Fundamentals of Insurance (BC) solved Questions and Answers 100% Correct, Exams of Insurance law

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Fundamentals of Insurance (BC) solved Questions

and Answers 100% Correct

Insurance plays an important role in managing financial risk. The main purpose of Insurance is to: A. Enable the consumer to obtain loan or mortgage. B. Provide employment and investment capital. C. Allow spread of risk. D. Reduce losses through loss prevention and loss reduction. - correct answer C. Allow spread of risk. When the insurer terminates an insurance policy, ALL of the following conditions apply, EXCEPT one. Pick the exception: A. The insured is entitled to 15 days' written notice of termination sent by registered mail of 5 days' written notice personally delivered. B. The refund due to the insured shall be calculated on a short rate basis. C. Unless otherwise stated, the refund shall accompany the notice of termination. D. The refund shall be in the form of money, postal or express company money order or cheque payable at par. - correct answer B. The refund due to the insured shall be calculated on a short rate basis. The major function of insurance is to: A. Reduce the cost of losses. B. Share the losses of the few among many. C. Safeguard the interest of the mortgagees D. Serve as the basis of the existing credit system. - correct answer B. Share the losses of the few among many. Under the policy of "fire" insurance, the insurer would be obligated to pay the following loss only: A. Fire damage caused to appliance following a sudden power surge. B. Fire damage to insured buildings occurring during a rebellion. C. Damage to insured property due to radioactive contamination. D. Loss of property caused by a process involving the application of heat. - correct answer B. Fire damage to insured buildings occurring during a rebellion. Generally, all of the following, except one, are seen to be "incompetent" or lacking the legal capacity to contract. Pick the exception: A. A corporation. B. A child. C. A trade name.

B. A lease agreement naming the tenant as the "No Risk Denied Insurance Corporation". C. A building contract showing the General Contractor as Bricks and Mortar Inc. D. An invoice for merchandise shipped to the order of Mandy's Souvenir and Gift Shop.

• correct answer D. An invoice for merchandise shipped to the order of Mandy's Souvenir and Gift Shop. Risk selection is based on the Underwriter's assessment of the hazards pertaining to the risk that has been submitted for insurance. An underwriter must determine whether or not there is a potential Moral Hazard. The following does not apply as a condition indicating the presence of a Moral Hazard: A. The moral character of the applicant for insurance. B. The financial condition of the applicant for insurance. C. The physical condition of the premises which may cause a loss to occur. D. The indifference to loss of the applicant for insurance. - correct answer C. The physical condition of the premises which may cause a loss to occur. A warranty is a: A. Promise by the broker to remit premiums to the insurer in accordance with the terms stated in the Agency Agreement. B. Guarantee of insureds that certain facts are truly as they are represented to be and that they will remain so. C. Piece of paper similar to an Endorsement which maked changes to the policy. D. Promise by the insurer to make payment of all claims submitted to it within a 21 day period. - correct answer B. Guarantee of insureds that certain facts are truly as they are represented to be and that they will remain so. All Homeowners Policies contain the section "Extensions of Coverage". All of the following losses are covered under this section, except one. Pick the exception: A. Damage to personal property during transportation to the insured's new principal residence located in Sydney, Nova Scotia, which is to be occupied by the insured within the next 10 days. B. The cost of repair the "tear out" damage to the insured's driveway that was necessarily caused to replace the ruptured water main. C. The cost to replace the insured's freezer food that was spoiled as a result of a power failure caused by lightening. D. Loss of the insured's indoor trees and plants due to exposure to extreme temperatures after a severe storm damaged part of the roof. - correct answer B. The cost of repair the "tear out" damage to the

insured's driveway that was necessarily caused to replace the ruptured water main.

