Fundamentals of Insurance - Licensing Practice Exam 2024, Exams of Nursing

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Fundamentals of Insurance - Licensing Practice Exam 2 024

1. To "Bind a Risk" means: a. Having authority from the Insurer to put insurance in force 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. Having authority from the Insurer to put insurance in force "Subrogation"d means: a. The right of the insurance company to recover payments made under the policy from another person who is legally responsible for the loss b. The amount of the insurance company receives from a person who is legally responsible for a loss c. That the insurance company takes over the salvage after it has paid the claim in full d. That the Insured has the option of receiving payment for the loss from either the insurer or the person responsible - correct answer a. The right of the insurance company to recover payments made under the policy from another person who is legally responsible for the loss Insurance coverage under the terms of the policy of "fire" insurance expires at: a. 12:01 a.m. Standard Time at the location of the property insurance b. 12:01 p.m. Standard Time at the location of the property insured c. Twelve months after the broker binds coverage d. 12:01 a.m. Standard Time at the address of the named insured - correct answer d. 12:01 a.m. Standard Time at the address of the named insured In the contract of Insurance, "consideration" means: a. Something of value b. The amount of the Insured 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. Something of value An Insurance Contract indemnifies the Insured against loss arising out of the happening of the specific event. Which of the following 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. All of the above - correct answer a. The event must be a future event and it must be accidental "Indemnify" means: a. Returning the premium of the Insured b. Restoring the Insured to the same financial position as he was in immediately prior to the loss c. Paying the Insured the face amount of the policy d. Restoring the insured to the same financial position as he was in at the inception date of the policy - correct answer b. Restoring the Insured to the same financial position as he was in immediately prior to the loss Under the Indemnity Agreement of the Fire Policy it states it will pay the lesser of three amounts in the event of a claim. One factor which does NOT enter into this calculation is: a. The actual cash value of the property b. The original cost of the property c. The insured's interest in the property d. The policy limit - correct answer b. The original cost of the property A physical hazard is: a. A type of peril b. The same as a moral hazard c. A physical feature of a risk, which may give rise to a loss d. The possibility of a loss due to the character of the insured - correct answer c. A physical feature of a risk, which may give rise to a loss The following is the most practical way in which to deal with risk: a. Transfer of risk b. Retention of risk c. Controlling of Risk d. Avoidance of Risk - correct answer a. Transfer of risk If a policy has been cancelled by the insurance Company before the term has expired: a. The commission is fully earned b. The total premium is returned c. Part of the commission, corresponding to the unearned portion of the premium must be returned to the Insured

d. The policyholder will be charged an additional fee for the cancellation - correct answer Every policy of "fire" insurance: a. Usually covers fire, smoke and specified types of explosion 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 Insurable Interest means: a. Interest gains on money in the bank b. Interest payable on loan c. The personal interest a person has in something he expects to inherit d. The financial interest a person has in something of value - correct answer d. The financial interest a person has in something of value The major function of insurance is: a. To reduce the cost of losses b. To spread the losses of the few among the many c. To safeguard mortgage investments d. To serve as the basis of existing credit system - correct answer b. To spread the losses of the few among the many With respect to federally licensed insurance companies, the Federal Department of Insurance: a. Controls the type of policies issued b. Regulates the financial stability of Insurers c. Stipulates the types of agents who may represent the company d. Only supervises life insurance companies - correct answer b. Regulates the financial stability of Insurers A "peril" is 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 - correct answer c. The cause of a loss Our Insured suffers the loss of a steak as a result of a fire, which, fortunately, was confined in her barbeque. Such loss to the steak is a result of a:

a. Direct fire b. Indirect fire c. Hostile fire d. Friendly fire - correct answer d. Friendly fire Under a policy of "fire" insurance, which one of the following losses is covered: a. Fire damage caused by a fire, which followed a short circuit b. Loss caused by enemy attack by Armed Forces c. Radioactive Contamination d. Loss of property caused by a process involving the application of heat - correct answer a. Fire damage caused by a fire, which followed a short circuit Statutory Conditions found in all policies of "fire" insurance: a. Outline the rules of conduct between the Insured and the Insurer b. Specify the coverage provided c. State the rights of third parties d. Are not expressly required by law - correct answer a. Outline the rules of conduct between the Insured and the Insurer If an Insured knowingly fails to reveal all material information when applying for insurance, the Insurer: a. Must pay all claims of the insured b. Must continue the policy until expiry, but may not renew it c. May void the policy in respect of the property so affected d. May sue the Insured for misrepresentation - correct answer c. May void the policy in respect of the property so affected In which of the following cases is it necessary for the Insurer to give consent for a Change of Interest? a. When an Insured sells his house and the new owner wants to continue the policy b. When an Executor takes over after the death of the Insured c. When there has been an authorized assignment under the Bankruptcy Act d. An Insured becomes insane and an administrator takes over his affairs - correct answer a. When an Insured sells his house and the new owner wants to continue the policy The statutory Conditions provide that the Insured must promptly notify the Insurer of any material change. A material change is one which: a. Results in damage to goods caused by their undergoing a process involving the application of heat

