Fundamentals of Insurance Practice Exam A - Manitoba

The majority of insurance business in Canada is transacted by:

a) Government Insurers

b) Direct Writing System

c) Mutual Companies

d) Private Insurers

d) Private Insurers

General Insurance involves all of the following types of insurance, except one. Pick the exception.

a) Life Insurance

b) Liability Insurance

c) Automobile Insurance

d) Property Insurance

a) Life Insurance

The definition of "Insurance" is found...

a) In the policy

b) In the Insurance Act of each province

c) In the Indemnity agreement

d) In the application form

b) In the Insurance Act of each province

The amount of indemnity is determined by the value of the insured property...

a) As it was when originally purchased

b) At the inception date of the policy

c) At the latest renewal date

d) Immediately prior to the loss

d) Immediately prior to the loss

Brokerage Owners are...

a) Employed by the provincial government

b) Employed by their sponsoring Insurer

c) Self-employed

d) Employed by Direct Writers

c) Self-employed

Which of the following is not an example of a Private Insurer?

a) ING Insurance

b) Portage Mutual Insurance

c) Manitoba Public Insurance

d) Red River Valley Mutual

c) Manitoba Public Insurance

When one of the eight elements of an insurance contract are not present, the contract may be...

a) Void or Voidable

b) Cancelled or Terminated

c) Suspended

d) Enforceable at law

a) Void or Voidable

Insurance companies use all of the following documents to make changes in the insurance contract, except one. Pick the exception.

a) Rider

b) Telephone change log

c) Endorsement

d) Floater

b) Telephone change log

Risks people face fall into one of the following categories, except one. Pick the exception.

a) Liability risk

b) Property risk

c) Financial risk

d) Personal risk

c) Financial risk

None of the following people have the legal capacity to contract, except one. Pick the exception.

a) Persons under the influence of alcohol

b) Minors

c) Mental incompetents

d) Seniors

d) Seniors

Which of the following entities have the legal capacity to contract?

a) Maggie's Lingerie Ltd.

b) Maggie's Lingerie

c) Maggie's Lingerie o/b employees of Maggie's Lingerie

d) Maggie's Lingerie o/b the shareholders and directors

a) Maggie's Lingerie Ltd.

Which of the following is the recommended form of dealing with risk?

a) Avoidance

b) Controlling

c) Retention

d) Transfer

d) Transfer

Agency Agreements are between...

a) The Broker and the Insured

b) The Insurer and the Insured

c) The Insurer and the Broker

d) Broker and Broker

c) The Insurer and the Broker

The Removal Clause contains all of the following conditions, except one. Pick the exception.

a) The amount of coverage at the new location will be reduced by the amount used at the named location

b) The property must be removed to prevent damage or further damage thereto

c) Only the peril of fire will be insured at the new location

d) The coverage at the new location will be in effect for 7 days or the unexpired term of the policy, whichever is less

c) Only the peril of fire will be insured at the new location

Only the following person(s) have the authority to change the policy.

a) The Insured and the Broker

b) An Officer of the insurance company

c) An employee of the Loss Payable

d) An office of the insurance company, or any licensed Broker

b) An Officer of the insurance company

The following three coverages are required on every policy insuring loss by fire.

a) Fire, hail, and lightning

b) Fire, windstorm, and explosion of natural, coal, or manufactured gas

c) Fire, windstorm, and hail

d) Fire, lightning, and explosion of natural, coal, or manufactured gas

d) Fire, lightning, and explosion of natural, coal, or manufactured gas

When an Insurer terminates a policy all of the following conditions must be followed, except one, for the termination to be valid. Pick the exception.

a) 15 days' notice by registered letter must be provided to the Insured

b) The refund must be calculated on a short rate basis

c) The refund must accompany the notice

d) The 15 days' notice begins on the day after it is received at the post office to which it was addressed

b) The refund must be calculated on a short rate basis

If title of the insured property changes, the new party of interest is automatically covered in all of the following circumstances, except one. Pick the exception.

a) Sale

b) Succession

c) Operation of Law

d) Death

a) Sale

A person who handles another person's money is called a(n)...

