Principals &Practices of Insurance
1. Define Insurance. Is ‘insurance’ the only risk handling tool? Discuss.
2. Discuss Principle of ‘Insurable Interest’ and its importance in Insurance Contract.
3. How the Principle of Indemnity is applicable in ‘Fire’ and ‘Life’ Insurance
4. Discuss the role of Insurance Underwriter.
5. Write Short Notes:
A). Nomination in Life Insurance Policy.
B). Definition of ‘Accident’
C). Pure Risk.
D). Moral Hazards.
(CASE STUDY)
Mr. Naresh Kumar insured his car for IDV of Rs. 4 lacs under Motor Package Policy from 01/01/2008 to 31/12/08. On 15/05/2008, his car got damaged in an accident. Surveyor assessed following expenses in getting his car repaired before depreciation:
Rs.
1. Labor Charges 4000
2. Tier Replacement 3000
3 Door Replacement 8000
4 Bumper Replacement ( Fiber Make) 3000
5. Painting Charges 1500
6. Wind Screen Glass 2000
7. Head Lights ( Both) Plastic Made) 2500
8. Towing Charges 500
9. Bonnet Replacement 4500
Depreciation Rate on Rubber/Fiber/Plastic Parts - 50%
Depreciation Rate on Metal Parts - 20%
Depreciation Rate on Glass Parts - Nil
Excess Clause - Rs. 500
1. You are required to item wise net amount payable under the Policy.
Ans:-
2. Briefly discuss the contents of a Motor claim ‘Survey Report’
Ans:-
In the event of an incident giving rise to a claim under the policy, the following steps should be taken:
In case of accidental damage to the vehicle:
1. Immediate intimation to the nearest office, which will issue a Claim Form.
2. Claim Form duly filled in to be submitted along with copy of Registration Certificate and driving license of the driver of the vehicle at the time of accident as also estimate of repairs.
3. Vehicle will be surveyed by a Surveyor, appointed by the insurance company, who shall submit his report to the company. In case of a major damage to the vehicle, a spot survey, at the site of accident, would also be arranged by the company.
4. Final bills/cash memos are to be submitted duly signed by the insured.
5. Salvage of the damaged parts may be required to be deposited with the insurance company after approval of the claim
3. Enumerate Various documents required for settlement of a ‘Personal Accident’ Insurance claim
1. PERIL’ REFERS TO
a. CONSEQUENCES OF OCCURRENCE OF AN EVENT
b. PROPERTY WHICH MAY SUFFER DAMAGE
c. CIRCUMSTANCES WHICH AGGRAVATE THE EVENT
d. AN EVENT WHICH MAY CAUSE DAMAGE TO PROPERTY
2. INSURANCE COVERS
a. BUSINESS RISKS
b. Pure risk
c. Gambling risk
d. Speculative risk
3. PURE RISK’ MEANS
a. GAMBLING
b. BUSINESS RISK
c. Speculation
d. UNEXPECTED EVENT WHICH IF OCCURS WILL BRING LOSSES AND NO PROFIT
4. BAD RISK’ FROM INSURERS’ POINT OF VIEW IS
a. LESS HAZARDOUS
b. MODERATELY HAZARDOUS
c. HIGHLY HAZARDOUS
d. NONE OF THE ABOVE
5. INSURABLE INTEREST MAY ARISE IN THE PROPERTY WHEN A PERSON
a. FINANCES THE PROPERTY
b. BECOMES OWNER OF THE PROPERTY
c. BECOMES LESSEE OF THE PROPERTY
d. All of the above
6. ABSENCE OF INSURABLE INTEREST IN THE SUBJECT MATTER WILL RENDER THE INSURANCE CONTRACT
a. Void
b. Voidable
c. Valid
d. Void ab- initio
7. SUBJECT MATTER OF INSURANCE IS
