OTl Practice Exam - Insurance Concepts

OTl Practice Exam - Study Notes

• Question 1: If a broker/agent knows pertinent information was not disclosed on an application and doesn't share it, they violate the doctrine of utmost good faith.

• Question 2: If a client isn't aware of a policy's coinsurance clause and deductible, the broker has failed to provide correct coverage.

• Question 3: Assignments of assets to an executor or administrator of a will can occur without insurer consent.

• Question 4: Personal liability for cemetery plots is typically covered by an endorsement to homeowners policies.

• Question 5: The proximate cause of loss is required for an insurer to pay an insured peril.

• Question 6: Statutory conditions are required in all home insurance policies.

• Question 7: The last link in a chain of events is the proximate cause.

• Question 8: Tenants' legal liability insurance covers damage done by the tenant to the premises they rent, not damage to the landlord's property.

• Question 9: If a property has several parts, the insurer is only liable for the insured value of the damaged or lost part(s).

• Question 10: Contribution is the sharing of loss or liability between two or more companies covering the same risk.

• Question 11: Commission is the profit-sharing/referral fee an intermediary receives, not the premium paid by the insured.

• Question 12: The term "flood" traditionally refers to a body of freshwater.

• Question 13: Risk management helps with client retention and pre-screening.

• Question 14: Publishing a defamatory letter in a newspaper is considered Libel.

• Question 15: The Use of Recreational Vehicle endorsement ensures compliance with vehicle operator qualification and age, specifically when operating off public highways.

• Question 16: A manufacturer might be responsible for compensatory damages in the case of a customer experiencing injury or property damage from their product.

• Question 17: Insurers must provide written confirmation of cancellation to the insured, including any applicable premium refund, as reasonably soon as possible when the insured requests the termination of the policy.

• Question 18: A fidelity policy protects against dishonest employee losses.

• Question 19: A comprehensive homeowners policy is an all-risks policy with listed exclusions.

• Question 20: Physical damage & liability for boats is covered under a homeowner's policy if the boat's value is below a threshold.

• Question 21: Damage from freezing of indoor plumbing is covered in basic homeowners policies.

• Question 22: Gambling is an example of speculative risk.

• Question 23: Mobile homes set on a foundation can be included on an auto policy.

• Question 24: Four optional own-damage coverages for auto policies are Collision/Upset, Specified Perils, Comprehensive, and All Perils.

• Question 25: Ground water is beneath the earth's surface.

• Question 26: Manuscript wording is a policy written specifically for a particular situation.

• Question 27: If an insured is found guilty of DUI in a collision, their insurance may or may not cover the damage depending on the circumstances & policy details.

• Question 28: A golfer being injured by the insured while on a golf course is covered under the homeowners policy's Personal Liability section.

• Question 29: Additional costs for modifications to comply with regulations due to loss are covered under repair/construction insurance.

• Question 30: OSFI enforces the Insurance Companies Act.

• Question 31: The two main categories of insurance businesses are property/liability and life/health/general insurance.

• Question 32: Condominium unit purchasers own a unit and share ownership of the common elements.

• Question 33: Agents and brokers hold funds in trust for insurers and various parties involved in insurance claims.

• Question 34: The Insurance Act establishes and governs auto statutory conditions.

• Question 35: A tenants policy can have an extension for indirect damages when a change in temperature is caused by an insured peril.

• Question 36: A Tenant's policy will usually include coverage for personal property removed temporarily from the premises, like for storage or if away from home.

• Question 37: Specific policy section details the commencement date, term, and expiry.

• Question 38: Aggregate limit refers to the maximum amount payable in total through a claims process during a policy term.

• Question 39: Insurers often refuse to reduce limits below what is often seen as a reasonable or mandated minimum.

• Question 40: Custom-made closet organizers are often covered under the Condominium Corporation's loss assessment coverage.

• Question 41: Common elements in a condo include elevators, hallways, gardens, and parking areas.

• Question 42: A mortgagee is a special class of loss payee that has a registered interest in real property.

• Question 43: If the broker receives a 20% commission on a $1000 premium, $200 is deposited to their operating account.

• Question 44: For a homeowners policy, a named peril must happen for a direct loss or damage.

• Question 45: Standalone garage protection is usually in Coverage B-Detached Private Structure within a comprehensive policy, which usually covers all risks.

• Question 46: An adjuster investigates claims, makes recommendations, negotiates settlements, and ensures policies and benefits are followed.

• Question 47: Prescription is the period within which an insured must file a claim.

• Question 48: Arson is a hostile fire, that is intentional.

• Question 49: Additional living expense limits vary though often they are a percentage of the building’s value or the sum assured for personal property.

• Question 50: Musical instrument rates depend on storage location, training level and professional or personal use.

• Question 51: Burglary is defined as the unlawful removal of property from a premise using visible force.