a) Fiduciary

b) Executor

c) Tortfeasor

d) Solvent

a) Fiduciary

The following are examples of a friendly fire, except one. Pick the exception.

a) Burning steaks on a BBQ

b) Spark from a wood fireplace

c) Wood burning in a fireplace

d) Garbage being burnt in a fireplace

b) Spark from a wood fireplace

A fire policy contains the following exclusions except one. Pick the exception.

a) Lightning damage to electrical devices or appliances

b) Application of heat

c) Contamination of Radioactive Material

d) Resultant damage to home from lightning damage to electrical devices or appliances

b) Application of heat

Which of the following is not an example of a Statutory Condition?

a) Replacement

b) Notice

c) Pair and Set

d) Material Change

c) Pair and Set

An Insured's perception of the brokerage services will be influenced by the way a claim is handled. It is important the Broker...

a) Pay all claims immediately

b) Call the adjuster every day to check in the status of the claim

c) Develop a system which will monitor the progress of the claim

d) Assist in the determination of the amount of indemnity on all claims

c) Develop a system which will monitor the progress of the claim

The law requires that insurance Brokers...

a) Tell the Insured when a claim is not covered

b) Exercise exceptional skill, care, and diligence

c) Exercise reasonable care, skill, and diligence

d) All of the above

c) Exercise reasonable care, skill, and diligence

An insurance Broker is...

a) A party to the contract if the Insured requests

b) Only required to represent the Insurer's interests

c) Not a party to the contract

d) Only required to represent the interests of the Insured

c) Not a party to the contract

All of the following are examples of conditions which affect the physical hazards of a risk, except one. Pick the exception.

a) Building construction

b) Financial conditions

c) Occupancy

d) Housekeeping

b) Financial conditions

Independent adjusters...

a) Are hired by Insurers because of their special expertise

b) Are used only on small losses

c) Are always appointed by the brokerage

d) Are hired by the Insured

a) Are hired by Insurers because of their special expertise

All of the following, except one, are factors considered in the indemnity agreement. Pick the exception.

a) The actual cash value of the property

b) The purchase price of the property

c) The interest of the Insured in the property

d) The amount of Insurance on the property

b) The purchase price of the property

Who of the following is an employee of the insurance company?

a) Independent Adjusters

b) Broker

c) Underwriter

d) Client

c) Underwriter

An underwriter performs all of the following duties, except one. Pick the exception.

a) Prepares the policy

b) Calls the client

c) Makes changes to the policy

d) Provides the quote

b) Calls the client

Which of the following factors will be considered when determining the amount of depreciation to be used in the determination of actual cash value?

a) The purchase price

b) Sentimental value

c) Accrued accounting depreciation

d) Normal life expectancy

d) Normal life expectancy

If the Insured fails to comply with all of the conditions of the replacement cost endorsement, the loss will...

a) Be denied

b) Be reduced by 50%

c) Revert to an actual cash value settlement

d) Be paid, as long as the Insured promises to comply within 2 years

c) Revert to an actual cash value settlement

If the Insured breeches a policy condition the Standard Mortgage Clause guarantees the mortgagee will be paid...

a) The amount of insurance

b) Their interest

c) The annual premium

d) The actual cash value of the property at the time of loss

b) Their interest

The Standard Mortgage Clause guarantees the mortgagee that the Insurer...

a) Will not charge the Insured with fraud

b) Will not surcharge the premium because of a material change

c) Will not inspect the premises without the mortgagee's permission

d) Will not change the policy to the disadvantage of the mortgagee unless proper notice is provided

d) Will not change the policy to the disadvantage of the mortgagee unless proper notice is provided

Which of the following would not be considered included in the definition of a Dwelling?

a) Attached garage

b) Above-ground, outdoor swimming pool

c) Portable gas barbeque

d) Construction materials to be used in renovations to the basement

c) Portable gas barbeque

The following are examples of indirect damage losses, except one. Pick the exception.

a) Loss of food in freezer when electrical motor is damaged by a lightning strike

b) Water damage from a sprinkler system as a result of an explosion

c) Smoke damage by overcooking food in the oven

d) Water damage from firefighters when putting out a chimney fire

d) Water damage from firefighters when putting out a chimney fire

Outdoor trees, shrubs, and plants are insured for all of the following perils, except one. Pick the exception.

