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Q 1. When claim recoveries are made from third parties, its known as ______ .
Premium Recovery
Subrogation
Deductible
Co-pay
Salvage

UnAttempted

CORRECT ANSWER:

Subrogation

Explanation:

Subrogation is the right for an insurer to legally pursue a third party that caused an insurance loss to
the insured.

This is done as a means of recovering the amount of the claim paid by the insurance carrier to the
insured for the loss.

Q 2. What is the General Insurance Corporation commonly known as ?

Government Re-insurer
National Re-insurer
International Re-insurer
Re-insurer
Global Re-insurer

UnAttempted

CORRECT ANSWER:

National Re-insurer

Q 3. 'Changes in the physical environment' can be identified as what type of risk ?

Strategic risk
Operational risk
Financial risk
Knowledge management risk
Compliance risk

UnAttempted

CORRECT ANSWER:

Strategic risk

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Explanation:

These options are of various type of risks and 'Changes in the physical environment' falls under
Strategic risk.

Q 4. Which is one main important provision of insurance Act ?

Claiming
Application
Filing
Registration
Enrolment

UnAttempted

CORRECT ANSWER:

Filing

Q 5. The full form of ALOP is ________ .

Advance Loss of Price Policy
Advance Loss of Profit Policy
Advance Loss of Property Policy
Advance Loss of Pension Policy
Advance Loss of Penalty Policy

UnAttempted

CORRECT ANSWER:

Advance Loss of Profit Policy

Explanation:
Advance Loss Of Profit (ALOP) Insurance

An insurance policy that provides coverage for financial losses due to delays in construction and
infrastructure projects. Advance loss of profit insurance (ALOP), provides a payout to companies that
face higher costs or lost profits when a project takes longer than expected to complete.

Q 6. Interruption of business due to machinery breakdown or damage to stocks etc is termed

as _______ .
Loss of continuity
Loss of assets
Loss of finance

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Loss of legal liability

Loss of profit

UnAttempted

CORRECT ANSWER:

Loss of profit

Explanation:

The Loss of Profits policy is formulated to cover the likely monetary loss occurring from break in
business activity that may arise due to physical loss of property by an event covered for insurance.

The Policy broadly covers loss of Gross Profit on account of interruption of business, consequent
upon Material Damage to property due to Fire or any other insured peril under the Standard Fire and
Special Perils Policy.

Q 7. Just because an insurer places facultative reinsurance on a policy will not make it ______
.
Risk free
More risky
Sudden risk
Constant risk
Regular risk

UnAttempted

CORRECT ANSWER:

Risk free

Explanation:

Facultative insurance is reinsurance for a single risk or a defined package of risks.

Reinsurer shares risk. Insurer will decide on how much risk to keep and balance risk is reinsured.

Q 8. An exporter regularly insures the export consignments. In case the deposit with the
insurance company falls short for one of the consignment, the risk is __________ .
equal to the policy amount
equal to the amount paid / deposited
equal to the commission
terminated
None of the above

UnAttempted

CORRECT ANSWER:
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terminated

Explanation:

In the deposit falls short, then the policy is not valid and no risk is covered (unless its an Open Cover
policy)

Q 9. In which category of insurance the insured is not paid the loss ?

Motor Vehicle insurance
Fire insurance
PA policy
Liability insurance
Marine hull policy

UnAttempted

CORRECT ANSWER:

Liability insurance

Explanation:

Liability policy follows consumer protection movement. The payments are not made to the insured but
to the third party claiming damages from the insured's negligence. For example - An electric appliance
causing injury to the user due to bad quality.

Q 10. Which natural peril is covered under a standard fire policy ?

Ship damage
Aircraft damage
Riot and Strike
Explosion
Storm

UnAttempted

CORRECT ANSWER:

Storm

Explanation:

In the above options, only storm is a natural peril and is included in standard fire policy.

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Q 11. Select the appropriate insurance product for the following : (i) Electro Medical Equipment
(ii) Navigational equipment (iii) Signal and transmitting equipment (iv) Telecommunication.
Advance Loss of Profits policy
Machinery Breakdown Policy
Standard fire and Machinery breakdown Policy
Contractors plant & machinery policy
Electronic Equipment Insurance Policy

UnAttempted

CORRECT ANSWER:

Electronic Equipment Insurance Policy

Explanation:

Electronic Equipments, Peripherals etc are covered under the Electronic Equipment Insurance (EEI)
Policy.