a. PROPERTY WHICH MAY SUFFER DAMAGE
b. CONSEQUENES OF OCCURANCE OF AN EVENT
c. AN EVENT WHICH MAY CAUSE DAMAGE TO PROPERTY
d. CIRCUMSTANCES WHICH AGGRAVATE THE EVENT
8. IN LIFE INSURANCE INSURABLE INTEREST MAY NOT EXIST BETWEEN
a. TWO FRIENDS
b. HUSBAND AND WIFE
c. FATHER AND DEPENDENT SON
d. EMPLOYER AND EMPLOYEE
9. MATERIAL FACT MEANS
a. DISCLOSING FACTS AT THE MATERIAL TIME
b. FACTS ABOUT THE RAW MATERIAL TO BE SUPPLIED
c. FACTS WHICH ARE NOT REQUIRED TO BE KNOWN BY THE INSURER
d. FACTS WHICH ENABLE THE INSURERS TO TAKE UNDERWRITING DECISION
10. INSURANCE
a. PROTECTS THE ASSETS
b. REDUCES POSSIBILITES OF LOSS
c. PREVENTS THE LOSS
d. PAYS WHEN THERE IS LOSS OF ASSETS
11. RISK FROM INSURERS’ POINT OF VIEW IS
a. CIRCUMSTANCES WHICH AGGRAVATE THE EVENT
b. CONSEUQUENCES OF OCCURANCE OF AN EVENT
c. AN EVENT WHICH MAY CAUSE DAMAGE TO PROPERTY
d. PROPERTY WHICH MAY SUFFER DAMAGE
12. PRINCIPLE OF UTMOST GOOD FAITH MEANS
a. BUYER SHOULD BE CAREFUL
b. PROPOSER CANNOT MISLEAD THE INSURER
c. BOTH PROPOSER AND INSURER MUST DISCLOSE THE MATERIAL FACTS
d. SELLER CANNOT MISLEAD THE BUYER
13. RISK TRANSFER’MEANS
a. TRANSFER OF INSURANCE POLICY FROM ORIGINAL INSURED TO NEW INSURED
b. PURCHASING INSURANCE COVER FOR PREMISES
c. SHIFTING OF LOCATION OF PREMISES
d. TRANSFER OF OWNERSHIP OF PREMISES
14. PRINCIPLE OF INDEMNITY IS STRICTLY APPLICABLE IN
a. FIRE INSURANCE
b. PERSONAL ACCIDENT INSURANCE
c. VALUED POLICY
d. LIFE INSURANCE
15. HAZARD’ REFERS TO
a. AN EVENT WHICH MAY CAUSE DAMAGE TO PROPERTY
b. CONSEQUENCES OF OCCURANCE OF AN EVENT
c. CIRCUMSTANCES WHICH AGGRAVATE THE EVENT
d. PROPERTY WHICH MAY SUFFER DAMAGE
16. INSURERS MAY ASSUME RISKS
a. ONLY ON RECEIPT OF PREMIUM IN ADVANCE
b. BY PROVIDING CREDIT FACILITY
c. WITHOUT RECEIPT OF PREMIUM
d. ON PERSONAL SURETY
17. LIFE INSURANCE CONTRACT IS NOT SUBJECT TO PRINCIPLE OF
a. PROXIMATE CAUSE
b. INDEMNITY
c. UTMOST GOOD FAITH
d. INSURABLE INTEREST
18. SELF INSURANCE IS ADVANTAGEOUS BECAUSE
a. INTEREST ON THE INVESTMENT OF FUNDS BELONGS TO THE INSURED
b. NO DISPUTES WILL ARISE WITH INSURERS OVER CLAIMS
c. THERE IS A DIRECT INCENTIVE TO CONTROL AND MINIMISE THE
d. ALL OF THE ABOVE
19. PRINCIPLE OF SUBROGATION MEANS
a. TRANSFER OF INSURED’S RIGHTS TO INSURER
b. TRANSFER OF INSURER’S RIGHTS TO INSURED
c. TRANSFER OF ONE INSURER’S RIGHTS TO ANOTHER INSURER
d. TRANSFER OF ONE INSURED’S RIGHTS TO ANOTHER INSURED
20. RISK MANAGER IS A PERSON WHO
a. INSPECTS RISKS PROPOSED FOR INSURANCE
b. LOOKS AFTER INSURERS UNDERWRITING DEPARTMENT
c. LOOKS AFTER THE RISK PROFILE OF AN ENTERPRENEUR
d. TAKES RISKS IN BUSINESS
21. INSURANCE UNDERWRITER IS A PERSON WHO
a. PURCHASES INSURANCE PRODUCTS
b. SELLS THE INSURANCE PRODUCTS
c. DECIDES WHETHER TO ACCEPT THE INSURANCE PROPOSAL OR NOT
d. INSPECTS THE RISKS BEFORE ACCEPTANCE OF PROPOSAL
22. RE-INSURANCE’ MEANS
a. TAKING TWO INSURANCE POLICIES ON ONE’S LIFE
b. TAKING TWO INSURANCE POLICIES ON ONE PROPERTY
c. INSURANCE OF INSURED BUSINESS
d. TAKING MORE THAN ONE INSURANCE POLICY ON TWO OR MORE PROPERTIES
23. PERSONAL ACCIDENT INSURANCE FALLS UNDER
a. LIFE INSURANCE
