Question 1

The principle of utmost good faith is meant to protect the interest of
A)The insurer
B)The community of policyholders
C)The shareholders
D)None of the above

Accepted Answer

B

Question 2

The principle of utmost good faith is important to ensure
A)That the premium charged is correct
B)That no one gets an undue advantage
C)That there is no adverse selection
D)All the three factors mentioned above

Accepted Answer

The principle of utmost good faith (uberrima fides) is crucial in insurance contracts, requiring both parties to disclose all material facts fully and honestly. This ensures that the premium charged is correct, prevents any party from gaining an undue advantage, and helps in avoiding adverse selection, where one party has information that the other does not, leading to an imbalance in the contract. Therefore, all three factors mentioned are important aspects of the principle of utmost good faith.

Question 3

Which of the following risks are insurable?
A)Speculative
B)Economic
C)Sure to happen
D)All the above

Accepted Answer

Economic risks are insurable because they involve the possibility of loss, which can be quantified and managed through insurance. Speculative risks and events that are sure to happen are not typically insurable.

Question 4

Insurable interest is
A)Defined in the Insurance Act
B)Defined in the Contract Act
C)Defined by IRDA
D)Not defined in any written law

Accepted Answer

Insurable interest is not explicitly defined in any specific written law, but it is a fundamental principle in insurance law that requires the policyholder to have a legitimate interest in the preservation of the insured subject matter.

Question 5

In case of life insurance, insurable interest should exist
A)At the inception of policy
B)At the time of claim
C)At the time of every renewal of premium payment
D)All the above occasions

Accepted Answer

Insurable interest must exist at the inception of the policy in life insurance, but it is not required to exist at the time of claim or at every renewal of premium payment.

Question 6

In the case of life insurance, the principle of insurable interest operates
A)In the same way as in marine insurance
B)In the same way as fire insurance
C)In the same way as in motor insurance
D)Differently than in other forms of insurances.

Accepted Answer

The principle of insurable interest in life insurance operates differently than in other forms of insurance. In life insurance, the policyholder must have an insurable interest in the life of the insured at the time of the contract's inception, but not necessarily at the time of the claim. This contrasts with other types of insurance, such as property or casualty insurance, where insurable interest must exist at the time of the loss.

Question 7

The term 'Assurance' refers to ___________
A)Life Insurance business
B)Fire insurance business
C)Motor Vehicle insurance
D)Marine insurance

Accepted Answer

Assurance is a term often used specifically in the context of life insurance business, where the event insured against (death) is certain to occur, but the timing is uncertain. This contrasts with insurance, which typically refers to coverage for events that may or may not happen.

Question 8

The central office of LIC of India is located at ________
A)Mumbai
B)New Delhi
C)Bangalore
D)Chennai

Accepted Answer

The central office of the Life Insurance Corporation of India (LIC) is located in Mumbai. Mumbai is a major financial center in India, and it is common for large financial institutions like LIC to have their headquarters there.

Question 9

Under ________ insurance, loss of profit policy is called as consequential loss policy
A)Marine
B)Property
C)Fire
D)Life

Accepted Answer

Under fire insurance, the loss of profit policy is referred to as a consequential loss policy. This is because it covers the loss of profit that a business suffers as a result of a fire, beyond just the physical damage to property.

Question 10

Health insurance can be availed by people aged between ______ and ______
A)10 and 100
B)7 and 75
C)5 and 75
D)10 and 70

Accepted Answer

Health insurance policies typically cover individuals starting from the age of 5 up to 75, as this range is commonly accepted by many insurance providers.

Question 11

________ was the first Indian Insurance Company
A)Bombay Mutual Assurance Society Ltd.
B)Bombay Insurance Society Ltd.
C)Insurance Regulatory Development Authority
D)General Insurance Corporation

Accepted Answer

Bombay Mutual Assurance Society Ltd., established in 1870, was the first Indian insurance company, marking the beginning of the insurance sector in India.