b. Due to a bylaw change, provides for use of materials superior to those that exists at the time the insurance policy was purchased c. Has led to damage to buildings of contents caused by alterations or additions d. Introduces a new feature, which increases the chance of loss - correct answer d. Introduces a new feature, which increases the chance of loss Our Insured has made application for Appraisal. The intent of the Appraisal process is to settle the dispute between our Insured and the Insurer regarding: a. The amount of settlement being offered b. Denial of Insurance coverage under the policy. c. Right of Insured to purchase salvage from an insured loss d. The premium charged for coverage being provided by the Insured - correct answer a. The amount of settlement being offered Where the Insured opts to repair, rebuild, or replace damage property rather than make payment in the form of a cash settlement it must: a. First provide the insured with the option of accepting or rejecting the proposed basis of settlement b. Provide the Insured with written notice of its intention to do so within 30 days after receipt of proof of loss c. Seek the consent of the Insured's mortgage d. Advise the Insured's broker or agent of its decision - correct answer b. Provide the Insured with written notice of its intention to do so within 30 days after receipt of proof of loss Under the policy of "Fire" insurance, the insurer must make payment for loss within: a. 60 days after completion of the Proof of loss b. 90 days after completion of the Proof of loss c. 60 days after completion of the proof of loss unless the contract provides a shorter period d. 1 year from the date of the loss occurred - correct answer c. 60 days after completion of the proof of loss unless the contract provides a shorter period In addition to the five essential elements to be contained in all contracts, an insurance contract is enforceable only if it contains the following three elements: a. Insurable interest, Indemnity, utmost good faith b. Insurable interest, consideration, indemnity c. Insurable interest, utmost good faith, lawful object d. Insurable interest, Indemnity, genuine intention - correct answer a. Insurable interest, Indemnity, utmost good faith

If your client does not advise the insurer of his previous losses when required to do so, he has 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 Which of the following would be the correct name of the Insured in the contract of insurance? a. The corner store b. John Doe trading as The Corner Store c. J.D.'s Corner Store d. The directors and Stockholders of The Corner Store Ltd - correct answer b. John Doe trading as The Corner Store Insurance is: a. Paying a sum of money or other thing of value upon the happening of a certain event b. A piece of paper, which is necessary for an individual to show that he, can pay a loss c. an undertaking by one party to indemnify another party against loss or liability against a certain risk or peril d. both a and c - correct answer d. both a and c Pick the best example of a physical hazard: a. The owner has a large mortgage which he cannot repay b. The bartender continues to pour drinks for the patron, even though the patron is unquestionably intoxicated c. The steps in the store are in disrepair d. The owner leave the safe unlocked because he cannot always remember the combination - correct answer c. The steps in the store are in disrepair The actual cash value is: a. The replacement cost at the time of the loss without depreciation b. The replacement cost at the time of loss less depreciation c. The original cost of the item d. The sentimental value of the item - correct answer b. The replacement cost at the time of loss less depreciation Indemnity means: a. Paying the insured the amount of the coverage stated on the policy

b. Paying the insured the full amount of the loss regardless of the coverage stated in the policy c. Restoring the insured to the financial position he was in at the time the policy came into effect d. Restoring the insured to the financial position he was in immediately before the loss - correct answer d. Restoring the insured to the financial position he was in immediately before the loss Spread of risk means a. To spread the losses of the few amongst the many b. To limit the amount of policies any broker can write in any given geographical area c. To spread the premium payment over several months d. To limit the amount recoverable under all policies - correct answer a. To spread the losses of the few amongst the many The responsibility for licensing insurance brokers and supervising of insurance contracts rest with: a. The insurance companies b. provincial governments c. federal government d. municipal governments - correct answer b. provincial governments A fire insurance policy must contain the following minimum coverages: a. Fire, lightening, explosion of any type b. fire c. fire, lightening, smoke damage d. Fire, lightening, explosion of natural, coal, or manufactured gas - correct answer d. Fire, lightening, explosion of natural, coal, or manufactured gas Standard exclusions to a fire policy included: a. War and hostilities, weather or not war is declared b. Lightening damage to electrical devices or appliances c. Application of heat d. All of the above - correct answer d. All of the above Misrepresentation can take various forms. Which of the following is not one of them. a. Fraudulent omission of a fact which is material b. Knowingly providing a false description of the property to the insurance company which will put the insurer at a disadvantage c. Providing false information on a matter, which the insurer considers to be material to its acceptance of risk

