Fundamentals of Insurance Practice Exam
2025 | Fundamentals of Insurance Exam
Practice Actual Exam 2025 Questions and
Correct Answers Rated A+
The major function of insurance is:
a. To reduce the cost of the losses
b. To share the losses of the few among the many
c. The safeguard the interest of mortgages
d. To serve as a basis of existing credit system -ANSWER-b. To share
the losses of the few among the many
A peril if best defined as:
a. The chance of a loss
b. The occurrence of a loss
c. The cause of a loss
d. The result of a loss -ANSWER-c. The cause of a loss
Indemnify means:
a. Returning the premium of the insured
b. Restoring the insured's to the same financial position as they were
in immediately prior to the loss
c. Paying the insured's the face amount of the policy
d. Restoring the insured's to the same financial position as they were -
ANSWER-b. Restoring the insured's to the same financial position as
they were immediately prior to the loss
,Property insurance contracts are designed to pay for loss or damage
arising out of the happening of a specific event. Only the following
statement regarding the events insured by property insurance contract
is correct:
a. The event must be a future event and it must be accidental
b. The event may happen with the co-operation of the insured
c. The event may happen with the intent of the insured
d. The event may occur accidentally or be caused deliberately by the
insured -ANSWER-a. The event must be must be a future event and it
must be accidental
The following is the most practical way in which to deal with risk:
a. Avoidance of Risk
b. Retention of Risk
c. Controlling of Risk
d. Transfer of Risk -ANSWER-d. Transfer of Risk
In a contract of insurance, consideration means:
a. The exchange of something of value parties
b. The amount the insurance can collect in event of a claim
c. The object of insurance
d. The reviewing of the details of the risk to be insured by an
underwriter -ANSWER-a. The exchange of something of value
between parties
Which of the following would be correct legal name of the insured in a
contact of insurance:
a. The corner store
,b. John's Corner Store
c. J.D.'s Corner Store
d. The Corner Store Ltd -ANSWER-d. The Corner Store Ltd
All contracts require that five elements be present if the contract is to
be enforceable by law. An insurance contract is enforceable only if it
contains the following three additional interest:
a. Insurable Interest, Utmost Good Faith
b. Insurable Interest, Consideration, Indemnity
c. Insurable Interest, Indemnity, Utmost Good Faith
d. Insurable Interest, Indemnity, Genuine Intention -ANSWER-c.
Insurable Interest, Indemnity, Utmost Good Faith
If your clients do not advise the insurer of previous losses when
required to do so, they have violated an essential principle of
insurance contracts. This principle is:
a. Legality of Object
b. Utmost good faith
c. Insurable Interest
d. Indemnity -ANSWER-b. Utmost good faith
To bind a risk means:
a. That the broker has committed an insurer to provide a contract of
insurance on the subject matter under discussion
b. Finding a company willing to give a quote on a risk
c. Getting underwriting information from a client
d. Automatically renewing an existing policy -ANSWER-a. That the
broker has committed an insurer to provide a contract of insurance on
the subject matter under discussion
, The property and casualty insurance compensation corporation
(PACICC) was formed for this purpose:
a. To have all insurers share in the payment of claims arising out of a
single catastrophe
b. To spread the costs of suspected fraudulent claims amongst all
insurers
c. To provide consumers with insurance protection in the event of an
insurer insolvency
d. To monitor the solvency of federally licensed insurers -ANSWER-c.
