Question 1

Risk may be dealt with in a number of ways including transferring it to others or retaining it intentionally. Which of the following alternatives is a transfer of risk?

Options :

A : A monitored security system.

B : Self-insurance.

C : An agreement of purchase and sale.

D : Purchase of insurance.

Answer: D

Question 2

According to the Statutory Conditions of a Fire Policy, Statutory Condition 2 - Property of Others states that the insurer is NOT liable for property owned by others unless:

Options :

A : The property is worth less than $500.

B : The interest of the insured in that property is specifically stated in the contract.

C : The property is located in the insured’s backyard.

D : The owner of the property also has their own insurance.

Answer: B

Question 3

According to the Statutory Conditions of an Automobile Policy (O.A.P. 1), if the insurer chooses to terminate the policy, they must provide a refund of the unearned premium. How must this refund be calculated?

Options :

A : On a short-rate basis, allowing the insurer to keep an administrative fee.

B : On a pro-rata basis, representing the exact proportion of the unused premium.

C : On a flat-rate basis, regardless of the time remaining in the policy term.

D : The insurer is not required to provide a refund if the termination is due to a claim.

Answer: B

Question 4

Your insured's young son has just purchased an automobile and wants you to insure it in his father's name and show himself as an occasional driver. Which of the following steps should you take?

Options :

A : Issue the policy as requested.

B : Decline to issue the policy as the son is obviously the principal driver and registered owner.

C : Place the policy with another insurer and rate the father as the principal driver.

D : Advise the son to register the vehicle in his mother's name and rate it on her driving record.

Answer: B

Question 5

Certain Accident Benefits limits under O.A.P. 1 Owner's Policy can be increased or extended at the option of the insured. What benefit CANNOT be changed?

Options :

A : Death and Funeral Benefits.

B : Income Replacement Benefit.

C : Caregiver Benefit for Catastrophic Injuries.

D : Disability Benefit after Age 65.

Answer: D

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