Principles Of Business: Insurance Quiz

Utmost Good Faith is a principle of insurance that requires both parties, the insurer and the insured, to act honestly and provide complete and accurate information during the formation of an insurance contract. This principle ensures that there is transparency and trust between the parties, allowing the insurer to assess the risk accurately and determine appropriate premiums. Failure to adhere to this principle can result in the contract being voided or claims being denied. Therefore, Utmost Good Faith is essential for maintaining the integrity of the insurance industry.

In order to insure against a risk, it is necessary to have an insurable interest. Insurable interest refers to a financial or legal interest in the property or person being insured, where the insured would suffer a financial loss if the insured property or person were to experience damage or loss. Without an insurable interest, there is no legitimate reason to obtain insurance coverage, as the insured would not be directly affected by any potential loss. Therefore, it is essential to have an insurable interest in order to obtain insurance.

Indemnity is the correct answer because it refers to the principle of insurance where the policy-holder is compensated for the loss incurred. This means that the insurance company will provide financial reimbursement to the policy-holder to restore them to the same financial position they were in before the loss occurred. It ensures that the policy-holder is not left in a worse off condition due to the loss, providing them with a sense of security and protection against financial hardships.

Fidelity Insurance is the correct answer because it specifically provides coverage to protect against loss by fraud and stealing by employees. This type of insurance is designed to safeguard businesses from financial losses caused by dishonest acts committed by their employees, such as embezzlement or theft. It helps businesses recover the financial damages incurred due to employee dishonesty, providing peace of mind and financial protection against internal risks.

Marine insurance is a type of insurance that provides coverage for loss and damage to ships and their cargoes. This type of insurance is specifically designed to protect against risks associated with maritime transportation, such as accidents, theft, and natural disasters. It provides financial compensation to the insured party in the event of any damage or loss that occurs during the shipment of goods by sea. Marine insurance plays a crucial role in mitigating the financial risks faced by ship owners, cargo owners, and other parties involved in the maritime industry.

Public liability insurance is a type of policy that provides coverage for the risk of liability for injury or death of members of the public who visit a business premises. This insurance is important for businesses as it protects them financially in case a member of the public suffers an injury or death while on their premises. It covers legal expenses, medical costs, and compensation claims that may arise from such incidents. By having public liability insurance, businesses can ensure that they are protected against potential financial losses and legal liabilities.

The document sent by the insurer to the insured that states the agreed terms between the two parties is commonly known as an insurance policy or policy. It can also be referred to as an insurance contract or simply a contract.

When an insured person experiences a loss, they are required to fill out a claim form. This form is then submitted to the insurer for review and consideration. The claim form serves as a formal request for compensation or coverage for the loss suffered by the insured. By submitting the claim form, the insured is initiating the process of seeking reimbursement or assistance from the insurer.

Comprehensive insurance is the correct answer because it provides coverage for both the damage to other people and the damage to the insured vehicle. This type of insurance goes beyond the minimum level required for liability and offers a broader range of protection. It typically covers damage caused by accidents, theft, vandalism, weather events, and other non-collision incidents. Comprehensive insurance is often recommended for drivers who want more extensive coverage and peace of mind.

Life assurance and assurance are both terms used to describe insurance that provides coverage against the loss of life. While the terms are often used interchangeably, there can be some slight differences in their usage depending on the context and the specific insurance policy. However, in general, both terms refer to insurance policies that offer financial protection to individuals and their families in the event of death.