a) Vandalism

b) Windstorm

c) Riot

d) Lightning

b) Windstorm

The Insuring Agreement for Personal Property includes coverage for:

a) Automobiles

b) Trailers

c) Aircraft

d) Watercraft

d) Watercraft

Consequential Loss Coverage would provide coverage for food spoilage from:

a) A result of the insured missing a payment and the power being turned off

b) The deep freeze breaking down

c) The deep freeze being accidentally unplugged

d) The deep freeze failing due to a fuse blowing

b) The deep freeze breaking down

The damage caused by a "Falling Object" will only by insured if the "Falling Object"...

a) Falling from an aircraft

b) Strikes the exterior of the building

c) Only strikes the building

d) Only strikes personal property

b) Strikes the exterior of the building

The definition of "you" or "your" includes the following, except one. Pick the exception.

a) His or her husband or wife

b) Common-Law couple living together for 15 months with a child

c) Grandparents who live with the Insured

d) 22-year old exchange student

d) 22-year old exchange student

IBC's Homeowner's forms include all of the following, except one. Pick the exception.

a) Homeowner's Named Perils Form (IBC 1150)

b) Homeowner's Broad Form (IBC 1153)

c) Homeowner's Comprehensive Form (IBC 1155)

d) Homeowner's Basic Form (IBC 1151)

a) Homeowner's Named Perils Form (IBC 1150)

Which of the following coverage limits is correct?

a) Personal Property - 100% of evaluation

b) Detached Private Structures - 10% of dwelling

c) Additional Living Expense - 10% of dwelling

d) Dwelling - 100% of Personal Property

b) Detached Private Structures - 10% of dwelling

A Single Limit Habitational policy is the total limit of...

a) All 8 coverages from Sections 1 &2

b) The dwelling limit

c) Coverages A, B, and C

d) Coverages A, B, C, and D

d) Coverages A, B, C, and D

Coverages for Condominium Policies have included the following unique coverages, except one. Pick the exception.

a) Unit Additional Protection

b) Common Element Assessment

c) Unit Improvements and Betterments

d) Loss Assessment

b) Common Element Assessment

The limit of insurance on Building would include...

a) The value of perimeter fencing

b) Packing, wrapping, or advertising materials

c) Artificial plants inside the building for decorative purposes

d) Tenant improvements and betterments

a) The value of perimeter fencing

The Debris Removal Clause will...

a) Pay for the removal of your neighbour's building debris after an explosion b) Pay for the removal of debris blown by windstorm onto the Insured's premises

c) Pay for the removal of debris from an uninsured building

d) Pay for the removal of debris from an atomic explosion

b) Pay for the removal of debris blown by windstorm onto the Insured's premises

The Reinstatement Clause...

a) Returns all the premiums paid by the Insured if there is a loss

b) Provides replacement cost settlement

c) Reinstates the limit of insurance after a loss

d) Provides rebates for deductible paid after a total loss

c) Reinstates the limit of insurance after a loss

The Property Protection Systems Clause requires the Insured to report any flaw, defect, or interruption that comes to their knowledge concerning of all the following systems, except one. Pick the exception.

a) Electrical System

b) Fire Detection System

c) Intrusion Detection System

d) Sprinkler System

a) Electrical System

A Co-Insurance Clause...

a) Limits the amount payable to 80% of all losses

b) Operates like a Deductible Clause

c) Only applies to total losses

d) Is used to penalize Insureds who do not insure to the proper value

d) Is used to penalize Insureds who do not insure to the proper value

A Commercial Named Perils form covers...

a) Losses which are specifically covered on a policy

b) Losses which are specifically excluded by a policy

c) Theft

d) Vehicle Impact

a) Losses which are specifically covered on a policy

Private Protection includes the following, except one. Pick the exception.

a) Fire Detection Systems

b) Fire Hydrants

c) Sprinkler Systems

d) Fire Extinguishers

b) Fire Hydrants

Which of the following statements is not true?

a) Theft Insurance is the broadest coverage available

b) Burglary Insurance will pay even if there is no evidence of force to take the property

c) Robbery Insurance is usually purchased to cover loss of money, securities, and other valuable property

d) Safe Burglary must have visible signs of force used to take the property

b) Burglary Insurance will pay even if there is no evidence of force to take the property

