INSURANCE INSTITUTE
CIP PRACTICE TEST EXAM
PREP CANADA COMPLETE
150 QUESTIONS
Question 1: Why does a CGL policy commonly exclude expected or intended injury?
Choices:
1) Liability insurance is intended mainly for fortuitous events rather than deliberately caused injury 2) Because intentional injury is always covered by property insurance 3) Because an insured can never be legally liable for intentional acts 4) Because exclusions apply only to premiums Correct Answer: Liability insurance is intended mainly for fortuitous events rather than deliberately caused injury Explanation: Insurance generally does not protect an insured against deliberately intended harm. The exact wording and any exceptions must be reviewed in the policy.Page 1
Question 2: A homeowner fails to disclose that the dwelling is being used to
manufacture furniture commercially. Why is this information important to an underwriter?
Choices:
1) It is irrelevant unless a claim has already occurred 2) It is a material fact because it may a�ect the insurer's decision or terms 3) It automatically proves fraud regardless of intent 4) It matters only if the mortgage lender requests it Correct Answer: It is a material fact because it may a�ect the insurer's decision or terms Explanation: A material fact is information that could in�uence a prudent insurer's decision to accept the risk or determine the premium or conditions. Commercial activity can materially change the exposure.
Question 3: Which statement best describes pure risk?
Choices:
1) There is an equal possibility of pro�t and loss 2) The outcome is always pro�table 3) There is a possibility of loss or no loss, but no possibility of gain 4) The risk can never be insured Correct Answer: There is a possibility of loss or no loss, but no possibility of gain Explanation: Pure risk involves uncertainty between loss and no loss, without a prospect of gain. Insurance is primarily designed to address pure risks.Page 2
Question 4: A client is confused by a major exclusion in a proposed policy. What is the best communication approach?
Choices:
1) Use technical jargon and avoid questions 2) Tell the client exclusions are unimportant 3) Promise the exclusion will never a�ect a claim 4) Explain the exclusion in clear language, con�rm understanding, and discuss available alternatives Correct Answer: Explain the exclusion in clear language, con�rm understanding, and discuss available alternatives Explanation: Good professional communication translates technical wording into clear, accurate explanations and checks that the client understands important limitations.Question 5: Under a standard CGL structure, Coverage A is most closely associated
with:
Choices:
1) Bodily injury and property damage liability 2) Marine cargo 3) Employee pension bene�ts 4) Automobile physical damage
Correct Answer: Bodily injury and property damage liability
Explanation: Coverage A of a standard CGL form addresses the insured's covered legal liability for bodily injury and property damage caused by an occurrence, subject to policy terms.Page 3