Chapter 4 Flashcards
In an insurance transaction, a broker owes a primary duty to:
a) The insurer.
b) The brokerage owner.
c) The clients
d) The insurance company.
C
Which of the following duties does a broker owe to insurers they represent?
a) Concealing premiums
b) Telling the truth about risks to the underwriter and not withholding key information
c) Withholding key information and not telling the truth about risks to the underwriter m.
d) Brokers do not owe a duty to insurers.
B
Concealing key risk information from an insurer:
a) Is a good way to serve a client’s best interests.
b) Can usually be justified.
c) Could result in a broker losing their job.
d) Is the correct way to save client money.
C
Why are brokers sometimes referred to as “frontline underwriters”?
a) Brokers are licensed as risk managers.
b) Underwriters have the first opportunity to assess a client’s risk.
c) Brokers have the first opportunity to speak with underwriter.
d) Brokers have the first opportunity to assess a client’s risk.
D
Which of the following statements regarding errors and omissions (E&O) is incorrect?
a) The courts impose a high standard of duty of care on brokers.
b) The courts do not impose a high standard of duty of care on brokers.
c) When a broker makes a mistake on a policy, the policy holder could suffer a financial loss.
d) The best defence against an E&O claim is a well - documented file.
B
Which of the following is not a cause of an E&O claim against a broker or brokerage?
a) Failure to advise underwriters of policy exclusions affecting coverage.
b) Failure to recommend adequate coverage for the client’s needs
c) Failure to place coverage or placing it too late.
d) Mistakes in coverage.
A
Monika declines her broker’s recommendation to buy replacement cost coverage on her building.
To reduce the chance of an E&O claim, the broker should:
a) Tell their manager.
b) Send an email to the underwriter.
c) Document Monika’s decision in her file and send a letter confirming the same.
d)Tell Monika it is against the law to refuse the broker’s advice.
C
A broker contract is:
a) A written agreement between an insurance company and a brokerage office.
b) An insurance policy.
c) An E&O policy
d) An employment agreement between the brokerage and each individual employee.
A
Selling insurance is mostly about:
a) Providing a quote for coverage requested, no more no less.
b) Filling out application and taking payment.
c) Understanding the client’s re and recommending appropriate coverage.
d) Satisfying the insurance company’s needs
C
Which statement best describes a general insurance needs assessment?
a) A physical characteristic of a risk which may give rise to a loss.
b) Asking questions to understand the health of the person to be insured.
c) Asking questions to understand the nature of the risk and the client’s objectives when buying insurance.
d) Asking sufficient questions to complete an application form.
C