Question 12

Which of the following insurance contract is not based on the principle of indemnity.
A)Fire insurance
B)Marine insurance
C)Life insurance
D)All

Accepted Answer

Life insurance is not based on the principle of indemnity because it provides a predetermined sum to the beneficiary upon the death of the insured, rather than compensating for a financial loss.

Question 13

Marine insurance may cover loss or damage to the ________
A)Ship
B)Cargo
C)Any other subject of Marine adventure
D)All of these

Accepted Answer

Marine insurance can cover loss or damage to the ship, cargo, and any other subject of marine adventure, making "All of these" the correct choice.

Question 14

When a banker collects cheques, dividend warrants, bills or other services on behalf of the customer, the banker the banker acts as an__________
A)Principal
B)Agent
C)Bailor
D)Bailee

Accepted Answer

When a banker collects cheques, dividend warrants, bills, or other services on behalf of a customer, the banker acts as an agent. This is because the banker is performing these services on behalf of the customer, following the customer's instructions.

Question 15

Motor insurance provides insurance cover to
A)Private Vehicles
B)Commercial Vehicles
C)Motorcycles
D)All of these

Accepted Answer

Motor insurance provides coverage for all types of vehicles, including private vehicles, commercial vehicles, and motorcycles, to protect against damages from accidents, theft, and other liabilities.

Question 16

Marine insurance may cover loss or damage to the
A)Ship
B)Cargo
C)Any other subject of Marine adventure
D)All of these

Accepted Answer

Marine insurance typically covers loss or damage to the ship, cargo, and any other subject of marine adventure, making "All of these" the correct choice.

Question 17

Hull insurance is a type of
A)Motor insurance
B)Fire insurance
C)Marine insurance
D)Miscellaneous insurance

Accepted Answer

Hull insurance is a type of marine insurance that covers damage to a ship's hull, machinery, and equipment.

Question 18

Freight insurance is under
A)Life insurance
B)Marine insurance
C)Fire insurance
D)Other miscellaneous insurance

Accepted Answer

Freight insurance falls under Marine insurance, which covers the loss of ships, cargo, and any transport by which property is transferred, acquired, or held between the points of origin and the final destination.

Question 19

A marine insurance is a contract of
A)Increment
B)Indemnity
C)Maturity
D)None

Accepted Answer

Marine insurance is a contract of indemnity, meaning it compensates the insured for losses suffered due to the damage or loss of ships, cargo, terminals, and any transport by which property is transferred, acquired, or held between the points of origin and final destination.

Question 20

Fire insurance came into existence after the Great Fire of London in
A)1666
B)1866
C)1686
D)1687

Accepted Answer

Fire insurance as a formal system began to develop after the Great Fire of London in 1666, which devastated a large part of the city. This catastrophic event highlighted the need for financial protection against losses from fire, leading to the establishment of the first fire insurance company.

Quiz 16: Understanding Principles and Types of Insurance Policies

The principle of utmost good faith is meant to protect the interest of

The principle of utmost good faith is important to ensure

Which of the following risks are insurable?

Insurable interest is

In case of life insurance, insurable interest should exist

In the case of life insurance, the principle of insurable interest operates

The term 'Assurance' refers to ___________

The central office of LIC of India is located at ________

Under ________ insurance, loss of profit policy is called as consequential loss policy

Health insurance can be availed by people aged between and

________ was the first Indian Insurance Company

Which of the following insurance contract is not based on the principle of indemnity.

Marine insurance may cover loss or damage to the ________

When a banker collects cheques, dividend warrants, bills or other services on behalf of the customer, the banker the banker acts as an__________

Motor insurance provides insurance cover to

Marine insurance may cover loss or damage to the

Hull insurance is a type of

Freight insurance is under

A marine insurance is a contract of

Fire insurance came into existence after the Great Fire of London in