Insurance – Principles, Types, Insurable Risks Quiz - ICSE Class 12 Commerce

Free practice quiz: Insurance – Principles, Types, Insurable Risks (ICSE Class 12 Commerce). 48 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

Sample questions

1. Which of the following is a fundamental principle of insurance that states that the insured must have a financial interest in the subject matter of insurance?

   1. Utmost Good Faith (Uberrimae Fidei)
   2. Indemnity
   3. Insurable Interest
   4. Subrogation
   Show answer

   Answer: C. Insurable Interest

   Insurable interest is the principle that requires the insured to suffer a financial loss if the insured event occurs. Without insurable interest, a contract of insurance is generally considered a wager and is void.

2. The risk of a company's assets being damaged or destroyed by natural calamities like earthquakes or floods falls under which category of insurable risks?

   1. Personnel Risks
   2. Liability Risks
   3. Property Risks
   4. Financial Risks
   Show answer

   Answer: C. Property Risks

   Property risks involve the potential for loss or damage to physical assets, such as buildings, machinery, and inventory, due to events like natural disasters, fire, theft, or vandalism.

3. What is the core difference between a 'named perils' policy and an 'all risks' policy in property insurance?

   1. A named perils policy covers all risks except those specifically excluded, while an all risks policy only covers listed perils.
   2. A named perils policy covers only the perils listed in the policy, while an all risks policy covers all perils except those specifically excluded.
   3. An all risks policy is always cheaper than a named perils policy.
   4. A named perils policy is mandatory for all types of property.
   Show answer

   Answer: B. A named perils policy covers only the perils listed in the policy, while an all risks policy covers all perils except those specifically excluded.

   In a named perils policy, coverage is restricted to the specific causes of loss listed in the policy. An 'all risks' policy (often referred to as 'all-risk' or 'open perils') provides broader coverage, insuring against any cause of loss not specifically excluded.

4. What is the primary purpose of 'Burglary Insurance'?

   1. To cover losses due to fire and explosion.
   2. To cover losses of cash or valuables stolen by force from premises.
   3. To cover losses from natural disasters.
   4. To cover losses due to employee dishonesty.
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   Answer: B. To cover losses of cash or valuables stolen by force from premises.

   Burglary insurance provides cover against loss or damage to property caused by burglary, which typically involves forced entry into the premises.

5. Which of the following is a direct consequence of the principle of 'Indemnity'?

   1. The insured is compensated for emotional distress.
   2. The insured can claim more than the actual loss.
   3. The insured is placed back in the financial position they occupied before the loss.
   4. The insurer profits from the loss.
   Show answer

   Answer: C. The insured is placed back in the financial position they occupied before the loss.

   The principle of indemnity ensures that the compensation received does not exceed the actual financial loss incurred, thereby preventing the insured from making a profit from the loss.

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