To provide consumers with insurance protection in the event of an
insurer insolvency
Insurance brokers have a fiduciary responsibility to their clients. The
following statement best summarizes the extent of the broker's
fiduciary responsibility:
a. The commission for the policy is considered to be fully earned
b. The total commission earned is returned to the insured
c. The unearned portion of the commission is returned to the insured
d. The commission, less 50%, is required to be returned to the insured
-ANSWER-c. The unearned portion of the commission is returned to
the insured
Under the terms of the Insurance Act, property which is necessarily
removed to prevent further damage is covered at the new location:
a. For seven days or until the policy expires
b. For seven days, but only if a removal permit is attached to the
policy
c. For a reasonable time
2025 | Fundamentals of Insurance Exam
Practice Actual Exam 2025 Questions and
Correct Answers Rated A+
The major function of insurance is:
a. To reduce the cost of the losses
b. To share the losses of the few among the many
c. The safeguard the interest of mortgages
d. To serve as a basis of existing credit system -ANSWER-b. To share
the losses of the few among the many
A peril if best defined as:
a. The chance of a loss
b. The occurrence of a loss
c. The cause of a loss
d. The result of a loss -ANSWER-c. The cause of a loss
Indemnify means:
a. Returning the premium of the insured
b. Restoring the insured's to the same financial position as they were
in immediately prior to the loss
c. Paying the insured's the face amount of the policy
d. Restoring the insured's to the same financial position as they were -
ANSWER-b. Restoring the insured's to the same financial position as
they were immediately prior to the loss
,Property insurance contracts are designed to pay for loss or damage
arising out of the happening of a specific event. Only the following
statement regarding the events insured by property insurance contract
is correct:
a. The event must be a future event and it must be accidental
b. The event may happen with the co-operation of the insured
c. The event may happen with the intent of the insured
d. The event may occur accidentally or be caused deliberately by the
insured -ANSWER-a. The event must be must be a future event and it
must be accidental
The following is the most practical way in which to deal with risk:
a. Avoidance of Risk
b. Retention of Risk
c. Controlling of Risk
d. Transfer of Risk -ANSWER-d. Transfer of Risk
In a contract of insurance, consideration means:
a. The exchange of something of value parties
b. The amount the insurance can collect in event of a claim
c. The object of insurance
d. The reviewing of the details of the risk to be insured by an
underwriter -ANSWER-a. The exchange of something of value
between parties
Which of the following would be correct legal name of the insured in a
contact of insurance:
a. The corner store
,b. John's Corner Store
c. J.D.'s Corner Store
d. The Corner Store Ltd -ANSWER-d. The Corner Store Ltd
All contracts require that five elements be present if the contract is to
be enforceable by law. An insurance contract is enforceable only if it
contains the following three additional interest:
a. Insurable Interest, Utmost Good Faith
b. Insurable Interest, Consideration, Indemnity
c. Insurable Interest, Indemnity, Utmost Good Faith
d. Insurable Interest, Indemnity, Genuine Intention -ANSWER-c.
Insurable Interest, Indemnity, Utmost Good Faith
If your clients do not advise the insurer of previous losses when
required to do so, they have violated an essential principle of
insurance contracts. This principle is:
a. Legality of Object
b. Utmost good faith
c. Insurable Interest
d. Indemnity -ANSWER-b. Utmost good faith
To bind a risk means:
a. That the broker has committed an insurer to provide a contract of
insurance on the subject matter under discussion
b. Finding a company willing to give a quote on a risk
c. Getting underwriting information from a client
d. Automatically renewing an existing policy -ANSWER-a. That the
broker has committed an insurer to provide a contract of insurance on
the subject matter under discussion
, The property and casualty insurance compensation corporation
(PACICC) was formed for this purpose:
a. To have all insurers share in the payment of claims arising out of a
single catastrophe
b. To spread the costs of suspected fraudulent claims amongst all
insurers
c. To provide consumers with insurance protection in the event of an
insurer insolvency
d. To monitor the solvency of federally licensed insurers -ANSWER-c.
To provide consumers with insurance protection in the event of an
insurer insolvency
Insurance brokers have a fiduciary responsibility to their clients. The
following statement best summarizes the extent of the broker's
fiduciary responsibility:
a. The commission for the policy is considered to be fully earned
b. The total commission earned is returned to the insured
c. The unearned portion of the commission is returned to the insured
d. The commission, less 50%, is required to be returned to the insured
-ANSWER-c. The unearned portion of the commission is returned to
the insured
Under the terms of the Insurance Act, property which is necessarily
removed to prevent further damage is covered at the new location:
a. For seven days or until the policy expires
b. For seven days, but only if a removal permit is attached to the
policy
c. For a reasonable time
