Book 1 Study 1

Question 0

True or False : Indemnity is what you purchase when you contract for insurance.

Answer 0

True

Question 1

True or False : A broker is an intermediary.

Answer 1

True

Question 2

True or False : The law of large numbers allows an insurer to determine who will actually have a loss.

Answer 2

False.

Question 3

True or False : Insurance is the pooling of many premiums to pay a few losses.

Answer 3

True.

Question 4

True or False : Insurance premiums are a minor factor in the Canadian economy.

Answer 4

False.

Question 5

True or False : Negligence is neglecting to do something a reasonable person would do.

Answer 5

True.

Question 6

True or False : A liability risk can arise from a persons conduct.

Answer 6

True.

Question 7

True or False : Spreading of risk is the secondary function of insurance.

Answer 7

False.

Question 8

True or False : Risk is the certainty of loss.

Answer 8

False

Question 9

True or False : Pure premium does not take inflation and profit into account.

Answer 9

True

Question 10

True or False : Consideration and actual cash value are the same thing.

Answer 10

False

Question 11

True or False : Frayed Carpet on stairs constitutes a physical hazard.

Answer 11

True

Question 12

True or False : Only speculative risk may be insured.

Answer 12

False

Question 13

True or False : Statistics of past losses form an important tool in the determination of loss.

Answer 13

True

Question 14

True or False : In an insurance contract the insurer is the first party.

Answer 14

False

Question 15

True or False : The availability of insurance has little effect on credit.

Answer 15

False

Question 16

True or False : A fortuitous even is an accidental happening.

Answer 16

True

Question 17

True or False : Hail is a peril.

Answer 17

True

Question 18

True or False : The premium is the price of a unit of insurance.

Answer 18

False

Question 19

True or False : The loss of a valuable piece of jewellery is an example of a personal risk.

Answer 19

False

Question 20

True or False : The exclusions determine the coverage in all risk policies.

Answer 20

True

Question 21

True or False : Moral hazard relates to the subject matter of insurance.

Answer 21

False

Question 22

True or False : To assume risk means to keep it and bear the losses yourself.

Answer 22

True

Question 23

True or False : Using tamperproof locks is one way of transferring risk.

Answer 23

False

Question 24

True or False : The primary function of insurance is loss prevention activities.

Answer 24

False