Practice Questions Flashcards
Four common methods of dealing with risk are:
a. Eliminate, control, retain and transfer.
b. Security alarm, fire alarm, fire extinguisher, a safe.
c. Eliminate, gamble, control, transfer.
d. Re-insure, retain, sell, control.
a. Eliminate, control, retain and transfer.
A form of insurance purchased by an insurance company to limit its losses is called:
a. Mortgage insurance
b. Investment bond
c. Underwriter insurance
d. Reinsurance
d. Reinsurance
What is the definition of Insurance?
a. The undertaking by one person to protect themself against loss or liability for loss in respect of a certain risk or peril, which an insurance contract has listed as may be exposed, and for an insurance company to pay a sum of money or a range of equal value objects upon the happening of a certain event.
b. The undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of insurance may be exposed, or to pay a sum of money or other thing of value upon the happening of a certain event.
c.The undertaking by an insurer to indemnify an individual person against loss or liability for loss in respect of a certain risk or peril to which the object of insurance may be exposed, or to pay a sum of money or other thing of value upon the happening of a certain event.
b. The undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of insurance may be exposed, or to pay a sum of money or other thing of value upon the happening of a certain event.
Which of the following is NOT a major function of insurance:
a. Spread of risk.
b. Eliminate worry.
c. Loss prevention and reduction.
d. Provide credit.
d. Provide credit.
A physical hazard is:
a. A type of peril.
b. A physical characteristic of a risk which may give rise to a loss.
c. The same as a moral hazard.
d. The possibility of a loss due to the nature of the insured.
b. A physical characteristic of a risk which may give rise to a loss.
A Managing General Agent (MGA) can be best defined as:
a. The Lloyd’s Corporation.
b. A brokerage office that has been granted authority by one or more insurance companies to transact business on their behalf.
c. An agent of a mutual insurance company that transacts business on behalf of policyholders.
d. A brokerage office that has been granted authority by one or more policyholders to transact business on their behalf.
b. A brokerage office that has been granted authority by one or more insurance companies to transact business on their behalf.
Why might a broker need to seek coverage for a client from an MGA or Lloyd’s of London?
a. The client’s operation is considered too high risk for the average insurer.
b. The client refuses to provide information about their operation to the broker.
c. The claims department has declined to provide coverage.
d. The broker wants to charge a higher premium to earn more commission.
a. The client’s operation is considered too high risk for the average insurer.
An underwriter performs many functions including:
a. Developing and managing broker contracts.
b. Analyzing application forms submitted by brokers to ensure eligibility.
c. Managing corporate investments.
d. Paying broker commission.
b. Analyzing application forms submitted by brokers to ensure eligibility.
Which of the following best describes Lloyd’s of London?
a. A coffee shop.
b. A claims adjusting firm.
c. A well-known insurance company.
d. A marketplace where insurance buyers and sellers come together.
d. A marketplace where insurance buyers and sellers come together.
A claims adjuster must:
a. Appoint brokers to sell insurance products.
b. Administer policyholder direct payment plans.
c. Develop and maintain broker portals.
d. Pay valid claims while ensuring the principle of indemnity is maintained.
d. Pay valid claims while ensuring the principle of indemnity is maintained.
Which of the following is not one of the sections in a commercial insurance package policy?
a. Property Insured.
b. Business Income.
c. Crime
d. Personal Liability
RIBO Textbook Chapter 10 Review Quiz
d. Personal Liability
Karen owns a commercial office building. All units are rented by business professionals. Which of the following property types is considered part of Karen’s building for insurance purposes?
a. Tenants’ stock.
b. Ornamental trees growing in the lobby of the building.
c. Office furniture.
d. Tenants’ liability
RIBO Textbook Chapter 10 Review Quiz
b. Ornamental trees growing in the lobby of the building.
Which of the following property types is defined as “stock” under a retail store’s commercial insurance package policy?
a. Merchandise not yet sold.
b. Goods that have been sold but are still in the policyholder’s possession pending delivery
c. Materials used to manufacture goods.
d. All of the above.
RIBO Textbook Chapter 10 Review Quiz
d. All of the above.
