OTL Practice Exam Study Notes

OTL Practice Exam Study Notes

• Question 1: If a broker/agent knows relevant information was not disclosed on an application and doesn't tell the insurer, they are violating the doctrine of utmost good faith.

• Question 2: Tim failed to explain policy exclusions, restrictions, and exemptions, leading to a client not understanding their policy's coinsurance clause, deductible.

• Question 3: Assignments of assets to an executor or administrator of a will can happen without insurer consent. Assignments when property is sold also do not require insurer consent.

• Question 4: Personal liability coverage for cemetery plots is typically provided through an endorsement, not inherently included with homeowners policies.

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

• Question 6: Statutory conditions are legally required to be present in all home insurance policies.

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

• Question 8: Tenant's legal liability insurance covers damages a tenant causes to the premises they rent.

• Question 9: If a property has parts, the insurer is only liable for the insured value of the lost or damaged parts, not necessarily the whole property.

• Question 10: The sharing of loss or liability between two or more insurance companies for the same risk is contribution.

• Question 11: Commission is the amount paid to an intermediary as a referral fee, not profit.

• Question 12: Traditionally, flood applied to a body of freshwater.

• Question 13: The benefit of using the risk management process for an intermediary is client retention.

• Question 14: If a letter published in a newspaper defames or injures a person's reputation, the letter's author is guilty of libel.

• Question 15: The Use of Recreational Vehicle endorsement ensures compliance with statutory conditions regarding vehicle operator qualifications and age when the vehicle is operated off public highways rather than on public highways.

• Question 16: If a customer experiences bodily injury or property damage from using a product, the manufacturer might be responsible for compensatory damages.

• Question 17: When an insured requests the termination of insurance, the insurer is legally required to send written confirmation of cancellation to the insured, including any premium refund, as soon as practicable.

• Question 18: A fidelity policy protects against loss caused by a dishonest employee.

• Question 19: A comprehensive homeowners policy covers all risks, while a named-perils policy covers only listed items in its exclusions section.

• Question 20: Physical damage and liability for boats under a homeowners policy is often limited to smaller owned pleasure boats with specific dollar limits.

• Question 21: Damage from freezing of indoor plumbing is covered under a basic homeowners policy.

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

• Question 23: A mobile home set on a foundation is a type of manufactured home.

• Question 24: All perils comprehensive, collision and upset, and named perils are optional own-damage coverages.

• Question 25: Ground water is a term used to identify water found beneath the earth's surface.

• Question 26: A manuscript wording is a policy customized for a specific situation.

• Question 27: Warren's insurance company is unlikely to cover the damage if he was convicted of driving under the influence during a collision.

• Question 28: A homeowners' policy's personal liability section covers situations where the insured's negligence causes injury to another person while using the property.

• Question 29: Additional costs for complying with laws after a loss, such as demolition/construction/repair, are covered by the bylaw endorsement.

• Question 30: OSFI enforces the Insurance Companies Act.

• Question 31: Property and casualty insurance are the two main categories.

• Question 32: Condo unit purchasers own a shared interest in the common elements and a specific unit within the building.

• Question 33: Agents and brokers hold funds received in trust on behalf of the insurers to which they are accountable.

• Question 34: The Insurance Act establishes the automobile statutory conditions.

• Question 35: Loss due to temperature change is a type of indirect damage, for which tenants policies might have an explicit extension.

• Question 36: This policy extension covers personal property temporarily removed from the premises due to an event (for example, a fire), such as being held in a storage unit.

• Question 37: The policy conditions section specifies the start date, term, and expiry date.

• Question 38: The CGL policy's aggregate limit is the maximum total amount the insurer will pay out in actual claims during a policy year.

• Question 39: A request to reduce liability limits on an auto policy might be refused if it falls below the mandatory minimum, or if it isn't appropriate.

• Question 40: Custom-made closet organizers would likely be covered by the unit owner's personal property.

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

• Question 42: A mortgagee, a lender who holds a mortgage on a property, is a special class of loss payee.

• Question 43: A broker earning 20% commission on a 1000premiumhas1000 premium has 1000premiumhas200 deposited in the operating account.

• Question 44: A named-perils policy requires a specific named peril to occur for a direct loss on property.

• Question 45: Standalone garages are covered under the Detached Private Structure section.

• Question 46: An adjuster investigates insurance claims, makes payment recommendations, negotiates payments, and settles claims.

• Question 47: Prescription is the term for the period within which an insured must make an insurance claim.

• Question 48: Arson is an intentional fire.

• Question 49: The additional living expense is often set as a percentage of the dwelling's value in a tenants policy; other policies will specify fixed amounts.

• Question 50: Musical instrument insurance rates depend on storage and frequency of usage.

