# Insurable Risk Management Quiz Questions

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When you want to ensure something against a risk, some insurance companies may not want to cover it rendering insurable, and risk is therefore insurable if it is immeasurable, not definable or certain. Take up the quiz below and get to test out your knowledge on insurable risk management by taking up this quiz. Be sure to share your score!

• 1.

### Under a proportional facultative reinsurance, the direct insurer insures a risk of sum assured \$1million. His retention on this risk is \$600,000 and the rest is absorbed by the reinsurers, if a loss of \$200,000 arises, what would be the reinsurers's share?

• A.

\$80,000

• B.

\$120,000

• C.

\$30,000

• D.

\$100,000

A. \$80,000
Explanation
In proportional facultative reinsurance, the reinsurer's share is determined by the proportion of the risk they agreed to cover. In this case, the direct insurer retained \$600,000 out of the \$1 million risk, which means the reinsurer agreed to cover \$400,000. Since the loss incurred is \$200,000, the reinsurer's share would be 50% of the loss, which is \$100,000. However, the question asks for the reinsurer's share, not the total amount the reinsurer would pay. Therefore, the correct answer is \$80,000, which is the reinsurer's share of the loss.

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• 2.

### Which of the following insurance arrangements is invalid because of a lack of insurable interest?

• A.

An employer effects a public liability policy to cover the negligent acts of his employee

• B.

A bowling club effecting an all risk policy on bowling balls belonging to its members

• C.

An employer effecting a group personal accident policy on all employees who are already entitled to workmen compensation benefits

• D.

A finance company effecting a comprehensive motor policy on a car because the hirer under a hire purchase agreement has failed to effect the policy

B. A bowling club effecting an all risk policy on bowling balls belonging to its members
Explanation
The insurance arrangement of a bowling club effecting an all risk policy on bowling balls belonging to its members is invalid due to a lack of insurable interest. Insurable interest refers to the financial or legal interest that a person has in the subject matter of the insurance policy. In this case, the bowling club does not have a direct financial or legal interest in the bowling balls owned by its members. Therefore, the insurance arrangement is considered invalid.

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• 3.

### Claim forms are frequently issued by the insurers and they

• A.

Are prepared and issued by insurance intermediaries

• B.

Contain information used to make underwriting decisions

• C.

Are exactly the same with all classes of business

• D.

Provide information that the insurers will need to process a claim

D. Provide information that the insurers will need to process a claim
Explanation
Claim forms are frequently issued by insurers because they provide information that the insurers will need to process a claim. When a policyholder needs to make a claim, they fill out a claim form which contains details about the incident, the policyholder's information, and any supporting documents. This information is crucial for the insurers to assess the validity of the claim and determine the coverage and amount to be paid out. Therefore, claim forms play a vital role in the claims process and provide the necessary information for insurers to process a claim efficiently.

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• 4.

### The legal principle to insurance contracts dealing with the insurer's right of recovery against a negligent or guilty party is called the principle of

• A.

Assignment

• B.

Indemnity

• C.

Subrogation

• D.

Contribution

C. Subrogation
Explanation
Subrogation is the correct answer because it refers to the legal principle that allows an insurance company to seek reimbursement from a negligent or guilty party for the damages they have paid to their insured. This principle enables the insurance company to step into the shoes of their insured and pursue legal action against the responsible party in order to recover the amount they have paid out. This helps prevent the insured from being financially burdened by the actions of others and promotes fairness in insurance contracts.

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• 5.

### Which of the following is NOT a criteria for a risk to be insurable?

• A.

Loss must be definite in terms of time and amount

• B.

There must be a large number of people with similar potential for loss available for insurance

• C.

Risk must be pure risk

• D.

Loss must be catastrophic

D. Loss must be catastrophic
Explanation
The criteria for a risk to be insurable include the loss being definite in terms of time and amount, there being a large number of people with similar potential for loss available for insurance, and the risk being a pure risk. However, the loss being catastrophic is not a criteria for a risk to be insurable.

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• 6.

