Insurance Broker Level 1 Set 6

Question 1

Personal Information Protection and Electronic Document Act (PIPEDA)

Answer 1

This act governs the collection and use of personal information. This act states that personal information to be collected must be relevant, and that all information that has been collected, or will be collected must be held in the strictest of confidence. When private information is collected for a purpose, it can only be used for that purpose. If you want to use it for another purpose, you must get permission from the client to do so. One exception is if you are required by a court of law to disclose the client’s information

Question 2

Prescription

Answer 2

In law, is a time after which a cause of action ceases. In insurance, it is the time after which a claim may not be brought.

Question 3

Rate

Answer 3

Is the price of a unit of insurance for a period of one year.

Question 4

Risk

Answer 4

Chance of financial loss to which an object of insurance is exposed

Question 5

Controlling Risks

Answer 5

Is concerned with taking measures to reduce the frequency and severity of losses

Question 6

Avoidance means;

Answer 6

That all chance of financial loss has been eliminated.
ex. people who rent rather than purchase their business premises will avoid the chance of financial loss from owning such property

Question 7

Retention of risk

Answer 7

Companies or individuals who choose to finance their own losses instead of buying insurance

Question 8

Transfer of risk

Answer 8

Means buying insurance to cover your losses

Question 9

Spreading the risk

Answer 9

Spreading the losses of a few among many is the main function of insurance.

Question 10

Principle of Indemnity

Answer 10

The amount of the payment is restricted to the amount required to indemnify the insured. This principal ensured that people receive the actual amount of their loss, no more, no less.

Question 11

Purpose of Insurance

Answer 11

The purpose of insurance is to pay for losses that are both accidental and future, it is not intended to respond to losses that are deliberate, or which have already occurred.

Question 12

Persons with insurable interests include;

Answer 12

• owners of property including their business partners
• Mortgagee
• Bailees to whom property is entrusted for repair, service or safekeeping
• Any person who may be held to a third party for bodily injury or property damage ( liability insurance)

Question 13

Direct Loss

Answer 13

When the object of a loss is actually attacked by an insurance peril

Question 14

Indirect loss

Answer 14

A consequence of a direct loss
ex. loss of food in a freezer when a motor fails
loss of rental income after a fire totally destroys a building
Loss of profits to a business after a windstorm levels the building

Question 15

Determining actual cash value

Answer 15

Based on;
Condition of the objects
Resale value
Normal life expectancy

Question 16

Government Insurers in Canada (Auto)

Answer 16

Sask, MB, BC and Quebec

Question 17

Subsection 1, Medical Payments and Funeral Expenses, expenses must be incurred within

Answer 17

2 years from the date of the accident

Question 18

Subsection 2 Total Disability must occur within

Answer 18

90 days of the accident

Question 19

In Alberta, total disability is not payable for the first

Answer 19

7 days from the date of the accident

Question 20

Section B, accident benefits, proof of loss

Answer 20

must be furnished within 30 days

Question 21

Legal Duty owed under Contract and Contract liability

Answer 21

are not parts of a tort

Question 22

Carrying passengers for compensation is not prohibited

Answer 22

but coverage will be denied unless permission is given by the company

Question 23

Debris removal is not

Answer 23

part of an indemnity agreement