#1
Which of the following is not one of the fundamental principles of insurance?
Guarantee
ExplanationGuarantee is not a fundamental principle of insurance.
#2
Which type of insurance provides coverage for losses caused by fire, lightning, and explosion?
Property Insurance
ExplanationProperty Insurance covers losses from fire, lightning, and explosion.
#3
Which of the following is an example of a peril in insurance?
Theft
ExplanationTheft is an example of a peril in insurance.
#4
Which of the following is a characteristic of a 'peril' in insurance?
It is the cause of a potential loss
ExplanationA peril is the cause of a potential loss in insurance.
#5
What does the term 'premium' refer to in insurance?
The amount the insured pays for insurance coverage
ExplanationPremium is the amount paid for insurance coverage by the insured.
#6
In insurance, what does 'Indemnity' mean?
Restoring the insured to the same financial position as before the loss
ExplanationIndemnity means restoring the insured to their pre-loss financial state.
#7
What is the 'principle of subrogation' in insurance?
Insurer's right to recover the amount paid from a third party
ExplanationSubrogation is the insurer's right to recover payments from a third party.
#8
What is a deductible in insurance?
The amount the insured must pay before the insurer covers the claim
ExplanationDeductible is the amount the insured pays before the insurer covers the claim.
#9
What is a rider in insurance?
An additional coverage added to a basic insurance policy
ExplanationA rider is extra coverage added to a basic insurance policy.
#10
What is the principle of 'proximate cause' in insurance?
The dominant or most significant cause of the loss
ExplanationProximate cause is the primary cause of the loss in insurance.
#11
Which of the following policies covers losses arising from legal liabilities?
Liability Insurance Policy
ExplanationLiability Insurance Policy covers losses from legal liabilities.
#12
What is 'coinsurance' in insurance?
A policy provision that allows the insurer to share the risk with the insured
ExplanationCoinsurance is a policy provision sharing risk between insurer and insured.
#13
In insurance, what does 'underwriting' involve?
Investigating and assessing the risk associated with insuring a person or property
ExplanationUnderwriting involves assessing the risk associated with insuring.
#14
What is 'reinsurance' in the insurance industry?
Insurance purchased by an insurance company to protect itself from large losses
ExplanationReinsurance protects an insurance company from large losses.
#15
What does 'actuary' do in the insurance industry?
Assesses risks and sets premium rates
ExplanationActuary assesses risks and sets premium rates in insurance.