You advise her that the

Loss Assessment Coverage would respond to all the following claims, except one. Pick the EXCEPTION: A. The portion of the cost to replace personal property damaged by fire because of an inadequate limit under her own policy. B. Payment to cover a portion of a water damage loss to common area, because of a high deductible under the condominium corporation's policy. C. Payment for a loss to collectively owned property, which was not covered under the condominium corporation's policy. D. Assessment to cover a portion of an insured loss to the building due to the co- insurance penalty imposed on the corporation by its insurer. - correct answer A. The portion of the cost to replace personal property damaged by fire because of an inadequate limit under her own policy. The loss of money due to actual destruction, disappearance or wrongful abstraction would be property insured under the following policy: A. Burglary Policy B. Robbery Policy C. Interior Messenger and Paymaster Robbery (Hold-Up) Policy. D. Money and Securities (Broad Form) - correct answer D. Money and Securities (Broad Form) The installation Floater is designed for contractors that specialize in the installation of machinery and equipment. The following property is not covered under this floater: A. Property in warehouse on the insured's premises. B. Property while in transit to the job site. C. Property awaiting installation at the job site. D. Property while being installed at the job site. - correct answer A. Property in warehouse on the insured's premises. Coverage provided for an insured's records under most policies of commercial property insurance is limited to: A. 20% of limit of insurance purchased on equipment. B. Those costs to gather, assemble and transcribe lost information. C. Blank value only. D. 50% of value of manual records and 75% of value of automated records. - correct answer C. Blank value only. The additional rate or premium charged by the insurer to pay for additional perils insured under a commercial property insurance policy is called: A. A surcharge B. A loading

C. The insureds shall advise the insurer when any contract providing monitoring or maintenance services has been cancelled. D. The insureds shall advise the insurer when they have been provided with notification of the suspension of police services in response to any such system(s) - correct answer B. The insureds shall advise the insurer of the existence of any municipal by- law or ordinance related to such system(s) According to the Canadian Legal System, the Insurance Act is: A. A part of the criminal code. B. A precedent established by common law. C. A part of the Civil Code. D. A statute law. - correct answer D. A statute law. An insured' s liability for sickness, disease or death caused to third parties is insured by liability policies under the coverages provided for: A. Personal Liability B. Bodily Injury C. Medical Payments D. Supplementary Payments. - correct answer C. Medical Payments The Commercial General Liability (CGL) Policy insured the liability exposures common to most businesses. Your client is an electrical contractor, who replaced the wiring in a customer's building. Two days after the work was finished, a fire broke out, and the fire chief determined that it was caused by a faulty connection. Which liability coverage in the CGL Policy would respond to this claim? A. Premises and Operations Liability B. Products Liability C. Completed Operations Liability D. Personal Injury Liability - correct answer C. Completed Operations Liability The Homeowners' Comprehensive Form (IBC 1155) insures the following loss or damage only: A. Loss to sporting equipment during its use. B. Damage caused by birds. C. Breakdown of dishwasher motor. D. Damage due to smoke from fireplace. - correct answer D. Damage due to smoke from fireplace. Under the Homeowner's Basic Form (IBC 1151) the following loss is not insured: A. Roof damage caused by falling object which strikes the dwelling building. B. Damage caused to the dwelling building by an automobile driven by a neighbour.

C. Wind damage to building siding. D. Damage caused by vandalism to a dwelling building in the course of construction. - correct answer D. Damage caused by vandalism to a dwelling building in the course of construction. The following claim would be insured by the Homeowners' Basic Form (IBC

1151. under the peril of theft: A. Theft of insured's registered black Labrador dog. B. Damage to door and lock by persons attempting to break-in to the insured's dwelling. C. Theft to personal property from a seasonal dwelling owned by the insured and which had not been occupied by the insured for almost two months. D. Theft of building materials from site of insured's new dwelling prior to its completion. - correct answer B. Damage to door and lock by persons attempting to break-in to the insured's dwelling. Under the Homeowners' Basic Form (IBC 1151) only the following loss is covered: A. Water Hammer. B. Damage to a garage door caused by a vehicle driven by the insured. C. Smoke damage due to the faulty operation of the basement furnace. D. Sewer back-up. - correct answer C. Smoke damage due to the faulty operation of the basement furnace. The emergency removal coverage provided by the Mobile Home Insurance Form insures all of the following, except one. Pick the exception. A. Cost to disconnect water services. B. Cost to disconnect power services. C. Towing or transporting costs. D. Cost of repair damage caused during moving. - correct answer D. Cost of repair damage caused during moving. The Additional Living Expense coverage provided under the Homeowners' Forms pays: A. Those increased costs only, if any, for temporary accommodations occupied by the insured after an insured loss. B. All costs as incurred by the insured for food, transportation, and accommodations after an insured loss. C. Those increased costs for items such as food, transportation, and accommodations which are incurred by the insured after an insured loss, so long as such costs do not serve to increase insured's standard of living. D. All mortgage payments which the insured must continue to make after an insured loss. - correct answer C. Those increased costs for items such as food, transportation, and accommodations which are incurred by the insured after an insured loss, so long as such costs do not serve to increase insured's

