FOI — IBABC Fundamentals of Insurance Quick Review

Last revised: June 17, 2026

Independent quick review for the Insurance Brokers Association of British Columbia's IBABC Fundamentals of Insurance (FOI), exam code FOI, with key concepts, common traps, and practice guidance.

How to Use This Quick Review

This independent Quick Review is for candidates preparing for the Insurance Brokers Association of British Columbia IBABC Fundamentals of Insurance (FOI) exam, code FOI.

Use it to review the big ideas before you move into topic drills, mock exams, and original practice questions with detailed explanations.

A strong FOI candidate should be able to:

Define core insurance terms precisely.
Identify whether a loss is first-party property, third-party liability, auto, or specialty coverage.
Apply insurance principles such as indemnity, insurable interest, utmost good faith, proximate cause, contribution, and subrogation.
Read policy wording in order: declarations, insuring agreement, definitions, exclusions, conditions, endorsements.
Spot common traps involving deductibles, exclusions, limits, vacancy, misrepresentation, and coinsurance.
Separate what the insured wants from what the policy actually promises.

Exam mindset: when a question gives policy facts, answer from the policy wording and insurance principles — not from what “seems fair.”

High-Yield FOI Map

Area	Know Cold	Common Exam Decision
Risk and insurance	Risk, peril, hazard, indemnity, pooling, law of large numbers	Is this an insurable risk or a normal business/personal expense?
Insurance contracts	Offer, acceptance, consideration, legal capacity, legality, insurable interest, utmost good faith	Is the policy valid, void, voidable, or limited by conditions?
Policy structure	Declarations, insuring agreements, exclusions, conditions, endorsements	Where in the policy would you confirm coverage?
Broker role	Client needs, disclosure, binding authority, documentation, E&O awareness	What should the broker do or explain?
Property insurance	Direct loss, indirect loss, named perils, broad/all-risks wording, ACV, replacement cost, deductibles, coinsurance	Does the physical loss trigger the policy, and how much is payable?
Habitational insurance	Building, detached structures, contents, additional living expense, personal liability	Which form fits owner, tenant, condo, or seasonal occupancy?
Liability insurance	Negligence, legal liability, damages, defence, occurrence vs claims-made	Is the insured legally liable to a third party?
Automobile insurance	Third-party liability, accident benefits, collision, comprehensive, specified perils, all perils	Which auto coverage responds to the loss?
Commercial insurance	Commercial property, CGL, crime, equipment breakdown, business interruption	Is the loss property, liability, crime, breakdown, or income loss?
Claims	Notice, protect property, proof/documentation, cooperation, subrogation, salvage	What must the insured/insurer do after a loss?

Core Insurance Vocabulary

Term	Quick Meaning	Trap to Avoid
Risk	Possibility of loss or variation from expected outcome	Risk is not the same as peril.
Peril	Cause of loss, such as fire, theft, windstorm, or collision	A peril causes the loss; it is not the object insured.
Hazard	Condition that increases chance or severity of loss	Hazard increases risk; it does not have to cause the loss directly.
Physical hazard	Tangible condition, such as faulty wiring or icy stairs	Often observable through inspection.
Moral hazard	Dishonesty or intent to cause/benefit from loss	Think fraud, arson, inflated claims.
Morale hazard	Carelessness because insurance exists	Not necessarily dishonest.
Pure risk	Chance of loss or no loss	Generally insurable.
Speculative risk	Chance of loss, no loss, or gain	Usually not the subject of ordinary insurance.
Fortuitous loss	Accidental or unexpected loss	Intentional losses are commonly excluded.
Indemnity	Restoring the insured to approximately the pre-loss financial position	Insurance is not meant to create profit from loss.
Insurable interest	Financial interest in the property, life, or liability exposure	Without interest, the contract may resemble a wager.
Premium	Consideration paid for coverage	Paying premium alone does not override exclusions or conditions.
Deductible	Amount the insured absorbs before insurer payment	Usually applies per occurrence or claim, depending on wording.
Limit of insurance	Maximum insurer will pay, subject to wording	A limit is not a guarantee every loss is covered.
Sublimit	Smaller limit inside a broader coverage	Common for special property or special loss types.
Exclusion	Removes or restricts coverage	Exclusions can defeat coverage even when the insuring agreement appears broad.
Endorsement	Policy amendment	May broaden, restrict, or clarify coverage.

