Midterm 1 Flashcards
Only putting the ones I struggled on/got wrong (19 cards)
Which sector of the insurance industry has the largest volumes by premiums?
Automobile insurance
Which type of insurer exists for the benefit of their policy holders?
Mutual Companies
Which type of insurance distribution arrangement involves a middleman who represents multiple insurance companies and owns their own clients?
Independent Broker
True or false:
Insurance companies may be asked to post a bond or additional collateral if they don’t meet the government’s solvency requirements
False, they’d just be suspended. Obliterated. Turned to dust.
According to the Insurance Act, when does a policy start?
A) 12:01 AM Standard Time at the Risk Location
B) 12:01 AM Standard Time at the Address of the Named Insured
C) 12:01 AM Local time at the Risk Location
D) 12:01 AM Local Time at the Address of the
Named Insured
B
A policy is only valid when…
The policy is delivered
When it comes to the Insurance Act, which of the following statements is not true?
A) The insurer has the right of subrogation against the responsible party after compensating the insured for their loss
B) The insurer will extend coverage to an alternate location for up to 7 days if the property is moved temporarily
C) Quote issuance must be done by the insurer
D) Any changes to the insurance contract must be signed by someone authorized before it is binding
B. Coverage is only extended if it was necessarily removed (i.e. to protect it from further loss)
When it comes to the basic fire coverage legislated in the Insurance Act, which of the following is not one such coverage?
A) Damage caused by hostile fire
B) Damage to property caused by lightning
C) Explosion of natural or manufactured gas
D) Explosion of hot water boilers in the insured’s home
D. Only explosions of natural, coal or manufactured gas is covered under the basic fire policy
When it comes to the Insurance Act, which of the following statements is not true?
A) There is no coverage for your property if you are not named on the policy
B) When a claim payment is disputed, the insured must go through an appraisal process
C) Any legal action against the insurer if a claim is denied or payment is inadequate must be done within 1 year (2 years in Alberta) of the date of loss
D) The insurance policy does not ever transfer. The new owner of the property must purchase their own insurance policy.
D. Insurance is transferred if the property was transferred through some involuntary legal mechanism (i.e. succession, order of law, death, bankruptcy). In those cases, it will be transferred to the trustee or whoever is responsible for administering the assets.
When a loss occurs, the insured has many responsibilities laid out in the Insurance Act. Which of the following is not one of them?
A) Notify the insurer in writing
B) Provide a proof of loss as soon as practicable
C) Take legal steps to begin the subrogation process if a responsible party exists.
D) The insured must sign a statutory declaration under oath
C
When it comes to terminating an insurance contract, which of the following is not required by the Insurance Act?
A) The insurer or the insured must give written notice to each other when cancelling a policy.
B) If the insurer is cancelling, they must give the insured 15 days notice if they are sending it by registered mail
C) If the insurer is hand delivering the cancellation notice, they only need to give 5 days notice
D) The insurer can cancel the policy at any time and for any reason
A. Only the insurer needs to give written notice to the insured. The insured can simply call the broker or the insurer and tell them that they want to cancel
When it comes to the Insurance Act, which of the following statements is not true?
A) If the insured is sending a notice to the insurer, they would send it to the local head office
B) If a loss occurs, the insured is required to take reasonable steps in order to protect the property from further loss
C) The insurer must pay losses within 90 days of receiving the proof of loss
D) The insurer can make the decision to pay cash for the loss or to repair or replace the property that was damaged
C. The insurer has 60 days
Which of the following is not a type of risk we face?
A) Personal Risk
B) Financial Risk
C) Property Risk
D) Liability Risk
B
Which of the following is deemed to have no legal capacity and would be unable to sign contracts?
Choose only ONE best answer.
A) Bob’s Burgers Inc.
B) Charles’ Hairdressers
C) Billy Jean
D) Jon Hamm dba Hamm’s Meats
B
Can’t be A because that’s a corporation (inc)
Can’t be C because that’s a person
Can’t be D because even though Hamm’s Meats is a trade name it’s tied to a real dude named Jon Hamm (look for dba, aka, o/a, or anything along those lines)
Of the different sources of information an underwriter uses to assess the quality of a risk, which is responsible for giving them information on the risk and the hazards involved?
A) Application
B) Broker information
C) Inspection report
D) Loss experience data
A
Which of the following is not a type of moral hazard?
A) Financial condition of the applicant
B) Honesty and level of ethics held by the applicant
C) Indifference to loss
D) Housekeeping
D, housekeeping is considered a physical hazard
Which source of information gives the underwriter an idea of the applicant’s personal and business reputation?
A) Application
B) Broker
C) Inspection report
D) Loss experience data
B
Which of the following is not the broker’s job when a claim occurs?
Choose only ONE best answer.
A) Report the claims to the insurer
B) Determine the status of a claim and monitor its progress
C) Help figure out the extent of a loss
D) Ensure client satisfaction
C
Which actor in the insurance industry is responsible for investigating losses and determining how they are settled?
A) Agent
B) Broker
C) Adjuster
D) Underwriter
C
