#1
Which of the following is a fundamental principle of insurance?
Indemnity
ExplanationInsurer compensates insured for actual losses.
#2
What is the primary purpose of an insurance contract?
To transfer risk from the insured to the insurer
ExplanationTransfer risk from insured to insurer.
#3
What does 'Indemnity' mean in insurance?
The insurer's obligation to compensate the insured for covered losses
ExplanationInsurer compensates for covered losses.
#4
What is 'Insurable Risk' in insurance?
Any risk that can be covered by insurance
ExplanationRisk eligible for insurance coverage.
#5
In insurance, what does the principle of 'Utmost Good Faith' refer to?
Insured must disclose all relevant information to the insurer
ExplanationInsured must be honest and disclose all information.
#6
What does 'Aleatory Contract' mean in insurance?
A contract where the performance is contingent upon an uncertain event
ExplanationPerformance depends on uncertain events.
#7
Which principle of insurance implies that the insured should not profit from a loss?
Indemnity
ExplanationInsured should be compensated, not profited.
#8
What does the 'Doctrine of Utmost Good Faith' require in an insurance contract?
Complete honesty and disclosure from both parties
ExplanationBoth parties must be fully honest.
#9
Which principle in insurance states that an insured should not be compensated more than the actual loss?
Indemnity
ExplanationCompensation limited to actual loss.
#10
Which principle in insurance pertains to the insured having a financial interest in the subject matter of insurance?
Insurable Interest
ExplanationInsured must have a stake in what's being insured.
#11
In insurance, what does 'Subrogation' mean?
Insurer's right to take legal action against a third party
ExplanationInsurer can sue third party for reimbursing.
#12
What is the principle of 'Contribution' in insurance?
Each insurer contributes proportionally to a loss under multiple policies
ExplanationMultiple insurers share loss burden.
#13
Which principle in insurance refers to the insured having a legal right to enforce the terms of the contract?
Legal right of action
ExplanationInsured can enforce contract terms.
#14
Which doctrine in insurance requires that all terms of the contract be explicitly stated in the policy document?
Doctrine of Uberrimae fidei
ExplanationAll contract terms must be explicit.
#15
Which principle in insurance requires that a contract be legally enforceable?
Legal Capacity
ExplanationContract must be legally enforceable.