Insurance Principles to Review First

Principle	What It Means	Exam Trap
Indemnity	The insured should be put back, as nearly as practical, to the pre-loss financial position.	Replacement cost coverage can modify the basic indemnity result, but only if conditions are met.
Insurable interest	The insured must have a legitimate financial interest in the subject of insurance.	Possession, ownership, leasehold interest, and legal responsibility can all matter.
Utmost good faith	Parties must deal honestly; applicants must disclose material facts.	A “small” omitted fact may be material if it would affect underwriting.
Material fact	Information that could influence acceptance, rating, terms, or continuation of risk.	Materiality is judged from the insurer/underwriting perspective, not just the applicant’s opinion.
Proximate cause	The dominant or effective cause of loss.	Do not stop at the first event chronologically; identify the effective cause.
Subrogation	After paying, insurer may pursue responsible third parties in the insured’s name.	The insured should not prejudice recovery rights after loss.
Contribution	If more than one policy covers the same interest and loss, insurers may share payment.	Contribution is not the same as subrogation.
Salvage	Insurer may have rights to damaged property after paying for it.	The insured cannot usually keep full claim payment and valuable salvage without wording support.
Fortuity	Insurance responds to accidental/uncertain events, not deliberate or inevitable losses.	Wear and tear, gradual deterioration, and intentional acts are frequent traps.

Risk Management and Insurability

Insurance is one risk management tool. FOI questions often test whether you can classify a situation before choosing coverage.

Risk Management Method	Meaning	Example
Avoidance	Do not engage in the activity	Do not operate a high-risk operation.
Loss prevention	Reduce frequency of loss	Install alarms, maintain equipment, train staff.
Loss reduction	Reduce severity after loss occurs	Sprinklers, fire doors, emergency plans.
Retention	Keep all or part of the risk	Deductibles, self-insured retentions, uninsured small losses.
Transfer	Shift financial consequences to another party	Insurance, indemnity agreements, contractual risk transfer.
Sharing	Spread risk among many parties	Insurance pooling, layered programs, group arrangements.

Characteristics of an Insurable Risk

A risk is more likely to be insurable when:

Loss is accidental or fortuitous.
Loss is measurable in financial terms.
A large number of similar exposure units exists.
Loss is not certain to occur.
Premium can be economically reasonable.
The risk is not primarily speculative.
Losses are not so catastrophic or correlated that pooling becomes impractical without special treatment.

Insurance Contract Basics

Insurance policies are contracts with special features.

Contract Element / Feature	FOI Review Point
Offer and acceptance	Application/submission and insurer acceptance create the basis for the contract.
Consideration	Premium from insured; promise to pay covered losses from insurer.
Legal capacity	Parties must have legal ability to contract.
Legal purpose	Contract cannot be for an illegal purpose.
Insurable interest	Required to support a valid insurance contract.
Conditional contract	Payment depends on policy conditions being met.
Contract of adhesion	Insurer writes wording; ambiguity may be interpreted against the drafter in many contexts.
Aleatory contract	Unequal exchange: small premium may produce large claim payment, or no claim.
Personal contract	Usually tied to the insured’s interest and circumstances, not just the property.
Utmost good faith	Disclosure and honesty are central.

Misrepresentation, Non-Disclosure, and Material Change

High-yield distinctions:

Issue	Meaning	Practical Effect
Misrepresentation	Incorrect statement of fact	May affect coverage if material.
Non-disclosure	Failure to reveal a material fact	May affect validity or terms.
Concealment	Intentional hiding of a material fact	Serious underwriting and claims issue.
Material change	Change during the policy term that affects the risk	Insured should notify insurer promptly according to policy requirements.
Fraud	Intentional deception for gain	Can jeopardize claim recovery and policy rights.

Candidate trap: do not assume the insurer must pay because a premium was accepted if the application involved material misrepresentation or the loss violates a policy condition.

Policy Structure: Read in the Right Order

A policy question is often solved by knowing where to look.

Policy Part	What It Does
Declarations	Identifies insured, policy period, premises/vehicles, limits, deductibles, forms, endorsements, premium.
Insuring agreement	States the core promise of coverage.
Definitions	Gives specific meanings to key words.
Exclusions	Removes coverage for specified causes, property, persons, activities, or circumstances.
Conditions	Duties, procedures, and rules that apply before/after loss.
Endorsements	Modify the policy; may override standard wording.
Statutory/standard conditions	Legally required or standard policy conditions may apply depending on class and jurisdiction. Know their purpose conceptually.

