OTL Practice Exam Six Master Copied January 12 2025
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Question 1 of 100
Your client, Bill West, has purchased a farm. You advise Bill that he requires a farm insurance policy which will cover his dwelling and contents as well as the rest of his farm. You recommend an endorsement be added to cover his farm machinery and equipment. The typical coverage this endorsement will provide is
Question 2 of 100
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?
Question 3 of 100
Your 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?
Question 4 of 100
Your clients have been renting a unit in a condominium high-rise building and have carried a tenants package policy with your office. They have just purchased a condominium unit similar to the one they have been renting and will soon move in. What advice do you provide to meet their needs?
Question 5 of 100
Under a Homeowners Basic Form, the named peril “water damage” excludes loss or damage caused by freezing in an unheated portion of the building during the normal heating season if the insured is away for more than
Question 6 of 100
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?
Question 7 of 100
The coverage for Replacement Transportation (OPCF 20) provides coverage for which of the following:
Question 8 of 100
Mary goes over on the ferry to Pelee Island. She is late and gets on last, just before the ferry sails. Halfway across a storm blows in and the ship is in danger of sinking. The last three cars that were put on the ferry are jettisoned to save the ship, other vehicles and passengers lives. The ships insurer and insurer of all the other vehicles will contribute to the insurers of the three vehicles that were dumped. This is an example of:
Question 9 of 100
A baby food manufacturer has a CGL giving them $5,000,000 in products and completed operations coverage. Their policy runs from February to February. In June, glass is found in a batch of apple sauce and $2,000,000 is paid out to children who were injured/cut when they ate it. In September, there is another recall on the squash, which had gone moldy. Several children became critically ill after eating it, and one child died as a result of a food allergy that kicked in when he ate it. A total of $3,500,000 was awarded to the families. The CGL paid only $3,000,000. This is an example of:
Question 10 of 100
One spring my neighbor was burning his grass to get it to grow faster. The fire got out of control and burned my pool liner and my shed with new patio furniture. My insurance company paid to replace my liner and patio furniture and to rebuild my shed I had to pay my $1,000 deductible. They told me they would go after my neighbour’s insurance company to be reimbursed what they paid and they would even obtain back for me the amount of my deductible. This is an example of:
Question 11 of 100
An insurer does not want to pay out more than $1,000,000 in any one catastrophe like a hail storm or a tornado. The underwriting department arranges a contract of insurance with another insurer which agrees that for 2% of the total property premium collected they will cover any losses over and above $1,000,000 limit. This is an example of:
Question 12 of 100
Quantum Insurance Brokers were situated in a strip mall that was severely damaged by a Dollar Store fire. The brokerage has coverage that will allow them to rent a unit in a nearby location, rent a phone system and computers and advertise their new location. They were shut down for two days, then reopened in the new location. What coverage would have provided them with this coverage?
Question 13 of 100
Billy’s Bait Emporium burned down in the peak of fishing season. He will lose $20,000 a month in lost income. This type of loss is called:
Question 14 of 100
As a broker, you get a call requesting you insure the new bridge going up between Canada and the US. You call your favourite commercial insurer and they tell you the risk is too big for them to take on alone. They agree to take 25% of the risk and suggest your round up some other insurers to place the coverage with. Five other insurers agree to take on a portion of the risk under the leadership of the first insurer you called. This is an example of:
Question 15 of 100
The Surf and Turf Restaurant has a walk in freezer hung with aged Angus beef, New Zealand lamb and veal. One evening there is an ice storm which brings down the power lines and the business is two days without power. The meat in the walk in freezer begins to thaw and is no longer viable to be sold in the restaurant. To be covered for this loss the restaurant would have to have:
Question 16 of 100
One of your co-workers who is a licensed broker, was accused of not placing insurance for various clients, of neglecting to submit the applications through the brokerage or to submit the client’s request for coverage to the respective insurers. As well as not making necessary changes to policies as requested by the clients, sometimes leaving the clients without insurance when they thought they were insured. Which of the following is incorrect?
Question 17 of 100
A windstorm damaged some farm buildings which have the farm rebuilding clause on their policy. The farm house has been moved a mile up the road, so the owners want to rebuild the two destroyed farm buildings up the road beside the new farmhouse. How much will they receive to rebuild the farm buildings?
Question 18 of 100
The Huntington Shoe Store covers theft losses to their business by store employees with a Fidelity Bond. What party to a bond contract would the Huntington Shoe Store be?
Question 19 of 100
Who is an insured under the Comprehensive Homeowner Policy?
Question 20 of 100
We will pay for unintentional direct damage you cause to property even though you are not legally liable. What section does this refer to?
