Fundamentals of Insurance BC Final
Exam and All Correct Answers 2025-
2026 Updated.
What is the major function of insurance? - Answer to allow the spread of risk
What are the five important functions of insurance? - Answer 1) insurance is the shifting of
financial responsibility for a loss
2) payment will be made only in the event of an insured risk
3) the amount of payment is restricted to the amount required to indemnify the insured
4) insurance covers losses the object may be exposed to
5) the indemnity can be in the form of money or repair/replacement
What are the three main types of insurance included in broad insurance (property and casualty)
- Answer Auto insurance
property insurance
liability insurance
(Also known as general insurance)
Identify the two major types of insurers - Answer 1) private insurers
2)government insurers
define how stock companies work compared to mutual companies - Answer Stock
companies exist to turn a profit
Mutual companies exist to provide lower insurance rates for its policy holders
What type of insurance involves government insurers - Answer Mandatory auto insurance,
such as ICBC
identify the two methods of distributing insurance and how the differentiate - Answer Direct
Writing System
, Chapter 2 - Answer
Define the 3 categories of risk - Answer Personal
Property
Liability
Identify the 4 options for dealing with risk - Answer 1) avoidance of risk
2) controlling of risk
3) retention of risk
4) transfer of risk
What are the two types of risk? Which is insurable? - Answer 1) Pure Risk
2) speculative risk
Only Pure risk is insurable as there is no chance for financial gain
Define an insurance contract - Answer an agreement between two or more parties which is
enforceable by law
What are the five elements required to be present in all contracts - Answer 1) agreement; an
offer made, and accepted
2) consideration; exchange of value between parties
3) legal capacity to contract
4) legality of object; cannot breach laws
5) genuine intention between parties
What are the three elements exclusively required in an insurance contract - Answer 1)
Insurable interest
2) Utmost good faith
3) Indemnity
Exam and All Correct Answers 2025-
2026 Updated.
What is the major function of insurance? - Answer to allow the spread of risk
What are the five important functions of insurance? - Answer 1) insurance is the shifting of
financial responsibility for a loss
2) payment will be made only in the event of an insured risk
3) the amount of payment is restricted to the amount required to indemnify the insured
4) insurance covers losses the object may be exposed to
5) the indemnity can be in the form of money or repair/replacement
What are the three main types of insurance included in broad insurance (property and casualty)
- Answer Auto insurance
property insurance
liability insurance
(Also known as general insurance)
Identify the two major types of insurers - Answer 1) private insurers
2)government insurers
define how stock companies work compared to mutual companies - Answer Stock
companies exist to turn a profit
Mutual companies exist to provide lower insurance rates for its policy holders
What type of insurance involves government insurers - Answer Mandatory auto insurance,
such as ICBC
identify the two methods of distributing insurance and how the differentiate - Answer Direct
Writing System
, Chapter 2 - Answer
Define the 3 categories of risk - Answer Personal
Property
Liability
Identify the 4 options for dealing with risk - Answer 1) avoidance of risk
2) controlling of risk
3) retention of risk
4) transfer of risk
What are the two types of risk? Which is insurable? - Answer 1) Pure Risk
2) speculative risk
Only Pure risk is insurable as there is no chance for financial gain
Define an insurance contract - Answer an agreement between two or more parties which is
enforceable by law
What are the five elements required to be present in all contracts - Answer 1) agreement; an
offer made, and accepted
2) consideration; exchange of value between parties
3) legal capacity to contract
4) legality of object; cannot breach laws
5) genuine intention between parties
What are the three elements exclusively required in an insurance contract - Answer 1)
Insurable interest
2) Utmost good faith
3) Indemnity