### Under liability insurance, the loss profit due to fire is known as

• A.

Fidelity guarantee insurance

• B.

Uberrima fiedes insurance

• C.

Consequential loss insurance

• D.

Hold harmless insurance

C. Consequential loss insurance
Explanation
Consequential loss insurance refers to the coverage provided by liability insurance for the loss of profit resulting from a fire. This type of insurance compensates the insured for the financial impact of the fire, such as the loss of income, additional expenses, and any other related costs. It is designed to protect businesses from the financial consequences of unexpected events like fires, ensuring that they can recover and continue their operations smoothly.

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• 7.

### Which of the following is an example of "conditions precedent to policy"

• A.

Utmost good faith

• B.

Charge of occupation

• C.

Inform insurer within a time frame when loss occur

• D.

Ensure burglary alarm is in good order

A. Utmost good faith
Explanation
Utmost good faith is an example of "conditions precedent to policy" because it refers to the principle that both the insurer and insured must disclose all relevant information honestly and accurately before the policy is issued. This principle ensures that both parties have complete and accurate information to assess the risk and determine the terms of the policy. Failure to disclose relevant information can result in the policy being voided or claims being denied.

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• 8.

### An insurance policy

• A.

Is the written evidence of the contract

• B.

Is the basis of a contract

• C.

Is like a cover note that have the same legal status of a actual insurance policy

• D.

Forms the basis o a contract

A. Is the written evidence of the contract
Explanation
The correct answer is "is the written evidence of the contract". An insurance policy serves as the documented proof of the agreement between the insurer and the insured. It outlines the terms, conditions, and coverage details of the insurance contract. The policy acts as a legal document that both parties can refer to in case of any disputes or claims. It provides clarity and transparency regarding the rights and obligations of the insurer and insured, making it an essential component of the insurance contract.

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• 9.

### The sellers in an insurance market are

• A.

Insurance agents

• B.

Lloyds intermediaries

• C.

Reinsurers ceding retrocession contracts

• D.

Insurance brokers

C. Reinsurers ceding retrocession contracts
Explanation
The correct answer is reinsurers ceding retrocession contracts. Reinsurers are companies that provide insurance to other insurance companies. Retrocession is the process by which a reinsurer transfers some or all of the risk it has assumed to another reinsurer. Therefore, reinsurers ceding retrocession contracts refers to reinsurers who are transferring the risk they have assumed to other reinsurers through retrocession contracts. This indicates that these sellers in an insurance market are involved in the process of transferring insurance risk.

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• 10.

### Speculative risks are risks that involve which of the following?

• A.

At loss

• B.

At best no gain situation

• C.

Either a profit or loss

• D.

Neither a profit or loss

C. Either a profit or loss
Explanation
Speculative risks refer to risks that involve the possibility of either making a profit or incurring a loss. These risks are typically associated with investments or ventures where the outcome is uncertain and dependent on various factors. Unlike pure risks, which involve only the possibility of loss, speculative risks offer the potential for both gains and losses. Therefore, the correct answer is "either a profit or loss."

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• 11.

### An example of active retention of risk is

• A.

Laziness or ignorance

• B.

Insurance policy with a deductible

• C.

No smoking rule in area which flammable materials are stored

• D.

Install fire sprinkler system

B. Insurance policy with a deductible
Explanation
Active retention of risk refers to the deliberate decision of an individual or organization to assume and manage a certain level of risk themselves, rather than transferring it to an insurance company or other party. In the given options, the only example that aligns with this concept is an insurance policy with a deductible. By choosing a policy with a deductible, the policyholder agrees to bear a portion of the financial risk in the event of a claim, instead of fully transferring it to the insurer. This demonstrates active retention of risk as the individual is consciously accepting the responsibility for a portion of the potential loss.

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• 12.

### Which of the following best describes Loss control best?

• A.

A method to transfer risk

• B.

A method to prevent or reduce loss if they occur

• C.

A non insurance method of retaining a risk

• D.