Coverage Analysis Workflow

    flowchart TD
	    A[Loss or claim occurs] --> B{Policy in force?}
	    B -- No --> Z[No coverage under that policy period]
	    B -- Yes --> C{Right insured / property / vehicle / operation?}
	    C -- No --> Z
	    C -- Yes --> D{Insuring agreement triggered?}
	    D -- No --> Z
	    D -- Yes --> E{Any exclusion applies?}
	    E -- Yes --> F{Exception or endorsement restores coverage?}
	    F -- No --> Z
	    F -- Yes --> G[Apply conditions, limits, deductibles]
	    E -- No --> G
	    G --> H[Calculate payable amount]

Documents You Should Recognize

Document	Purpose	Trap
Application	Information used to underwrite risk	Incorrect answers can create serious coverage issues.
Binder / cover note	Temporary evidence of coverage before policy issuance	Only valid within its terms and authority.
Policy	Full contract wording	The policy controls over assumptions.
Certificate of insurance	Evidence of coverage	It may not amend the actual policy unless wording says so.
Endorsement	Changes policy terms	Always check whether it broadens or restricts.
Renewal notice	Continues/replaces coverage for a new term if accepted	Terms may change at renewal.
Cancellation notice	Ends coverage according to policy/legal requirements	Do not invent dates unless provided in the question.

Broker Role and Professional Judgment

FOI is not only about memorizing policies. It also tests practical broker thinking.

A broker should generally be able to:

Gather accurate risk information.
Identify client needs and exposures.
Explain coverage options, limitations, deductibles, and exclusions in plain language.
Avoid promising coverage beyond authority or policy wording.
Document advice, instructions, and declined coverages.
Submit complete and accurate information to insurers.
Handle client information professionally.
Recognize situations requiring referral, underwriting approval, or specialist advice.

Broker Authority Traps

Situation	Correct Thinking
Client asks, “Am I covered right now?”	Confirm whether coverage has actually been bound and within what authority.
Broker submits application but insurer has not accepted	Submission is not automatically coverage.
Broker has binding authority	Coverage may be bound only within the scope of that authority.
Client asks for advice after a loss	Provide process guidance, avoid admissions, notify insurer, document facts.
Client declines recommended coverage	Document the offer, explanation, and decline.

Underwriting and Rating Basics

Underwriting asks: Should the insurer accept this risk, and on what terms?

Factor	What Underwriter Considers
Occupancy/use	How property, vehicle, or premises is used.
Construction	Materials, age, updates, protection features.
Location	Fire protection, crime, flood/water, earthquake, traffic, exposure concentration.
Claims history	Frequency, severity, pattern, and corrective action.
Moral/morale hazard	Integrity, care, risk management attitude.
Limits requested	Size of possible loss.
Deductible	Insured’s retained portion and loss frequency control.
Coverage breadth	Named perils vs broader forms; endorsements.
Loss control	Alarms, sprinklers, maintenance, driver training, contracts.

Rating Concepts

Term	Quick Review
Frequency	How often losses occur.
Severity	How expensive losses are.
Exposure	Unit used to measure risk, such as property value, revenue, payroll, vehicle use, or location.
Rate	Price per exposure unit.
Premium	Rate applied to exposure, modified by underwriting factors.
Adverse selection	Higher-risk applicants are more likely to seek coverage unless underwriting controls exist.
Reinsurance	Insurance for insurers; spreads large or accumulated risks.

Property Insurance: Core Concepts

Property insurance is first-party coverage: the insured claims for loss to the insured’s own property or financial interest.

Concept	Meaning
Direct physical loss	Physical damage to insured property caused by an insured peril.
Indirect / consequential loss	Financial loss resulting from direct loss, such as loss of income or extra expense.
Named perils	Covers only perils listed in the policy.
Broad / all-risks style wording	Covers direct physical loss unless excluded, subject to wording.
ACV	Actual cash value; often replacement cost less depreciation, depending on circumstances and wording.
Replacement cost	Cost to repair/replace with new property of like kind and quality, subject to conditions.
Deductible	Insured’s share of each covered loss.
Pair and set	Loss to one item may affect value of matching items; wording controls.
Debris removal	Cost to remove damaged property debris may be covered, often subject to limits/conditions.
Sue and labour / mitigation	Insured may have duties to protect property from further damage.

