Study 4: From Quote to Policy - MC Flashcards
Why does selecting an insurer require more consideration for a broker?
A. Brokers select insurers on a rotation basis to ensure equal support to each market their
brokerage supports.
B. Brokers select an insurer from the ones represented based on an analysis of insurers’ products
and underwriting.
C. Insurers provide brokers with less assistance in arranging coverage than they give to agents in
similar situations.
D. Insurers have higher expectations of the quality of client that a broker presents to them than they
do with agents.
Brokers select an insurer from the ones represented based on an analysis of insurers’ products and underwriting.
Rationale: The broker needs to check the insurers’ underwriting guidelines, analyze and compare each
insurer’s products, and select an appropriate policy or wordings based on the analysis of the client’s
needs.
What are the common forms for personal-lines package policies?
A. Comprehensive, actual cash value, and replacement cost
B. Comprehensive, broad, and agreed value
C. Guaranteed replacement cost, actual cash value, replacement cost
D. Comprehensive, broad, and limited
Comprehensive, broad, and limited
Rationale: Personal-lines package policies are available in comprehensive, broad, and limited forms.
A. The capacity to confirm to people who have submitted insurance applications that they have
insurance coverage
B. A temporary measure to insure in an agreed manner while waiting for the completed policy to be
issued
C. A written or oral agreement given by an insurer to insure a risk
D. The limit, expressed by the insurer, up to which the intermediary can insure
The capacity to confirm to people who have submitted insurance applications that they have insurance coverage
Rationale: Binding authority is the capacity to confirm to people who have submitted insurance
applications that they have insurance coverage. It gives agents or brokers the power to make decisions
that enter insurers into contracts of insurance.
Which of the following statements is true of backdating?
A. It can expose the insurer to losses that have already occurred that otherwise would not have
been within the policy term.
B. It is always indicative of a fraudulent situation.
C. It is a common request and intermediaries usually have binding authority to backdate.
D. It is allowed, but only for seven days.
It can expose the insurer to losses that have already occurred that otherwise would not have been within the policy term.
Rationale: Occasionally, a client may ask the broker to backdate coverage—that is, the client asks that
the effective date of cover precede the date of the application. Because this can expose the insurer to
losses that have already occurred that otherwise would not have been within the policy term, there will
be resistance against backdating in most cases.
What is a cover note?
A. A temporary measure to insure in an agreed manner while waiting for the completed policy to be
issued
B. A written or oral agreement issued by an agent or broker to insure a risk, pending the issuance of
a formal policy
C. A document with insurance, or the insurance protection provided
D. An interim receipt
A document with insurance, or the insurance protection provided
Rationale: A cover note is a document issued by agents or brokers that tells the insured that the
insurance described within it has been set up.
What is the definition of errors and omissions?
A. Actions or inactions of an insurance intermediary in the performance of professional duties that
lead to financial losses
B. Fraudulent statements from an insurance intermediary that lead to a misrepresentation
C. Actions or inactions of an insurance intermediary in the performance of professional duties that
lead to property damage losses
D. Fraudulent statements from an insurance intermediary that lead to bodily injury losses
Actions or inactions of an insurance intermediary in the performance of professional duties that lead to financial losses
Rationale: Actions or inactions of an insurance intermediary in the performance of professional duties
that lead to financial losses for the customer are known as errors and omissions.
Which of the following statements best describes a deductible?
A. It is the amount of a loss that the insured must pay.
B. It is imposed if the insured is at fault.
C. It only applies to property losses.
D. It is always stated as a dollar value.
It is the amount of a loss that the insured must pay.
Rationale: A deductible is the amount of a loss that the insured must pay. A deductible creates an
economic incentive for insureds to protect their property from damage.
Where do statutory conditions apply?
A. In Quebec only
B. To all insurance policies
C. In all Civil Code provinces
D. In all common law provinces and territories
In all common law provinces and territories
Rationale: Statutory conditions apply in each of the provinces and territories except Quebec.
Which of the following is a reason for premium discrepancy between a binder and the replacing
policy?
A. Coverages were left off or added in error.
B. The policy was declined for underwriting reasons.
C. The insurer uncovered aspects of the risk that were not as described in the application.
D. The insurer’s standard policy wording may have changed.
The insurer uncovered aspects of the risk that were not as described in the application.
Rationale: When there is a discrepancy between the final premium and the premium quoted on the
binder, a possible reason is that investigation could have made the insurer aware that the risk differs
from the application, resulting in re-rating.
What is the best way to compare a binder to the policy that replaces it?
A. A side by side, line by line comparison is often the best way.
B. The underwriter will always point out differences.
C. Matching the premium is often the best way.
D. Matching the coverages is often the best way.
A side by side, line by line comparison is often the best way.
Rationale: A side by side, line by line comparison is often the best way to ensure that the document
received matches the requested coverage
