Canadian Securities Course (CSC) Level 1 Practice Exam

What do provincial insurance companies do?

1. Protect the deposits of banks

2. Protect the deposits of credit unions

3. Provide insurance for cars

4. Offer mortgage insurance

The correct answer is: Protect the deposits of credit unions

Provincial insurance companies primarily focus on providing various types of insurance, including automobile insurance and property insurance to individuals and businesses within their jurisdiction. While they do play a role in the insurance marketplace, the specific function of protecting deposits is generally associated with institutions such as credit unions, which are insured by provincial deposit insurance organizations. The protection of a credit union’s deposits involves ensuring that customers' funds are safeguarded in the event of financial instability within the credit union. This coverage helps build trust and stability in the financial system, promoting consumer confidence. Furthermore, it's worth noting that while mortgage insurance is important for securing loans related to real estate, this type of insurance may not be directly provided by provincial insurance companies but rather by specialized mortgage insurers. Thus, the focus of provincial insurance companies is on providing coverage and managing risk across various categories of insurance, particularly vehicle and property coverage, but not limited solely to protecting deposits of credit unions.