Humber/Ontario Real Estate Course 2 Exam Practice

Which of the following insurance-related statements is correct?

1. If a buyer has a low personal credit score, it could result in a lower insurance premium for a new home.

2. A buyer doesn't need to worry about applying for new credit cards when buying a home as it won't impact the insurance premium.

3. Frequent recent insurance claims on a previous home will have little impact on the premium for a new home purchase.

4. If a buyer informs the insurer that the home has a main floor area of about 1,500 sq ft, but it’s actually 2,300 sq ft, the premium will likely be much higher.

5. Immediate payment of insurance premiums can lead to a reduction in the overall insurance costs for the buyer.

6. Being a first-time home buyer will likely result in reduced insurance premiums.

The correct answer is: If a buyer informs the insurer that the home has a main floor area of about 1,500 sq ft, but it’s actually 2,300 sq ft, the premium will likely be much higher.

Option D is correct because providing false or inaccurate information about the property's size can lead to a higher insurance premium. Insurance companies calculate premiums based on various factors, including the size of the property. If the buyer informs the insurer that the home is smaller than its actual size, the insurer will discover this discrepancy during the underwriting process, potentially resulting in a higher premium to adequately cover the larger property. Options A, B, C, E, and F are incorrect because they provide misleading information about insurance-related matters that are not accurate in real-world scenarios. For example, personal credit scores, frequent insurance claims, and being a first-time home buyer can all impact insurance premiums, often resulting in increased costs rather than reductions as implied in those options.