Quiz
Basic Insurance Concepts & Principles - exampdfs 02
Fragen in diesem Quiz (50)
1Which of the following clauses is useful for insuring antiques?
- AReinstatement Clause
- B"New for Old " Clause
- CLimit of Liability Clause
- DAgreed Value Clause
2Which of the following is most often included in a Householder's Insurance policy?
- A"New for Old" Clause
- BAgreed Value Clause
- CDeductible Clause
- DFranchise Clause
3What of the following is defined as "the right of one person (the insurer) to take over the rights of another (the insured)"?
- ASubrogation
- BSublet
- CRight of Lien
- DAssignment
4Which of the following is used to make sure that an insured person does not get more than an indemnity by claiming for the same loss or damage from both the insurance policy and another source or sources?
- ASubrogation
- BSublet
- CRight of Lien
- DAssignment
5Under common law, the insurer must ________ the insured before they can exercise subrogation rights.
- Ainsure
- Binform
- Cindemnify
- DNone of the others
6With regards to subrogation, if there is any surplus after the insurers have recovered their money, the ________ is entitles to keep it.
- Ainsurer
- Binsured
- Csplit equality amongst the insurer and the insured
- DNone of the others
7Subrogation is applicable only to:
- AContracts of Indemnity
- BMotor Insurance
- CReinsurance
- DMarine Cargo Insurance
8Which of the following situations is also known as ex-gratia payment?
- AA payment made by an insurer outside the terms of the policy
- BThe premiums an insurer pays to a reinsurer
- CThe premiums forfeited by the insurer due to fraud by the insured
- DThe payment a third party (in the case of subrogation) is obligated to pay
9Subrogation rights most frequently arise in:
- Atort
- BContract
- Creinsurance
- DAll of the others
10Waiver of subrogation rights most frequently arise in:
- AReinsurance
- BLife insurance
- CMotor insurance
- DAll of ther others
11In common law, which requirement must be satisfied before contribution arises?
- Atwo or more policies of indemnity must exist
- Bthe policies must cover a common interest
- Cthe policies must be liable for the loss
- DAll of the others
12Which of the following clauses when added to a policy will cause the policy not to contribute if there is another insurance in force?
- ANon-Contribution Clause
- BCancel-out Clause
- CCommon Interest Clause
- DBasis of Contribution Clause
13Which of the following is NOT a category of peril?
- AInsured Peril
- BPecuniary Peril
- CUnnamed Peril
- DExluded Peril
14Which of the following is TRUE regarding a Fire Insurance policy which excludes damage from explosion?
- AA falling tree branch lands on some electrical circuitry and causes an electrical fault, which in turns starts a fire. The fire damage is covered.
- BThe fire reaches a gas cylinder and causes an explosion. The resulting damage is not covered.
- CThe falling tree branch damages part of the property. The resulting damage is not covered.
- DAll of the others.
15Suppose a Householder's Insurance policy covers a direct physical loss to a property resulting from fire or lightning. A fire occurred in a bedroom of a house. Fireman sprayed the other rooms to keep the fire from spreading. The water causes damage to the furniture, antiques, etc. In such a case:
- Athe entire loss is covered, including the water damage
- Bthe entire loss is covered, excluding the water damage
- Cnothing is covered
- DNone of the others
16Duties of an Agent to the Principal include all the following except:
- AObey the principal's instruction under all circumstances
- BAct in good faith towards the principal
- CAccount for money received on behalf of the principal
- DExercise proper care and skill
17An agent should not delegate his duties except where the delegation:
- Ais expressly consented by the principal
- Bis to be implied from the circumstances of the case
- Crelates to some purely administrative act for which no special skill or discretion is required
- DAll of the others
18Agents must act within the scope of their authority which can be classified into all of the following except:
- Aactual authority
- Bimplied authority
- Ctemporary authority
- Dapparent authority
19Which of the following authorities is exercised when an insurance agent collects the premium from the insured?
- Aexpress authority
- Bapparent authority
- Ccustomary authority
- Dimplied authority
20Which of the following authorities is exercised when a broker negotiates with the insurer on the insured's behalf without given authority?
- Aexpress authority
- Bapparent authority
- Ccustomary authority
- Dimplied authority
21Apparent authority is also known as:
- AExpress authority
- BImplied authority
- CUsual authority
- DOstensible authority
22Where an agent has acted outside the scope of what is permitted in the terms of the agency agreement, and the principal accepts the acts as having been done on his behalf, this is called:
- AWaiver
- BEstoppel
- CRatification
- DNone of the others
23The following are rules in relation to a valid ratification, except
- AThe agent who performed the act must have purported to act on behalf of the principal
- BThe principal should only ratify the affected parts of the contract
- CThe client must have believed that he was dealing with an authorized agent of the principal
- DThe agent must have represented himself as an agent of the principal
24The voluntary relinquishment of a known legal right is known as:
- AWaiver
- BEstoppel
- CRetification
- DNone of the others
25Leonard has a motor insurance policy and its premium is due. He calls the insurance agent and asks for an extension of time. The insurance agent assured him that the insurer has a 10 day grace period for overdue premiums. If Leonard has an accident during the grace period, the insurer cannot deny liability, because of the law of ________, designed to prevent persons from changing their minds to the detriment of another party.
- AIndemnity
- BEstoppel
- CRight of Lien
- DRatification
26If an agent incurs liability or pays out money in the performance as an agent, he has a right to be indemnified by the principal except when:
- Ahis act is not authorized by the principal
- Bhe is in breach of his duties as an agent
- Che incurs money or expends money solely as a result of his own fault
- DAll of the others
27Which of the following describes the Right of Lien?