The following loss would be insured by the Homeowners' Comprehensive Form (Form IBC 1155): A. Theft of exotic birds. B. Golf club broken from impact with a tree on the golf course. C. Gun collected stolen while on display at local exhibition. D. Breaking of building glass by a raccoon. - correct answer D. Breaking of building glass by a raccoon. One of the perils insured under the Homeowners' Basic Form (IBC 1151) is theft including damage caused by attempted theft. Although the coverage for theft is very broad, there are limitations that apply to this peril. All of the following losses are excluded, except one. Pick the exception: A. Theft of the insured's camera during a sightseeing trip while vacationing in Europe. B. Theft of a diamond ring the insured had left in the laundry room and to which the tenant had access. C. Theft of a generator and other power tools from the insured's summer cottage during a time when the cottage was unattended by the insured. D. Loss of collector's music albums, which the insured had given to an acquaintance to copy onto CD's, but which were never returned. - correct answer A. Theft of the insured's camera during a sightseeing trip while vacationing in Europe. When one person, (the plaintiff), sues the other person, the defendant, for damages, before awarding damages, the courts require the plaintiff to prove all the following elements, except one. Pick the exception: a. the defendant had a moral duty to defend the plaintiff'f well-being b.the defendant owed the plaintiff a legal duty of care c the defendant breached the legal duty of care d. damages were suffered as the proximate result of the defendant's action - correct answer a. the defendant had a moral duty to defend the plaintiff'f well-being Your client operates a medical clinic near your office. She was recently sued by a customer who broke her back when the rail leading to a second floor office gave away, causing her to fall a distance of 5 meters to the floor below. This is an example of: a. a premises liability claim, b. a professional liability claim. c. A products liability claims d. a completed operations liability claims - correct answer a. a premises liability claim, Businesses have some unique liability exposures which need to be properly insured. Your client sells toasters on a mail order basis. Which one of the following liability coverages would be most important for such a business?

a. premises liability b. operations liability

Most liability policies provide coverage on an occurrence basis. All of the following statememts, except one, correctly describes what the policy covers. Select the statement which is incorrect. a. the amount of insurance stated on the policy is the maximum amount payable for all occurrences, which happened during the policy period. b. the policy covers bodily injury or property damage resulting from an accident. c. the policy covers bodily injury or property damage caused by an exposure to a harmful condition over a long period of time. d. the amount of insurance stated on the policy is available for each occurrences during the policy period. - correct answer a. the amount of insurance stated on the policy is the maximum amount payable for all occurrences, which happened during the policy period. All home owners forms insure the personal liability of the insured arising out of: a. the insured's private actions anywhere in the world and business related actions in north America only b. the insured's action as private citizen anywhere in the world c. the insured's private and business actions anywhere in the world d. the insured;s private actions in Canada and USA - correct answer b. the insured's action as private citizen anywhere in the world All Homeowners and Habitational package policies include liability insurance. Coverage E would respond to all of the following instances, except 1. a. bodily injury or property damage caused by the insured arising out a personal non- business activity. b. bodily injury suffered by a resident employee as a direct result of the insured's negligence. c. fire damage to a cottage rented by the insured when a burning log rolled out of a fire place. d. property damage to a third party resulting from the personal actions of a named insured who does not reside at the insured premises. - correct answer d. property damage to a third party resulting from the personal actions of a named insured who does not reside at the insured premises. Your client is considering hiring a contractor to perform renovations to a building. She would share in any liability for injury or damage caused by such contractor in all of the following instances, except one. a. when the work being contracted is inherently dangerous b. when she supplies "blue prints" and leaves the contractor to his own resources to arrive at the desired results. c. when she supplies defective machinery or equipment form which injury or damage arises. d. when she provides on site direction and on-going supervision of work. - correct answer b. when she supplies "blue prints" and leaves the contractor to his own resources to arrive at the desired results.

