Passing IIC C130 Exam Using 2026 Practice Tests [Q47-Q64]

NO.47 An insured reports a loss to their broker and is subsequently contacted by an adjuster to discuss the claim. A few days later, the insured calls their broker to ask a question about their claim settlement. What is the best course of action for the broker to take?

Review the policy wordings with the insured

Advise the insured to contact the ombudsperson

Provide expected settlement values to the insured

Connect the insured with their loss adjuster to discuss the claim

NO.48 A commercial general liability policy has an aggregate limit of $1,000,000. During the current term, the insurer has already paid for three liability claims: one for $100,000, a second for $500,000, and a third for
$300,000. How much will the insurer pay if a new claim of $300,000 is submitted?

$0

$100,000

$300,000

$1,000,000

NO.49 Which homeowners package policy provides all-perils coverage on the building and named-perils coverage on the contents?

Basic

Broad

Standard

Comprehensive

NO.50 Brenda’s house is valued at $250,000. She has a policy coverage limit of $220,000 and an 80 percent coinsurance clause. What would be the payout if the insured suffers a loss of $150,000?

$120,000

$150,000

$176,000

$220,000

NO.51 How many years of driving experience are newly licensed drivers generally credited for if they have completed an approved driver training course?

One or two years

Two or three years

Three or four years

Four or five years

NO.52 a) Describe the characteristics and exposures of a seasonal dwelling.
b) Describe the characteristics of a mobile home.

NO.53 Briefly discuss the liability exposures that arise from the ownership of animals.

NO.54 Why would an intermediary want to know if a client is renovating their home?

The liability hazards decrease because the home is unoccupied.

The policy needs to be cancelled and written under a builder’s risk policy.

The increase in property taxes will have to be factored into the premium.

The risk of a peril occurring is greater for a building under construction.

NO.55 What must an intermediary remember when using a valuation guide to calculate the replacement cost for a dwelling?

There is no substitute for an on-site inspection by the intermediary.

The mortgage value may be less than the cost of replacing the building.

The tool used by each insurer would provide the exact same calculation.

There will be increased costs to repair or replace luxury or custom dwellings.

NO.56 When brokers are self-regulated, which body enacts the licensing laws?

Federal government only

Provincial or territorial government

Brokerage or agency in which the intermediary is employed

Insurance company with which the intermediary places the majority of business

NO.57 Which name is a legal entity?

Best Brokers

Trains ‘R Rolling

Joe’s Bar and Grill

Olivia Clemente dba Discovery Playcare

NO.58 Which item would be insured under a personal articles floater?

Antique table

Leather sofa

Coffee machine

Stamp collection

NO.59 What is an agent’s consideration when assessing a potential client and the client’s attitude towards risk?

People have the same acceptance of risk.

People’s habits are unrelated to their level of risk.

Availability of insurance coverage may be affected by the client’s lifestyle.

Clients who lead riskier lives are good sources of profit for insurance brokers.

NO.60 John, a broker, has binding authority for comprehensive homeowners policies up to $200,000. On Saturday morning, a potential client calls John and advises that she is at the lawyer’s office signing the purchasing documents for a $500,000 home and requires comprehensive homeowners coverage immediately. What action should John take?

Provide coverage on a named-perils basis

State that he will try to arrange coverage with the insurer on Monday morning

Issue a cover note providing a comprehensive homeowners policy with a policy limit of $500,000

Inspect the home and, if the risk is acceptable, issue a comprehensive homeowners policy with a limit of $500,000

NO.61 The insurance industry is entering a hard market as a result of losses arising from extreme weather. Megan, a broker, has been advised by the North American Fire and Casualty Company that it will be increasing its homeowner policy rates by 25 percent, effective immediately.
How should Megan deliver the bad news to her client Mr. Robertson, a widower living on a fixed pension?
How will she communicate with her client and what outcomes will Megan work towards?

