GIE - C81 Midterm

Question 1

Risk is dealt with in a number of ways:

a) identify, reduce and retain
b) identify, measure and control
c) eliminate or reduce, assume or retain and transfer
d) eliminate and transfer

Answer 1

c) eliminate or reduce, assume or retain and transfer

Question 2

In the provinces with compulsory automobile plans, no policy is issued. Proof of insurance is a vehicle owner’s ______ ______ and/or a driver’s ______ .

a) registration, certificate, license
b) registration, passport, license
c) binder, certificate, license
d) passport, pink slip, license

Answer 2

a) registration, certificate, license

Question 3

Notice of loss cannot be given by:

a) Agent of the Insured
b) Employer without Insured
c) A person to whom any party of the insurance money is payable
d) A dependent

Answer 3

b) Employer without Insured

Question 4

With regards to Accident benefits “the insured” includes:

a) The named Insured
b) Any person who is involved in an accident with the insured automobile
c) Both of the above
d) None of the above

Answer 4

c) Both of the above

Question 5

The insured is known as:

a) The first party
b) The second party
c) The third party
d) the fourth party

Answer 5

a) The first party

Question 6

Fortuitous means:

a) Accidental
b) Future
c) Strong
d) In the past

Answer 6

a) Accidental

Question 7

Which of the following is not true with regards to a policy?

a) It is written evidence of a policy
b) It contains terms and conditions of the policy
c) It identifies the named insureds
d) It does not expire.

Answer 7

d) It does not expire.

Question 8

What is risk?

a) Insurance
b) The chance of loss
c) Indemnity
d) Gambling

Answer 8

b) The chance of loss.

Question 9

Who is not a legal party to the policy?

a) First Party
b) Second Party
c) Third Party
d) The Insured

Answer 9

c) Third party

Question 10

The man function of Insurance is to?

a) Give everyone total security
b) Spread the losses of a few among the many
c) Spread the losses of the many among the few
d) Eliminate risk

Answer 10

b) Spread the losses of a few among the many

Question 11

A peril is?

a) A condition attributed to the human element.
b) A condition which makes a loss more severe.
c) An event which may cause a loss to occur.
d) A mental attitude.

Answer 11

c) An event which may cause a loss to occur.

Question 12

Rate is?

a) The total amount an insured will pay.
b) The cost of policy.
c) Always expressed as percentage.
d) The price of a unit of insurance.

Answer 12

d) The price of a unit of insurance.

Question 13

Which of the following is not a way to spread risk?

a) Insuring a large number of risks.
b) Insuring different types of risks.
c) Declining as many risks as possible.
d) Insuring risks in a variety of locations

Answer 13

c) Declining as many risks as possible.

Question 14

Which is not a category of general insurance?

a) Business interruption.
b) Crime
c) Accident
d) Life

Answer 14

d) Life

Question 15

Intermediaries are:

a) Only concerned with selling.
b) Responsible for handling all claims.
c) The physical link between the insured and the insurer
d) The physical link between the insurer and the adjuster

Answer 15

c) The physical link between the insured and the insurer

Question 16

Agents/Brokers must:

a) Act within the terms of their contract.
b) Remit premiums in a specified time.
c) Advise the insurer of all claims.
d) All of the above.

Answer 16

d) All of the above.

Question 17

A binder:

a) Must be in writing
b) Is a confirmation of coverage.
c) Must be an oral agreement.
d) Is issued by the insured.

Answer 17

b) Is a confirmation of coverage.

Question 18

Which is not an essential element of good broker/client service?

a) Good claims handling.
b) Good reputation.
c) Adequate range of coverage.
d) Adequate range of advertising.

Answer 18

d) Adequate rang of advertising.

Question 19

Insurers may be divided into 3 major groups, which is not one of those groups?

a) Stock Company
b) Co-operative
c) Profit Company
d) Government

Answer 19

c) Profit Company

Question 20

Stock companies achieve a profit from:

a) Interest on investments and underwriting gain
b) Underwriting gain and credit borrowing.
c) Interest on investments and rating.
d) Pure premium and underwriting gain.

Answer 20

a) Interest on investments and underwriting gain.

Question 21

Which is true of Lloyds?

a) It is an insurance market.
b) It is not an insurance company.
c) It’s groups of members are known as syndicates.
d) All of the above.

Answer 21

d) All of the above.

Question 22

Factory Mutual’s specialize in:

a) Insuring factories.
b) Crime prevention.
c) Fire prevention.
d) Insuring Farm Equipment.

Answer 22

c) Fire prevention.

Question 23

Decisions to accept/reject a risk are not based on:

a) Personal information about the applicant.
b) Details of physical hazards and exposure.
c) Special factors pertaining to the class of risk.
d) Number of past automobile accidents.

Answer 23

d) Number of past automobile accidents.

Question 24

Risks may be rejected because:

a) The insurer does not write that class of business.
b) There is typo on the application.
c) The insurer does not like the intermediary.
d) The race/gender of the applicant.

Answer 24

a) The insurer does not write that class of business.

Question 25

A deductible:

a) Applies to every policy.
b) Is a standard amount.
c) Is a percentage of the liability amount.
d) Is the amount of the loss an insured must pay.

Answer 25

d) Is the amount of the loss an insured must pay.

Question 26

Which is not a main section of a policy?

a) Limits section.
b) Insuring Agreements.
c) Policy conditions.
d) Signature class.

Answer 26

a) Limits section.