d. Fully disclosing all information which is important to the insurance company - correct answer d. Fully disclosing all information which is important to the insurance company The insurance company will not be responsible for one of the following cases in which there is a change in the interest of the property: a. The property is assigned under the Bankruptcy Act b. The owner dies c. The policy owner and the named insured are different on the policy d. There is a change in title of the property due to the succession or operation of law - correct answer c. The policy owner and the named insured are different on the policy Where there is a material change in the risk, the insurer can: a. do neither of c or d b. do both c or d c. charge an additional premium and keep the risk d. cancel the policy and return any unearned premium - correct answer b. do both c or d Under the statutory conditions of a fire policy, the contract can be terminated by: a. The insurer is given fifteen days notice of termination by registered or ordinary mail b. The insurer giving five days notice of termination by registered of ordinary mail c. The insurer is given fifteen days notice of termination by registered mail d. The insurer immediately upon personally delivering notice of cancellation - correct answer c. The insurer is given fifteen days notice of termination by registered mail After a loss, the insured would do the following according to the statutory conditions a. If required provide a complete list of undamaged property and show in detail the original cost, actual cash value, and amount of loss claimed b. Delivered to the insurer as soon as practicable a proof of loss verifier by a statutory declaration c. Give the insurer notice of the loss immediately d. All of the above - correct answer d. All of the above Which of the following is not required under the proof of loss: a. A statement of when and how the loss occurred b. Show what steps the insured took to reduce the damage c. Show the names of the insurers and the amount of their insurance d. Show where the property was at the time of loss - correct answer b. Show what steps the insured took to reduce the damage Who can give notice and proof of loss:

a. The owner, the owner's agent, or anyone to who any part of the insurance is payable b. the owner only c. The morgrage holder only d. The owners insurance agent - correct answer a. The owner, the owner's agent, or anyone to who any part of the insurance is payable Under Salvage, the insurer is responsible to: a. Take all steps to ensure that the property is not damaged any further b. Remove the property to prevent further damage to the property c. Be responsible to get a salvage dealer to buy the damaged property d. Contribute on a pro-rata basis towards any reasonable, proper expenses to protect the property from further damage - correct answer d. Contribute on a pro-rata basis towards any reasonable, proper expenses to protect the property from further damage Under Entry, Control, Abandonment Clause, the insured has the right to: a. Prevent the insurance company from entering the property until he sets the appointment b. Give the insurer full control of the property c. Abandon the property so he can dispose of it d. None of the above - correct answer d. None of the above Under the Statutory Condition "Appraisal", which of the following is true: a. The insurer will settle the claim only if the insured had an appraisal for the damaged property before the loss occurred b. The insured must have his appraiser determine how the loss occurred and advise the insured c. The insurer and the insured disagree on the amount of the loss and can use this process to settle the claim d. The broker is responsible for establishing the value of the insured's property - correct answer c. The insurer and the insured disagree on the amount of the loss and can use this process to settle the claim The elements of all contracts are: a. Agreement, Consideration, Legality of object, legal capacity of the parties to the contract, genuine intention b. Agreement, cash exchange, legality of object, legal capacity of the parties to the contract, genuine intention c. Agreement, consideration, illegality of object, illegal capacity of the parties to the contract, genuine intention d. Agreement, consideration, illegality of object, illegal capacity of the parties to the contract, genuine intention - correct answer a. Agreement, Consideration, Legality of object, legal capacity of the parties to the contract, genuine intention

There are three contractual elements of an insurance policy that are unique. Which one of the following does not fall in this category. a. Insurable Interest b. Indemnity c. Offer and Acceptance d. Utmost Good Faith - correct answer c. Offer and Acceptance Who has insurable interest in an insurance policy? a. The owner of the policy after he has sold his interest in the property. b. The owner of the policy if he is the owner of the property covered by the policy c. The mortgage company who has been paid in full d. A neighbour - correct answer b. The owner of the policy if he is the owner of the property covered by the policy Which is the true statement about temporary insurance? a. It cannot be an oral binder b. It is not the same as a written policy c. If oral, is should be confirmed in written d. It is a legal contract with form - correct answer c. If oral, is should be confirmed in written Under a fire policy, the following property would not be excluded: a. A form tractor and Canadian Savings Bonds b. A deed to the property and a canoe c. A frame building and its contents d. $50 in cash and a 1985 Pontiac Firebird - correct answer c. A frame building and its contents In an insurance policy, a warranty is: a. A guarantee that goodwill be used in its manufactured purpose b. A guarantee that a product will last a specific lifetime c. A guarantee that the insurer will pay any loss if the insured pays his premium d. A guarantee by the insured that a certain set of conditions will be observed during the policy period and, if violated, voids the coverage - correct answer d. A guarantee by the insured that a certain set of conditions will be observed during the policy period and, if violated, voids the coverage The fire policy includes an extension of coverage for removal. Which of the following statements is true?