See the solution in Explanation below:
Explanation:
Megan should deliver the bad news clearly, respectfully, and with empathy, but she should not hide or soften the facts so much that Mr. Robertson misunderstands the situation. She should contact him personally, preferably by telephone or in person, because he is a widower on a fixed pension and the premium increase may cause financial stress. Her tone should be calm, professional, and supportive. She should explain that the increase is not personal to him alone; it is connected to a hard insurance market caused by higher expected future losses from extreme weather. Premiums are determined by statistical predictions of future losses and tend to increase during a hard market.
Megan should use active listening. This means she should allow Mr. Robertson to express frustration, ask questions, and explain his financial concerns. Active listening includes interpreting verbal and non-verbal cues, not simply giving a one-way explanation. She should avoid blaming the insurer or making promises she cannot keep. She should also avoid using technical language without explanation. Instead, she should explain the reason for the increase in plain language: insurers are paying more claims from weather-related losses, repair costs are rising, and insurers are tightening rates and underwriting rules.
The outcomes Megan should work toward are fairness, understanding, and a practical coverage solution. First, she should make sure Mr. Robertson understands why the premium increased. Second, she should review his policy to see whether the coverage still fits his needs. Third, she can explore options to reduce the premium, such as increasing the deductible, reviewing dwelling values, removing unnecessary optional endorsements, checking eligibility for discounts, improving risk-control features, or remarketing the policy to another insurer if appropriate. However, she must not recommend cutting essential coverage just to make the premium cheaper. That would expose Mr. Robertson to underinsurance and expose Megan to errors and omissions risk.
After discussing the options, Megan should clearly explain the consequences of each choice. If Mr. Robertson chooses a higher deductible, he must understand he will pay more out of pocket after a loss. If he removes optional coverage, he must understand what losses will no longer be insured. If he keeps the policy as issued, he must understand the new premium and payment requirements. Megan should document the conversation, confirm the client’s decision in writing, and remind him to review the policy documents for accuracy. A broker’s policy communication should include a reminder for the insured to review policy documents carefully.

NO.62 A tenant’s negligence causes a fire in the dwelling they rent. Typically, who is initially responsible for paying the damage?

The tenant who negligently caused the fire

The insurer that issued the homeowners policy

The insurer that issued the tenant’s legal liability policy

The dwelling’s owner who is responsible for the tenant’s actions

NO.63 During the renewal process, which tool keeps the broker on track and protects against lawsuits by requiring the insured’s signature?

Binder

Checklist

Flowchart

Cover note

NO.64 Brenda works as a property and casualty underwriter in an industry that has some staged claims. Her accounts have a poor loss ratio and she has been put on a performance plan. She recently shadowed a senior broker for training purposes. He advised her on qualifying the client to establish whether the client and the brokerage can form a mutually beneficial business relationship.
She has just been approached by a new client, who would be the largest client in her portfolio. Describe what Brenda should keep in mind for her process regarding this client. How can Brenda qualify the client? Provide two questions she could ask if she suspects a moral hazard.

See the solution in Explanation below:
Explanation:
Brenda should not accept the client only because the account is large. A large client may produce significant premium, but it may also bring serious underwriting, claims, moral hazard, and errors and omissions risk.
Since Brenda’s accounts already have a poor loss ratio and the industry has some staged claims, she must qualify the client carefully before treating the account as a good business opportunity. Qualifying the client means determining whether the client’s needs, risk profile, attitude toward risk, claims history, and expectations match the brokerage’s and insurer’s ability to provide suitable coverage. The course logic is that an intermediary should understand how to differentiate service by knowing the client’s current insurance arrangements and needs.
Brenda should begin by gathering complete underwriting information. She should identify the client’s operations, ownership structure, property values, liability exposures, prior insurers, loss history, risk controls, financial stability, and reason for seeking new coverage. She should also consider whether the client is being transparent and whether the requested coverage is reasonable for the exposure. Under the principle of utmost good faith, full disclosure of material information is required from the applicant. Brenda should not rely only on the attractiveness of the premium. She should ask open-ended questions, verify details, document all answers, and be alert to inconsistencies between the client’s story, prior claims, business operations, and requested limits.
To qualify the client, Brenda can ask questions such as: What insurance coverage do you currently have, and why are you considering changing brokers or insurers? What losses or claims have you had in the past five years, including any incidents that did not result in payment? What risk controls do you have in place to prevent losses? What coverage problems, exclusions, or disputes have you experienced with previous insurers? What are your expectations regarding premium, deductibles, claims service, and coverage limits?
These questions help Brenda determine whether the account is profitable, insurable, and ethically suitable for the brokerage.
If Brenda suspects a moral hazard, she should ask direct but professional questions. First: “Have you had any previous claims denied, investigated, or disputed by an insurer? If yes, what were the circumstances?” Second: “Are there any financial pressures, business closures, unpaid loans, legal disputes, or operational changes that could affect the risk or the likelihood of a claim?” These questions are appropriate because moral hazard involves the possibility that the insured’s character, honesty, financial condition, or conduct could increase the chance of a loss or exaggeration of a claim. If concerns remain, Brenda should seek additional documentation, consult underwriting management, and avoid binding or recommending coverage until the risk is properly understood.

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