Q 12. Whose task is to meet people, explain and persuade them to buy the correct insurance ?
Brokers
Banks
Individuals
Agents
Insurers

UnAttempted

CORRECT ANSWER:

Agents

Q 13. A person, whose home was destroyed in a fire, has replaced the tile flooring with marble
and advised the supplier to mention in the bill the material as tile. This is an example of
claim ________
Over valuation
Indemnity
Betterment
Under insurance
Reinstatement

UnAttempted

CORRECT ANSWER:

Betterment

Explanation:
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Betterment Clause in Insurance - A provision which stipulates that if the repair or replacement of the
damaged parts results in better than "like kind or quality," the insurers will not pay for this net
improvement.

This clause is designed to preserve the concept of indemnity so the insured does not profit from the
loss when the circumstances are such that it is impossible for the insurer to repair or replace the
property without bettering the insured's position.

Q 14. Where are the rights of subrogation commonly enforced ?

Motor Third Party (TP) insurance
Burglary insurance
Marine insurance
Fire insurance
Erection all risk insurance

UnAttempted

CORRECT ANSWER:

Motor Third Party (TP) insurance

Explanation:

Subrogation is the right for an insurer to legally pursue a third party that caused an insurance loss to
the insured.

Third party causing accident to insured of an insurer, is generally seen in motor third party insurance.

Q 15. The public disclosure of unaudited balance sheet has to be made ________ by the
insurance firm.
Half monthly
Monthly
Quarterly
Half yearly
Annually

UnAttempted

CORRECT ANSWER:

Annually

Explanation:

Disclosure of Balance sheet, Cash flow and Profit and loss follows ICAI accounting standard which is
yearly.

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Q 16. What pattern does the procedure in respect of claims under various classes of insurance
follow ?
Common Pattern
Special Pattern
Modular Pattern
Fixed Pattern
Analytical Pattern

UnAttempted

CORRECT ANSWER:

Common Pattern

Explanation:

The claim process is a relatively consistent process involving a number of well defined steps so as to
provide efficient customer service and meet the needs of the customer.

Q 17. Which policy is issued in conjunction with ALOP policy ?

Boiler and Pressure Plant Insurance
Machinery Breakdown Insurance
Marine hull Insurance
Erection / construction insurance
Deterioration of Stock Insurance

UnAttempted

CORRECT ANSWER:

Erection / construction insurance

Explanation:

Advance Loss of Profit (ALOP) Policy : Then main objective of this policy is to idemnify the principal
for the actual loss sustained due to delay in commencement of commercial operation of a new project
under installation / construction.

This is a highly specialised type of policy which is drafted specifically in each case.

Q 18. Which policy provides indemnity to the insured in respect of his legal liability to pay
compensation to his employees who sustain personal injury by accident ?
Employee Insurance policy
Compulsory public liability policy
Professional indemnities policy

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Legal liability policy

Workmen’s compensation policy

UnAttempted

CORRECT ANSWER:

Workmen’s compensation policy

Q 19. Pure Risk falls within the ________ .

Scope of premium
Frame work of business
Frame work of management
Scope of risk of management
Centre of organization

UnAttempted

CORRECT ANSWER:

Scope of risk of management

Q 20. TPA's are in the form of ________ .

Partnership Firms
Companies
Insurance Brokers
Hospitals
Surveyors

UnAttempted

CORRECT ANSWER:

Companies

Explanation:

Third Party Administrators (TPA) are required to be companies with a share capital of at least Rs 1
crore.

Q 21. GIGO is ________ for the insurers.

Advantageous
Profitable
Neutral
Harmful
Can have a positive or negative effect

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UnAttempted

CORRECT ANSWER:

Harmful

Explanation:

GIGO means Garbage In Garbage Out. This means if you input nonsensical data in the IT systems, the
output will be nonsensical.

Q 22. To whom are long term insurance policies suitable ?

Retail customers
Corporate customers
Rural low income customers
Multinational customers
Industrial customers

UnAttempted

CORRECT ANSWER:

Retail customers

Explanation:

For policies like fire insurance there is long term insurance possible and suitable to avoid regular
renewals and it provides discount also. Fire insurance for retail segment i.e. individual house owners
provide discount in basic premium for more than one year of insurance renewal.

Q 23. Bonus is a ________ in the renewal premium for favourable and positive claims
experience.
Top Up charge
Commission
Addition
Discount
Extra amount

UnAttempted

CORRECT ANSWER:

Discount

Explanation:

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No claim bonus (NCB) is a discount, given by an insurer to a policyholder for making no claims
during the policy term. NCB can be accumulated over years and the discount ranges from 20%
to 50% on the own damage premium.

Q 24. The amount of relief fixed under the Compulsory Public Liability policy in case of
permanent partial disablement is ______ .
Rs 11000
Rs 11500
Rs 12500
Rs 17500
Rs 19000

UnAttempted

CORRECT ANSWER:

Rs 12500

Explanation:

The actual medical expenses fixed is upto a maximum of Rs 12500 in various cases like permanent
total disability, temporary partial disablement etc.