Question 27

A Material Fact:

a) Is the subject of insurance.
b) Is any fact that related to the item insured.
c) Need only be divulged if the insured is asked about it.
d) Is anything that could affect the premium being charged.

Answer 27

d) Is anything that could affect the premium being charged.

Question 28

Which of these statements is FALSE? If an insurer issues a policy that differs from the application.

a) The Insurer must notify the insured of the difference.
b) Notification of the difference must be in writing
c) If insured does not object within the specified time (except QE) the policy stands as written
d) The policy is null and void

Answer 28

d) The policy is null and void.

Question 29

Very large risks are often insured by.

a) Extension policies
b) Prescription policies
c) Subscription policies
d) Endorsements

Answer 29

c) Subscription policies

Question 30

Utmost Good Faith:

a) Is an essential of all contracts
b) Means an insured must answer all questions of an application.
c) Applied to the insured and the intermediary only.
d) Is a superior standard of honesty.

Answer 30

d) Is a superior standard of honesty.

Question 31

Temporary insurance:

a) Is only for oral contracts.
b) Cannot be cancelled.
c) Must be cancelled in the same way as policy of a similar type would be.
d) May be cancelled verbally in all cases.

Answer 31

c) Must be cancelled in the same way as a policy of a similar type would be.

Question 32

A Plaintiff is on who:

a) Has a lawsuit brought against them.
b) Brings a lawsuit against another.
c) Has been used.
d) Has a complaint brought against them.

Answer 32

d) Has a complaint brought against them.

Question 33

Auto policy forms

a) Must be approved by the Provincial Government
b) Must be approved by the Federal Government
c) Must be approved by the insurer
d) Must be approved by the insured

Answer 33

a) Must be approved by the Provincial Government.

Question 34

The application does not:

a) Identify the parties to the contact.
b) Identify the vehicles involved.
c) Identify the drivers
d) Identify the rate

Answer 34

d) Identify the rate.

Question 35

The minimum compulsory Third Party Liability coverage in BC is:

a) $20,000
b) $200,000
c) $2,000,000
d) $5,000

Answer 35

b) $200,000

Question 36

The minimum compulsory Third Party Liability coverage in Quebec is:

a) $50,000
b) $500,000
c) $5,000,000
d) $5,000

Answer 36

a) $50,000

Question 37

Direct compensations applied to:

a) Property Damage
b) Bodily Injury
c) Liability
d) Crime

Answer 37

c) Liability.

Question 38

Under Accident Benefits, an insured person is:

a) The name insured.
b) Spouse and dependents of named insured.
c) Any person who is involved in an accident with the insured automobile.
d) All of the above.

Answer 38

d) All of the above.

Question 39

A tortfeasor is:

a) A victim.
b) A wrongdoer
c) A coverage
d) A benefit

Answer 39

b) A wrongdoer.

Question 40

Under Accident Benefits, Medical Expenses, what is specifically covered?

a) Dental Services
b) X-ray Services
c) Nursing Services
d) Homeopath Services

Answer 40

a) dental services

Question 41

Collateral Benefits are:

a) Sources of loss payment from outside the auto policy.
b) Always part of the policy
c) Paid to the mortgagee
d) Part of Liability Coverage

Answer 41

a) Sources of loss payment from outside the auto policy.

Question 42

In Quebec:

a) the exact wording of the Conditions is set out by legislation
b) Conditions do not apply
c) Only the subject matter is specified by legislation.
d) All of the above are false.

Answer 42

c) Only the subject matter is specified by legislation.

Question 43

The following damage is included under the all perils coverage.

a) Vandalism of a vehicle.
b) Rusting of a vehicle.
c) Radioactive contamination
d) Damage caused to the vehicle while the driver was intoxicated.

Answer 43

a) Vandalism of a vehicle.

Question 44

A proof of loss:

a) May be orally given
b) Details a loss and the resulting claims
c) Has no time limit in which it must be submitted.
d) Must be prepared by a lawyer.

Answer 44

b) details a loss and resulting claims.

Question 45

Salvage:

a) Belongs to the insurer when the claim has been paid.
b) Always belongs to the insured.
c) Consists of the useless debris of a total loss.
d) Is what remains after a fire loss.

Answer 45

a) Belongs to the insurer when the claim has been paid.

Question 46

Statutory Conditions:

a) Are made up of definitions, rules and regulations which govern auto policies.
b) Are know as Special Conditions in Alberta
c) Contain the exact words as specified in the Charter of Rights.
d) Do no apply to extension policies

Answer 46

a) Are made up of definitions, rules and regulations which govern auto policies.

Question 47

Accident Benefits do not pay any expenses arising out of an auto accident for:

a) Vehicle damage
b) Loss of wages
c) Dental work
d) Funerals

Answer 47

a) Vehicle damage

Question 48

Coinsurance clauses:

a) Make a profit for the insurer.
b) Punish the insured.
c) Encourage insured’s to carry adequate amounts of insurance.
d) Are always 80%

Answer 48

c) Encourage insured’s to carry adequate amounts of insurance.

Question 49

If a policy is subject to an 80% coinsurance clause, what amount of insurance is necessary to provide full coverage in case of a total loss of a building valued at $100,000?

a) $100,000
b) $80,000
c) $20,000
d) None of the above.

Answer 49

a) $100,000

Question 50

A building is subject too a 90% coinsurance clause. The building is valued at $200,000 and is insured for $170,000. The loss is $130,000. What will the insurer pay?

a) $180,000
b) $122,778
c) $130,000
d) $117,000

Answer 50

b) $122,778