Question 21 of 100
A client came into the office looking for a new house insurance policy. He has a Comprehensive Homeowner Policy with a premium of $1,100. You would like to sell him a house insurance policy because you know he will eventually bring his other business to you if you insure the house. However, once the quote is completed, all of the markets for which you can offer a policy are for at least $200 higher than his current policy. You would:
Question 22 of 100
Melanie had a kitchen fire in her apartment while making French fries. Damage to the unit was $20,000. Three months later, Melanie received a bill from her landlord’s insurance company for the $20,000. Which section of her Tenant Policy would pay the bill?
Question 23 of 100
A commercial client comes in to pay his $27,000 premium. It is near the end of the day, and the bank deposit for the day has been done. What can the brokerage do?
Question 24 of 100
Who is an insured person under your OAP 1 for statutory Accident Benefits?
Question 25 of 100
If you acquire any additional fine arts, we will automatically insure these under this coverage:
Question 26 of 100
The owner’s policy on a vehicle he loans to a friend is:
Question 27 of 100
Following the death of an insured, the policy will protect the heir (successor) to the insured’s estate but not the purchaser of the property should the heir sell. This is an example of:
Question 28 of 100
Once the damaged item is replaced or a cash settlement given to the insured, the insurer gets ownership of the damaged property and may sell it to a wrecker or collector with the amount it is being sold for, being used to reduce the total amount of the loss. This is an example of:
Question 29 of 100
A legal concept that states if a person by their actions or lack of actions, show that they are not going to exercise a legal right allowed them, then later they are not able to exercise that right. This is an example of:
Question 30 of 100
Reece was on a shopping trip in Pennsylvania and withdrew money from a bank machine. Later that morning a store told her the money was counterfeit and wouldn’t accept it. When she got home the bank advised there was nothing they could do and advised her to call her insurance company. Luckily Reece has a tenants policy so she is planning to call her company to see if there is coverage. Do you think there is coverage under her policy?
Question 31 of 100
Which statement is incorrect about the by-law exclusion?
Question 32 of 100
We will pay up to the full cost of repairing or replacing your boating equipment (whichever is less), but not more than the amount of insurance shown on the coverage summary page. What basis will losses to watercraft on a Watercraft Floater be paid?
Question 33 of 100
Food Freezer coverage provides coverage for spoilage of frozen food on a freezer on the insured premises.
Question 34 of 100
Andrew neglected to tell his broker about his recent diagnosis of a lung disorder for which he was hospitalized and is now on a steroid puffer. While in St. Lucia, in part due to the humidity, he developed respiratory distress while zip lining and had to be hospitalized. Will Andrew’s travel policy cover the $38,000 bill for his medical evacuation from the rain forest and subsequent hospitalization?
Question 35 of 100
Oliver has purchased a package to attend Equestrian events, at the Toronto summer Olympics. The package, which cost $10,000, also includes three night hotel at the venue he has chosen to attend. His air fare cost him an additional $1,000. He purchased trip cancellation and emergency medical coverage. Two days before he is due to depart, his sister is critically injured in a car accident and he decides to remain home by her bedside. Will his insurer cover the money lost because he is unable to travel?
Question 36 of 100
Will’s grandmother is visiting from Viet Nam. They purchased Visitor to Canada coverage for her prior to her arrival. She is quite elderly but in good health except for being on medication for high blood pressure. While sightseeing in Niagara Falls, she complains of a headache, light headedness and has a severe nosebleed. She is brought to the Emergency Room of the Niagara Metro Hospital and it is determined, she is suffering from severely elevated blood pressure. Her medication is changed, and she is kept overnight for observation due to her age. Hospital bill came to $4,000. Will this be covered by her Visitor to Canada policy?
Question 37 of 100
Marnie’s mother joins the family on a trip to Chicago. On a visit to the rose garden park she is bitten by a squirrel, while feeding them nuts. She is brought to the hospital and the bite is treated, but she is told she will have to undergo a series of rabies shots, four over a period of 14 days at a cost of $7,000. Will her Emergency Medical Travel Insurance cover the costs?
Question 38 of 100
Your travel insurance client tells you he is going to participate in a climb in the Himalayan Mountains, within sight of Mount Everest. What would you tell him?
Question 39 of 100
After an automobile accident, how soon must an insurer give notice to an insured claimant when they are going to repair the automobile?
Question 40 of 100
An insured, while driving a courtesy car from the garage where his car is in for repairs, causes an accident. The damage to the courtesy car is $7,000. The insured has a $1,000 deductible on his own policy. The courtesy car has a $2,500 deductible. The insured’s own insurance company will pay:
Question 41 of 100
A fully insured vehicle skids on an icy driveway and hits a neighbour’s car. Whose policy and what section will repair the neighbour’s vehicle?