Which of the following forms is the most commonly used in today’s commercial package policies?
a. Fire, Lightning and Explosion Form.
b. Fire and Extended Coverage Form.
c. Habitational Form.
d. Broad form.
RIBO Textbook Chapter 10 Review Quiz
d. Broad form.
Yuusuf operates a convenience store in a building he owns. Thieves broke the window and caused a great deal of damage inside. Repairs are expected to take three weeks. The claims adjuster advised Yuusuf to move his stock and equipment to a storage facility to protect it from further damage. Which commercial property extension pays for these costs?
a. Removal.
b. Debris Removal.
c. Building Damage by Theft.
d. Growing Plants, Trees, Shrubs Outside the Building.
RIBO Textbook Chapter 10 Review Quiz
a. Removal.
Under a commercial property Broad Form, insured property is covered against:
a. All Perils.
b. Actual cash value.
c. Named perils.
d. Specified perils.
RIBO Textbook Chapter 10 Review Quiz
a. All Perils.
The commercial property Broad Form wording excludes loss or damage for certain types of property. Which of the following types of property is not excluded under the Broad Form?
a. Cash, stamps or tickets.
b. Watercraft held for sale (and therefore considered to be stock).
c. Jewellery, watches, gems, and pearls valued up to the limit specified in the policy.
d. Property which has been confiscated by a public authority.
RIBO Textbook Chapter 10 Review Quiz
b. Watercraft held for sale (and therefore considered to be stock).
The commercial property Broad Form excludes several perils or causes of loss. Which of the following excluded perils or losses may be added to a policy for an additional premium?
a. Earthquake insurance.
b. Wear and tear, rust, corrosion, or gradual deterioration.
c. Shortage of equipment or stock which has been discovered while conducting an inventory.
d. All of the above.
RIBO Textbook Chapter 10 Review Quiz
a. Earthquake insurance.
Which of the following causes of loss are excluded from a commercial property Broad Form?
a. Backup or overflow of water from sewers, sumps, septic tanks, or drains.
b. Flood.
c. Damage caused by rodents, insects, or vermin.
d. All of the above.
RIBO Textbook Chapter 10 Review Quiz
d. All of the above.
Moe’s business policy will indemnify him for the costs to repair or replace lost or damaged business property without deduction for depreciation. What is this basis of settlement called?
a. Actual cash value.
b. The limit of insurance.
c. Indemnification.
d. Replacement cost.
RIBO Textbook Chapter 10 Review Quiz
d. Replacement cost.
Which of the following best describes a Comprehensive Tenant Policy?
a. It covers theft only.
b. It covers theft only, provided there are visible signs of breaking in.
c. It is the same as a Homeowner Policy, but it does not cover buildings or outbuildings.
d. It covers the insured’s building, summer cottage, and the contents of both.
RIBO Textbook Chapter 7 Review Quiz
c. It is the same as a Homeowner Policy, but it does not cover buildings or outbuildings.
What is covered under a Condominium Unit Owner Policy?
a. The condominium building itself plus the unit owner’s contents.
b. Outbuildings.
c. The unit owner’s personal property (contents) and any unit improvements and betterments.
d. Other structrues separated by a clearly defined space.
RIBO Textbook Chapter 7 Review Quiz
c. The unit owner’s personal property (contents) and any unit improvements and betterments.
An all-risks policy covers:
a. All kind of loss.
b. Fire, extended coverage, and earthquake.
c. Specified perils, including earthquake and sewer backup.
d. Any kind of loss, subject to exclusions.
RIBO Textbook Chapter 7 Review Quiz
d. Any kind of loss, subject to exclusions.
Which of the following best describes the fire and extended coverage Secondary and Seasonal Residence Forms?
a. They are identitical.
b. The Secondary Residence Form covers more perils.
c. The Seasonal Residence Form covers more perils.
d. Both automatically include burglary coverage.
RIBO Textbook Chapter 7 Review Quiz
b. The Secondary Residence Form covers more perils.