- AAn agent may have the right to retain goods belonging to his principal if there is any money outstanding in his favour
- BA principal may have the right to revoke an agent's authority
- CAn agent may have the right of renouncing the agency
- DAn agent may have the right to act as a middle-man between the principal and a third-party
28An agency may be terminated by which of the following acts?
- ACompletion of the business or specific act
- BAgreement between parties to the contract
- CDeath of either the principal or the agent
- DAll of the others
29Which of the following is NOT true with regards to the role of agent during claims?
- AThe agent must give prompt advice to the insured of the claims requirement
- BThe agent must be careful not to give any indication of acceptance or rejection of the claim
- CThe agent cannot inform the insurer of any potential claims without consent from the insured
- DThe agent must make clear to the insured that the insurer's investigation and processing of a claim is not prejudiced
30Which of the following is NOT true about the description or definition of a contract?
- AAn agreement enforceable by law
- BA legally binding agreement between two or more parties
- CAn agreement involving a promise or a set of promises to perform one or more acts whereby the promise must be made by all parties of the contract
- DAn agreement governing the obligations of the insurer and the rights of the insured.
31Which of the following are elements for a contract to be valid?
1) Intention to create legal ralationship
2) Offer and acceptance
3) Consideration
4) Capacity to contract- A1) and 2)
- B1) and 4)
- C1), 2), and 4)
- DAll of them
32Which of the following is NOT a characteristic of group insurance?
- AThere is a master contract
- BThere is an experience rating
- CThere is no eligibility requirements
- DIt is cost effective
33The amount returned by an insurer to a group policyholder when the claims experienced of a particular group has been more favourable than anticipated is known as the:
- AExcess
- BExperience refund
- CVoluntary benefits
- DNo-claim discount
34Which of the following is an advantage of a voluntary group insurance compared to a compulsory one?
- AEase of administration since there is no payroll deduction to monitor
- BLower cost owing to less administrative work involved
- CGenerates interest and appreciation from the participating employees in the insurance plan
- DGreater pooling effect or risks
35Third party policies do not require insurable interest between the proposer and insured.
- ARichtig
- BFalsch
36What is a Cover Note?
- AA document highlighting any additional coverage added to the policy
- BA temporary cover before an insurance policy is issued
- CThe cover page of an insuranc policy
- DA note from the insurer to the insured
37Certificate of Insurance are normally used in all the following except:
- ALife insurance
- BWork injury compensation
- CMotor insurance
- DMarine insurance
38The following is true of a cover note except:
- AIt is valid only for a certain period
- BIt is subject to the usual terms and conditions of the insurance policy for that class of business
- CIt is subject to any further special clauses (if applicable)
- DIt is subject to the insurance policy being in force and issued
39The certificate of insurance for motor insurance must be kept by the ______ at all times.
- ATraffic Police
- BGovernment
- CMotorist
- DInsurer
40In marine insurance, insureds have regular shipments of cargo and it is sometimes inconvenient for the insurer to issue an insurance policy giving the details of all the classes for each and every shipment. What sort of Master policy is issued to solve this problem?
- ABroad cover
- BMiscellaneous cover
- COpen cover
- DAll cover
41What is the 'contra proferetum' rule?
- AThe policy must be issued within the fixed period of time as promised by the insurer
- BIt is a rule in marine insurance that the policy must cover broad definitions of the quality of the vessels, basis of valuation and limits, together with a rating structure
- CThe responsibility of the insured to make sufficient copies of a Certificate of Insurance for display at all business premises
- DThe person drawing up a legal document is responsible for any defects in it and cannot profit from such defects
42What is the Preamble Clause?
- AThis clause sets out in details, precisely what the policy is insuring
- BThis clause states the parties to the contract
- CThis clause states that it is the insured's responsibility to establish that a loss falls within the policy contract
- DThis clause sets of the exlucsions or exceptions in a policy document
43Which type of warranties do not appear in the policy but are understood to automatically apply in the contract of insurance?
- AExpress Warranties
- BImplied Warranties
- CBoth Express Warranties and Implied Warranties
- DNone of the others
44The statement "In witness whereof, this Policy has been signed by and on behalf of the Company", is known is:
- AAttestation clause
- BExpress Warranty
- CImplied Warranty
- DEndorsement
45Conditions precedent to liability are conditions which must be fulfilled:
- Abefore the contract can become valid
- Bif the contract is to continue once it becomes binding
- Cbefore the insured is legally entitled to recover under the contract
- DAll of the others
46An insured has a policy with Insurer X for $75,000 and Insurer Y for $25,000. A loss arises to the sum of S$40,000, under the Independent Liability method of calculation, how much should Insurer X pay for?
- A$10,000
- B$15,385
- C$24,615
- D$30,000
47An insured has a policy with Insurer X for $75,000 and Insurer Y for $25,000. A loss arises to the sum of S$40,000, under the Respective Sums Insured, how much should Insurer Y pay for?
- A$10,000
- B$15,385
- C$24,615
- D$30,000
48An agreement whereby one or more reinsurers automatically accept all reinsurance which falls within pre-detemined limits is known as:
- AFacultative reinsurance
- BTreaty reinsurance
- Cproportional reinsurance
- DNon-proportional reinsurance
49An insurer insures a risk on a sum insured of $10M and his retention on his risk is $2M. It reinsures the risk under a Facultative Excess of Loss cover of $8M in excess of $2M. If the loss is $5M, what is payable by the reinsurer?
- ANothing
- B$2M
- C$3M
- D$5M
50An insurer insures a risk on a sum insured of $10M and his retention on this risk is $2M. It reinsures the risk under a Facultative Excess of Loss cover of $8M in excess of $2M. If the loss is $1M, what is payable by the insurer?
- ANothing
- B$1M
- C$3M
- D$6M
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- Basic Insurance Concepts & Principles - exampdfs 02
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- shuiziliu
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