Quiz
Basic Insurance Concepts & Principles (Fourth Edition - 2013) from SCI website
Questions in this quiz (40)
1________ are set up primarily to insure the risks of their parent and related companies.
- AReinsurers
- BDirect insurers
- CCaptive insurers
- DComposite insurers
2Insurers are using alternative distribution channels to market their insurance products. Which one of the following is NOT an alternative distribution channel?
- APost offices
- BThe Internet
- CCredit card providers
- DMarketing staff of the insurer.
3A vehicle collision that causes a driver to suffer personal injury and physical damage to his vehicle is an example of a:
- Apure risk
- Bspeculative risk
- Cnon-financial risk
- Dfundamental risk
4________ is NOT a speculative risk.
- ARunning in a marathon
- BBetting on a horse race
- CVenturing into a food business
- DInvesting in stocks and securities
5________ are uninsurable.
- APure risks
- BFinancial risks
- CParticular risks
- DSpeculative risks
6The potential loss of an insurable risk must be:
- Acaused intentionally
- Bindefinite in terms of time and amount
- Clarge enough to create a financial burden for the insured
- Dcertain to happen to a large number of insureds at the same time
7The lightning that caused the factory owned by Adrian to be burnt down is referred to as the:
- Aperil
- Bhazard
- Cdamage
- Dnon-financial risk
8Betsy has a fear of drowning, so she chooses not to swim. This is an example of risk:
- Atransfer
- Bcontrol
- Cphobia
- Davoidance
9Strict enforcement of safety rules in construction sites is an example of loss:
- Atransfer
- Breduction
- Cavoidance
- Dprevention
10As specified in Session 57(1)(b) of the Insurance Act (Cap. 142), insurable interest is NOT present when the:
- Ahusband purchases insurance on the life of his wife
- Bcreditor purchases insurance on the life of his debtor
- Cgrandmother purchases insurance on the life of her grandson
- Dfather purchases insurance on the life of his son below 18 years old
11Which one of the following insurance policies does NOT require proof of insurable interest in the event of a claim?
- ALife Insurance policy
- BMarine Insurance policy
- CLiability Insurance policy
- DProperty Insurance policy
12Under the doctrine of utmost good faith, the parties to an insurance contract have the duty to disclose all:
- Acommonly known facts
- Bfacts only when asked for
- Cmaterial facts relating to the risk being proposed
- Dmaterial assumptions relating to the loss reduction
13In his proposal form for Fire Insurance, Donald states that his warehouse is installed with fire extinguishers when it is not. This is an example of ________ misrepresentation.
- Ainnocent
- Bnegligent
- Cfraudulent
- Dspeculative
14Under the principle of indemnity, there are a number of methods by which an insurer can provide the necessary indemnity to the insured in the event of a loss. Which one of the following is NOT a method of providing indemnity?
- AReplacement
- BCash payment
- CReinstatement
- DPolicy renewal discount
15The principle of indemnity applies to ________ Insurance policies.
- ALife
- BPecuniary
- CCritical Illness
- DPersonal Accident
16Max Hardware Storage, a warehouse, caught fire recently. Its owner claimed a loss of S$80,000 (hardware stock) against its Fire Insurance policy that included an Average Clause. The loss adjuster appointed by the insurer was satisfied that the quantum of loss claimed was correct. However, the lost adjuster was of the opinion that there was at least S$160,000 in stock, but only S$120,000 was insured. As such, on application of average, the insurer's liability for loss under the policy amounts to
- AS$30,000
- BS$60,000
- CS$90,000
- DS$120,000
17An explosion at his neighbour's factory caused a fire which spread to Calvin's factory and caused extensive damage. The insurer having paid the claim to Calvin under his Fire Insurance policy assumes his rights to recover the loss from his neighbour, who was responsible for the fire. This legal doctrine is known as:
- Aexcess
- Baverage
- Cindemnity
- Dsubrogation
18The principle of contribution arises when there is a loss that involves two or more insurance policies covering:
- Adifferent perils
- Bthe common interests
- Cdifferent subject matters
- Dthe same amount of sum insured
19Which one of the following statements about a general insurance agent is NOT correct?
- AHe procures new business for the insurer.
- BHe services his existing business for the insurer.
- CHe is also the principal party in an agency agreement.
- DHe is essentially an intermediary acting for the insurer.
20________ authority is the power that is granted to an agent by the principal in specific terms in the agency agreement.
- AUsual
- BActual
- CImplied
- DApparent
21The situation where the principal accepts its agent's actions that are made outside the scope of the agency agreement is known as:
- Aestoppel
- Bratification
- Creinstatement
- Dostensible authority
22Which of the following statements relating to the Law of Contract is CORRECT?
- AUndischarged bankrupts have the legal right to enter into contracts.