Which of the following is not included as equipment on a commercial policy?

a) Fax Machines

b) Tenant Improvements to Building

c) Boardroom Table

d) Business Cards

d) Business Cards

An Installation Floater covers property at all of the following locations, except one. Pick the exception.

a) While waiting to be picked up at the warehouse

b) While in transit to the job site

c) While awaiting installation at the job site

d) During installation until accepted, or the interest of the Insured ceases

a) While waiting to be picked up at the warehouse

The occupier of a property owes no legal duty to a trespasser. However, the occupier may be liable for any injuries caused if he does any of the following, except one. Pick the exception.

a) Set traps to capture or injure a trespasser

b) Fails to point out unusual dangers on the property

c) Intentionally causes harm to the trespasser

d) Set traps to capture the trespasser

b) Fails to point out unusual dangers on the property

All of the following describe what Business Interruption Insurance does, except one. Pick the exception.

a) A Contract of Indemnity

b) Insures the majority of perils insured by the Property Policy

c) Coverage not limited to policy period

d) Pays expenses when they reduce amount of loss

b) Insures the majority of perils insured by the Property Policy

All of the following would fall into the classification of licensee, except one. Pick the exception.

a) Hunters

b) Snowmobilers

c) Meter Readers

d) Customers

d) Customers

The occupier of a property has the following duty to an Invitee:

a) Keep the premises safe from any danger whatsoever

b) Only notify the Invitee of unusual dangers

c) Make the premises safe for the Invitee's use

d) No legal duty other than not being able to set traps

c) Make the premises safe for the Invitee's use

This group of people are owed the highest duty of care:

a) Visitors

b) Children

c) Invitee

d) Licensee

b) Children

British Columbia, Alberta, Ontario, and Nova Scotia have enacted Occupiers' Liability Acts which amend the common law term of Licensee and Invitee to the general term:

a) Friends

b) Neighbours

c) Tortfeasors

d) Visitors

d) Visitors

This law deals with written law:

a) Common Law

b) Civil Law

c) Statute Law

d) Criminal Law

c) Statute Law

Which of the following is not an element of a Tort?

a) Duty Owed

b) Duty Breached

c) Damages Suffered

d) Damages Awarded

d) Damages Awarded

Liability policies include Supplementary Payments. These payments:

a) Are part of the amount of insurance

b) Are provided in addition to other coverage limits

c) Only insure costs of defense

d) Cover the cost of emergency medical aid

b) Are provided in addition to other coverage limits

The Liability policy is limited to the payment of:

a) Punitive Damages

b) Exemplary Damages

c) Nominal Damages

d) Compensatory Damages

d) Compensatory Damages

An occurrence means:

a) An accident

b) An accident, including continuous or repeated exposure to substantially the same general harmful conditions

c) An event which occurs suddenly

d) An event which cannot be insured

b) An accident, including continuous or repeated exposure to substantially the same general harmful conditions

Bodily Injury means:

a) Personal injury

b) Only physical injury to a person

c) Bodily injury, sickness, disease, or death

d) Sickness, death, and some forms of personal injury

c) Bodily injury, sickness, disease, or death

All of the following are included in the Supplementary Payments, except one. Pick the exception.

a) Costs of defense

b) The amount of the settlement

c) Court costs

d) Interest from the date of judgement

b) The amount of the settlement

In the event of an Occurrence, Claim, or Action, the Insured must not do which of the following?

a) Provide prompt notice to the Insurers of any occurrence

b) Provide assistance other than for first aid

c) Authorize the Insurer to obtain records and other information

d) Provide copies of all legal papers received

b) Provide assistance other than for first aid

Examples of Personal Injury claims include all of the following, except one. Pick the exception.

a) Libel

b) Sickness

c) Slander

d) Wrongful Entry

b) Sickness

Motorized golf carts are insured:

a) While in use on the insured premises

b) Only while in storage

c) While in use on a golf course

d) When used for golfing purposes

c) While in use on a golf course

All of the following activities are insured under the Liability coverages provided on a Homeowner's policy, except one. Pick the exception.

