Download Alberta General Insurance Level 1 Exam 2025 | Complete Questions and Correct Answers and more Exams Insurance Economics in PDF only on Docsity!
Alberta General Insurance Level 1 Exam 2025 |
Complete Questions and Correct Answers |
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Which of the following is true about the form of organization that an insurer may take? a) A joint stock company is owned by its policy holders b) A farm mutual insurance company is owned exclusively by farmers who buy shares in the company c) Lloyds of London is NOT an insurance company; it is a place where underwriters undertake to insure risks d) Mutual insurance companies are NOT required to be licensed under the Insurance Act ---------CORRECT ANSWER-----------------c) Lloyds of London is NOT an insurance company; it is a place where underwriters undertake to insure risks Insurance allows people to live their lives and carry on their business without the fear that some single catastrophe or natural disaster could physically and financially ruin them. Which of the following best defines "insurance"? a) It is minimization of detrimental effects of risk b) It is the method of sharing the losses of the few individuals in a group who suffer them among the many members of the group who do not c) It influences the outcome of a loss
d) It is based on risk or uncertainty ---------CORRECT ANSWER-----------------b) It is the method of sharing the losses of the few individuals in a group who suffer them among the many members of the group who do not Many large insurers market their policies through the independent brokerage system. An independent broker is a) one who has authority from a company to manage all of that company's business within his or her territory b) one who has authority from a company to appoint other agents and to settle claims c) one who represents only one company d) a business person who may place business with any number of insurers --------- CORRECT ANSWER-----------------d) a business person who may place business with any number of insurers The insurance industry manages large pools of money from premiums which are generally paid in advance. This capital has a positive influence on the economy. An example of this is a) insurers invest in federal, provincial and municipal bonds, thus recycling premiums into community development b) the peace of mind that results when substituting a known premium payment for an uncertain loss payment c) businesses must set aside reserves of money in case of a future loss or accident
Regulation of persons who sell insurance to the general public falls under the control of a) the federal government b) the provincial governments c) the Insurance Brokers Association of Canada d) insurance companies whom they have agreements with ---------CORRECT ANSWER-----------------b) the provincial governments It is your responsibility as a broker to assist individual insurance consumers to determine the best insurance program for them. A risk analysis is an effective tool to a) retain, organize and file your notes b) clarify information provided by your client c) determine property items at risk as well as the likelihood of events happening d) describe the differences between named perils and all-risk wordings --------- CORRECT ANSWER-----------------c) determine property items at risk as well as the likelihood of events happening In insurance terms, a peril is frequently described as a cause of loss. Which of the following is NOT a peril?
a) Lightning b) a wood-burning stove used for heating c) Windstorm d) Burglary ---------CORRECT ANSWER-----------------b) a wood-burning stove used for heating You have requested a flow chart from your client to assist you in identifying exposures to loss. A flow chart maps the sequence of business activities using graphic representation. One of the main benefits of a flow chart is its ability to a) describe in detail the subjects of insurance b) reveal bottlenecks in production which may be difficult to repair or replace in a timely manner c) highlight any legal liabilities d) identify appropriate insurance policies to address the exposure to loss --------- CORRECT ANSWER-----------------b) reveal bottlenecks in production which may be difficult to repair or replace in a timely manner For a risk manager, controlling a risk means a) measuring the frequency and severity of the exposure accurately b) developing a plan to address loss prevention and reduction strategies including loss assumption or risk transfer methods
c) in understanding that an underwriter will implement stricter terms and conditions in a soft market d) all of the above ---------CORRECT ANSWER-----------------a) in matching your client's needs to the most appropriate insurance product being offered at the time Why is it necessary to monitor and modify a risk management plan? a) If it is determined that a technique is not effective, changes may be required b) New exposures to loss may develop c) Benchmarks used to measure outcomes may be unrealistic and require modification d) all of the above ---------CORRECT ANSWER-----------------d) all of the above There may be times when the premium you quote to a client from the rate manual and the final premium differ. It is important that you discuss the reason for the discrepancy with your underwriter so you can a) have the discrepancy corrected b) explain the reasons for the difference to your client c) look for other solutions such as an increase in deductible to lower the premium d) all of the above ---------CORRECT ANSWER-----------------d) all of the above