a. The insured's property will be insured for an indefinite period of time if removed to prevent further loss or damage b. The insured's property will be insured for a maximum of 7 days, or expiry of the policy, if remove to prevent loss of further loss or damage c. The insured's property is insured only while on his property even if it is in danger of loss or further damage at that location d. The insured's property will be insured at a safe location until the damage is repaired even though the policy expired in 3 days - correct answer b. The insured's property will be insured for a maximum of 7 days, or expiry of the policy, if remove to prevent loss of further loss or damage Under the indemnity agreement, the insurer agrees to pay the least of three amounts. Which one is the exception? a. The amount of the outstanding mortgage b. The ACV of the property at the time of the loss c. The interest the insured has in the property at the time of loss d. The amount of insurance of the property as stated on the declarations page - correct answer a. The amount of the outstanding mortgage In which case will the insured be unable to apply the Replacement Cost Endorsement? a. Insured decides to rebuild on another piece of real estate b. Rebuilding is going to take longer than expected because contractor is behind schedule c. Insured has already began to replace the property d. Insured is rebuilding on the same site using due diligence and dispatch - correct answer a. Insured decides to rebuild on another piece of real estate All of the following are "insured's" under most Habitational insurance, policy except one: Pick the explanation: a. Insured's grandmother who lives with them b. 16 - year-old foster child left in the care of the insureds c. Insured's twins, age 22, who are living at insured's home while attending university d. Insured's common law spouse who moved in four months ago - correct answer d. Insured's common law spouse who moved in four months ago The Additional Living Expenses coverage as provided under Habitational Insurance Policies would: a. Pay those increased costs only, if any, for temporary accommodations occupied by the insured after an insured loss b. Pay all costs as incurred by the insured for food, transportation and accommodations occupied by him after an insured's loss

c. Pay 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 the Insured's standard of living d. Pay all mortgage payments, which Insured must continue to make after an insured loss - correct answer c. Pay 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 the Insured's standard of living Loss caused by "freezing" during the usual heating season is covered on Habitational Insurance Policies only if the Insured fulfills the obligations outlines in the policy. If the insured is away for more than four consecutive days, he must: a. Advise the Insurer that the dwelling will be unoccupied b. Obtain written permission from the Insurer for continuation of coverage during period of occupancy c. Ensure all windows and doors are securely locked and heating maintained d. Arrange for a competent person to enter the dwelling daily to ensure heating is being maintained or shut water supply off and drain all the pipes and appliances - correct answer d. Arrange for a competent person to enter the dwelling daily to ensure heating is being maintained or shut water supply off and drain all the pipes and appliances All of the following items of personal property, except one, are subject to Special Limits of Insurance under most Habitational Insurance Policies. Pick the exception: a. Books, tools, and instruments relating to a business, profession, or occupation b. Watercraft, including equipment c. Computer hardware d. Money - correct answer c. Computer hardware Where an Insured's access to his own dwelling is prohibited by civil Authority, the Insurer will respond to pay Fair Rental Value and Additional Living Expenses under most Habitational Insurance Policies provided that: a. Access is denied as a direct result of damage to neighbouring premises by a peril insured against under our Insured's policy b. Access is denied as a direct result of damage to the insured's premises from a peril insured against under our insured's policy. c. Access is denied as a direct result of contamination by radioactive material d. Access must be denied for a period of no more than 10 consecutive days - correct answer a. Access is denied as a direct result of damage to neighbouring premises by a peril insured against under our Insured's policy Our Insured recently purchased a Homeowners Comprehensive Form, which she was told, covered her property for "All Risks" of physical loss or damage. Last week, her home was burglarized and $30,000 in jewelry stole. Her insurer would pay:

