q&A| Instant
Download Pdf
1. Which of the following best describes the principle of indemnity in
insurance?
A. The insurer must pay more than the actual loss
B. The insurer must compensate for the exact amount of the loss
C. The insured can profit from a loss
D. The insurer pays regardless of the loss amount
B. The insurer must compensate for the exact amount of the loss
Rationale: The principle of indemnity ensures that the insured is
restored to their financial position prior to the loss without profiting.
2. In insurance, what does “insurable interest” mean?
A. The insured must benefit financially from the insurance contract
B. The insurer has a financial stake in the insured
C. The insured can claim on any property
D. The insurance covers only personal injury
A. The insured must benefit financially from the insurance
contract
Rationale: Insurable interest ensures that the insured would suffer a
financial loss if the insured event occurs.
3. Which of the following is an example of a peril?
A. Fire
B. Homeowner
C. Policyholder
D. Broker
A. Fire
Rationale: A peril is the cause of a loss, such as fire, theft, or flood.
,4. Which type of insurance covers legal liability for injury to others or
their property?
A. Life insurance
B. Liability insurance
C. Health insurance
D. Property insurance
B. Liability insurance
Rationale: Liability insurance protects the insured against legal
responsibility for injuries or damages caused to others.
5. What is the primary purpose of underwriting in insurance?
A. To market policies to clients
B. To assess and classify risk
C. To invest premiums
D. To settle claims
B. To assess and classify risk
Rationale: Underwriting evaluates risk to determine acceptability and
appropriate premium rates.
6. Which policy provision allows the insured to cancel the policy at any
time?
A. Insuring agreement
B. Termination clause
C. Cancellation clause
D. Exclusion clause
C. Cancellation clause
Rationale: A cancellation clause outlines the rights of either party to
terminate the policy under specified conditions.
7. Which of the following best describes a deductible?
A. Amount the insurer will not cover
B. Amount the insured must pay before coverage applies
C. Total sum insured
D. Premium discount
B. Amount the insured must pay before coverage applies
Rationale: A deductible reduces small claims and aligns the insured
with the risk-sharing principle.
8. Which type of insurance policy pays a fixed sum on the death of the
insured?
A. Term life insurance
, B. Whole life insurance
C. Health insurance
D. Disability insurance
A. Term life insurance
Rationale: Term life insurance provides a death benefit for a specified
term if the insured dies within that period.
9. What is the primary purpose of co-insurance in property insurance?
A. To increase premiums
B. To share risk between multiple insurers
C. To encourage the insured to maintain adequate insurance
D. To reduce liability claims
C. To encourage the insured to maintain adequate insurance
Rationale: Co-insurance requires the insured to carry insurance equal
to a specified percentage of the property value.
10. In insurance contracts, the doctrine of utmost good faith requires:
A. Only the insurer to disclose relevant information
B. Both parties to disclose all material facts
C. Only the insured to disclose material facts
D. That claims are always paid
B. Both parties to disclose all material facts
Rationale: Utmost good faith ensures both insurer and insured act
honestly and disclose material information.
11. What is a “hazard” in insurance terminology?
A. The cause of loss
B. A condition that increases the likelihood or severity of loss
C. The insured property
D. The insured amount
B. A condition that increases the likelihood or severity of loss
Rationale: Hazards may be physical, moral, or morale, and increase
the risk of a covered peril.
12. Which of the following is an example of a moral hazard?
A. Leaving a window open during a storm
B. Submitting fraudulent claims
C. Faulty wiring in a building
D. Poor weather conditions
B. Submitting fraudulent claims