Which of the following losses are not covered under a Comprehensive Homeowner Policy?
a. Collapse of the roof due to snow load at the seasonal dwelling.
b. Additional expenses resulting from a temporary stay in a hotel following bad storm damage to the roof.
c. Smoke damage to a light-coloured chesterfield following a kitchen fire.
d. Damage caused by a tree falling into the swimming pool and destroying the liner.
RIBO Textbook Chapter 7 Review Quiz
a. Collapse of the roof due to snow load at the seasonal dwelling.
Under the Comprehensive Homeowner Policy, which of the following statements is correct?
a. House guests’ property are automatically covered for the perils of the policy.
b. House guests’ property can never be covered under the policy.
c. Only the property of the named insured is covered under the policy.
d. None of the above.
RIBO Textbook Chapter 7 Review Quiz
d. None of the above.
The Kumar family has rented the same seasonal dwelling for 20 years, for two months each year. They bring all their clothes, bedding, and supplies (worth $4,000). Unfortunately, a fire destroyed the building in the first week and all was lost. They have a $50,000 Comprehensive Tenant Policy, How much would this policy pay above the $500 deductible?
a. Nothing.
b. $1,800.
c. $3,500.
d. $4,000.
RIBO Textbook Chapter 7 Review Quiz
c. $3,500.
Shaun plans to renovate his bungalow, which means he has to vacate his home for six months. His coverage for additonal living expense will:
a. Not provide any coverage.
b. Provide coverage for a maximum of two weeks.
c. Pay all the extra expense incurred during the six-month period.
d. Provide coverage only is a loss occurs in those six months.
RIBO Textbook Chapter 7 Review Quiz
a. Not provide any coverage.
Jelena is selling her house and moving to a low-rise condominium. She asks you, her broker, what she should do with her current Homeowner Policy. What would you advise her to do?
a. Endorse the current policy to the new address, but delete the building and liability coverage because they will be covered under the master policy of the condominium.
b. All the building coverages for the new condoominium are covered by the master policy, so she needs a Tenant Policy in her name.
c. Make no change, as the Homeowner Policy is just as good as the Condominium Unit Owner Policy. She just need to change the address.
d. The Homeownner Policy must be replaced by the Condominium Unit Owner Policy, which gives certain extra coverages she will need as a unit owner.
RIBO Textbook Chapter 7 Review Quiz
d. The Homeownner Policy must be replaced by the Condominium Unit Owner Policy, which gives certain extra coverages she will need as a unit owner.
Is loss or damage caused by an earthquake insurable?
a. Yes - it is one of the insured perils usually covered in a property insurance policy.
b. No - it is not available under a property policy.
c. No - being an “act of god,” it is never insurable.
d. Yes - it can be added to a property policy for an additional premium.
RIBO Textbook Chapter 7 Review Quiz
d. Yes - it can be added to a property policy for an additional premium.
Which of the following losses or damages would NOT be covered by the Comprehensive Homeowner’s wording?
a. Damage caused by accidental escape of water from a water main.
b. Damage caused by freezing during the usual heating season if the insured is away for more than four consecutive days and a competent person is daily entering the building.
c. Ground water or rising of the water table or surface water.
d. Accidental discharge of an automatic sprinkler with the insured dwelling.
c. Ground water or rising of the water table or surface water.
When an insured purchases ____ coverage, one does not need to purchase burglary or robbery coverage on the same property.
a. Door lock replacement.
b. Pet life insurance.
c. Home security system.
d. Theft.
d. Theft.
Under a Condominium Owner’s Comprehensive form, loss assessment coverage pays:
a. For the damage to the unit caused by any Named Peril.
b. Only when there is a policy in place with the Condominium Corporation.
c. Any amounts assessed to the condominium unit owner for damage to common areas of the Condo due to lack of insurance or under-insurance on the part of the Condominium Corp.
d. The limit shown on the Declaration page for this coverage or $50,000.
c. Any amounts assessed to the condominium unit owner for damage to common areas of the Condo due to lack of insurance or under-insurance on the part of the Condominium Corp.
The basis of settlement for most claims using the Comprehensive Homeowner’s wording is ______, unless otherwise stated.
a. as listed in the declarations
b. replacement value
c. cash value less depreciation
d. actual cash value
d. actual cash value