• Question 52: Independent brokerage uses independent agents that represent multiple companies for clients.

• Question 53: Non-disclosure is a failure to disclose essential information.

• Question 54: An insured is bound by the minimum coverage requirements when legally responsible for the loss—in this case, the higher Nova Scotia amount.

• Question 55: Underwriters evaluate a risk and assess whether it is eligible for insurance.

• Question 56: A binder is a written or oral agreement for insurance coverage until a formal policy is issued.

• Question 57: Actuaries determine fair risk calculation of premiums based on data.

• Question 58: A request for insurance is an application.

• Question 59: Brokers have a duty to act in the best interests of their clients, including avoiding remunerative gain or disadvantaging clients by disclosing material facts truthfully.

• Question 60: Negligent acts and intentional acts are covered by liability policies, not illegal or criminal activities..

• Question 61: The primary function of insurance is to protect assets.

• Question 62: Damage to a kitchen by fire is a covered peril.

• Question 63: Homeowners policies usually include a Personal Liability section covering injuries or damage to others.

• Question 64: If a business is still affected even after reopening, Business Income (replacements for income loss for business) or Extra Expenses (expenses incurred for business) are preferred.

• Question 65: Voluntary Compensation for Residence Employees would cover housekeeper injuries during employment in the home.

• Question 66: Publishing a defamatory letter in a newspaper constitutes libel.

• Question 67: Non-owned auto policies cover situations where the insured uses a vehicle not owned by the insured and not necessarily the employer, for a purpose related to their job/business.

• Question 68: Four optional “own damage” coverages include collision or upset, comprehensive, specified perils, and all perils (often associated with auto insurance).

• Question 69: Comprehensive homeowners typically covers all risks for physical damage; the named perils policy only covers direct loss related to those listed.

• Question 70: The Office of the Superintendent of Financial Institutions in Canada deals with federal licensing and supervision of insurance companies.

• Question 71: Remote adjusters typically handle non-complex losses where site visits are not required.

• Question 72: An employer-issued laptop may be covered under a homeowner's personal articles endorsement.

• Question 73: Items with historical value should be insured by a fine arts floater policy.

• Question 74: Coverage summaries include perils covered, premium and rates, exclusions, and policy conditions.

• Question 75: Underwriters will decide whether to accept a risk. They are also permitted to adjust rates, and place a risk with another insurer.

• Question 76: The loss/damage policy section for automobile usually covers comprehensive losses.

• Question 77: A basic homeowners policy covers most perils for buildings and contents, usually with a few exclusions.

• Question 78: Renters/tenant policies have sections for personal property, personal liability, and sometimes additional living expenses.

• Question 79: Depending on the province, you may not need a license/certification to be an insurance agent. Licensing requirements may vary for insurance agents/brokers across different Canadian provinces/territories.

• Question 80: The term for the person receiving the benefits from the insured person's policy, besides the named insured, is a loss payee.

• Question 81: Cottage owners seeking suitable coverage may find the Seasonal Homeowner's form a useful tool for insurance planning.

• Question 82: Yes, if a fire department charge is related to a policy covered peril, the policy typically will pay.

• Question 83: Policies typically use the pro rata method of calculating the amount owed or refunded for cancellation.

• Question 84: The proximate cause of a loss is the primary factor directly causing the loss, not other indirect causes.

• Question 85: Personal-line insurance is designed for individual and families.

• Question 86: The Sue and Labor clause requires the insured to protect the insured property from further loss or damage when there is a claim.

• Question 87: Pure premium is the cost of insurance needed to pay claims.

• Question 88: Direct writers can typically represent an unlimited number of insurance companies.

• Question 89: Valued items of historical significance should be covered on a valued basis, not a depreciated or insurance cost basis. Items with sentimental value must be addressed differently.

• Question 90: An automobile collision with a moose would most likely be addressed under a comprehensive coverage.

• Question 91: Items displayed at a fair are not automatically covered; instead, there are additional coverages available.

• Question 92: A broker acts on behalf of the insured in placing insurance business.

• Question 93: The temporary substitute is usually defined as the same vehicle being used for the same type of activity.

• Question 94: Loss of rental income caused by damage is considered an indirect loss.

• Question 95: The special entities managing risk-sharing pools in automobile insurance (typically managing pooled premium funds for auto claims) will vary across jurisdictions/organizations.

• Question 96: Pure risk does not offer any chance of gaining or profit in an insurance scenario.

• Question 97: Ridesharing is the term for arrangement through mobile applications, for example, Uber, Lyft.

• Question 98: An indirect loss in the case of a damaged car may include damages to the vehicle in the case of a windstorm or tree impacting the vehicle.

• Question 99: Example situations with indirect losses may be different from indirect losses related to other circumstances or conditions in regards to the car.

• Question 100: A clause regarding anti-concurrent causes may limit coverage should multiple water perils occur during the same policy duration.