Principles and Practice of Insurance (C11) Free Practice Test

Question 1

Which factor could explain poorer performance of renewal clients as opposed to new business clients?

A. An automated renewal process

B. Reinsurance only being available on renewal policies

C. New business clients limit claims in order to keep premiums low

D. More strict underwriting criteria for renewal risks

Correct Answer: C

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Question 2

Insurer A and Insurer B cover the same building and the policies are NOT subject to contribution. The building sustains a loss of $450,000. How can the insured claim for their loss?

A. Claim the full amount from Insurer A and have Insurer B pay the loss deductible

B. Claim the full amount from insurer A

C. Claim the full amount from Insurer B and request them to subrogate against Insurer A

D. Claim 50% of the loss from each insurer

Correct Answer: B

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Question 3

What are many of the statutory conditions designed to accomplish?

A. Provide clarity on the intent of the policy

B. Outline the steps to take to cancel the policy

C. Shift the onus of proof from the insured to the insurer

D. State how PIPEDA applies to the insured and insurer

Correct Answer: A

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Question 4

Which clause paysreplacement costeven if the lossexceeds the amount of insuranceon the dwelling?

A. Pure restitution replacement clause

B. Total replacement cost clause

C. Guaranteed replacement cost clause

D. Outright replacement clause

Correct Answer: A,C,D

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Question 5

Jack owns a convenience store. During a severe hurricane, he places sandbags in front of his store and boards up the windows. Which technique of loss control is Jack utilizing?

A. Loss reduction

B. Diversification

C. Risk transfer

D. Avoidance

Correct Answer: A

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Question 6

Dominika's house sustains a fire resulting in a $500,000 total loss to the house and contents. Some pieces of furniture are salvageable and valued at $4,000 by the insurer. Dominika chooses to keep these items for her next home. Dominika's policy has a guaranteed replacement cost clause with a limit of $500,000 and a deductible of $1,000. What settlement amount will Dominika recover from the loss?

A. $500,000

B. $496,000

C. $499,000

D. $495,000

Correct Answer: D

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Question 7

Which role is directly employed by the Canadian property and casualty insurance industry?

A. Lawyer

B. Mechanic

C. Travel agent

D. Health professional

Correct Answer: A

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Question 8

Which statement best describes a valued contract?

A. The policy pays the full cost of replacing items even if this amount exceeds policy limits

B. Settlements are based on a predetermined amount agreed upon at contract formation

C. The insured can reject settlement offers and force a higher payout

D. Settlements involve periodic payments due to the nature of valuation

Correct Answer: B

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Question 9

How are staff adjusters and independent adjusters similar?

A. Both are licensed only in Quebec and New Brunswick

B. Neither is allowed to perform an investigation

C. Neither has any limitation on their authority to settle claims

D. Both work on behalf of, and are paid by, the insurer

Correct Answer: D

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IIC Principles and Practice of Insurance (C11) Free Practice Test