Named Perils vs Broader Wording

Question Wording	Likely Direction
“The policy covers fire, lightning, explosion, windstorm…”	Named perils approach. Confirm the cause is listed.
“Covers all direct physical loss except…”	Broader approach. Confirm physical loss, then test exclusions.
“Water entered gradually over several months…”	Watch for gradual damage, seepage, maintenance, or wear exclusions.
“Property mysteriously disappeared…”	Check theft, mysterious disappearance, proof, and special limits.
“Earth movement/flood/overland water/sewer backup…”	Often requires careful endorsement review; do not assume automatic coverage.

Common Property Exclusions

Exact wording controls, but FOI candidates should recognize common exclusion themes:

Wear and tear.
Gradual deterioration.
Latent defect or inherent vice.
Mechanical or electrical breakdown.
Rust, corrosion, rot, mould, contamination.
Intentional or criminal acts by an insured.
War, terrorism, nuclear hazard, or governmental action.
Insects, vermin, or animals, depending on wording.
Vacancy-related losses.
Business use or commercial property under a personal policy.
Property illegally acquired or used.

Property Valuation and Claim Payment

Actual Cash Value vs Replacement Cost

Valuation Basis	Meaning	Common Trap
Actual cash value	Reflects depreciated value or fair value of used property, depending on wording and circumstances	Not the same as original purchase price.
Replacement cost	Cost to repair or replace with new property of like kind and quality	Conditions may require actual repair/replacement before full payment.
Market value	Price property would sell for	Not always the insurance valuation method.
Agreed value	Value agreed in advance, if policy provides	Do not assume it applies unless stated.
Stated amount	A stated limit or value; wording determines effect	Not always a guarantee of full payment.

Coinsurance Formula

Coinsurance encourages the insured to carry insurance close to the required value.

\[ \text{Limit required} = \text{Value of insured property} \times \text{Coinsurance percentage} \]\[ \text{Claim payment before deductible} = \frac{\text{Limit carried}}{\text{Limit required}} \times \text{Amount of loss} \]

Then apply the deductible and policy limits as required by the wording.

Quick example:

Item	Amount
Property value	500,000
Coinsurance requirement	80%
Required limit	400,000
Limit carried	300,000
Covered loss	100,000
Coinsurance fraction	300,000 / 400,000
Payment before deductible	75,000

Common trap: if the insured carried at least the required limit, the coinsurance penalty does not apply, but deductibles and limits still do.

Habitational Insurance Review

Habitational forms are tested through who owns what and what exposure exists.

Insured Situation	Main Insurance Need
Homeowner occupying own dwelling	Building, detached structures, contents, additional living expense, personal liability.
Tenant / renter	Contents, additional living expense, tenant legal liability, personal liability.
Condo unit owner	Unit contents, improvements/betterments, loss assessment, unit owner liability, deductible assessment exposure.
Landlord / rented dwelling	Building, rental income exposure, landlord liability, landlord’s contents if any.
Seasonal or secondary dwelling	Property and liability, with attention to occupancy, vacancy, water, theft, and maintenance conditions.

Habitational Coverage Buckets

Bucket	What to Remember
Dwelling building	Structure and attached components, subject to policy wording.
Detached private structures	Garages, sheds, other structures separated from dwelling.
Personal property / contents	Movable property owned/used by insured; special limits may apply.
Additional living expense	Extra costs after insured damage makes premises unfit to occupy.
Fair rental value	Rental income lost due to insured damage, if covered.
Personal liability	Third-party claims for bodily injury or property damage.
Voluntary payments	Limited no-fault style payments may exist in some forms; wording controls.

Habitational Traps

A tenant’s policy does not insure the landlord’s building.
A landlord’s building policy does not insure the tenant’s contents.
Condo corporation insurance and unit owner insurance are not the same policy.
Vacancy is not the same as temporary absence; vacancy can seriously restrict coverage.
Home-based business property and liability may need special coverage.
Jewellery, bicycles, collectibles, money, watercraft, and tools may have special limits or exclusions.
Replacement cost is not automatic for every item or situation.
Additional living expense usually requires an insured direct loss.

Automobile Insurance Review

In the British Columbia context, candidates should understand auto insurance concepts clearly and avoid assuming that every vehicle loss is handled by the same coverage part. Exact forms, statutory requirements, and policy wording control.