a. $30, b. $2, c. $5, d. 50% immediately and the remaining 50% upon replacement of the jewelry - correct answer b. $2, The IBC Homeowner's Forms provide for a 10% limit of insurance carried on the Dwelling to extended to Detached Private Structures. This 10% limit: a. Is a separate coverage limit, which is in additional to the amount of insurance provided on the dwelling? b. Is included within the amount of insurance provided on the dwelling c. Is available only where the amount of insurance provided on the dwelling is used up d. Is subject to co-insurance required - correct answer a. Is a separate coverage limit, which is in additional to the amount of insurance provided on the dwelling? Personal Property insured on all IBC Homeowners forms is insured a. World wide b. Anywhere in Canada, Mexico, or the continental United States c. Anywhere in North America excluding Mexico d. Only at the location described on the Coverage Summary Page - correct answer a. World wide All of the following losses to property are excluded under the IBC Homeowners Comprehensive Form except one. Pick the Exception: a. Sporting equipment where loss due to use b. Loss or damage caused by birds, vermin, rodents, or insects c. Breakage of fragile or brittle articles d. Smoke from a fireplace - correct answer d. Smoke from a fireplace Which is the following is correct? a. A condominium unit owner must insure his portion of the common elements of the building b. A condominium unit owner owns the space inside his unit, his contents, and any improvements bought or installed by himself c. A condominium corporation never owns the land on which the building stands d. The condominium agreements makes unit owners responsible for caused to common elements - correct answer b. A condominium unit owner owns the space inside his unit, his contents, and any improvements bought or installed by himself Which of the following types of property is usually not subject to special limits of liability? a. Business instruments

b. Philatelic property c. jewelry d. Flatware - correct answer d. Flatware Under the Homeowners policy form, who is not an insured? a. Minor aged foster child b. Common spouse of six months c. named insured d. spouses live in mother - correct answer b. Common spouse of six months Which item is not consider "dwelling" under the Homeowners policy? a. Permanently installed swing set b. Outdoor swimming pool c. Storage Shed d. Building Materials on the adjacent premises - correct answer c. Storage Shed Under the homeowners policy, windstorm will cover only one of the following: a. Damage to outside porch due to weight of melting ice or snow b. Damage caused by a leaking roof c. Damage caused by rain pouring into open window d. Damage to storm door when wind blew it off the hinges - correct answer d. Damage to storm door when wind blew it off the hinges Which of the following would be covered under additional living expenses? (Homeowners) a. Cost of accommodations at a four-star hotel b. Cost of accommodations for Florida vacation c. Cost of mobile home rental d. Cost of accommodations for pet - correct answer d. Cost of accommodations for pet Under a homeowners form, outdoor trees, shrubs and plants are insured for: a. Maximum of 10% if the amount of insurance on the dwelling b. Building amount c. Maximum 20% of the amount of insurance on the dwelling d. Maximum amount of $500 per tree, shrub, or plant - correct answer d. Maximum amount of $500 per tree, shrub, or plant Which water loss will be covered by a homeowner's policy? a. Insured left bathtub faucet running b. Water seeped through basement walls in low lying areas

c. piped burst from freezing while insured were on one-week vacation is mexico d. sewer backup in basement - correct answer a. Insured left bathtub faucet running Loss or damage caused by freezing an automatically covered where the insured has not been away from the premises for more than: a. one day b. two days c. three days d. four days - correct answer d. four days Which of the following require a separate policy or endorsement in addition of a homeowners policy? a. personal liability b. coverage for an outbuilding on the property c. Jewelry and furs over $2,000 in value d. Personal Property Temporarily removed - correct answer c. Jewelry and furs over $2,000 in value Which loss will not be covered by the Comprehensive Homeowners policy? a. Carpet is worn out from years of use b. Flood damage c. Structural damage caused by earth settling d. All of the above - correct answer d. All of the above The rate on which the base rate is set is determined by all but which one? a. The type of construction b. The credit rating of the insured c. The claims history of similar types of risk d. The type of fire protection in the area - correct answer b. The credit rating of the insured Under the terms of the fire policy, property which is necessarily removed to prevent further loss or damage is specified as being covered at the new location: a. For seven days or until the policy expires if this is less than seven days b. For seven days, but only if the removal permit is attached c. For a reasonable time. d. Until the original location is repaired - correct answer a. For seven days or until the policy expires if this is less than seven days The rate on a commercial property insurance policy would NOT be affected by:

a. The type of construction b. The type of business and processes involved c. Fire Protection d. The length of time applicant has remaining on building lease - correct answer d. The length of time applicant has remaining on building lease Under a commercial property insurance policy, the following item would not be considered as equipment a. Packing and Wrapping b. Portable "work stations" and wall dividers c. Microwave oven located in staff room for employees' use d. Office furnishings situated in owners' private office - correct answer a. Packing and Wrapping Our client, a Doctor, becomes the tenant of a building formerly occupied by a craft shop. Upon taking possession, he makes several improvement and betterments to the interior in order to suit his own business. We would include the value of such improvements and betterments under the amount of insurance on: a. Stock b. Equipment c. Building d. Personal Property - correct answer b. Equipment A building worth $360,000 is insured for $90,000 and the policy contains an 80% co- insurance clause. A fire caused $72,000 damage. The insured will cover: a. $22, b. $72, c. $90, d. $57,600 - correct answer a. $22, A building worth $200,000 is insured for $125,000 and the policy contain an 80% co- insurance clause. A fire causes the total building to be destroyed. The insured will recover: a. $97,662. b. $78,125. c. $100,000. d. $125,000.00 - correct answer d. $125,000. The Reinstatement Clause contained in most policies of commercial property insurance provides that: a. Coverage limits are automatically re-instated after an insured loss

