Book 2 Study 4

Question 1

Under the terms of a fire policy which of the following is NOT part of the definition of fire?

A) ignition.
B) something in the nature of an accident.
C) scorching.
D) something on fire which ought not to be on fire.

Answer 1

C) scorching.

Question 2

A hostile fire is

A) intentionally kindle.
B) overheated stove.
C) a fire in a place provided for it.
D) a fire that escapes the boundaries provided

Answer 2

D) a fire that escapes the boundaries provided

Question 3

Every policy that insures the peril of fire must also include, subject to certain limitations, insurance for losses caused by

a) lightning and windstorm.
b) all smoke and water damage.
c) explosion and lightning damage.
d) vandalism and vehicle impact.

Answer 3

c) explosion and lightning damage.

Question 4

An extended coverage endorsement attached to a fire policy

a) adds coverage for more perils.
b) increases the amount of coverage under the policy.
c) adds coverage for additional property.
d) all of the above.

Answer 4

a) adds coverage for more perils.

Question 5

Which of the following is not an extended coverage peril?

a) water escape.
b) smoke.
c) explosion.
d) earthquake.

Answer 5

d) earthquake.

Question 6

Which of the following does NOT enter into the calculation of the amount an insurer will pay for a loss?

a) the actual cash value of the property.
b) the amount of the mortgage.
c) the insured’s interest in the property.
d) the amount of applicable insurance.

Answer 6

b) the amount of the mortgage.

Question 7

An example of an insurable loss under a fire policy is:

a) a fire loss arising out of a revolution.
b) vandalism to a vacant warehouse.
c) damage to an automobile when the garage roof collapses due to snow.
d) smoke damage to the insured’s newly painted house, cause by a fire next door.

Answer 7

d) smoke damage to the insured’s newly painted house, caused by a fire next door.

Question 8

The Statutory condition relating to misrepresentation does NOT deal with

a) honesty relating to the nature of the risk to be insured.
b) false description of the property to be insured.
c) omission of the important facts relating to the property.
d) claims.

Answer 8

d) claims.

Question 9

An insurance policy may be terminated by:

a) a mortgagee at any time.
b) the insurer, subject to proper notice.
c) the insured, subject to proper notice.
d) an agent of the insurer.

Answer 9

b) the insurer, subject to proper notice.

Question 10

According to policy Statutory conditions, after a loss an insured

a) has 30 days to report the loss.
b) is not legally required to open his books of account to the insurer.
c) does not have to disclose insurance with other insurance companies.
d) must provide the insurer with a proof of loss as soon as possible.

Answer 10

d) must provide the insurer with a proof of loss as soon as possible.

Question 11

Statutory Conditions do NOT deal with:

a) salvage.
b) right of access to premises after loss.
c) change of title of insured property.
d) premium.

Answer 11

d) premium.

Question 12

Quebec General Conditions

a) are identical to Statutory Conditions in other provinces.
b) are sections of the Civil Code reproduced in insurance policies.
c) are applicable only to fire insurance risks.
d) set down the rights and responsibilities of insured and insurers under the policy.

Answer 12

b) are sections of the Civil Code reproduced in insurance policies.

Question 13

Which of these statements is FALSE?

a) Insurers must pay an insured cash if he/she so desires, after a loss.
b) Insurers may decide to repair or replace the damaged property.
c) If an insurer decides to repair, work must be commenced within a stated time after proof of loss is received.
d) Only the insurer has the option of deciding how indemnity will be delivered.

Answer 13

a) Insurers must pay an insured cash if he/she so desires, after a loss.

Question 14

With respect to Quebec General Conditions relating to subrogation, which one of these statements is TRUE?

a) The insurer has subrogation right against all third parties.
b) Insureds can prejudice their rights of recovery from their own insurers if through their acts their insurer’s subrogation rights are prejudiced.
c) The insurer only has subrogation rights against members of the insured’s household.
d) All of the above statements are false.

Answer 14

b) Insureds can prejudice their rights of recovery from their own insurers if through their acts their insurer’s subrogation rights are prejudiced.

Question 15

Which of these statements is TRUE? In Quebec:

a) it is illegal to have two policies on the same property.
b) it is permissible to have tow policies on the same property if the perils insured are not identical.
c) if there are two policies on the same property, an insured can collect the total loss from one, subject to policy limits.
d) if there are two policies on the same property, an insured can only collect from each one the proportion of the loss that the sum insured bears to the total amount of insurance.

Answer 15

c) if there are two policies on the same property, an insured can collect the total loss from one, subject to policy limits.

Question 16

In which case would assignment of an insurance policy be automatic?

a) A sells cottage to B.
b) A gives cottage to B.
c) A goes bankrupt and B is appointed as trustee in bankruptcy.
d) In none of these cases.

Answer 16

c) A goes bankrupt and B is appointed as a trustee in bankruptcy.

Question 17

With respect to the Quebec General Conditions which of the following statements is TRUE?

a) Materiality is not defined in the conditions.
b) If one item of a pair is lost or damaged, the insurer will only pay half the total value.
c) Fire resulting from a volcanic eruption is not covered.
d) An insured may not sue his/her own insurer.

Answer 17

a) Materiality is not defined in the conditions.

Question 18

There are three general types of exclusions under insurance policies. Which item does NOT belong in this group?

a) Those that exclude losses that are considered to be uninsurable.
b) Those that exclude property that the insurer does not wish to insure.
c) Those that restrict or limit coverage.
d) Those that exclude property that can be insured under other types of policies.

Answer 18

b) Those that exclude property that the insurer does not wish to insure.

Question 19

If it is necessary to move property to protect it from loss, which one of these statements is TRUE?

a) Coverage is automatically terminated under the policy.
b) Coverage is for the remained of the policy term.
c) There is no coverage unless an endorsement is issued.
d) The amount of coverage available is the amount that is left over from what has already been incurred for the loss.

Answer 19

d) The amount of coverage available is the amount that is left over from what has already been incurred for the loss.

Question 20

Basic fire policies cover:

a) lightning damage to appliances if it results in a fire.
b) fire damage to a building during renovations under certain circumstances.
c) the increased cost of rebuilding a property because of a local by-law.
d) money, if the insured has the serial numbers of the bills.

Answer 20

b) fire damage to a building during renovations under certain circumstances.