a) Your work as a salesclerk in a department store

b) The occasional rental of your residence

c) Rental of your garage, up to three car spaces

d) Temporary or part-time business pursuits of an insured person under the age of 21 years

a) Your work as a salesclerk in a department store

These are the four Insuring Agreements provided in Section II of a Homeowner's Form:

a) Personal Liability, Premises Liability, Products Liability, Tenants Legal Liability

b) Personal Liability, Voluntary Medical Payments, Voluntary Payment for Damage to Property, Voluntary Compensation for Residence Employees

c) Personal Liability, Voluntary Medical Payments, Voluntary Payment for Damage to Property, Legal Liability for Residence Employees

d) Personal Liability, Premises Liability, Tenants Legal Liability, Voluntary Compensation for Residence Employees

b) Personal Liability, Voluntary Medical Payments, Voluntary Payment for Damage to Property, Voluntary Compensation for Residence Employees

Which of the following is not covered by Voluntary Medical Payments?

a) Pain and Suffering Payments

b) Surgical Payments

c) Ambulance Service

d) Dental Payments

a) Pain and Suffering Payments

Coverage is provided for all of the following losses on a Homeowner's Form, except one. Pick the exception.

a) Injury to a postal employee caused by the Insured's dog

b) Drowning of a neighbour's child in the Insured's pool

c) Bodily injury to the Insured after slipping on his driveway

d) Fire damage to a neighbour's home from sparks from an outdoor barbeque pit

c) Bodily injury to the Insured after slipping on his driveway

Which of the following types of watercrafts are not covered for bodily injury or personal damage?

a) Watercraft with an Outboard motor of 15hp

b) Watercraft with an inboard motor of 55hp

c) Rented Watercraft with a motor of 75hp

d) Non-motorized watercraft of 25ft in length

b) Watercraft with an inboard motor of 55hp

Which professional is not included in Errors and Omissions insurance?

a) Accountants

b) Architects

c) Pharmacists

d) Insurance Brokers

c) Pharmacists

All of the following will directly affect claim cost, except one. Pick the exception.

a) Age of applicants dependants

b) Occupation

c) Sex

d) Age

a) Age of applicants dependants

Some group insurance plans provide all the following coverage options, except one. Pick the exception.

a) Dental plan

b) Road-side Assistance

c) Accidental death and dismemberment

d) Extended health care

b) Road-side Assistance

Most workers' compensation plans will provide the following coverage:

a) Preventative dental plan

b) Coverage for prescription drugs

c) Suicide benefits

d) Death benefits

d) Death benefits

Most accidents occur away from work. This percentage most closely represents the number of accidents which are non-work related.

a) 20%

b) 10%

c) 90%

d) 60%

c) 90%

Factors that affect the premium of insurance include all of the following, except:

a) Applicant's personal information

b) Consumer Price Index

c) Type of benefits requested

d) Type of policy

b) Consumer Price Index

In general,

a) The longer the elimination period the lower the premium

b) The shorter the elimination period the lower the premium

c) The longer the benefit period the lower the premium

d) The broadest definition of disability is Any Occupation

a) The longer the elimination period the lower the premium

One form of compensation under the Personal Injury Protection Program is Income Replacement Indemnity. Identify the correct waiting period under this benefit.

a) 90 days

b) 60 days

c) 7 days

d) Immediate

c) 7 days

To ensure your Third Party Liability is valid, the Insured must follow the conditions of the policy. There are certain situations where coverage will not be afforded. Indentify the situation below where coverage would not be provided.

a) The vehicle was driven during the day

b) The vehicle was used by someone other than the registered owner

c) The individual driving was not qualified or allowed by law to drive (an unlicensed driver)

d) The driver was under age 25

c) The individual driving was not qualified or allowed by law to drive (an unlicensed driver)

Under the Autopac Program there are some Additional Agreements that have been agreed to by the Insurer. Identify the correct statement regarding custom duties.