Question 42 of 100
Uninsured Automobile Coverage would pay for which of the following:
Question 43 of 100
Once the damaged item is replaced or a cash settlement given to the insured, the insurer gets ownership of the damaged property and may sell it to a wrecker or collector with the amount it is being sold for, being used to reduce the total amount of the loss. This is an example of:
Question 44 of 100
Laura has a sewer backup claim in the area of the basement where the baby/child furniture is stored. Several items are deemed total losses and the insurer offers to replace them. Laura says she does not need them as the kids are all young teenagers and she does not plan to extend her family. The insurance company adjuster offers Laura the cost to replace the furniture less a percentage of depreciation for each year she has had the furniture. This is an example of:
Question 45 of 100
When an insurance company gives brokers permission to put coverage in place to a total insured value of $1.5 million. This is an example of:
Question 46 of 100
Jax has Specified Perils on his automobile policy, which does not cover falling objects but does cover windstorm. One evening, the wind blows a tree down on his car. Is the damage to his car covered?
Question 47 of 100
“The losses of the few are shared by the many” best describes which concept:
Question 48 of 100
Which of the following elements is not required to be present to form any type of legal contract?
Question 49 of 100
Risk may be dealt with in a number of ways. Which one of the following alternatives is a transfer of risk?
Question 50 of 100
A snowboard shop advised their insurance broker their stock values average $20,000 a month except for February, March, and December when sales increase by forty percent for those months. How would you suggest the shop insure their stock?
Question 51 of 100
A retail store has a commercial Fire, Stock and Equipment form on their store. They also have a blanket glass insurance policy. There is a fire and the building is gutted and all of the windows are broken. Which policies will respond to the loss?
Question 52 of 100
Armin’s Tool and Die shop insures their building for $300,000 with a 90% co-insurance clause and a $5,000 deductible. It has a rebuilding cost of $450,000. The building is hit by lightning and sustains a loss of $170,000. What will the insurer pay out?
Question 53 of 100
Safe burglary insurance would not cover which one of the following?
Question 54 of 100
A client called to add another vehicle onto his automobile policy. He only put comprehensive on the vehicle as he was planning on parking it for the winter. Two months later, he called his broker requesting proof of insurance slips immediately as he had been stopped the day before for driving with no insurance. As it was a second offence, he was facing a minimum of $10,000 to a maximum of a $50,000 fine under the Compulsory Insurance Act. As his broker you would:
Question 55 of 100
A friend of yours is a mortgage broker. She suggests that she send her clients to see you about house insurance. What would you tell her?
Question 56 of 100
An insured comes into your office to cancel his house insurance policy, saying he can get it $30 cheaper at the brokerage down the street. What would you do?
Question 57 of 100
Mikaela took the insurance broker level one licensing course and passed the exam with a mark in the high 80’s. What may she do as a broker with a restricted license?
Question 58 of 100
Your client has a seasonal dwelling at which he stores his canoe valued at $1,800. Upon his arrival, he found that the canoe had been stolen and the front door smashed open. Your client had purchased coverage for Burglary and Robbery. You advice your client:
Question 59 of 100
If you have a Comprehensive Homeowners Policy and currently insure $100,000 in Fine Arts, how would we insure any additional fine arts under this coverage:
Question 60 of 100
Which statement is correct with respect to coverage under Section II Liability Coverage:
Question 61 of 100
Which of the following statements is correct?
Question 62 of 100
Which of the following would allow an insurance company the right to deny or limit coverage in the event of a claim involving an automobile?
Question 63 of 100
The Direct Comprehensive Property Damage section is used when the insured:
Question 64 of 100
What type of calculation is used on premium when an insured cancels a policy?
Question 65 of 100
Which of the following is not true of the Mortgage Clause?
Question 66 of 100
There are three types of exclusions under insurance policies. Which of the following does not belong to this group of exclusions?
Question 67 of 100
Bill has a building valued at $500,000. He has insured it for $480,000 with a 90% co-insurance clause. He has a loss of $200,000. What will the insurer pay?
Question 68 of 100
Dajinder has a property insured for $600,000 while its replacement cost is $750,000. There is a 100% co- insurance clause on the policy and a $5,000 deductible. He has an $80,000 loss. How much will the insurer pay?
Question 69 of 100
An alarm company approaches your brokerage and suggests you give out alarm hardware to everyone for whom you write a house insurance policy. They will make their money from the installation and monthly monitoring fees. You would:
Question 70 of 100
The Statutory Conditions of the Homeowner Policy determine how a loss will be settled in regards to a misrepresentation about a material fact that was made at the time the policy was taken out. Which of the following is correct?
Question 71 of 100
The Seasonal Dwelling Policy includes an optional extension which without increasing the amount of insurance shown in the declaration allows up to 10% of the amount of insurance to insure:
Question 72 of 100
Which of the following is not covered by a Comprehensive Homeowner Policy?