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

• Question 52: An independent brokerage uses independent sales representatives to represent multiple insurance companies.

• Question 53: Non-disclosure of material facts is a breach of utmost good faith.

• Question 54: Greta's insurer will pay the higher minimum limit, which is $500,000 in Nova Scotia from the at-fault case.

• Question 55: Underwriters decide if a risk is eligible for insurance.

• Question 56: A binder is a temporary agreement covering a risk while waiting for the formal policy.

• Question 57: Actuaries use data to create accurate insurance rates.

• Question 58: An application is a formal request for insurance.

• Question 59: A broker's duty to a client is to act in their client's best interest and avoid personal gain influencing their decisions.

• Question 60: Negligent acts can be covered by a liability policy if they result in injury or damage to others.

• Question 61: Insurance's primary function is to protect assets and secure credit.

• Question 62: Fire damage to a kitchen, loose carpet, and slippery sidewalks are all potential perils.

• Question 63: Personal Liability is the section covering damages/injuries an insured causes to others.

• Question 64: Business interruption insurance compensates for income loss if a business is affected by the loss, even if temporarily reopened.

• Question 65: Voluntary compensation for residence employees or injuries might come under voluntary compensation policies.

• Question 66: If a letter is deemed to injure or defame a person's reputation in print, the letter's author is guilty of libel.

• Question 67: Non-owned automobile policies cover employees using either the employer's commercial or personal vehicle for business purposes, but not for purely personal use.

• Question 68: Specified perils, named perils, collision, and upset, and comprehensive are optional own damage coverages.

• Question 69: A comprehensive homeowners policy covers all risks except those explicitly excluded.

• Question 70: Determining who manages licensing for insurance companies would depend on the jurisdiction.

• Question 71: Remote adjusters typically take care of straightforward losses that might not require a site visit.

• Question 72: Musical instruments, employer-issued laptops, shrubbery, and snowmobiles can be scheduled on a personal articles endorsement.

• Question 73: Items of historic value should be insured as fine arts floaters.

• Question 74: Perils insured against are part of the coverage summary.

• Question 75: Underwriters can accept a risk with conditions, increase the rate, reject it, or place it with another insurer.

• Question 76: Optional coverage for loss or damage is comprehensive coverage.

• Question 77: A comprehensive homeowners policy covers all risks with specific exceptions; a basic policy just covers named perils.

• Question 78: Sections in a tenant's policy include personal property, personal liability, and potentially additional living expenses.

• Question 79: Only some provinces require licensing for insurance intermediaries.

• Question 80: An assignee is generally a person who receives the insurance proceeds.

• Question 81: If the property/structure has many similarities to an owner's primary residence, then a homeowners policy is the most suitable.

• Question 82: Fire department charges arising from an automobile fire are usually not covered.

• Question 83: Some insurers calculate premium refunds or outstanding amounts on a pro rata or short rate basis.

• Question 84: The proximate cause is the immediate and effective cause of the loss.

• Question 85: Personal-lines insurance primarily covers individuals for such things as their cars, houses, and other personal assets.

• Question 86: A clause that requires the insured to protect the insured property is referred to as the Sue and Labor clause.

• Question 87: Pure premium is the underlying cost of providing coverage, not including additional charges or profits.

• Question 88: The number an agent typically represents depends on the insurance company.

• Question 89: Valued items are insured on a cost basis, not depreciated value.

• Question 90: Third party liability, comprehensive, and specified perils are possible coverages for a moose collision.

• Question 91: Comprehensive policies will cover exhibited items, but policies typically exclude property on display or exhibit.

• Question 92: A broker acts on behalf of the insured to place coverage.

• Question 93: The temporary substitute automobile refers to a replacement vehicle when the insured's vehicle is being repaired.

• Question 94: Lost rental income is considered an indirect loss in most instances.

• Question 95: Special industry pools manage risk sharing in auto insurance, specifically in risk management.

• Question 96: Pure risk describes a situation where a loss is possible but with no profit potential.

• Question 97: Ridesharing is arranging transportation through a mobile application.

• Question 98: Indirect cyber risks might include costs for repairing damaged network systems.

• Question 99: Incorrect scenarios (involving neighbors or children) regarding loss of property are not good examples of losses in insurance. An actual peril resulting in an insured risk would be the correct scenario.

• Question 100: Anti-concurrent causation limits coverage if more than one water damage peril occurs during a specific time period — typically, within a year.

Prepare for your OTL exam with this comprehensive practice quiz. Each question addresses crucial concepts related to insurance policies, liability coverage, and ethical obligations in the insurance industry. Test your knowledge and ensure you understand key aspects of underwriting and claims processing.