Coverage Concept	What It Generally Addresses
Third-party liability	Injury or property damage claims made by others against the insured driver/owner.
Accident benefits / injury benefits	Benefits related to injury, subject to applicable wording and rules.
Uninsured / underinsured motorist protection	Loss involving inadequately insured or uninsured responsible motorists, depending on wording.
Collision	Physical damage to the insured vehicle from collision or upset.
Comprehensive	Physical damage from non-collision causes, such as theft, fire, vandalism, glass, windstorm, depending on wording.
Specified perils	Only listed physical damage perils.
All perils	Combines collision and comprehensive-style protection, subject to wording.
Deductible	Amount the insured pays for covered physical damage claims.

Auto Exam Traps

Scenario	Think
Vehicle hits another car	Liability for damage to others; collision for own vehicle if purchased/applicable.
Vehicle is stolen	Comprehensive, specified perils, or all perils may respond depending on wording.
Windshield cracked by stone	Often physical damage/glass issue; confirm coverage and deductible.
Driver uses vehicle for delivery/business	Use classification and disclosure matter.
Unlisted or occasional driver	Confirm policy terms and underwriting information.
Vehicle modified or used differently	Material change and underwriting relevance.
Contents stolen from vehicle	Auto policy may not cover all personal property; check property policy/sublimits.

Liability Insurance and Negligence

Liability insurance is third-party coverage. It responds when the insured faces a claim from another person or organization, subject to wording.

Negligence Elements

To establish negligence, a claimant generally needs:

Duty of care — defendant owed a duty to claimant.
Breach of duty — defendant failed to meet required standard.
Causation — breach caused the loss.
Damages — claimant suffered compensable harm.

Term	Meaning
Bodily injury	Physical injury, sickness, disease, or death, as defined.
Property damage	Physical injury to tangible property or loss of use, as defined.
Personal injury	Certain non-physical injury offences, depending on wording.
Defence costs	Costs of defending covered claims; treatment depends on wording.
Occurrence	Accident/event causing injury or damage during policy period.
Claims-made	Claim must be made, and often reported, during the policy period, subject to retroactive date and wording.
Vicarious liability	One party held responsible for another’s acts, such as employer/employee situations.
Contractual liability	Liability assumed under contract; may be excluded or limited unless covered.

Liability Coverage Decision Rules

Question	Why It Matters
Is there a third-party claim?	Liability insurance is not for the insured’s own property damage unless special coverage applies.
Is the insured legally liable?	Liability coverage generally requires legal liability, not just sympathy or customer relations.
Did bodily injury/property damage occur?	The insuring agreement must be triggered.
Did it arise from covered premises, operations, product, or activity?	Scope of coverage matters.
Is the injury/damage expected or intended?	Intentional harm is a common exclusion.
Did the insured assume liability by contract?	Contractual liability may be restricted.
Has the insured admitted liability or made voluntary payments?	Policy conditions may restrict this.

Commercial Insurance Quick Review

Commercial questions often ask you to match the exposure to the right coverage.

Coverage	Primary Purpose	High-Yield Trap
Commercial property	Insures business buildings, stock, equipment, contents, and other insured property	Business property values and locations must be accurate.
Commercial general liability	Third-party bodily injury/property damage from premises, operations, products, completed operations, and other covered hazards	CGL is not a warranty of work quality.
Business interruption	Covers loss of business income/extra expense after insured property damage	Usually requires covered direct physical loss first.
Equipment breakdown	Sudden and accidental breakdown of insured equipment	Wear and tear/maintenance issues are different.
Crime insurance	Employee dishonesty, theft, burglary, robbery, money/securities, depending on form	Crime is not the same as ordinary property coverage.
Inland marine / floaters	Property in transit, off premises, mobile equipment, contractor’s equipment, special property	Useful when property moves or values vary by location.
Builders risk	Property under construction or renovation	Named parties and project values must be clear.
Professional liability / E&O	Financial loss from professional negligence or errors	Often claims-made; not the same as CGL.
Cyber/privacy coverage	Network, data, privacy, extortion, liability, and response costs, depending on form	Not automatically covered by traditional property/CGL.
Surety bond	Three-party guarantee of performance or obligation	Surety is not the same as two-party insurance.