b. Coverage, which is suspended due to the breach of policy conditions, is automatically re-instated when that breach is corrected c. Coverage, which has been terminated by the insurer, may be re-instated at the request of the insured upon application to the insurer in writing d. Property lost or damaged shall be reinstated with equivalent property of like kind and quality - correct answer a. Coverage limits are automatically re-instated after an insured loss Under a policy of insurance, a "deductible" is generally: a. Payable by the insured only if he is responsible for loss b. Payable by the insured only where the insurer disputes the amount of its liability for the loss c. Payable by the insured in all situations where the insured peril has an applicable deductible d. The responsibility of the broker - correct answer c. Payable by the insured in all situations where the insured peril has an applicable deductible Co-Insurance clause are designed to: a. Prevent the change of a total loss b. Transfer part of the risk to another insurer c. Discourage the insured from gambling on suffering only a partial loss d. Penalize the insurance in the event of over insurance - correct answer c. Discourage the insured from gambling on suffering only a partial loss Which of the following statement is correct in connection with the 80% co-insurance clause? a. It restricts the insurance payable to less than 80% of the actual cash value of the property b. The insured can collect only 80% of any loss c. If the amount of insurance is less than 80% of the value of the property, payment may be less than actual loss d. The amount of insurance carried must, by law, be not less than 80% of the value of the property - correct answer c. If the amount of insurance is less than 80% of the value of the property, payment may be less than actual loss Which of the following statements is true when a Standard Mortgage Clause is attached to the policy? a. The insurer could be called upon to pay a loss to the mortgage, even though the Insured violated a policy condition b. The mortgage is not required to advise the insurer of any material change in the risk known to him

c. The insurer may cancel the policy at any time by providing the mortgage with seven days notice of cancellation by registered mail d. Neither the insured nor the insurer may cancel the policy until the mortgage has been paid off - correct answer a. The insurer could be called upon to pay a loss to the mortgage, even though the Insured violated a policy condition Our insured has a commercial property insurance policy to which a replacement cost endorsement is attached. to qualify for settlement on a replacement cost basis, this endorsement requires that ALL of the following obligations, except one, be complied with by the insured. pick the exception: a. Replacement shall be effected by insured with due diligence and dispatch b. Replacement shall be on the same site or an adjacent site c. Replacement shall commence within 45 days of insurer agreeing to pay the loss d. payment of the loss on the replacement cost basis shall be provided only after the insured has stated to replace the property - correct answer c. Replacement shall commence within 45 days of insurer agreeing to pay the loss Which of the following statement is TRUE with respect to a boiler and machinery policy? a. Damage to the insured's own property is excluded b. The insured can purchase "inspection service" for an additional premium c. The insurer may suspend insurance at any time if the equipment is unsafe d. Business interruption and bylaws coverage are automatically included - correct answer c. The insurer may suspend insurance at any time if the equipment is unsafe There are very few exclusions to coverage provided by a Glass Insurance Policy. Three common exclusions are: a. Smoke, fire and nuclear energy hazard b. Fire, windstorm, nuclear energy hazard c. fire, windstorm and war d. Fire war and nuclear energy hazard - correct answer d. Fire war and nuclear energy hazard Crime policies define certain terms as they relate to coverage. The broadest meaning is given to: a. Burglary b. Theft c. Hold-up d. Robbery - correct answer b. Theft Safe Burglary insurance covers all of the following losses except one. Pick the exception:

a. Damage to premises resulting from a safe burglary b. Damage to contents of safe, which was blasted open c. Theft of money from a locked safe, which has been opened by someone who knew the combinations d. Removal of the entire safe and it's contents - correct answer c. Theft of money from a locked safe, which has been opened by someone who knew the combinations The Earnings Forms of Business Interruption coverage: a. Commence at the time of the loss and cease once the premises have been physically rehabilitated b. Commence at the time of the loss and continue to provide coverage until such time as turnover has been restored to level it would have been if the loss had not occurred. c. Included loss of profit due to damage to finished stock d. Limit the period of indemnity to correspond with the term of the policy - correct answer a. Commence at the time of the loss and cease once the premises have been physically rehabilitated An Extra Expense Policy: a. Is the same as a Gross Earnings Form b. Is a simple, inexpensive policy used for small risks c. Provides income after a loss for small business d. Pays additional expenses needed to keep a business going during the period of restoration after a loss - correct answer d. Pays additional expenses needed to keep a business going during the period of restoration after a loss The basic principle behind Business Interruption Insurance is: a. To restore the building to the condition that was in before the loss b. To find a place for the employees to work during the period that that business is out of operation c. To restore the income that would have been earned if the business had not been interrupted d. To maintain a higher level of operation during the period of repaid than existed prior to the loss - correct answer c. To restore the income that would have been earned if the business had not been interrupted If an architect's drawings are destroyed in a fire, the cost of redrafting them would be covered by: a. Electronic Data Processing Policy (EDP) b. Valuable Papers and Records Policy c. Broad Form Policy d. Accounts Receivable Policy - correct answer b. Valuable Papers and Records Policy

Our insured stores a vacuum cleaner, a floor polisher, and cleaning materials at his business for general maintenance of the building. When determining the values for insurance, should be include the amount for these items under: a. building b. stock c. equipment d. cleaning supplies - correct answer a. Building A named perils form would cover which loss: a. damage to the carpet resulting from sewer back up b. damage to the walls resulting from an earthquake c. damage to the building resulting from an enemy military bomb d. damage to the building resulting from the furnace backing up, sending smoke through the building - correct answer d. damage to the building resulting from the furnace backing up, sending smoke through the building Materials used for packaging are considered: a. building b. stock c. equipment d. common carrier - correct answer b. stock He had a policy for $70,000 instead of the $100,000 actual cash value. His policy had an 80% co-insurance clause. If a total loss occurs, how much will he be paid? a. $100, b. $87, c. $80, d $70,000 - correct answer d. $70, Your insured had a partial loss of $20,000. He had a policy for $70,000 instead of the $100,000 actual cash value. His policy had an 80% co-insurance clause. How much will he be paid? a. $25, b. $20, c. $17, d. $14,000 - correct answer c. $17, Which is not a common characteristic of business interruption policies? a. claim can be made where civil authority interrupts business

b. loss occurs to insured property by an insured peril before business interruption claim be made c. policy will be paid for expediting expense to reduce total loss d. indemnity period is limited by policy expiry date - correct answer d. indemnity period is limited by policy expiry date Under the business interruption form, the period of indemnity is limited to the expiry of the indemnity period or when net income is restored to the level it would be if the loss had not occurred: a. earnings b. profits c. extra expense d. rental value - correct answer d. profits The reinstatement clause of a fire policy means: a. The insured will have the same amount of insurance on the property as he did immediately prior to the loss b. If the insured will have to pay the full earned premium after cancellation for the policy to be in force c. The insured policy limit will not be reduced by the amount of his losses until renewal d. when the insured pays an additional premium after suffering a loss, his coverage will be returned to the amount he had immediately before the loss - correct answer a. The insured will have the same amount of insurance on the property as he did immediately prior to the loss The required under a locked vehicle warranty is: a. That if your vehicle is not locked there will be no vandalism coverage b. That only property that is in a totally enclosed locked vehicle will be covered for loss by theft, provided there are signs of forcible entry c. That property left in a convertible with the top down will be covered d. none of the above - correct answer b. That only property that is in a totally enclosed locked vehicle will be covered for loss by theft, provided there are signs of forcible entry Glass insurance provides for coverage under the following condition: a. Accidental breakage b. war c. scratching or marring d. fire - correct answer a. Accidental breakage The owner leaves this night deposit bag on his desk while he closes shop for the day. When he returns to the desk, the bag is missing. He will claim for the loss under which form of crime coverage?

a. Burglary b. robbery c. kidnapping d. none of the above - correct answer b. None of the above Liability policies are covered with matters of civil liability. Civil Law addresses the following areas: a. criminal law b. tort legal liability and contractual liability c. legal liability d. contractual liability - correct answer b. tort legal liability and contractual liability which of the following is not a major type of liability exposure: a. personal liability b. fraud liability c. automobile liability d. professional liability - correct answer b. fraud liability "Negligence" is: a. Failing to do what a reasonable person would do in a given situation b. Acting prudently, having regard to the circumstances c. willfully disobeying the law d. aiding and abetting another person to commit a felony - correct answer a. Failing to do what a reasonable person would do in a given situation All of the following "elements" except one, are required to be present if the legal liability of our clients is to be proven. Pick the exception: a. Client owed a duty b. Duty breached as a result of negligence c. negligent actions proximate cause of damages d. Damages unforeseeable - correct answer d. Damages unforeseeable The occupier of a property owes the greatest duty of care to: a. children b. invitees c. trespassers d. licensees - correct answer a. children

