IC56 Mock Test Sample 5
Fire insurance policies include various legal and technical provisions governing claims and coverage. Conditions address risks like building displacement and define procedures such as handling claims “without prejudice” until liability is confirmed. Key legal concepts include onus of proof, good faith, and indemnity under the Indian Contract Act, 1872. Principles like insurable interest apply to parties such as lessees and trustees. Clauses like escalation protect against inflation, while betterment reflects improved replacements. Marine concepts like abandonment may also apply. Proper claim settlement involves accurate valuation, adherence to conditions, and final steps like complete documentation or seeking assistance, ensuring fair and efficient claim resolution.
Q1. Which condition provides for fall or displacement of building?
a) Condition 1
b) Condition 2
c) Condition 3
d) Condition 4
Q2. Which is known as second-hand value?
a) Value in exchange
b) Value in use
Q3. What is the legal expression referring to the duty to produce evidence to prove a statement?
a) Reasonable requirement
b) Principle of indemnity
c) Declaration of oath
d) Onus of proof
Q4. Until liability is clearly established, insurers deal with claims ____________.
a) With utmost good faith
b) Without utmost good faith
c) Without prejudice
d) With prejudice
Q5. Award passed by Insurance Ombudsman is only recommendatory.
a) True
b) False
Q6. Which of the following comes under provisions of the Indian Contract Act, 1872 applicable to fire insurance?
a) Offer and acceptance
b) Legality
c) Consideration
d) Indemnity
Q7. What refers to superior qualities of replaced machinery (higher output, lower cost)?
a) Depreciation
b) Betterment
c) Consideration
d) Value
Q8. Which clause acts as a cushion against inflation for buildings, plant, and machinery?
a) Pro-rata average
b) Depreciation
c) Contribution
d) Escalation clause
Q9. In which cases does insurable interest arise?
a) Lessors and lessees
b) Trustees or receivers
c) Bailees
d) All of the above
Q10. The ________ is recognized in marine insurance where damaged property can be abandoned to claim loss.
a) Rights are exercisable until claim withdrawal
b) Right to forfeit policy benefits
c) Right of abandonment
d) Rights conferred on insurers
Q11. Which proviso applies normal indemnity if insured fails to intimate reinstatement within 6 months?
a) Proviso 1
b) Proviso 2
c) Proviso 3
d) Proviso 4
Q12. In all commercial contracts, _______ must be observed.
a) Positive duty
b) Fiduciary nature
c) Good faith
d) Fraud
Q13. The words __________ mean machinery must be replaced with similar type only.
a) Not superior to or more extensive
b) Of the same kind or type
c) Positive and negative factors
d) None of these
Q14. Rakesh’s property value = ₹50,000, insured for ₹40,000, loss = ₹50,000. Claim payable?
a) ₹20,000
b) ₹30,000
c) ₹40,000
d) ₹50,000
Q15. Escape of water beyond normal limits due to overflow or barrier break is called:
a) Fire
b) Explosion
c) Flood
d) Lightning
Q16. What is a final step for successful fire insurance claim?
a) Ignoring minor details
b) Submitting incomplete forms
c) Seeking assistance if needed
d) Withdrawing the claim
Q17. Under Leakage and Contamination Cover, minimum excess is:
a) ₹30,000
b) ₹60,000
c) 1% of sum insured
d) 2.5% of sum insured or ₹30,000 whichever is lower
Q18. Maximum indemnity period for additional rent coverage is:
a) 1 year
b) 2 years
c) 3 years
d) 4 years
Q19. Extra costs may relate to:
a) Size of building
b) Different materials
c) Different foundation
d) All of the above
Q20. Onus of proof is otherwise known as:
a) Wording of proof
b) Burden of proof
c) Terms of proof
d) Evidence of proof