a) All repairs to insured autos must be made in Canada, therefore no custom duties will be paid in a loss settlement

b) The Insurer must pay the duty on all repairs made to the vehicle while out of Canada

c) The Insurer will pay custom duties on all necessary repairs made in the United States, in order to ensure vehicle is road worthy, so the vehicle can be transported back to Canada for the balance of repairs to be done

d) All of the above

b) The Insurer must pay the duty on all repairs made to the vehicle while out of Canada

All Perils Coverage is a mandatory component of Manitoba's Autopac Program. Identify the property that would not be insured by this coverage.

a) An automobile

b) A tape deck, permanently attached to the vehicle

c) The Insured's personal tools stolen from the vehicle

d) A CD stolen from the auto while in the CD player

d) A CD stolen from the auto while in the CD player

Third Party Liability coverage excludes:

a) Liability imposed by any workers compensation laws

b) Damages caused to another vehicle

c) Bodily injury or property damage caused to a third party while traveling outside of Manitoba

d) Damages caused to the neighbour's fence as a result of an accident collision

a) Liability imposed by any workers compensation laws

All of the following statements are true about the Registered Owner of a vehicle, except one. Pick the exception.

a) The registered owner can also be the actual owner

b) The registered owner is the one who keeps, looks after, and controls the vehicle

c) If the registered owner is not the actual owner, he or she cannot sell the vehicle

d) The registered owner's driving record does not influence the insurance rates. The insurance rates are determined by the driving record of the actual owner.

d) The registered owner's driving record does not influence the insurance rates. The insurance rates are determined by the driving record of the actual owner.

There are 3 ways to provide automobile insurance. Which form is not correct?

a) Private Insurers

b) 100% Fault Insurance Plans

c) Compulsory Government Insurance Plans

d) No Fault Insurance Plans

b) 100% Fault Insurance Plans

Which is not a document used by MPI to receive insurance?

a) TOD

b) NVIS

c) COI

d) RST

d) RST

There are 4 Premium Rating Factors used to decide the amount of insurance. Which is incorrect?

a) Age of the registered owner

b) Where the Insured lives

c) Vehicle use

d) Driving Record of the registered owner

a) Age of the registered owner

Which coverage is not provided by a Rental Car Policy?

a) Loss of use to Lessors

b) Loss of use to Lessees

c) Third Party Liability

d) Legal Liability for damage to owned autos

d) Legal Liability for damage to owned autos

Under the Off-Road Vehicle Act, Accident Benefits provide coverage for the following, except one. Pick the exception.

a) The Off-Road Vehicle

b) Medical expenses

c) Death expenses

d) Funeral expenses

a) The Off-Road Vehicle

A Broker's license may be revoked if:

a) He is found guilty of impaired driving

b) She does not hold a professional designation within 5 years

c) He is guilty of fraud

d) She is out of the province for more than 6 consecutive months

c) He is guilty of fraud

Organizations like RIBO, insurance councils, and provincial insurance broker associations have established ethical standards which go beyond those described in the Insurance Act. When incorporated into written form, they are referred to as:

a) Statutory conduct

b) Compliance requirements

c) Ethical statue

d) Code of conduct or Code of Ethics

d) Code of conduct or Code of Ethics

When a Broker knows he does not have the competence to properly serve a client, the Broker should:

a) Try his best

b) Refer this customer to a broker with the required competence

c) Refer to the Provincial Insurance Act for guidance

d) Advise the customer that the coverage required is not available

b) Refer this customer to a broker with the required competence

Brokers must be candid and honest when providing clients with insurance advice. All of the following are examples of conduct which does not meet this standard, except one. Pick the exception.

a) Being careful and precise when discussing the exclusions found in the policy

b) Giving bold statements such as "Everything is covered!"

c) Misleading the client as to the reason for re-marketing their account

d) Failing to advise clients of warranties on the policy

a) Being careful and precise when discussing the exclusions found in the policy

All of the following are examples of not providing quality service. Pick the exception.

a) Failing to return telephone calls

b) Failing to give sufficient notice of non-renewal

c) Failure to provide compensation for uninsured claim

d) Failure to inform clients of alterations to coverages

c) Failure to provide compensation for uninsured claim

In simple terms, ethics relates to:

a) One's legal duty to others

b) One's moral duty to others

c) The requirement to be licensed in every province

d) The requirement to complete a professional designation

b) One's moral duty to others