b. SELF INSURANCE
c. MEDICLAIM INSURANCE
d. MISC INSURANCE
24. BANCASSURANCE MEANS
a. BANK ACCOUNT OPENED BY AN INSURANCE COMPANY
b. BANKS SELLING INSURANCE ON BEHALF OF THEIR CLIENTS
c. BANKS PURCHASING INSURANCE COVER FOR THEIR PROPERTY
d. BANKS SELLING INSURANCE PRODUCTS ON BEHALF OF INSURERS
25. UNDER PAKAGE ENDOWMENT ASSURANCE THE POLICY PERIOD IS
a. SUM ASSURED IS NOT PAYABLE IF THE INSURED SURVIVES A CERTAIN PERIOD
b. UNLIMITED
c. SURVIVAL BENEFITS ARE PAID DURING THE CURRENCY OF THE POLICY
d. LIMITED FOR CERTAIN NUMBER OF YEARS
26. PRINCIPLE OF CONTRIBUTION IS APPLICABLE WHERE THERE
a. EXISTS ONE INSURANCE POLICY ON ONE SUBJECT MATTER
b. EXIST TWO OR MORE POLICIES ON ONE SUBJECT MATTER
c. EXISTS ONE INSURANCE POLICY ON MORE THAN ONE SUBJECT MATTER
d. EXIST TWO OR MORE INSURANCE POLICIES ON MORE THAN ONE SUBJECT MATTER
27. PRINCIPLE OF INSURABLE INTEREST MEANS
a. PENAL INTEREST ON DELAYED PAYMENT OF PREMIUM
b. BANK CHARGES ON INSURANCE PREMIUM REMITTANCE
c. INTEREST PAYABLE \ON INSURANCE MONEY
d. PECUNIARY INTEREST IN THE SUBJECT MATTER OF INSURANCE
28. ‘MORAL HAZARD’ REFERS TO
a. CONDUCT OF THE SURVEYOR
b. PHYSICAL FEATURES OF THE PROPERTY
c. CONDUCT OF THE INSURER
d. CONDUCT OF THE INSURED
29. SHOPKEEPERS INSURANCE’ IS A KIND OF
a. LOSS OF PROFIT INSURANCE
b. PERSONAL INSURANCE
c. LIFE INSURANCE
d. COMMERCIAL INSURANCE
30. WORKMENS COMPENSATION INSURANCE IS TAKEN BY
a. EMPLOYERS
b. EXECUTIVES
c. EMPLOYEES
d. STATE GOVERNMENT
31. INSURABLE INTEREST MUST EXIST IN MARINE INSURANCE POLICY
a. NOT NECESSARY TO EXIST AT ANY TIME
b. AT THE TIME OF THE LOSS
c. AT THE INCEPTION OF THE POLICY
d. BOTH AT THE TIME OF INCEPTION OF THE POLICY AND AT THE TIME OF LOSS
32. UNDER ‘WHOLE-LIFE’ INSURANCE THE SUM ASSURED IS PAYABLE
a. ON MATURITY OF THE POLICY
b. DURING THE CURRENCY OF THE POLICY WHEN THE INSURED IS ALIVE
c. UPON THE DEATH OF THE ASSURED
d. NONE OF THE ABOVE
33. “EXCESS” CLAUSE IS INSERTED IN INSURANCE CONTRACT TO AVOID
a. HIGH VALUE CLAIMS
b. TRIVIAL CLAIMS
c. FRAUD CLAIMS
d. FREQUENT CLAIMS
34. INSURABLE INTEREST MAY EXIST IN FIRE POLICY
a. THROUGHOUT CURRENCY OF THE POLICY
b. ONLY AT THE BEGINNING
c. BOTH AT THE BEGINNING AND AT THE TIME OF LOSS
d. ONLY AT THE TIME OF LOSS
35. HOUSEHOLDERS INSURANCE’ POLICY FALLS UNDER
a. COMMERCIAL INSURANCE CATEGORY
b. PERSONAL INSURANCE CATEGORY
c. LIFE INSURANCE
d. SELF INSURANCE
36. PRESENTLY IN INDIA NON-LIFE INSURANCE PREMIUM IS SUBSTANTIALLY
a. NON-TARIFFED
b. REGULATED BY GIC
c. UNDER MARKET AGREEENT
d. TARIFFED
37. CO-INSURANCE MEANS
a. HUSBAND AND WIFE LIFE COVER JOINTLY
b. INSURANCE OF ONE PROPERTY BY TWO OR MORE INSURERS UNDER ONE POLICY
c. INSURANCE OF MORE THAN ONE PROPERTY UNDER TWO POLICIES
d. INSURANCE OF MORE THAN ONE PROPERTY UNDER ONE POLICY
38. INSURANCE CONTRACTS ARE SUBJECT TO THE PRINCIPLE OF
a. UTMOST GOOD FAITH
b. INSURABLE INTERESTS
c. INDEMNITY
d. ALL OF THE ABOVE
39. NON-DISCLOSURE OF MATERIAL FACTS BY THE INSURED MAY RENDER THE INSURANCE CONTRACT
a. VOID
b. VOIDABLE
c. VOID- AB-INITIO
d. VALID
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University: AMITY Year: 2015