Big C11 Cards Flashcards
Midterm + Multiple choice questions
Which type of risk can be insured?
Pure risk
Antoine opens up a new barber shop on a busy downtown street and expects to earn a big profit. What is this an example of?
Speculative risk
What is a peril?
Event that will give rise to a loss
What is an example of a proximate cause of loss?
Clare has a building and it collapses after being damaged and weakened by a raging fire in another building. Although the building collapsed, the fire next door directly precipitated the collapse and qualifies as the proximate cause of the loss
What is both a pre-loss and a post-loss objective of risk management?
Social responsibility
What is a simple definition of earnings?
Difference between revenues and expenses: the profits (net income) of a business
All costs associated with managing pure risk are known as what?
Cost of risk
What is an example of an organization practising social responsibility after a loss?
Deciding to maintain as many employees on the payroll as possible despite a major loss affecting a building and equipment
What method is commonly used to identify exposure?
Survey
What is an example of a peril?
Explosion resulting in fire
Insurance is based on the existence of:
Risk
What are the duties of a risk manager
Identifying loss exposures to prevent and reduce losses
Examples of loss prevention activities include which of the following?
- Installing anti theft protection devices on a vehicle
Which is the act enacted by the canadian gov that deals with fed licensing and supervision of insurance companies and solvency standards for insurers
The insurance companies act
What is at the heart of all gov reg
- To protect consumers
The highway traffic act deals with all of the following except 1
- Basic contents of a policy
Which of the following is an example of physical hazard
- Basic electrical wires
Telematics is one of the insurance initiative that
- Analyzes the exposure a client needs to manage and provide a plan of action manage the risk
The role of insurance intermediary is to
- Bring the client and the insurer in to a contractual relationship by arranging insurance
Which of the following is a non-profit org, funded by the insurance industry that responds to the claims of the policyholders when an insurer becomes insolvent
- Property and casualty insurance compensation corporation
The operation of an automobile at the legal speed limit is an example for
- A contract enforceable at law without agreement
A contract that is considered as never made or existed and which cannot stand up in court is termed as
- Void contract
Richard renovated the basement of his detached home….
- Material fact
What is the function of aid to credit
- Granters of credit like mortgage…
Which of the follow statement is true about the deductible in a policy
- Specifies the amount the insured must pay….
Silence where there is an obligation to speak is known as which of the following
- Concealment
Whose rights do statutory conditions in a property policy protect?
- Both the insured’s and the insurer’s rights
On the insurance application, suzzane….
- Misrepresentation
Standard of honesty greater than that usually required in most non-insurance contracts is known as which of the following
- Utmost good faith
Which of the following has the legal capacity to contract
- 20 yr old male buying a car
Who is the first party of an insurance contract
If a loss occurs under an insurance binder and before the policy has been issued, how will the insurer respond?
- Pay the claim in accordance….
Which of the following elements is unique to insurance contracts
- Utmost good faith
Federal insurance regulators have many priorities, which (1) of the following is the most significant of all?
- The financial stability and solvency of licensed insurance companies
In arranging a contract of insurance, an agent or broker is always required to do which of the following?
- Disclose all relevant material facts to the insurer
Which of the following is not a definition of “certificate of insurance”
- It does not certify the existence of insurance
Actual cash value is
- Replacement value less any accumulated depreciation
A document, issued by the superintendent of financial institutions, giving a company approval to carry on the business of insurance.
- Order of commencement
Remote cause is best defined as:
- A cause that is not proximate cause of loss and is separated from the proximate cause in a chain of events leading to a loss
Which of the following is an example of an indirect loss?
- Loss of rental income…
Which of the following situation is an example of insurable interest in property
- A homeowner whose personal property…
Which of the following describes the principle of indemnity
- To put back into the same financial position…
Which type of adjusters are independent…
Which of the following concepts upholds the principle of indemnity
- Insurable interest
When an insured property is not totally destroyed or lost and the property that remains has some value, what is this known as?
- Salvage
Which of the following best defines non-disclosure or concealment?
- An applicant for insurance withholds information pertinent to a risk
Which of the following is not included in the duties of a risk manager
- Acting as an in house legal counsel
The risk management process is used to ;
- Determine the exposures clients need to manage
What are the types of insurance that make up general insurance
- Property insurance and casualty insurance
Which part of an insurance policy states the perils insured against?
- Insuring agreements
What kind of offer is needed in order to establish a legally binding contract?
- the offer must be made and accepted
Which of the following statements is true for a sub policy
- The policy documents must be signed by the member of each participating insurer
What can be a consequence of the applicant misrepresenting material facts on the application for insurance?
- The loss could be denied or the insurance policy could be voided or canceled
Personal lines insurance may be written on a replacement cost basis which is:
- Replacement or repair of the damaged property as it cost at the time of the loss with property of like kind and quality, without a deduction for depreciation.
What must an insurer do if the insured cancels a policy mid-term
- Return the unearned portion of the insured’s premium
Which of the following is fundamental to the principle of utmost good faith?
- Duty of disclosure
Which statement best describes the mechanism of insurance?
- A large group of individuals contribute to a pool of funds to reimburse a member for a loss caused by some specific happening
Define the term peril
- An event that will give rise to a loss
What is the proximate cause of loss?
The immediate and effective cause of the loss
A tenant negligently caused a fire…
- Liability risk
Which of the following is an example of a professionals not employed by the insurance industry
- Sportsmen
Which of the following is an example of a document that fulfills the promise of coverage in an insurance contract?
- Certificate of insurance
A contract in which one party agrees to indemnify another party is
- An insurance contract
WHat is the correct process for terminating temporary insurance
- Exactly the same way as a policy
What is the term used for the person or firm requesting insurance
- Applicant
What is the claims department within an insurance company organized to do?
- Deliver the promise made to the consumer when the insurance policy was sold.
