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IIC Principles and Practice of Insurance Sample Questions:
1. A company suffers a $100,000 property loss at its commercial location. If Insurer X and Insurer Y have policies subject to the same terms and conditions, and there is no deductible, what will each insurer pay based on the information below?
Insurer X insured amount: $400,000
Insurer Y insured amount: $100,000
A) Insurer X pays $100,000; Insurer Y pays $0
B) Insurer X pays $80,000; Insurer Y pays $20,000
C) Insurer X pays $0; Insurer Y pays $100,000
D) Insurer X pays $50,000; Insurer Y pays $50,000
2. What is a cover note?
A) An amendment added to a written document that alters its provisions
B) Document issued by intermediaries to inform the insured that coverage has been arranged
C) File notes confirming insurance discussions between the intermediary and the insured
D) Purchase agreement between the agent or broker and the insurer
3. What is the effect of perils and hazards on insurance rates for the underwriter?
A) The rate is determined by the law of large numbers for the hazards listed on the policy
B) An underwriter may increase the rate if the insured event is likely to increase the hazard
C) An underwriter may use a higher rate if a hazard increases the likelihood of a loss by an insured peril
D) The rate is calculated by multiplying the premium by the amount insured for each peril
4. 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) Both work on behalf of, and are paid by, the insurer
D) Neither has any limitation on their authority to settle claims
5. How would a moving and storage company benefit from purchasing insurance to cover customers' goods while in transit?
A) Opportunity for more subscription policies
B) Provides a feeling of security
C) Greater acquisition potential
D) More capital for business ventures
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: B | Question # 3 Answer: C | Question # 4 Answer: C | Question # 5 Answer: C |