A premium a) is not a primary motivator for clients in obtaining insurance coverage b) in the rate manual is the final premium c) is the amount of money an insurer charges to provide insurance coverage d) if lower, is the sole factor in customer retention ---------CORRECT ANSWER------- ----------c) is the amount of money an insurer charges to provide insurance coverage Agencies/brokers must have efficient systems to handle reported claims. While it is not generally the function of producers to be involved in the handling of claims, they must do which of the following? a) Promptly notify the insurer if a loss is reported and appears not to be covered by the policy b) recommend and appoint an adjuster c) Monitor the progress of the claim and assist the client, adjuster and insurer, whenever requested d) all of the above ---------CORRECT ANSWER-----------------c) Monitor the progress of the claim and assist the client, adjuster and insurer, whenever requested Brokers or agents do not normally adjust claims, but you are an advocate for the insured. To provide good claims service to your client, it is important to
When reviewing policy wordings, identify any conditions or warranties that require action or duties on the part of the insured in order to maintain coverage. Once identified, a) contact the insurer and have them removed b) contact the insurer and have them modified c) bring them to the attention of the insured and explain the effect they would have on potential losses d) all of the above ---------CORRECT ANSWER-----------------c) bring them to the attention of the insured and explain the effect they would have on potential losses Which of the following is NOT an example of private or personal information a) A client's contact information b) A client's credit rating c) A list of criteria for acceptable risk identification d) Medical history for an identified client ---------CORRECT ANSWER-----------------c) A list of criteria for acceptable risk identification Customer profiles are useful tools for identifying clients and their insurance needs. Because information being collected is confidential, discretion and respect for the privacy of others is essential. A federal statute, the Personal Information Protection and Electronic Documents Act requires
a) information gathered for a specific purpose must only be used for that purpose b) information requested must be relevant c) information collected must be held in strictest confidence d) all of the above ---------CORRECT ANSWER-----------------d) all of the above Your insured, a sole proprietor, purchased a building valued at $1 million. The insurance policy has a coinsurance clause based on the replacement cost value of 90%. Contrary to your advice, your insured insures the building for only $500,000. He suffers a windstorm loss totaling $150,000. How much will the insurer pay? a) $75, b) $83, c) $150, d) $93.755 ---------CORRECT ANSWER-----------------b) $83, An insured property is covered by two separate commercial policies placed with two different insurers. Insurer A's policy has a limit of $100,000 and Insurer B's policy has a limit of $200,000. The insured suffers an insurable loss of $230,000. Assuming no deductibles apply, how much will each insurer pay? a) Insurer A will pay $100,000. Insurer B will pay $130, b) Insurer A will pay $100,000, Insurer B will pay $200, c) Insurer A will pay $76,659. Insurer B will pay $153,
The Commercial Building, Equipment and Stock insurance policy identifies three types of equipment for which coverage is provided. Which of the following is NOT one of these three types? a) Tenants' improvements and betterments if the insured does not own the building b) Packing materials used to ship stock c) Property belonging to others for which the insured is legally liable d) The contents usual to the business the insured is engaged in, other than stock - --------CORRECT ANSWER-----------------b) Packing materials used to ship stock The basic principle of business interruption insurance is a) to arrange alternate employment for employees while the building is being repaired following an insured loss b) To restore the premises to the condition they were in before the loss c) to cover the cost of relocation the business d) to restore the income that would have been earned had the business not been interrupted ---------CORRECT ANSWER-----------------d) to restore the income that would have been earned had the business not been interrupted On a commercial crime insurance policy, employee dishonesty insurance a) is provided on a discovery basis
b) is also known as fidelity insurance c) protects insured against dishonest acts committed by employees, alone or in collusion with others d) all of the above ---------CORRECT ANSWER-----------------d) all of the above Which of the following losses normally excluded under a boiler and machinery policy can be added by endorsement? a) Fire b) Nuclear reaction or radioactive contamination c) Increased costs due to the enforcement of a bylaw regulating building construction d) War related losses ---------CORRECT ANSWER-----------------c) Increased costs due to the enforcement of a bylaw regulating building construction A surety bond a) is a contract between two parties b) protects the surety c) provides security to a party entering into a contractual agreement with another d) protects the insurer ---------CORRECT ANSWER-----------------c) provides security to a party entering into a contractual agreement with another
