Exam (elaborations)
General Insurance Level 1 - Alberta Questions and Answers 2024
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General Insurance Level 1 - Alberta
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General Insurance Level 1 - AlbertaYour 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) $75,000
b) $83,333
c) $150,000
d) $93.755 - answerb) $83,333
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 $130,000
b) Insurer A will pay $100,000, Insurer B will pay $200,000
c) Insurer A will pay $76,659. Insurer B will pay $153,341
d) Neither insurer will pay. Two policies on the same property are prohibited - answerc)
Insurer A will pay $76,659. Insurer B will pay $153,341
On a Commercial Building, Equipment, and Stock Form, that insures the building owner,
which of the following would not be included under the "building" definition?
a) Growing plants and trees inside the building used for decorative purposes
b) Building maintenance supplies
c) Fixed structures pertaining to the building
d) Temporary fixtures and fittings - answerd) Temporary fixtures and fittings
Under a Commercial Building, Equipment, and Stock insurance policy, the definition of
"stock" includes
a) merchandise of every description usual to the insured's business, including packing
and wrapping materials
b) advertising material usual to the insured's business
c) all stock including similar property belonging to others for which the insured is
obligated to insure
d) all of the above - answerd) all of the above
,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 -
answerb) 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 - answerd) 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 - answerd) 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 - answerc) 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 - answerc) provides security to a party entering into a contractual
agreement with another
A marine insurance policy provides coverage for
, a) the hull and cargo
b) the hull only
c) cargo only
d) property damage to third parties only, not the vessel itself - answera) the hull and
cargo
Statutory conditions which are found in all fire policies
a) impose obligations on both the insured and the insurer
b) specify the coverages provided
c) state the rights of a third party
d) are not expressly required by law - answera) impose obligations on both the insured
and the insurer
Actual cash value (ACV) is understood as the cost of replacing property, less any
depreciation to it. Most insurers expand their definition to recognize that a fair estimate
of depreciation at the time of loss depends on which of the following factors?
a) The property's physical condition
b) The property's resale value
c) The property's obsolescence
d) All of the above - answerd) 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 - answera) 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
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