A particular risk that affects a limited group of people

B. A method to prevent or reduce loss if they occur
Explanation
Loss control is best described as a method to prevent or reduce loss if they occur. This means implementing measures and strategies to minimize the likelihood and impact of potential losses or damages. It involves identifying potential risks, implementing safety protocols, training employees, and implementing safety equipment or systems. By taking proactive steps to prevent or minimize losses, businesses can protect their assets, reduce financial liabilities, and ensure the continuity of their operations.

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• 13.

### Which of the following statements is true?

• A.

At lloyds of london, underwriting members are not grouped into syndicates

• B.

An insurance principle is bound by acts within the actual authority of the agent and not by any authority which the agent ostensibly possess

• C.

An agent has certain rights against the principle. They are remuneration, lien, indemnity

• D.

The basis if risk transfer is that the losses of a few are met by the contribution of many

C. An agent has certain rights against the principle. They are remuneration, lien, indemnity
Explanation
The answer states that an agent has certain rights against the principle, which include remuneration, lien, and indemnity. This means that an agent is entitled to be paid for their services, has the right to retain possession of certain property until they are paid, and is protected from any losses or damages incurred while acting on behalf of the principle. These rights ensure that the agent is properly compensated and protected in their role.

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• 14.

### Which of the following is not an advantage of arbitration?

• A.

Arbitration proceedings are conducted in private

• B.

Proceedings are informal and may be less expensive than litigation

• C.

The credibility of arbitration may be undermined if proceedings are conducted in a unbiased manner

• D.

Verdict is final unless a point of view is raised

C. The credibility of arbitration may be undermined if proceedings are conducted in a unbiased manner
Explanation
The credibility of arbitration may be undermined if proceedings are conducted in an unbiased manner. This means that if the arbitration process is not fair and impartial, it can lead to doubts about the credibility and integrity of the arbitration decision. It is important for arbitration proceedings to be conducted in an unbiased manner to ensure that the parties involved have confidence in the process and the final verdict.

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• 15.

### The concept of subrogation and contribution:

• A.

Mean exactly the same thing but expressed in a diff manner

• B.

Are concepts that are not connected to indemnity in any way

• C.

May be considered sub principles and corollaries to principle of indemnity

• D.

Will apply in every class of insurance including Life and PA insurance

C. May be considered sub principles and corollaries to principle of indemnity
Explanation
The concept of subrogation and contribution may be considered sub principles and corollaries to the principle of indemnity. This means that they are closely related and connected to the principle of indemnity in insurance. Subrogation refers to the right of an insurer to step into the shoes of the insured and pursue recovery from a third party who caused the loss. Contribution, on the other hand, refers to the right of multiple insurers to share the cost of a claim proportionately. Both of these concepts are derived from and support the principle of indemnity in insurance.

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• 16.

### Notifications of claims and loss is

• A.

Not subjected to time limits

• B.

The insured's responsibility

• C.

Insurer's responsibility

• D.

Required to enable loss management measurements

B. The insured's responsibility
Explanation
The correct answer is "the insured's responsibility." Notifications of claims and loss are the insured's responsibility because they are required to inform the insurer about any potential claims or losses. This allows the insurer to assess the situation and take appropriate measures for loss management. There are no specific time limits mentioned in the question, indicating that the responsibility lies with the insured rather than the insurer.

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• 17.

### To avoid disputes after signing the insurance contract, proposal forms usually includes the warning statement which reads:

• A.

The insurer or agent has a duty to provide proper advice on the subject matter of insurance

• B.

The proposer/insured has a duty to state perils to be insured

• C.

The proposer/insured is to disclose in the proposal form fully and faithfully all the facts which he/she knows or ought to know

• D.

The insurer or agent is entitted to reject the proposal if he finds that the information provided is inadequate

C. The proposer/insured is to disclose in the proposal form fully and faithfully all the facts which he/she knows or ought to know
Explanation
The correct answer is that the proposer/insured is required to disclose all the facts they know or ought to know in the proposal form. This is important because it allows the insurer or agent to make an informed decision about whether to accept or reject the proposal. By providing all relevant information, the proposer/insured helps to prevent disputes that may arise after signing the insurance contract. Failure to disclose all the necessary facts could result in the insurer rejecting the proposal if they find the information provided to be inadequate.

