C14 – Test your Knowledge, Multiple Choice

Question 1

The Law of Large Numbers states that the accuracy of predicting a future event is related to the

a. frequency of the past observations used
b. claims costs arising from past occurrences
c. size of the sample of past observations used
d. location of the type of risk

Answer 1

c. size of the sample of past observations used

Question 2

To increase limits or to lower deductibles, insureds in Manitoba can purchase extension insurance from

a. Auto Pak
b. Autopac
c. Auto Pak and private insurers
d. Autopac and private insurers

Answer 2

d. Autopac and private insurers

Question 3

What is the percentage priority in British Columbia that bodily injury claims have over property damage claims in respect to Priorities of Payment?

a. 20%
b. 50%
c. 75%
d. 90%

Answer 3

d. 90%

Question 4

Which of the following is considered carrying passengers for compensation or hire under the SPF1?

a. driving current or prospective clients
b. driving a domestic worker hired by the insured or the insured’s spouse
c. driving customers to and from locations such as airports or hotels, and on sightseeing excursions
d. driving children to and from school activities that are conducted within an educational program

Answer 4

c. driving customers to and from locations such as airports or hotels, and on sightseeing excursions

Question 5

In which of the following situations would Accident Benefits be provided by Autoplan:

a. Suicide
b. attempted suicide
c. cyclists injured in a motor vehicle accident
d. motor vehicle involved in a race or speed test

Answer 5

c. cyclists injured in a motor vehicle accident

Question 6

The primary objectives of any special industry program for insurance availability should include

a. equal sharing of the insurance market by all insurers
b. equitable sharing of the residual market by all insurers
c. proportional sharing of the insurance market by all underwriters
d. all of the above

Answer 6

b. equitable sharing of the residual market by all insurers

Question 7

The QPF 1 is NOT suitable for covering which of the following?

a. private passenger vehicles
b. recreational vehicles
c. garage risks
d. motorcycles

Answer 7

c. garage risks

Question 8

An insurer’s best defense against absolute liability claims is to

a. hire effective legal representation
b. use the defense of misrepresentation
c. ensure you prove onus probandi
d. do research before binding coverage

Answer 8

d. do research before binding coverage

Question 9

Subrogation is the transfer of legal rights to the

a. insurer
b. insured
c. third party injured
d. crown

Answer 9

a. insurer

Question 10

While driving home from his job in Toronto, Joe hits a pothole in the road and loses control of his vehicle, crashing into a third party’s fence. Joe has an OAP 1 with Collision coverage.

What part of the policy would pay to repair the third party’s fence?

a. DCPD coverage
b. Third Party Liability coverage
c. Loss or Damage coverage
d. Uninsured Automobile coverage

Answer 10

b. Third Party Liability coverage

Question 11

While driving to work, Dominique is involved in an accident with another vehicle, in which the other driver is 100% at fault. There were several individuals who witnessed the accident take place. The accident caused serious damage to the Dominique’s vehicle, which was covered by his own insurer.

In this scenario who is considered the first party?

a. Dominique
b. the witnesses
c. the insurance company
d. the other driver

Answer 11

a. Dominique

Question 12

Which of the following is an example of a temporary substitute automobile?

a. you test drive a new vehicle when shopping for cars
b. you borrow your wife’s vehicle to go to the grocery store
c. a friend lends you their vehicle while your vehicle is in for repairs
d. you lease a vehicle for six months while working overseas in another country

Answer 12

c. a friend lends you their vehicle while your vehicle is in for repairs

Question 13

One of the Accident Benefits that Autoplan provides is

a. funeral expenses
b. tax benefits
c. legal expenses
d. life benefits

Answer 13

a. funeral expenses

Question 14

Which of the following provinces has NOT established a rate board to control automobile insurance rates?

a. New Brunswick
b. Newfoundland
c. Nova Scotia
d. Saskatchewan

Answer 14

d. Saskatchewan

Question 15

In New Brunswick, Uninsured Motorist coverage is

a. separate from Accident Benefit coverage
b. an optional coverage
c. included in Accident Benefit coverage
d. included in Third Party Liability coverage

Answer 15

a. separate from Accident Benefit coverage

Question 16

As per the Insurance (Vehicle) Act, B.C. residents that are injured or killed, or whose property is damaged by an uninsured or unidentified driver is provided with automatic coverage of up to

a. $ 200,000
b. $ 250,000
c. $ 500,000
d. $ 1,000,000

Answer 16

a. $ 200,000

Question 17

Under DCPD coverage in New Brunswick, fault is determined using

a. fault determination rules
b. the Driver’s Fault Chart
c. liability rules
d. court decisions

Answer 17

a. fault determination rules

Question 18

A car year is the measurement of

a. an insurer’s exposure
b. the year the insured vehicle was made
c. the condition of the insured vehicle
d. the mileage on the insured vehicle

Answer 18

a. an insurer’s exposure

Question 19

Other than the insurer’s reinsurance treaties, limits for Section A—Liability Coverage stated in the limit table are based on the

a. extent to which the insurer is willing to expose its own net account
b. types of classes and risks that the insurer will write
c. total amount of premium collected
d. the insurer’s yearly profit projections

Answer 19

a. extent to which the insurer is willing to expose its own net account

Question 20

Under Prescribed Condition 8, action or proceedings against the insurer may be brought within

a. 1 year from the occurrence of loss or damage
b. 2 years from the occurrence of loss or damage
c. 3 years from the occurrence of loss or damage
d. 5 years from the occurrence of loss or damage

Answer 20

b. 2 years from the occurrence of loss or damage

Question 21

If loss or damage occurs to an insured’s vehicle a proof of loss should be submitted to the insurer 90 days from when the

a. accident occurred
b. claim was reported
c. damage was assessed
d. police report occurred

Answer 21

a. accident occurred

Question 22

If the insurer pays the actual cash value of the automobile or exercises its option to replace it, who owns any resultant salvage?

a. the insurer
b. the insured
c. the government
d. it is destroyed

Answer 22

a. the insurer

Question 23

Hector purchased a basic Autoplan coverage with Collision and Comprehensive coverage. While driving to the store on a rural road, Hector collided with a deer. The deer was fine, but there was $2,000 damage to Hector’s vehicle.