d) All of the above ---------CORRECT ANSWER-----------------d) All of the above A "mortgagee" is defined as a person or organization that lends money to someone to buy property. The mortgagee under a mortgage clause on a property insurance policy has certain rights and obligations. Which of the following is a right of the mortgagee? a) The right to share in the loss payment, as long as the insured owes something on the mortgage b) The right to share in the loss payment, unless the mortgagor neglects the property c) The right to share in the loss payment, unless occupation of the premises is for purposes more hazardous than those permitted by the policy d) all of the above ---------CORRECT ANSWER-----------------a) The right to share in the loss payment, as long as the insured owes something on the mortgage In anticipation of building an addition to his home, which you insure under a homeowner package policy for $320,000, your client purchases and stores on his property $4,000 worth of lumber. A serious windstorm strikes the area and your insured's lumber pile is destroyed. What coverage would be available under your policy? a) None. The lumber is not yet part of the building b) The lumber would be fully covered under Coverage A - Dwelling Building c) The loss would be paid under the 10% extension of Coverage C - Personal Property for property outside the building
d) None. The policy excludes damage to property in the open caused by windstorm ---------CORRECT ANSWER-----------------b) The lumber would be fully covered under Coverage A - Dwelling Building Motorized vehicles are excluded under Coverage C - Personal Property of a homeowner policy. Coverage is provided as an exception to the exclusion for which of the following? a) Mobility Scooter b) Lawn mower c) Child's motorized toy car up to a maximum speed of 10 km/hr d) All of the above ---------CORRECT ANSWER-----------------d) All of the above Stamp and coin collections are best insured by a/an a) Personal articles floater b) Fine arts floater c) Homeowner package policy (Comprehensive Form) d) Homeowner package policy (Basic Form) ---------CORRECT ANSWER----------------- a) Personal articles floater Under the Definitions section of a homeowners form, "data problem" is defined as
c) Food spoilage when a circuit breaker trips, disrupting the supply of power d) Damage to the freezer due to food spoilage up to the full limit of insurance for Coverage C ---------CORRECT ANSWER-----------------b) Expenses incurred to store freezer food in a cold storage unit while the freezer is being repaired Your clients have been renting a unit in a condominium high-rise building and have carried a tenants package policy with your office. They have just purchased a condominium unit similar to the one they have been renting and will soon move in. What advice do you provide to meet their needs? a) Transfer their existing policy (as is) to their new address. The buildings are similar, and they do not plan to buy any additional contents right away. b) Cancel their entire policy. they no longer have any need for insurance as the condominium corporation is required by law to insure all exposures for the owners of every unit c) Get full details of the security arrangements and alarm systems in the building. You will then be able to recommend how much fire and theft insurance they should carry. d) Cancel their tenants policy and apply for a special package policy designed for condominium unit owners ---------CORRECT ANSWER-----------------d) Cancel their tenants policy and apply for a special package policy designed for condominium unit owners Which of the following is correct
a) The condominium unit owner package purchased by a unit owner must provide sufficient insurance limits to cover the common elements of the building in addition to his/her contents and any improvements b) A condominium corporation never owns the land on which the building stands c) A condominium unit owner owns the space inside his/her unit, the contents, and any improvements bought or installed by him/her d) The condominium unit owners package policy does not provide personal property insurance ---------CORRECT ANSWER-----------------c) A condominium unit owner owns the space inside his/her unit, the contents, and any improvements bought or installed by him/her Your client, Bill West, has purchased a farm. You advise Bill that he requires a farm insurance policy which will cover his dwelling and contents as well as the rest of his farm. You recommend an endorsement be added to cover his farm machinery and equipment. The typical coverage this endorsement will provide is a) coverage for scheduled equipment only b) all-risk coverage c) subject to 100% coinsurance d) all of the above ---------CORRECT ANSWER-----------------b) all-risk coverage Burglars enter the insured's unlocked seasonal residence and steal some of the contents. Under the seasonal residence insurance policy, the loss is a) covered, subject to the policy deductible