Q 25. What shall the surveyor not disclose to a third party ?

Any information acquired during survey works
Any information acquired during policy analysis
Any information acquired during policy findings
Any information acquired during policy classification
Any information acquired during holding negotiations

UnAttempted

CORRECT ANSWER:

Any information acquired during survey works

Explanation:

Surveyor has to maintain the secrecy of survey work.

Q 26. What is the method of reinsurance known as where the individual proposal are referred
for reinsurance acceptance or otherwise ?
Contractual Relationship
Treaty Reinsurance
Excess of loss

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Quota share treaty

Facultative reinsurance

UnAttempted

CORRECT ANSWER:

Facultative reinsurance

Explanation:

In Facultative Re-insurance the individual risks are offered to the re-insurer who quotes on his
experience of that particular type of risk.

Q 27. Which part of the insurance policy introduces the Insurer and Insured ?
Heading
Preamble
Operative Clause
Contractual Clause
Signature

UnAttempted

CORRECT ANSWER:

Preamble

Explanation:

The Preamble includes the names of different parties to the contract - the insured and the company
providing the insurance.

Q 28. What presents a full picture of the risk for deciding the rates of premium for drafting the
policy and incorporating warranties ?
Risk inspection
Risk standardisation
Damage inspection
Premium rates inspection
Hazard inspection

UnAttempted

CORRECT ANSWER:

Risk inspection

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Q 29. What has to be duly maintained for efficient management of cover notes ?
Balance Sheet
Cash Book
Ledger
Register
Journal

UnAttempted

CORRECT ANSWER:

Register

Explanation:

Just like Policy and Claim register, Cover Note register helps in efficient management.

Q 30. Motor vehicles are classified into ____ major categories.

1
2
3
4
5

UnAttempted

CORRECT ANSWER:

Explanation:

The categories are Car, Two wheelers and Commercial vehicles.

Q 31. In whose name can the Special Declaration Policy CANNOT be issued ?
Single name
Own name
Nominee name
Agents name
Joint names

UnAttempted

CORRECT ANSWER:

Joint names

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Explanation:

Special Declaration Policy is a special type of Policy (a form of floating policy) issued in India,
originally formulated by the Tariff Advisory Committee for Marine Inland Transits exceeding a
prescribed volume of estimated annual turnover. Usually issued to clients who have large turnover
with many and frequent dispatches of goods within India by rail, road, air or inland waterways.

Policy shall not be issued in joint names, even in respect of Holding/Subsidiary companies.

Q 32. There is an increase in burglaries due to _______ .

Fall in the stock markets
Economic Depression
Non-education
Unemployment
Deflation

UnAttempted

CORRECT ANSWER:

Economic Depression

Explanation:

Poverty is the root cause of crimes & it’s linked with the economic depression. Under economic
depression, not enough employment could be generated. Burglaries consequent upon poverty &
unemployment may be controlled to a greater extent with the growth of economy.

Q 33. Premium and claims are shown in accounts on _______ .

Actual basis
Gross basis
Net basis
Claim basis
Earned basis

UnAttempted

CORRECT ANSWER:

Net basis

Explanation:

In practice, expenses are deducted from written premiums and the resulting net figure is used to
calculate reserves.

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Q 34. ERF contribution forms part of which act liability ?

Public liability act
Insurance Act
Workmen Compensation Act
Motor Vehicle Act
Marine Insurance Act

UnAttempted

CORRECT ANSWER:

Public liability act

Explanation:

An amount equal to premium is to be paid to insurer for contribution to Environment Relief Fund
(ERF) which pays relief.

Q 35. For insurance companies, the acceptance of proposal is done by _____ .

Actuaries
Agent
Underwriter
Insurance Executive
Policy holder

UnAttempted

CORRECT ANSWER:

Underwriter

Explanation:

After reviewing the proposal papers and the medical reports the underwriter may decide to accept the
proposal.

Q 36. What is the amount of claim payable under franchise limit is 300 when amount of loss is
Rs 580/-
Rs 100
Rs 300
Rs 500
Rs 580
NIL

UnAttempted
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CORRECT ANSWER:

Rs 580

Explanation:

Franchise Limit : A minimum amount of loss that must be incurred before insurance coverage applies.
A franchise deductible differs from an ordinary deductible in that, once it is met, the entire amount of
the loss is paid, subject to the policy limit. Any claim beyond Rs. 300 is fully passed on to insurer.

Q 37. Which ratio should be regularly reviewed and reduced by an Insurance Company ?
Profit to Earning ratio
Management Expense ratio
Turnover ratio
General Expense ratio
Expense ratio

UnAttempted

CORRECT ANSWER:

Management Expense ratio

Explanation:

The profitability of an insurance company depends upon controlling expenses. Expenses comprises of
claim expenses & management expenses. Since the claims are unpredictable, an insurer would do well
if it is able to control its management expense ratio.