Which of the following subsections would cover Hector’s loss?

a. specified perils
b. comprehensive
c. collision
d. additional coverage

Answer 23

b. comprehensive

Question 24

Computer programs that have been programmed to handle some risk selection through flagging the underwriter on the screen are known as

a. flagging underwriting systems
b. risk selection underwriting systems
c. intelligent underwriting systems
d. broad range underwriting systems

Answer 24

c. intelligent underwriting systems

Question 25

What is the name of the Alberta risk sharing pool that allows automobile insurers to transfer any eligible private passenger automobile insurance exposure they underwrite, up to a pre-defined maximum?

a. grid pool
b. non-grid pool
c. “first chance” risk sharing pool
d. mobile pool

Answer 25

b. non-grid pool

Question 26

In BC, a verbal application of insurance can only be completed

a. over the phone
b. with proof of ones vehicle registration
c. accompanied by a signed written application
d. in a face-to-face interview in the agent or broker’s office

Answer 26

d. in a face-to-face interview in the agent or broker’s office

Question 27

What usual function of underwriting is considered illegal for government insurers in British Columbia?

a. selling endorsement coverage
b. selling coverage extensions
c. declining basic insurance coverage
d. lowering insurance rates

Answer 27

c. declining basic insurance coverage

Question 28

Basic Autoplan insurance includes coverage for

a. loss or damage, third party liability, accident benefits
b. loss of use, third party liability, accident benefits
c. third party liability, accident benefits, first party coverage
d. third party liability, accident benefits, second party coverage

Answer 28

c. third party liability, accident benefits, first party coverage

Question 29

A minimum liability limit of $500,000 is required in

a. Alberta
b. Newfoundland
c. Nova Scotia
d. Prince Edward Island

Answer 29

c. Nova Scotia

Question 30

Under the CLEAR system, rate groups for vehicles are based on their

a. claims costs
b. MSRP
c. consumer appeal
d. name brand

Answer 30

a. claims costs

Question 31

Residual markets are

a. special programs to ensure insurance availability for all unlicensed drivers
b. sponsored by government insurers
c. special programs to ensure insurance availability for risks that are less desirable/more hazardous from an underwriting standpoint
d. special programs to encourage insurance for risks that are more desirable/less hazardous from an underwriting standpoint

Answer 31

c. special programs to ensure insurance availability for risks that are less desirable/more hazardous from an underwriting standpoint

Question 32

Crown corporations provide automobile insurance in which provinces?

a. Saskatchewan and Manitoba
b. British Columbia and Alberta
c. Manitoba and Ontario
d. Saskatchewan and Alberta

Answer 32

a. Saskatchewan and Manitoba

Question 33

Under Own Damage coverage, deductibles do NOT apply to losses resulting from

a. fire, hail, or theft of the entire vehicle
b. fire, lightning, or theft of the entire vehicle
c. fire, windstorm, or theft of the entire vehicle
d. fire, earthquake, or theft of the entire vehicle

Answer 33

b. fire, lightning, or theft of the entire vehicle

Question 34

Lawsuits for motorists and injured passengers are banned in

a. Alberta
b. British Columbia
c. Prince Edward Island
d. Quebec

Answer 34

d. Quebec

Question 35

In respect to automobile accidents, the onus of proof lies with the

a. crown
b. defendant
c. plaintiff
d. evidence

Answer 35

c. plaintiff

Question 36

Precedent is

a. judge-made-law
b. established by the Order in Council
c. established by the Lieutenant Governor in Council
d. a statute governing British Columbia Automobile Insurance

Answer 36

a. judge-made-law

Question 37

Uninsured Motorist coverage is provided under Accident Benefits Coverage in

a. Alberta
b. Newfoundland
c. Nova Scotia
d. Prince Edward Island

Answer 37

a. Alberta

Question 38

The higher the deductible

a. the lower the premium
b. the higher the premium
c. the lower the risk absorbed by the insured
d. the higher the chance of loss

Answer 38

a. the lower the premium

Question 39

What is the limit of basic Underinsured Motorist Protection under Autoplan?

a. $ 200,000
b. $ 500,000
c. $ 1,000,000
d. $ 2,000,000

Answer 39

c. $ 1,000,000

Question 40

In which of the following provinces are Accident Benefits optional?

a. Alberta
b. Newfoundland
c. Nova Scotia
d. Prince Edward Island

Answer 40

b. Newfoundland

Question 41

Which of the following provinces has a risk sharing pool that is designed to provide affordable automobile insurance to operators with less then six years of driving experience and clean driving records?

a. Alberta
b. British Columbia
c. New Brunswick
d. Nova Scotia

Answer 41

c. New Brunswick

Question 42

The Fichier central des sinistres automobile is

a. a fraud tracking system
b. an automobile claims tracking system
c. a property damage compensation fund
d. a risk sharing pool

Answer 42

b. an automobile claims tracking system

Question 43

Specified Perils coverage is typically sold as a combination with which type of coverage?

a. all perils
b. comprehensive
c. collision coverage
d. additional coverage

Answer 43

c. collision coverage