Question 1

According to the Statutory Conditions of an Automobile Policy (O.A.P. 1), if the insurer chooses to terminate the policy, they must provide a refund of the unearned premium. How must this refund be calculated?

Options :

A : On a short-rate basis, allowing the insurer to keep an administrative fee.

B : On a pro-rata basis, representing the exact proportion of the unused premium.

C : On a flat-rate basis, regardless of the time remaining in the policy term.

D : The insurer is not required to provide a refund if the termination is due to a claim.

Answer: B

Question 2

According to the Statutory Conditions of a Fire Policy, Statutory Condition 2 - Property of Others states that the insurer is NOT liable for property owned by others unless:

Options :

A : The property is worth less than $500.

B : The interest of the insured in that property is specifically stated in the contract.

C : The property is located in the insured’s backyard.

D : The owner of the property also has their own insurance.

Answer: B

Question 3

Certain Accident Benefits limits under O.A.P. 1 Owner's Policy can be increased or extended at the option of the insured. What benefit CANNOT be changed?

Options :

A : Death and Funeral Benefits.

B : Income Replacement Benefit.

C : Caregiver Benefit for Catastrophic Injuries.

D : Disability Benefit after Age 65.

Answer: D

Question 4

A broker is approached by a high-net-worth client who wants to place their unique collector car insurance with an unlicensed US-based insurer because the rates are significantly lower. What is the broker's primary obligation?

Options :

A : Place the coverage as requested to ensure the client is satisfied with the savings.

B : Refuse the business because brokers are strictly prohibited from dealing with unlicensed insurers.

C : Advise the client of the risks, obtain a signed "Unlicensed Insurer" disclosure, and ensure no licensed market is available.

D : Tell the client to contact the US insurer directly so the broker can avoid any legal responsibility.

Answer: C

Question 5

Risk may be dealt with in a number of ways including transferring it to others or retaining it intentionally. Which of the following alternatives is a transfer of risk?

Options :

A : A monitored security system.

B : Self-insurance.

C : An agreement of purchase and sale.

D : Purchase of insurance.

Answer: D