#1
Which of the following is an essential element of an insurance contract?
Premium payment
ExplanationNecessary payment for coverage
#2
What is the purpose of a 'rider' in an insurance policy?
An additional coverage attached to the main policy
ExplanationExtra coverage provision
#3
What is the purpose of an 'exclusion' in an insurance policy?
To limit coverage by specifying what is not covered
ExplanationCoverage limitation
#4
Which legal principle requires an insured to disclose all relevant information to the insurer before the policy is issued?
Uberrimae fidei
ExplanationPrinciple of utmost good faith
#5
What does the term 'subrogation' mean in insurance?
Insurer's right to step into the insured's shoes to recover from third parties
ExplanationInsurer's recovery from third parties
#6
In insurance, what does the term 'co-insurance' refer to?
Insured and insurer sharing the covered losses
ExplanationShared loss coverage
#7
Which legal doctrine implies that an insurance policy should not provide a financial gain to the insured in the event of a loss?
Indemnity
ExplanationPrinciple of compensation
#8
What does the principle of 'utmost good faith' require in insurance contracts?
Full and honest disclosure of all material facts
ExplanationRequirement for complete disclosure
#9
In insurance, what is 'moral hazard'?
Risk associated with the character and integrity of the insured
ExplanationRisk due to personal conduct
#10
What is the primary purpose of reinsurance in the insurance industry?
To transfer risk from the primary insurer to another insurer
ExplanationRisk transfer mechanism
#11
What is the concept of 'adverse selection' in insurance?
Insuring high-risk individuals without proper underwriting
ExplanationRisk of insuring high-risk individuals
#12
What is the purpose of the 'loss ratio' in insurance underwriting?
To determine the percentage of premiums paid out as claims
ExplanationClaims payout assessment
#13
What legal doctrine allows an insurer to deny a claim if the insured intentionally caused the loss?
Intentional act exclusion
ExplanationDenial of claim due to intentional harm
#14
In insurance, what does 'fiduciary responsibility' refer to?
Insurer's duty to act in the best interests of the insured
ExplanationResponsibility to act in client's best interest
#15
What is the purpose of 'cancellation provision' in an insurance policy?
To prevent the insurer from canceling the policy
ExplanationPolicy non-cancellation provision