There are a number of established "legal precedents" which will affect our client's legal liability for damage. Generally, our insured will be liable for damages caused in all of the following instances except one. Pick the exception: a. Domestic animals b. escape of dangerous things c. acts of his children over 10 years of age d. acts of an employee acting within the scope of his employment - correct answer c. acts of his children over 10 years of age Our insured hires an independent contactor to perform renovations to her building. Our insured will be deemed to be liable for the acts of an "independent" contractor in all of the following instances except one. Pick the exception: a. Where insured hires and fires the employees of the independent contractor b. where insured supplies "blue prints" and leaves a contractor to his own resources to arrive at the desired results c. where insured supplies tools and materials from which damages arose d. Where insured provides on-site direction and supervision of work - correct answer b. where insured supplies "blue prints" and leaves a contractor to his own resources to arrive at the desired results An "occurrence basis" liability policy is "broader" than a liability policy issued on an "accident basis". An occurrence basis policy: a. provides coverage only for a sudden and unusual event b. provides coverage for damage caused by continuous and repeated exposure to substantially the same harmful conditions c. provides excess insurance over other existing liability policies d. Provides coverage for bodily injury and property damage caused intentionally - correct answer b. provides coverage for damage caused by continuous and repeated exposure to substantially the same harmful conditions Generally, the insuring agreement in policies of liability insurance contains all of the following conditions of coverage except one. pick the exception: a. bodily injury or property damage must have been suffered by a third party b. the amount of any damages awarded will include separate amount for punitive, exemplary and compensatory damages suffered c. The amount of any damages awarded is restricted to those, which are compensatory in nature d. the insured must have legally liable for damage - correct answer b. the amount of any damages awarded will include separate amount for punitive, exemplary and compensatory damages suffered

which of the following is NOT covered under the supplementary payments section of a liability policy a. defence of the insured against claims and suites for negligence. b. expenses to help with the defense c. interest on the insured portion of the judgement d. the amount of the actual judgment - correct answer d. the amount of the actual judgment a comprehensive personal liability police protects against claims for the bodily injury and property damage arising out of: a. personal acts of insured, carelessness of insured's children and ownership of certain typed of boats and motorized vehicles b. personal acts of the insured ownership of certain boats and ownership of automobiles c. personal acts of the insured, carelessness of insured's and default in payment of debts d. personal acts of the insured, poor up-keep of insured's dwelling and ice on the steps of the insured's business premises - correct answer a. personal acts of insured, carelessness of insured's children and ownership of certain typed of boats and motorized vehicles the voluntary property damage section of a homeowners liability of comprehensive personal liability excludes damage caused intentionally by an insured over the age of a. 12 years b. 18 years c. 21 years d. Majority, as determined in province in which insured resides - correct answer a. 12 years our insured's children are actively involved in the sport of water polo, our insured's regularly attend out of town competitions with their children, often staying in a hotel for a number of days. the comprehensive personal liability policy insures their liability for damage to the room they occupy arising out of the following loss(es) a. fire b. fire, lightning and specified types of explosion c. all risks d. fire, explosion, smoke, and water escape - correct answer d. fire, explosion, smoke, and water escape the following statement best describes the insurance coverage provided under "completed operations liability"

a. covers damages caused from deficiencies after work preformed within the policy territory b. covers all damages arising out of proven deficiencies in both products sold and work performed c. covers damages caused from deficiencies in work preformed anywhere in the world d. covers all damages arising out of proven deficiencies in the insured's work while such work is being preformed - correct answer a. covers damages caused from deficiencies after work preformed within the policy territory which of the following is not an element of tort? a. insured's negligence is the proximate cause of the damage b. the insured will know or should know that his actions could cause damage c. no actual damaged need to suffered d. insured must owe a duty to the claimant - correct answer c. no actual damaged need to suffered there are three degrees of care which can ne owed to individuals on your premises. what is the name given to guests? a. trespasser b. amigo c. invitee d. licensee - correct answer d. licensee in which of the following situations would the parent be responsible for their child's tort a. child employed by parents in meat market cuts another child's hand when using the meat saw b. damaged caused by killer dog being walked by child c. fire damage where child is usually allowed to play with matches d. all of the above - correct answer d. all of the above an example of strict liability is a. pet lion escapes and mauls neighbor b. emotional damage to child resulting from parental authority c. insured responsible for damaged caused by his auto even if he wasn't driving d. insured cuts off neighbor's flowers while mowing grass on property line - correct answer a. pet lion escapes and mauls neighbor employers liability will apply a. if employee uses employer's property without authorization for his own purpose b. if damaged are caused by a non-employee to whom the employee delegates part of his authority