Q 38. Which insurance provides cover against death of animals like cows, bulls etc. within the
geographical area ?
Animal insurance
Cattle insurance
Farm insurance
Agricultural equipment insurance
Domestic Livestock insurance

UnAttempted

CORRECT ANSWER:

Cattle insurance

Explanation:

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The Cattle Insurance scheme covers the following whether indigenous, exotic or cross-bred.

a. Milch Cows and Buffaloes

b. Calves / Heifers
c. Stud Bulls
d. Bullocks (Castrated Bulls) and Castrated Male Buffaloes.

Q 39. The constitution of _______ was done as per the provisions of Motor Vehicle Act.
MACT - Motor Accidents Claim Tribunal
FACT - Fatal Accidents Claim Tribunal
Motor Damages Act
Motor Vehicles Accident Act
Motor Tribunal Act

UnAttempted

CORRECT ANSWER:

MACT - Motor Accidents Claim Tribunal

Explanation:

MACT was formed as per the provisions of Motor Vehicle Act and deals with matters related
to compensation of motor accidents victims or their next of kin .The Tribunal deal with claims relating
to loss of life/property and injury cases resulting from Motor Accidents.

Q 40. The questions on Circumstances and Date of incident form a part of ________ .
Contract form
Claim form
Proposal form
Policy form
Renewal Notice

UnAttempted

CORRECT ANSWER:

Claim form

Explanation:

The Claim form will ask for details like :

- Name

-Policy Number

- Date and Time of incident

- Location of incident
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-Circumstances of the incident

etc.

Q 41. Whose services do Property and Liability insurers use for rate setting ?
Actuaries
Underwriters
Brokers
Commissioners
Advisors

UnAttempted

CORRECT ANSWER:

Actuaries

Q 42. All parties to insurance contract are subject to the principle of ________ .
Utmost good promise
Utmost good honesty
Utmost good loyalty
Utmost good truthfulness
Utmost good faith

UnAttempted

CORRECT ANSWER:

Utmost good faith

Explanation:

Utmost good faith is one the important principle on which insurance is based.

Q 43. Agricultural Insurance Corporation takes care of ________ .

Pesticides and Fertilizers
Agro chemicals
Crop
Farmers
Investment in agricultural business

UnAttempted

CORRECT ANSWER:

Crop

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Q 44. Which insurance policy reimburses hospitalisation and domiciliary hospitalisation

expenses for treatment of diseases etc.
Endowment Insurance
Life Insurance
Mediclaim Insurance
Accident Insurance
Motor Insurance

UnAttempted

CORRECT ANSWER:

Mediclaim Insurance

Q 45. Marine cover note is worded along with the _________ .

Marine insurance number
Marine note number
Marine cover note number
Marine serial note number
Marine delivery note number

UnAttempted

CORRECT ANSWER:

Marine cover note number

Q 46. Which of these options is dissimilar in personal accident insurance ?

On duty
Off duty
24 hours hospitalisation
India
Worldwide

UnAttempted

CORRECT ANSWER:

24 hours hospitalisation

Explanation:

Personal accident covers for India and even stay abroad, off duty and even on duty. 24 hours as
requirement to stay hospitalised is for Mediclaim and not Personal accident.

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Q 47. Policies under group health insurance schemes may be accepted in _______ .
Equity Shares
EMIs
Loans
Installments
Debentures

UnAttempted

CORRECT ANSWER:

Installments

Explanation:

Group health insurances can be granted by insurer by monthly salary deduction - as installments.

Q 48. Is the maximum weekly amount that can be claimed under the temporary total
disablement benefit of PA policy is ________ .
Rs. 1000
Rs. 3000
Rs. 5000
Rs. 7500
Rs. 10000

UnAttempted

CORRECT ANSWER:

Rs. 3000

Explanation:

The amount of weekly payment is restricted to a maximum sum of Rs.3000 whatever be the capital sum
assured.

Q 49. What is also known as endorsement ?

Assignments
Stamping of the policy
Cover letter
Advertisment
Policy document

UnAttempted

CORRECT ANSWER:

Policy document
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Explanation:

Endorsements are normally used when the terms of an insurance contract are to be varied.
Endorsements are attached to the policy document and the two together constitute the evidence of an
insurance contract.

Q 50. The Open Cover contract is generally issued for a period of _____ months.
3
6
9
12
24

UnAttempted

CORRECT ANSWER:

12

Explanation:

An Open Cover is useful for large import export firms and describes the cargo, voyage and cover in
general terms and takes care automatically of all shipments which fall within its scope.

Its usually issued for a period of 12 months and is renewable annually.

Out of 50 questions 50 are un attempted.

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