- BMutual agreement of a contract can be evidenced by the making of an offer either orally or in writing.
- CA contract is enforceable by law without a consideration being passed from the promisee to the promisor.
- DAll of the others.
23Which one of the following insurance policies is an example of a "master contract" that is effected by a company to offer optional employee benefits?
- AMarine Hull
- BBuilding and Contents
- CGroup Personal Accident
- DDirectors' and Officers' Liability
24Which one of the following documents does NOT form part of an insurance contract?
- ADeclaration
- BCover Note
- CClaim Form
- DCertificate of Insurance
25In the proposal form for Fire Insurance, the information that has a material bearing on the potential hazards of the risk is the:
- Ainsured's address
- Bperiod of insurance cover
- Cinsurer's warning statement
- Dinsured's means of identification
26Which one of the following statements BEST describes a cover note?
- AIt can be used as a renewal notice.
- BIt replaces the lost policy document.
- CIt has the same legal status as the actual policy.
- DIt forms the basis of risk assessment by the insurer.
27A Certificate of Insurance is typically NOT required for ________ Insurance.
- ALiability
- BMarine Cargo
- CPrivate Motor Car
- DCommercial Vehicle
28An implied condition is one that must be complied with, but does not appear in the policy document. Which one of the following is an example of an implied condition?
- AWarranties
- BSubrogation of rights
- CNotification of claims
- DExistence of subject matter
29Which one of the following question is NOT usually included in a check list used to perform a preliminary validation of a Property Insurance claim by an insurance company?
- AIs the claimant entitled to the payment?
- BIs the property covered under the policy?
- CDid the loss occur in a place covered by the policy?
- DIs the loss the indirect result of a hazard covered under the policy?
30In the event of a loss or damage, the onus of proving that the loss has occurred rests solely with the:
- Aagent
- Binsured
- Clawyers
- Dreinsurer
31A "Sue and Labour" clause enables the insured to recover expenses incurred in averting or minimising a loss under a policy. This clause is commonly found in a/an ________ Insurance policy.
- AMarine Cargo
- BProduct Liability
- CCommercial Vehicle
- DErrors and Omissions
32________ are independent intermediaries who can help policyholders to ensure that the eventual claim settlement recommended to the insurers is fair to both parties within the terms of the policy.
- AEnginners
- BRisk surveyors
- CLoss adjusters
- DForensic scientists
33In Singapore, Section 24A of the Limitation Act (Cap. 163) provides for legal actions pertaining to damages for negligence, nuisance or breach of duty in respect of personal injuries to commence before the expiration of a certain limitation period from the date on which the course of action accrued. The limitation period in Singapore is ________ years.
- Aone
- Bthree
- Csix
- Dnine
34The common method of settlement of the loss of a jewellery under a Theft Insurance policy is by:
- Arepair
- Bavoidance
- Creplacement
- Dreinstatement
35________ is a risk transfer mechanism whereby the reinsurer transfers part of a risk to another reinsurer.
- AInsurance
- BContribution
- CRetrocession
- DCo-insurance
36Which one of the following regarding treaty reinsurance is FALSE?
- AIt may be placed on a proportional basis.
- BThe reinsurers are obliged to accept all risks ceded.
- CSurplus Reinsurance is one example of treaty reinsurance.
- DIt is more costly to administer as compared to facultative reinsurance.
37A contract of reinsurance is strictly between the ________ and the reinsurer.
- Adirect insurer
- Boriginal insured
- Cinsurance agent
- Dreinsurance broker
38After retaining S$3,000,000 on a risk with an original sum insured of S$5,000,000, Gold Insurer reinsured the balance with Silver Reinsurer on a Proportional Facultative Reinsurance basis.
If there is a loss of S$2,000,000 on the risk, Silver Reinsurer will be liable to pay its share of loss amounting to:- AS$200,000
- BS$400,000
- CS$600,000
- DS$800,000
39The Monetary Authority of Singapore (MAS) Guideline No: FSG-G01 sets out fit and proper criteria applicable to all relevant persons in relation to the carrying out of any activity regulated by MAS. Examples of relevant persons are:
- Adirector of a registered insurer
- Bbroking staff of a registered insurance broker
- Csubstantial shareholder of a registered insurer
- Dall of the others
40Which of the following statements relating to the Singapore General Insurance Code of Practice ("The Code") is FALSE?
- AThe objective of the Code is to ensure that the general insurance customer is treated fairly.
- BThe Code covers how an insurance agent should maintain confidentiality of information relating to any of his customers.
- CThe Code covers all types of general insurance products (including commercial lines) which are sold to corporate clients.
- DAll of the others.
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- Basic Insurance Concepts & Principles (Fourth Edition - 2013) Mock Paper
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- shuiziliu
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- English
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