Question 73 of 100
Two friends Jacob and Winnie purchase a home together. Jacob contributed $25,000 and Winnie contributed $75,000 towards the $100,000 home. The purchased a joint policy with an 80% co-insurance clause for the amount of $80,000. Six months after they purchased it a fire destroyed the home. How much would Jacob and Winnie be paid respectively.
Question 74 of 100
A snowboard shop advised their insurance broker that stock values average $50,000 a month except for January, February and March when their stock increases by 40-50%. How would you recommend they insure this additional stock?
Question 75 of 100
Which of the following is not excluded under typical travel health policy.
Question 76 of 100
You have a Comprehensive Homeowners Policy with a limit of $250,000 for Coverage A and a $250 deductible. In which of the following circumstances would your deductible not apply.
Question 77 of 100
You have three antique vases. Two were stolen and one is being repaired and returned to you. Which clause prevents you from claiming all three?
Question 78 of 100
A jewellery store has a commercial Fire, Stock and Equipment form on their store. They also have a blanket glass insurance policy. There is a fire and the building is gutted and all of the windows are broken. Which policies will respond to the loss?
Question 79 of 100
Joe’s Tool and Die shop insures their building for $300,000 with a 90% co-insurance clause and a $5,000 deductible. It has a rebuilding cost of $450,000. The building is hit by lightning and sustains a loss of $170,000. What will the insurer pay out?
Question 80 of 100
Sunny Yard Landscapers has tools insured for $60,000. In the spring they bought $40,000 more worth of tools and forgot to insure them. The tool-shed was caught in a tornado and the building and most of the tools were destroyed. The tool floater has an 80% co-insurance clause. They lost 50,000 of their tools. What amount of their loss will be covered?
Question 81 of 100
There is an incentive contest going on in your brokerage and you are in the lead to win a trip to Freeport, Bahamas if you sell over a specified amount of gross written premium. A new client tells you about an at fault accident he has in Alabama, while driving with a friends vehicle that was insured and registered there. This is a second accident and will make him ineligible for the preferred markets. Reports pulled, do not show the Alabama accident. What do you do?
Question 82 of 100
Your client has a season dwelling at which he stores his canoe valued at $1,800. Upon his arrival, he found that the canoe had been stolen and the front door smashed open. Your client had purchased coverage for Burglary and Robbery. You advised your client:
Question 83 of 100
Ed and Susan rented a cottage for a week in a North Western Ontario resort complex. Included in the cost of the cottage is use of a golf cart to get around the complex. Are they covered to drive the golf carts to the beach or to the area where the rock climbing and hiking trails are located?
Question 84 of 100
Joe and Jessica have a cottage in Muskoka insured on a Seasonal Dwelling Fire and Extended Coverage Form. There is severe weather, hail and winds and the fence surrounding the property is destroyed. Would it be covered under the Seasonal Policy?
Question 85 of 100
The notice to authorities clause requires an insured to give notice to the police or other law enforcement agency if loss or damage is due to the peril of:
Question 86 of 100
Relief from forfeiture means:
Question 87 of 100
Which statement is correct?
Question 88 of 100
Once an underwriter decides to accept a risk, they must establish an appropriate premium. They apply base rates established by actuaries, add loadings, and then multiply the final rate by the amount insured to obtain the premium. A loading applied by an underwriter
Question 89 of 100
When an insurer pays a claim to its insured under a contract of insurance and attempts to recover the amount from a third party whom it believes is responsible for the damage, this is known as
Question 90 of 100
Reinsurance is insurance for insurance companies. It is a method of spreading risk for insurers. Which of the following is NOT a reason for reinsuring?
Question 91 of 100
Carlos Marrero is an agent for Elite Insurance Company. Although he represents only Elite Insurance, he is not a company employee and is responsible for his own expenses. Carlos is paid a commission for the policies he sells, but the client list belongs to Elite Insurance Company. What type of company is Elite Insurance?
Question 92 of 100
During each certificate term, if additional hours of continuing education are taken, a maximum of _____ hours may be applied to the following certificate term.
Question 93 of 100
Based on the principal and agent legal relationship, it is understood that an insurer’s (principal’s) knowledge of a risk is the same as that of the intermediary (agent). What does this mean?
Question 94 of 100
Which of the following is not one of the ethical principles followed by a broker or agent?
Question 95 of 100
Separate locations or duplication of items would be considered what strategy with respect to risk management?
Question 96 of 100
Which two provinces in Canada have prohibited the right to sue with respect to bodily injury and death?
Question 97 of 100
Which statutory condition does not apply when the contract does not insure against liability for loss or damage to persons or property, such as when a vehicle is permanently parked, and third party liability coverage is not purchased.
Question 98 of 100
Which statutory condition does not apply when the contract does not insure against loss of or damage to the automobile.
Question 99 of 100
Regarding minor injuries, which of the following statements is TRUE?
Question 100 of 100
Many large insurers market their policies through the independent brokerage system. An independent broker is