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• 18.

### The main purpose of endorsements

• A.

• B.

Describes and states the ground rules for the policy

• C.

States the parties to the contract

• D.

Record any changes made to existing policy

D. Record any changes made to existing policy
Explanation
Endorsements are used to record any changes made to an existing insurance policy. These changes could include adding or removing coverage, adjusting policy limits, or updating personal information. By endorsing the policy, the insurer is able to document and track any modifications made, ensuring that the policy accurately reflects the insured's needs and circumstances. This helps to maintain the integrity of the policy and ensures that both parties are aware of any changes that have been made.

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• 19.

### Which is a common form of proportional reinsurance?

• A.

Facultative excess of loss

• B.

Quota share

• C.

Excess of loss

• D.

Catastrophe excess of loss

B. Quota share
Explanation
Quota share is a common form of proportional reinsurance where the insurer cedes a fixed percentage of each policy to the reinsurer. This means that the reinsurer will assume a proportionate share of both the premiums and losses associated with the policies. This type of reinsurance is often used to spread risk and stabilize the insurer's underwriting results. It allows the insurer to retain a portion of the risk while transferring the rest to the reinsurer, providing a more balanced approach to risk management.

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• 20.

### Which of the following does not consist of the authority of agent?

• A.

Express authority

• B.

Waiver of authority

• C.

Usual or customary authority

• D.

Implied authority

B. Waiver of authority
Explanation
The authority of an agent refers to the power and rights granted to them by the principal to act on their behalf. Express authority is explicitly given and stated in a contract or agreement. Usual or customary authority refers to actions that are considered normal or customary in a specific industry or trade. Implied authority is not explicitly given but is reasonably assumed based on the agent's role and responsibilities. Waiver of authority, on the other hand, does not pertain to the authority of an agent. It refers to the intentional relinquishment or abandonment of a right or claim by the principal.

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• 21.

### Which of the following is not a major objective regarding reinsurance?

• A.

To eliminate uncertainty of losses and provide peace of mind to the direct insurer

• B.

To help stabilize the direct insurer's losses by smoothing the fluctuations from year to year

• C.

To help increase the direct insurer's capacity so that he can cover more catastrophe risks

• D.

By way of reinsurance the effects of catastrophes can be cushioned

C. To help increase the direct insurer's capacity so that he can cover more catastrophe risks
Explanation
The objective of reinsurance is to eliminate uncertainty of losses and provide peace of mind to the direct insurer, to help stabilize the direct insurer's losses by smoothing the fluctuations from year to year, and to cushion the effects of catastrophes. However, increasing the direct insurer's capacity to cover more catastrophe risks is not a major objective of reinsurance.

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• 22.

### The renewal certificate does not contain:

• A.

Policy number

• B.

Correction of error in description

• C.

Period of insurance and renewal date

• D.

Signatures of authorized signatories

B. Correction of error in description
Explanation
The correct answer is "correction of error in description". The renewal certificate is a document that provides information about the policy's renewal, including the policy number, period of insurance, renewal date, and signatures of authorized signatories. However, it does not typically include any corrections of errors in the policy description. This means that if there are any errors in the policy description, they would not be corrected in the renewal certificate.

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• 23.

### The term padding does not include

• A.

Providing more service than what is required

• B.

Cheating and a criminal offence

• C.

Grounds for suspecting or cancelling an agent's registration

• D.

When an agent quote a premium rate set by the insurer and keeps the difference

A. Providing more service than what is required
Explanation
The term padding refers to the act of adding unnecessary or excessive elements to something. In the given options, all the other choices - cheating and a criminal offence, grounds for suspecting or cancelling an agent's registration, and when an agent quotes a premium rate set by the insurer and keeps the difference - involve some form of dishonesty or unethical behavior. However, providing more service than what is required does not fall under the category of padding as it implies going above and beyond the necessary level of service.

