Fundamentals of Insurance Chapter 1
(BC Canada) Questions and Answers
2025.
The major function of insurance is to achieve a spread of risk. Explain what is meant by "spread
of risk" - Answer to share the losses of a few among the many
Explain, Insurance provides a means of shifting one's financial responsibility for a loss to
another party - Answer Insurance provides them with a means of shifting these obligations
to others in exchange for money, referred to as premiums. A contract will be in place
Explain, payment will be made only in the event of The happening of a certain risk or peril -
Answer RISK is defined as either the chance of a financial loss to which an object of
insurance may be exposed or commonly used as the actual object of insurance
PERIL is defined as the cause of lost such as fire wind or hail
payment will only be made it event something happens regarding either one of these
Explain, the amount of the payment is restricted to the amount required to indemnify the
insured. - Answer The proper application ensures that people receive the actual amount of
their loss no more and no less. The insurer will determine the value of the insured property as it
existed immediately prior to the loss.
Explain, insurance covers losses to which the object of insurance may be exposed. - Answer
The purpose of insurance is to pay for those losses which are both accidental and future. It is
not intended to respond to losses which are deliberate or which have already occurred.
Covering deliberate losses and losses that have already occurred are not viable for insurance
companies to stay profitable.
Explain, the indemnity provided can be in the form of a sum of money or other thing of value. -
Answer The insuring company always has the right to settle a claim either by repairing or
replacing the damaged item or by paying the insured money for the damaged items.
(BC Canada) Questions and Answers
2025.
The major function of insurance is to achieve a spread of risk. Explain what is meant by "spread
of risk" - Answer to share the losses of a few among the many
Explain, Insurance provides a means of shifting one's financial responsibility for a loss to
another party - Answer Insurance provides them with a means of shifting these obligations
to others in exchange for money, referred to as premiums. A contract will be in place
Explain, payment will be made only in the event of The happening of a certain risk or peril -
Answer RISK is defined as either the chance of a financial loss to which an object of
insurance may be exposed or commonly used as the actual object of insurance
PERIL is defined as the cause of lost such as fire wind or hail
payment will only be made it event something happens regarding either one of these
Explain, the amount of the payment is restricted to the amount required to indemnify the
insured. - Answer The proper application ensures that people receive the actual amount of
their loss no more and no less. The insurer will determine the value of the insured property as it
existed immediately prior to the loss.
Explain, insurance covers losses to which the object of insurance may be exposed. - Answer
The purpose of insurance is to pay for those losses which are both accidental and future. It is
not intended to respond to losses which are deliberate or which have already occurred.
Covering deliberate losses and losses that have already occurred are not viable for insurance
companies to stay profitable.
Explain, the indemnity provided can be in the form of a sum of money or other thing of value. -
Answer The insuring company always has the right to settle a claim either by repairing or
replacing the damaged item or by paying the insured money for the damaged items.