The personal injury liability coverage, in the commercial general liability would respond to all of the following torts, except one. a. negligence b. false arrest c. libel or slander d. wrongful entry or eviction - correct answer a. negligence The personal liability coverages, provided on homeowners forms are designed to insure: a. the legal liability for private citizens for their actions. b. the legal liability for insureds arising out of their business pursuits. c. the legal liability of insureds arising out of the operation of all owned and non-owned automobiles. d. all exposures for which an insured might be legally liable. - correct answer a. the legal liability for private citizens for their actions. Homeowners forms covers the insured's legal liability for loss or damage to rented or leased premises from all of the following losses, except 1. a. fire b. explosion c. smoke from a fireplace d. water damage - correct answer c. smoke from a fireplace The professional liability exposure of insurance brokers is only insured under a policy of: a. personal liability insurance b. commercial general liability insurance c. Malpractice insurance. d. errors and omissions insurance. - correct answer d. errors and omissions insurance. In the event of an occurrence, claim or action, the insured under a liability policy must do of the following, except one. a. provide the insurer with prompt notification of any accident or occurrence which may lead to a claim. b. immediately forward to the insurer copies of any legal paper received. c. make such voluntary payments on behalf of the insurer as are required interim to satisfy the plaintiff. d. assist the insurer in in the investigation, settlement or defence of the claim or action - correct answer c. make such voluntary payments on behalf of the insurer as are required interim to satisfy the plaintiff. While in the majority of cases law considers a person "innocent until proven guilty" there are circumstances in which the courts deem the defendant " guilty until proved innocent"

. this approach is referred to as "strict liability and apply to all of the following actions , except one. a. the defendant made a fire on his property to burn yard waste and the fire spread to neighbouring property where it destroyed an outbuilding.

examination.

The premium for a "single trip" travel policy is based on all the following factors, except one. a. the distance between the applicants home address and and the final destination b. the number of days the applicant is travelling c. the number of persons insured under the travel policy d. the age and medical condition of the applicant. - correct answer a. the distance between the applicants home address and and the final destination The following statements apply to Own Damage Coverages are true except one. Pick the Exception: A. The insured must promptly notify ICBC of any loss or damage. B. When there is a loss or damage to the insured automobile, the insured must take all reasonable steps to protect the vehicle from further loss. C. When the claim involves the theft of the insured automobile, a report must be filed with policy within 48 hours of discovery. D. Permission is automatically provided for insureds to make any temporary repairs considered necessary to drive the insured vehicle to a repair shop, garage or other place where repairs are to be completed. - correct answer D. Permission is automatically provided for insureds to make any temporary repairs considered necessary to drive the insured vehicle to a repair shop, garage or other place where repairs are to be completed. Basic Autoplan provides owners of vehicles of the private passenger type with the following limit of third party liability coverage: A. $50, B. $200, C. $500, D. $1,000,000 - correct answer B. $200, Yesterday, the insured parked her automobile in an outdoor lot at a local mall. It was struck by a hit-and-run driver. Damage caused to the rear fender was $1150. The insured does not have Own Damage Coverage. However, the Uninsured or Unidentified Motorist Protection Coverage provided by Basic Autoplan would provide for the following payment: A. $ B. $ C. $ D. $750 - correct answer C. $ Damage caused to the insured automobile as a result of impact with a domestic or wild animal, either living or dead, would be covered only if the insured purchased this Own Damage Coverage: