Fundamentals of Insurance - Practice Exam [ACTUAL EXAM]
LATEST VERSION [QUESTIONS AND ANSWERS] WITH
PRACTICE EXAM DETAILED AND VERIFIED FOR
GUARANTEED PASS- LATEST UPDATE 2025 GRADED A
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 - CORRECT
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 -
CORRECT 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 - CORRECT 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 - CORRECT
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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT
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
d. Until the original location is repaired - CORRECT ANSWER a. For seven days or
until the policy expires
Subrogation refers to:
a. The amount the insurance company receives from a person who is legally
responsible for loss
b. The right of the insurance company to recover payments made under the policy from
another person who is legally responsible for the loss
c. The right of the insurance to take over the salvage after the claim has been made
d. The right of the insured's to collect the amount of their loss from either the insurer or
the person responsible - CORRECT ANSWER b. The right of the insurance company
to recover payments made under the policy from another person who is legally
responsible for the loss
Every policy of "Fire" insurance:
a. Usually covers fire, smoke, and specific types of explosions
b. Is required by law to cover fire, windstorm, and lightening
c. Covers fire, explosion, and windstorm
d. Is required by law to cover at least fire, lightening, and specified types of explosions -
CORRECT ANSWER d. Is required by law to cover at least fire, lightening and
specified types of explosions
Your clients recently burnt a large pot roast when a fire broke out in their kitchen oven.
This loss to the roast is considered to be a result of:
a. Direct fire
b. Indirect fire
c. Hostile fire
d. Friendly fire - CORRECT ANSWER d. Friendly fire
Statutory conditions found in all policies of "fire" insurance:
a. Outline the duties and responsibilities of the insured and the insurer
b. Specify the coverages provided
LATEST VERSION [QUESTIONS AND ANSWERS] WITH
PRACTICE EXAM DETAILED AND VERIFIED FOR
GUARANTEED PASS- LATEST UPDATE 2025 GRADED A
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 - CORRECT
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 -
CORRECT 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 - CORRECT 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 - CORRECT
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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT 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 - CORRECT
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
d. Until the original location is repaired - CORRECT ANSWER a. For seven days or
until the policy expires
Subrogation refers to:
a. The amount the insurance company receives from a person who is legally
responsible for loss
b. The right of the insurance company to recover payments made under the policy from
another person who is legally responsible for the loss
c. The right of the insurance to take over the salvage after the claim has been made
d. The right of the insured's to collect the amount of their loss from either the insurer or
the person responsible - CORRECT ANSWER b. The right of the insurance company
to recover payments made under the policy from another person who is legally
responsible for the loss
Every policy of "Fire" insurance:
a. Usually covers fire, smoke, and specific types of explosions
b. Is required by law to cover fire, windstorm, and lightening
c. Covers fire, explosion, and windstorm
d. Is required by law to cover at least fire, lightening, and specified types of explosions -
CORRECT ANSWER d. Is required by law to cover at least fire, lightening and
specified types of explosions
Your clients recently burnt a large pot roast when a fire broke out in their kitchen oven.
This loss to the roast is considered to be a result of:
a. Direct fire
b. Indirect fire
c. Hostile fire
d. Friendly fire - CORRECT ANSWER d. Friendly fire
Statutory conditions found in all policies of "fire" insurance:
a. Outline the duties and responsibilities of the insured and the insurer
b. Specify the coverages provided
