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