principles of insurance Quiz-1

principles of insurance Quiz-1

Quiz

 

1. How does the principle of mitigation benefit both the insured individual and the insurance company?
   1.   It maximizes the insured's claim payout without affecting the insurance company's costs.
   2.   It allows the insured to ignore any damage, reducing the need for claims.
   3.   It reduces the insured's coverage limits, lowering potential claim payouts.
   4.   It promotes a fair and balanced approach to handling claims, preventing unnecessary losses for both parties.
2. In insurance, what does the principle of cause proxima help determine?
   1.   The likelihood of an event occurring in the future
   2.   Whether an insured individual is responsible for the loss
   3.   The chronological order of events leading to a claim
   4.   The actual and most dominant cause of a loss or damage
3. What is the principle of mitigation in insurance?
   1.   The principle that insurance companies should always maximize their profits
   2.   The principle that insurance premiums should be reduced for all policyholders
   3.   The principle that insured individuals should take reasonable steps to minimize the impact of a loss
   4.   The principle that insurance policies should cover all possible risks
4. In which type of insurance policy is the principle of mitigation most commonly applied?
   1.   Health insurance
   2.   Travel insurance
   3.   Property insurance
   4.   Liability insurance
5. The principle of cause proxima is particularly important in determining claims related to which type of insurance?
   1.   Property insurance
   2.   Life insurance
   3.   Travel insurance
   4.   Liability insurance
6. What is the principle of "contribution" in insurance?
   1.   It refers to the act of donating to charitable causes through insurance proceeds.
   2.   It is a concept that requires insurers to contribute a portion of their profits to policyholders.
   3.   It dictates that when a person is overinsured, multiple insurers share the claim payment proportionally.
   4.   It encourages policyholders to contribute to their insurance premiums regularly.
7. What is the principle of "insurable interest" in insurance?
   1.   It refers to the amount of premium an insured person has to pay.
   2.   It dictates the maximum coverage limit of an insurance policy.
   3.   It requires the insured to have a financial stake in the subject matter of insurance.
   4.   It determines the location where insurance policies can be sold.
8. Which type of insurance contract typically requires the highest level of insurable interest?
   1.   Health insurance
   2.   Life insurance
   3.   Travel insurance
   4.   Vehicle insurance
9. How does the principle of indemnity relate to insurable interest?
   1.   Insurable interest determines the premium, while indemnity determines coverage.
   2.   Insurable interest ensures fair compensation based on actual loss under indemnity.
   3.   The two principles are unrelated in insurance.
   4.   Insurable interest guarantees complete coverage, while indemnity limits compensation.
10. If an insured person intentionally damages their own property to claim insurance, what principle is being violated?
    1.   Principle of indemnity
    2.   Principle of subrogation
    3.   Principle of contribution
    4.   Principle of good faith
11. The principle of indemnity is based on the idea that insurance should:
    1.   Encourage speculative investments
    2.   Fully cover any potential loss, regardless of its value
    3.   Compensate for actual financial loss, not profit
    4.   Guarantee unlimited payouts for policyholders
12. Which type of insurance is most commonly associated with the principle of contribution?
    1.   Health insurance
    2.   Life insurance
    3.   Vehicle insurance
    4.   Travel insurance
13. Which of the following is an example of a situation where insurable interest exists?
    1.   A person insures their neighbor's car.
    2.   A business owner insures their competitor's inventory.
    3.   A homeowner insures their own house.
    4.   A person insures their friend's health.
14. If an insured person fails to disclose a pre-existing medical condition to the insurer, what could be the consequence?
    1.   The insurer would still cover the medical condition
    2.   The premium would be reduced
    3.   The claim could be denied or policy canceled
    4.   The insurer would be responsible for medical expenses
15. Which type of insurance policy is most closely aligned with the principle of indemnity?
    1.   Property insurance
    2.   Life insurance
    3.   Health insurance
    4.   Travel insurance
16. What does the principle of "utmost good faith" mean in insurance?
    1.   The insurer must always act in their own best interest
    2.   Both the insurer and the insured must disclose all relevant information truthfully
    3.   The insurer can withhold information to protect their profits
    4.   The insured is not required to provide any information to the insurer
17. Which party is generally required to have insurable interest in a life insurance policy?
    1.   The insurance agent
    2.   The beneficiary
    3.   The insurance company
    4.   The insured person
18. In the context of insurance, what term is often used to refer to the principle of good faith?
    1.   "Caveat emptor"
    2.   "Pro rata"
    3.   "Uberrimae fides"
    4.   "Res ipsa loquitur"
19. What is the principle of indemnity in insurance?
    1.   The principle that insurance premiums should be reasonable for all policyholders
    2.   The principle that insurance contracts must be legally binding
    3.   The principle that insurance policies should cover a wide range of risks
    4.   The principle that insurance provides compensation for actual financial loss
20. What is the principle of "cause proxima" in insurance?
    1.   It refers to the main cause of an incident leading to a claim.
    2.   It is an old term no longer used in insurance practices.
    3.   It focuses on the distant causes of an event, rather than the immediate ones.
    4.   It only applies to health insurance claims.