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• 24.

### Insurable interest is

• A.

Only important with life and property insurance

• B.

Is not always necessary with every kind of insurance

• C.

Is required to be present at one time or another with all insurances

• D.

Is only applicable if the financial loss can be measured with exact precision

C. Is required to be present at one time or another with all insurances
Explanation
Insurable interest refers to the financial stake or relationship that a person has in the subject matter of an insurance policy. It ensures that the policyholder has a legitimate reason to insure the property or life being covered. While insurable interest is particularly important in life and property insurance, it is also necessary in other types of insurance. This is because insurable interest establishes a connection between the policyholder and the insured item, ensuring that the policyholder would suffer a financial loss if something were to happen to it. Therefore, insurable interest is required to be present at some point in time with all types of insurance.

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• 25.

### The functions of a risk manager are:I: to apply probability and statistical theory to problems relating to insurance II: to identify risk exposures and implement risk control programs to eliminate or minimize such risksIII: to keep accurate records, including loss records and payrolls figuresIV: to update members on technical matters and current practices relating to risk and insurance management

• A.

I, II, III

• B.

II & III

• C.

II, III, IV

• D.

All

B. II & III
Explanation
The functions of a risk manager are to identify risk exposures and implement risk control programs to eliminate or minimize such risks, as well as to keep accurate records, including loss records and payroll figures. These functions are described in options II and III. Option I is incorrect because applying probability and statistical theory to problems relating to insurance is not specifically mentioned as a function of a risk manager. Option IV is incorrect because updating members on technical matters and current practices relating to risk and insurance management is not mentioned as a function of a risk manager. Therefore, the correct answer is II & III.

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• 26.

### Which of the following is NOT an objective of the General insurance Association (GIA)?I: Recommending guidelines on policy conditions and rates to its membersII:Enhanced the standards of market practiceIII: Foster public confidence in the general insurance industry IV: act as a body of informed opinion in dealing with trade and market associations with other bodies

• A.

I, IV

• B.

II, III

• C.

I, II, IV

• D.

ALL

A. I, IV
Explanation
The General Insurance Association (GIA) has multiple objectives, including recommending guidelines on policy conditions and rates to its members, enhancing the standards of market practice, and fostering public confidence in the general insurance industry. However, it does not act as a body of informed opinion in dealing with trade and market associations with other bodies. Therefore, the correct answer is I, IV.

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• 27.

### The principle of contribution can be modified byI: Non contribution clauseII: Knock for knock agreementIII: more specific insurance clauseIV: ex-gratia payment

• A.

I,II,III

• B.

I,III

• C.

All

• D.

II,IV

B. I,III
Explanation
The principle of contribution can be modified by including a non-contribution clause, which states that certain policies will not contribute towards a loss if another policy covers it. This allows insurers to avoid duplicate payments. Additionally, a more specific insurance clause can modify the principle by specifying the order in which policies should contribute to a loss. This helps to determine which policy should pay first and how much. Therefore, options I and III are correct as they both suggest modifications to the principle of contribution.

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• 28.

### Which of the following is NOT a major benefit of behaving ethically?

• A.

It commands respect from among professional peers and associates

• B.

It is useful device to expose dishonest and incompetent persons

• C.

It instills self respect in the insurance professional more than what monetary reward can offer

• D.

Insurance buyers likes to continue doing business with a professional who can be trusted

B. It is useful device to expose dishonest and incompetent persons
Explanation
The given answer states that "It is useful device to expose dishonest and incompetent persons" is NOT a major benefit of behaving ethically. This means that behaving ethically does not serve as a useful tool to expose dishonest and incompetent individuals.

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• 29.

### Ratification of an agency are subject to the application of certain rules except:I: the agent who performed the act must purport to act on behalf of principleII: Ratification must be entire not just parts of it by agentIII: The client must believed that he is dealing with an authorized agent of the principle IV: the agent must have represented himself as an independent agent

• A.

I,III

• B.

I,II,III

• C.

II,III,IV

• D.

II,IV

D. II,IV
Explanation
The correct answer is II,IV. This is because the statement in option II, which states that ratification must be entire and not just parts of it by the agent, is incorrect. Ratification can be partial and does not have to be for the entire act. Additionally, the statement in option IV, which states that the agent must have represented himself as an independent agent, is also incorrect. The agent does not have to represent himself as an independent agent for ratification to occur.

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• 30.

• A.

Normally appointed by insurers

• B.

Mostly appointed to adjust small claims

• C.

Mostly appointed to adjust motor claims

• D.

Normally appointed by an insurance intermediary

A. Normally appointed by insurers
Explanation
Loss adjusters are professionals who are appointed by insurance companies to investigate and assess the extent of a loss or damage claimed by policyholders. They play a crucial role in determining the validity of claims and ensuring that the insurance company pays out the appropriate amount. Loss adjusters are independent and impartial, working on behalf of the insurer to gather evidence, evaluate the circumstances, and negotiate settlements with the policyholders. Their expertise is not limited to a specific type of claim, such as small claims or motor claims, but rather encompasses a wide range of insurance claims.

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• 31.

### A renewal notice is usually sent to an insured before his policy expires, this document has the following characterisitcs except

• A.

The insurer has the option whether to send it or not

• B.

It contains the same information found in the policy

• C.

It is similar to the schedule of the policy

• D.

It is known as an expiry notice

C. It is similar to the schedule of the policy
Explanation
The renewal notice is a document sent to an insured before their policy expires. It typically contains the same information found in the policy, such as coverage details, premium amount, and policy terms. It is also known as an expiry notice, as it informs the insured about the upcoming expiration of their policy. However, it is not similar to the schedule of the policy. The schedule of the policy is a document that provides a summary of the insured items, their values, and any additional coverage options. The renewal notice focuses on the expiration and renewal process, while the schedule provides a detailed overview of the policy coverage.

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• 32.

### The public trustee is a government agency that

• A.

Makes compassionate ex gratia payment to victims of motor vehicle accidents

• B.

Assist MAS in regulating the insurance market and protect the interest of the policyholders

• C.

Protect the interest of road traffic accident victims by ensuring the adequacy of out of court settlements

• D.

To distribute compensation monies to the family members

C. Protect the interest of road traffic accident victims by ensuring the adequacy of out of court settlements
Explanation
The public trustee protects the interest of road traffic accident victims by ensuring the adequacy of out of court settlements. This means that they work to make sure that victims of motor vehicle accidents receive fair and appropriate compensation for their injuries and damages, without having to go through a lengthy and costly court process. By doing so, they aim to provide a more efficient and accessible way for victims to receive the compensation they deserve, while also ensuring that their rights and interests are protected.

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• 33.

### For a misrepresentation to happen, which of the following conditions has to be satisfied? I: the statement can be one of opinion or belief II: the statement must be material and induce the making of the contractIII: the statement must be made to party of contract and caused loss to the person who relied on itIV: the statement must not include the contract

• A.

I,II,III

• B.

ALL

• C.

III,IV

• D.

II,III

D. II,III
Explanation
To satisfy the condition for misrepresentation, the statement must be material and induce the making of the contract (condition II). Additionally, the statement must be made to a party of the contract and cause loss to the person who relied on it (condition III). These two conditions must both be satisfied for misrepresentation to occur.

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• 34.

### The doctrine of Utmost Good Faith:

• A.

Does not apply to any other type of contract except insurance

• B.

Requires all material facts to be disclosed

• C.

Means that exact financial compensation is payable to the insured

• D.

Only applies to written information supplied by the insured

B. Requires all material facts to be disclosed
Explanation
The doctrine of Utmost Good Faith requires all material facts to be disclosed. This means that when entering into an insurance contract, both the insured and the insurer have a duty to provide all relevant information that could potentially affect the decision to provide coverage or the terms of the policy. This includes disclosing any pre-existing conditions, previous claims, or other relevant details. Failure to disclose material facts can result in the policy being voided or claims being denied. This doctrine applies specifically to insurance contracts and not to any other type of contract.

