C131 by IIC Valid Free Exam Practice Test

Question 1

In risk management, how can a risk be transferred?

A. By eliminating the risk B. By reducing the risk through loss prevention C. By using contracts D. By self-insuring

Correct Answer: C

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Question 2

How does a self-insured retention (SIR) differ from a deductible?

A. Applies to losses below a specific amount B. Is a method of insuring risk C. Does not encourage loss prevention measures D. Does not affect the policy limit

Correct Answer: A

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Question 3

After examining an organization's financial statements and accounting records, a broker decides that they would like to take the company on as a client. What did the broker determine during their examination that helped make this decision?

A. The organization is consistently profitable. B. The organization has a captive company. C. The organization is compliant with federal and provincial tax laws. D. The organization has paid policy premiums on time for the last seven years.

Correct Answer: A

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Question 4

An employee of a self-storage facility is careless and causes a fire resulting in damages to the contents in three rental storage units. The renters of the units could seek reimbursement under which policy?

A. Contingent business interruption policy B. Warehouseman's legal liability policy C. Rental insurance policy D. Commercial property floater policy

Correct Answer: B

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Question 5

A company that owns several large coal mines is sent a letter of notification from its insurer, stating that policy coverage will be more restrictive going forward, particularly regarding pollution. Why would the coverage become more restrictive?

A. Insurer competition B. Reduction in mandatory arbitration C. Changes in the law D. Decrease in remediation expenses

Correct Answer: C

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Question 6

Which action illustrates the duty of care required from a broker when arranging a client's insurance program?

A. Inspect all the client's premises and provide risk control recommendations B. Disclose the percentage of the premium that will be paid as commission C. Provide insurance options for known exposures D. Await inquiries from the client before approaching the insurer on policy wording discrepancies

Correct Answer: C

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Question 7

XYZ Insurer is known for using the first-in principle. If multiple brokers request quotations for a new applicant, how does XYZ Insurer respond?

A. Blocks itself from dealing with other brokers on the risk B. Cooperates with the largest brokerage C. Negotiates with each broker based on the same terms and conditions D. Releases quotes for each broker sequentially

Correct Answer: A

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Question 8

A broker is using their prior market knowledge to place a risk with an insurer who accepts luxury log cabins.
Which insurer aspect is the broker considering?

A. Risk management B. Risk appetite C. Risk avoidance D. Risk tolerance

Correct Answer: B

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IIC Advanced Skills for the Insurance Broker and Agent - C131 Exam Practice Test