Business Interruption Essentials

Concept	Meaning
Trigger	Usually insured physical damage to insured property or relevant dependent property, depending on wording.
Indemnity period	Period during which covered income loss is measured.
Gross earnings / profits	Method of measuring income loss; wording controls.
Extra expense	Additional cost to continue or resume operations.
Waiting period	Time deductible; no payment for initial period if wording applies.
Ordinary payroll	May be limited or specifically insured.
Mitigation	Insured should reduce the loss where reasonable.

Candidate trap: business interruption does not usually fix poor sales, market decline, or voluntary closure unless the policy trigger is met.

Claims Handling Review

Claims questions test duties, sequence, and fairness.

Typical Claim Flow

Step	What Happens
Notice of loss	Insured reports loss promptly according to policy requirements.
Initial coverage review	Insurer checks policy period, insured, property, peril, exclusions, and conditions.
Investigation	Facts, cause, damages, liability, and documentation are gathered.
Reservation of rights if needed	Insurer may investigate while preserving coverage position.
Proof/documentation	Insured provides requested evidence of loss, ownership, value, and circumstances.
Adjustment	Amount of covered loss is determined.
Settlement/payment	Payment issued subject to limits, deductibles, and conditions.
Salvage/subrogation	Insurer may recover salvage or pursue responsible third parties.
File documentation	Communications and decisions should be recorded.

Duties After Loss

Exact wording controls, but common insured duties include:

Give prompt notice.
Protect property from further damage where reasonable.
Separate damaged from undamaged property if practical.
Provide inventory, receipts, records, or proof of value.
Cooperate with investigation.
Do not make false statements.
Do not voluntarily admit liability or settle liability claims without insurer consent.
Preserve evidence and recovery rights.

High-Yield Calculations

Calculation	How to Think
Deductible	Covered loss minus deductible, subject to policy limit.
Sublimit	Pay no more than the applicable smaller limit for that item/loss type.
ACV	Replacement cost less depreciation, unless wording/circumstances indicate another method.
Replacement cost	Pay cost to repair/replace with like kind and quality, subject to policy conditions.
Coinsurance	Limit carried divided by required limit, multiplied by loss.
Total loss	Payment cannot exceed applicable limit and valuation basis.
Multiple policies	Contribution may apply if policies cover same interest and loss.
Liability limits	Apply occurrence/claim limit, aggregate if relevant, and defence-cost wording.

Fast Coinsurance Checklist

Determine property value at time required by wording.
Multiply by coinsurance percentage.
Compare required limit to limit carried.
If carried limit is too low, apply penalty fraction.
Apply deductible.
Apply policy limit and any sublimit.

Common FOI Candidate Mistakes

Mistake	Better Approach
Treating every loss as covered because it is accidental	First identify the coverage trigger, then exclusions and conditions.
Confusing peril and hazard	Peril causes loss; hazard increases chance/severity.
Assuming “all risks” means everything	It still has exclusions, conditions, limits, and definitions.
Ignoring definitions	Defined words may change the ordinary meaning.
Forgetting endorsements	Endorsements can override the base wording.
Applying liability coverage to the insured’s own property	Liability is for third-party claims, not first-party property loss.
Assuming replacement cost always pays new-for-old immediately	Conditions often apply.
Missing coinsurance	Underinsurance can reduce payment even when the loss is below the limit.
Confusing vacancy and unoccupancy	Vacancy can create more serious restrictions.
Assuming business use is covered under personal insurance	Business exposures often need special coverage.
Treating broker submission as bound coverage	Coverage must be accepted/bound within authority.
Forgetting material change	Changes in use, occupancy, drivers, property, or operations can affect coverage.
Confusing subrogation and contribution	Subrogation pursues responsible third parties; contribution shares between insurers.
Choosing the “fairest” answer	Choose the answer supported by insurance principles and policy wording.

Quick Decision Rules by Scenario

Property Loss

Ask:

Is the damaged property insured property?
Did direct physical loss occur?
Was the cause a covered peril, or not excluded under broader wording?
Did any exclusion remove coverage?
Did an endorsement add coverage back?
Did the insured meet conditions?
What valuation, limit, sublimit, deductible, or coinsurance applies?

Liability Claim

Ask:

Is a third party claiming bodily injury, property damage, or defined injury?
Is the insured legally liable or potentially legally liable?
Did the event occur within the policy trigger?
Does the claim arise from covered premises, operations, products, completed operations, auto, professional services, or another exposure?
Does an exclusion apply?
Are defence costs covered, and how do they interact with limits?

