Alberta General Insurance Level 1 Practice Exam

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What happens in a broker bill of premiums?

  1. Broker invests the premiums until due

  2. Insured sends payment directly to the broker

  3. Premiums are adjusted based on claims

  4. Broker collects and holds payment in trust until sent to the insurance company

The correct answer is: Broker collects and holds payment in trust until sent to the insurance company

In a broker bill of premiums, the broker acts as an intermediary between the insured and the insurance company. Option A is incorrect because the broker does not invest the premiums, they only hold them in trust until they are sent to the insurance company. Option B is incorrect because the insured typically sends payment directly to the insurance company. Option C is incorrect because the premiums are not adjusted based on claims, they are determined based on risk assessment and coverage. Option D is the correct answer because the broker collects the premiums from the insured and holds them in trust until they are sent to the insurance company on the insured's behalf.

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