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1. With respect to an insurance contract, what is the best example ofconsideration?
A) Jennifer agrees to sell a $20,000 painting for $10,000 to her friend Shania
B) Martin is returning a shirt he purchased online for $35 because he found it cheaper elsewhere
C) Calvin wants to start a tutoring business and may charge $40 per hour
D) Yasmin offers to sell her dog for $500 but Paula refuses
2. Which insurance term is defined as providing compensation for losses or expenses that have been incurred?
A) Pure captive
B) Salvage
C) Utmost good faith
D) Indemnify
3. Which statement reflects how an insurer invests their capital?
A) There are no restrictions as to how an insurer can invest their capital
B) Insurers are compelled by regulations to invest in non-liquid assets
C) Provincial regulations allow insurers to invest in foreign bond markets
D) Government regulations specify the types of investmentsnot permittedto insurers
4. Antonio lights a firecracker and throws it to Brett. Brett tosses it to Sandra. Sandra catches it and throws it to Celina. It explodes in Celina's hands, injuring her. Who is the immediate cause of the loss?
A) Sandra
B) Brett
C) Celina and Antonio
D) Antonio and Brett
5. Which principle of insurance requires that an insured must have a financial interest in the subject matter of insurance at the time of loss?
A) Insurable interest
B) Subrogation
C) Utmost good faith
D) Indemnity
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: C,D | Question # 3 Answer: D | Question # 4 Answer: A | Question # 5 Answer: A |
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