Auto Loss

Ask:

Is the vehicle/driver/use covered?
Is the loss injury, third-party property damage, or damage to the insured vehicle?
For own vehicle damage: collision, comprehensive, specified perils, or all perils?
Are deductibles, depreciation, limits, or exclusions relevant?
Was the risk properly disclosed?

Broker Conduct

Ask:

What information should the broker gather?
What coverage options or limitations should be explained?
Was coverage actually bound?
Was the client’s instruction documented?
Should the broker refer to insurer/underwriter/specialist?
Could the client reasonably misunderstand the advice?

Last-Week Review Priorities

If time is short, prioritize:

Insurance principles: indemnity, insurable interest, utmost good faith, proximate cause, subrogation, contribution.
Policy reading: declarations, insuring agreements, definitions, exclusions, conditions, endorsements.
Property basics: named perils vs broader wording, ACV vs replacement cost, deductibles, coinsurance.
Habitational forms: homeowner, tenant, condo, landlord, seasonal occupancy.
Liability basics: negligence, legal liability, third-party claims, occurrence vs claims-made.
Auto basics: liability vs physical damage, collision vs comprehensive vs specified/all perils.
Broker judgment: disclosure, documentation, binding authority, client advice.
Claims duties: notice, protect property, cooperate, prove loss, avoid voluntary admissions.

Practice Plan: Connect Review to Question-Bank Work

After reading this Quick Review, use independent companion practice to turn recognition into exam performance.

Recommended sequence:

Topic drills first
Drill risk concepts, policy structure, property, liability, auto, and broker responsibilities separately.
Review detailed explanations
Do not only mark right/wrong. Read why each wrong option is wrong.
Create a trap list
Track repeated mistakes such as confusing peril/hazard, missing exclusions, or applying the wrong coverage part.
Move to mixed original practice questions
Mixed questions force you to identify the topic without being told.
Use timed mock exams last
Practice pacing and decision-making under exam-like conditions.
Return to weak topics
If your mock results show weak liability, coinsurance, or policy wording interpretation, go back to focused drills before another mock.

Final Quick Review Checklist

Before your next practice session, confirm you can answer these without notes:

What is the difference between risk, peril, and hazard?
What makes a fact material to insurance?
What is the difference between misrepresentation, non-disclosure, and material change?
How do declarations, exclusions, conditions, and endorsements interact?
When does subrogation apply?
How is contribution different from subrogation?
What is the difference between ACV and replacement cost?
How do you calculate a coinsurance penalty?
What is the difference between named perils and broader/all-risks style wording?
Why is vacancy a coverage concern?
What are the elements of negligence?
Why is liability insurance third-party coverage?
What is the difference between collision and comprehensive auto coverage?
Why does business interruption usually require a covered physical damage trigger?
What should a broker document when a client declines recommended coverage?

Next step: use this review as your checklist, then work through FOI topic drills, original practice questions, and mock exams with detailed explanations until you can consistently explain both the correct answer and the trap in each incorrect option.

Professional Conduct, Privacy, E&O, and Communication

Free Practice Exam

FOI — IBABC Fundamentals of Insurance Quick Review

How to Use This Quick Review

High-Yield FOI Map

Core Insurance Vocabulary

Insurance Principles to Review First

Risk Management and Insurability

Characteristics of an Insurable Risk

Insurance Contract Basics

Misrepresentation, Non-Disclosure, and Material Change

Policy Structure: Read in the Right Order

Coverage Analysis Workflow

Documents You Should Recognize

Broker Role and Professional Judgment

Broker Authority Traps

Underwriting and Rating Basics

Rating Concepts

Property Insurance: Core Concepts

Named Perils vs Broader Wording

Common Property Exclusions

Property Valuation and Claim Payment

Actual Cash Value vs Replacement Cost

Coinsurance Formula

Habitational Insurance Review

Habitational Coverage Buckets

Habitational Traps

Automobile Insurance Review

Auto Exam Traps

Liability Insurance and Negligence

Negligence Elements

Liability Coverage Decision Rules

Commercial Insurance Quick Review

Business Interruption Essentials

Claims Handling Review

Typical Claim Flow

Duties After Loss

High-Yield Calculations

Fast Coinsurance Checklist

Common FOI Candidate Mistakes

Quick Decision Rules by Scenario

Property Loss

Liability Claim

Auto Loss

Broker Conduct

Last-Week Review Priorities

Practice Plan: Connect Review to Question-Bank Work

Final Quick Review Checklist

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