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• 35.

### An excess of loss treaty insurance is arranged for \$800,000 in excess of \$200,000. If a loss of \$600,000 occurs, what amount does the direct insurer be able to recover from the reinsurer?

• A.

\$200,000

• B.

\$100,000

• C.

\$400,000

• D.

\$500,000

C. \$400,000
Explanation
In an excess of loss treaty insurance, the direct insurer is responsible for losses up to a certain threshold, in this case \$200,000. Any losses exceeding this threshold, up to the coverage limit of \$800,000, are covered by the reinsurer. In this scenario, the loss of \$600,000 falls within the coverage limit, so the direct insurer can recover the full amount of the loss from the reinsurer, which is \$400,000.

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• 36.

### Which of the following illustrations is a practical example of a particular risk

• A.

Investing in stocks and shares with the sole purpose of making profits

• B.

Making a decision to emigrate to the USA to effect a change in a career

• C.

Typhoon damaging extensive parts of taiwan

• D.

Misappropriation of money by an employee of a retail outlet

D. Misappropriation of money by an employee of a retail outlet
Explanation
The correct answer is misappropriation of money by an employee of a retail outlet. This is a practical example of the risk of internal theft or fraud within a business. It involves an employee abusing their position of trust to steal money from the retail outlet, which can result in significant financial losses for the company.

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• 37.

### In a situation where the insured had fraudulently misrepresented material facts, the insurer is entitled to

• A.

Avoid the policy as whole

• B.

Refuse to pay the claim and affirm the validity of policy

• C.

• D.

Pay charges to insured

A. Avoid the policy as whole
Explanation
If the insured has fraudulently misrepresented material facts, the insurer has the right to avoid the policy as a whole. This means that the insurer can treat the policy as if it never existed and is not obligated to provide any coverage or pay any claims. Avoiding the policy allows the insurer to protect itself from being taken advantage of due to the insured's fraudulent actions.

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• 38.

### The measure of indemnity in a machinery and equipment that has a second hand market is dependent on:I: the cost of the second hand itemII: allowance made for wear and tear and depreciationIII: additional transport and installation charges IV: cost of repair or reconstruct at time of loss

• A.

ALL

• B.

I,II,III

• C.

I,II

• D.

I,III

D. I,III
Explanation
The measure of indemnity in a machinery and equipment that has a second hand market is dependent on the cost of the second hand item (I) because the value of the item will be based on its market price. It is also dependent on additional transport and installation charges (III) because these costs are necessary to bring the item to its intended location and make it operational. The allowance made for wear and tear and depreciation (II) is not mentioned as a factor in determining the measure of indemnity, and the cost of repair or reconstruct at the time of loss (IV) is not mentioned either.

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• 39.

### The information in a typical claim form includes all the following except

• A.

Full particulars of insured

• B.

Details of the applicant

• C.

Warranties applicable to policy

• D.

Name and witnesses in motor or liability claims

C. Warranties applicable to policy
Explanation
A typical claim form includes full particulars of the insured, details of the applicant, and the names and witnesses in motor or liability claims. However, it does not include warranties applicable to the policy. Warranties are specific conditions that the insured must comply with in order for the policy to remain valid. While these conditions may be mentioned in the policy document, they are not typically included in the claim form.

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• 40.

### When disputes arise between the insured and the insurer, in respect of claims made under insurance policies, the disputes can be referred to:

• A.

SIngapore insurance institue

• B.

• C.

Financial industry disputes resolution centre

• D.

General insurance association

C. Financial industry disputes resolution centre
Explanation
The correct answer is the financial industry disputes resolution centre. This organization is responsible for resolving disputes between the insured and the insurer regarding claims made under insurance policies. They provide a neutral and independent platform for both parties to present their case and reach a fair resolution.

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