ICS01 Principles and Practice of Insurance and Survey and Loss Assessment Mock Test 13

Q1. What is the purpose of a deductible clause in insurance policies?

a) To increase the insurer's liability for small claims
b) To minimize the insured's responsibility for large claims
c) To reduce claims by eliminating smaller ones
d) To transfer risk from the insured to the insurer
e) To adjust claims based on the value of the loss

Q2. Why is it essential for a surveyor to ensure the survey report contains only factual information?

a) To confuse the insurer with contradictory statements
b) To expedite the policy renewal process
c) To ensure accuracy and reliability in decision-making
d) To increase the workload for the insurer
e) To delay the claims settlement process

Q3. What does the total cost of merchandise sold represent when deducted from the total cost of merchandise taken into the premises?

a) The average inventory cost
b) The net profit
c) The operating expenses
d) The cost of stock on hand
e) The gross sales

Q4. What does the insured agree to do under a declaration policy?

a) Fix a permanent sum insured for the entire policy period
b) Declare stock values to the insurer on a monthly basis
c) Maintain a fixed premium throughout the policy term
d) Adjust the policy coverage annually
e) Cancel the policy if stock values fluctuate significantly

Q5. What is the consequence of under-insurance in burglary insurance?

a) No coverage is provided for any losses
b) The insured must pay a higher premium to cover the shortfall
c) Pro-rata average is applied, reducing the amount payable in case of a claim
d) The insurer is liable to cover the full value of the loss
e) The insured is compensated for the full value of the loss

Q6. What event marks the commencement of the transit under Inland Transit (Rail or Road) Clause "C"?

a) Loading of each package onto the carrying vehicle
b) Departure from the origin railway station
c) Departure from the warehouse
d) Signing of the insurance policy
e) Arrival at the destination point

Q7. What does the implied warranty regarding the adventure insured entail?

a) That the ship is seaworthy
b) That the adventure insured is lawful
c) That the ship is reasonably fit to carry the goods
d) That the ship is unseaworthy
e) That the adventure shall be carried out in a lawful manner

Q8. Why is a system of classification of risks adopted in insurance?

a) To confuse policyholders
b) To increase administrative complexity
c) To minimize the impact of hazards
d) To facilitate proper assessment of common hazards and reasonable forecast of future losses
e) To reduce the amount of claims

Q9. Who typically holds insurable interest in a motor vehicle under a Hire Purchase Agreement?

a) Only the owner
b) Only the insurer
c) Only the lessee
d) Only the lessor
e) Both the owner and the party with the Hire Purchase Agreement

Q10. How can subrogation rights arise under a fidelity guarantee policy?

a) By denying the claim
b) By paying the loss
c) By canceling the policy
d) By refusing to negotiate with the third party
e) By increasing the premium amount