Banking Financial Awareness · General Awareness

Insurance Policies and Claims

1,514 Questions

Insurance policies provide financial protection against specific perils, involving concepts like deductibles, premiums, and claim settlements. Banking and insurance aspirants need a solid grasp of policy types, coverage limits, and claim procedures. Practice these questions to understand how different insurance principles apply in real scenarios.

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Insurance Policies and Claims Questions

Multiple choice

Escalation clause added to the fire policy allows automatic regular increase not exceeding ______% in sum insured throughout the period of the policy.

  1. 5

  2. 10

  3. 25

  4. 50
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Escalation clause: It will be in order for insurers to allow automatic regular increase in the sum insured throughout the period of the policy in return for an additional premium to be paid in advance. The terms and conditions for this extension shall be as follow: (a) The selected percentage increase shall not exceed 25% of the sum insured. (b) The additional premium, payable in advance, will be at 50% of the full rate, to be charged on the selected percentage increase. (c) The sum insured at any point of time would be assessed after application of the escalation clause. (d) Escalation clause will apply building, machinery and accessories only and will not apply to stock.

Multiple choice

A marine insurance policy where only the amount of claim is specified and all other details are omitted is known as

  1. valued policy

  2. port risk policy

  3. floating policy

  4. mixed policy
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Floating policy is a marine insurance policy where only the amount of claim is specified and all other details are omitted till the time the ship embarks on its journey. For clients who undertake frequent trips of cargo transportation through waters, this is the most ideal and feasible marine insurance policy.

Multiple choice

In property insurance, the chances of a wooden structure catching fire are high; hence,

  1. a lower premium is required to insure wooden structure

  2. a higher premium is required to insure wooden structure

  3. high claim will be there at low premiums

  4. high claim will be there, no matter what the premium is
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In the field of property insurance, the chances of a wooden structure catching fire are more than stone structures; hence, a higher premium is required to insure the wooden structure.Risks are divided into different categories depending on the degree of risk that is present. In the given case, higher risk will lead to high premiums.

Multiple choice

A penalty imposed on the insured by the insurance carrier for under reporting/declaring the value of tangible property is known as

  1. co-insurance

  2. franchise

  3. deductible

  4. retention

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Co-insurance is a penalty imposed on the insured by the insurance carrier for under reporting/declaring/insuring the value of tangible property or business income. The penalty is based on a percentage stated within the policy and the amount under reported.

Multiple choice

The premium for burglary policy depends upon ______________.

  1. nature of insured policy

  2. moral hazard of the insured himself

  3. construction and location of the premises

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Rates of premium for burglary policy depend upon the nature of insured property, the moral hazard of the insured himself, construction and location of premises, safety measures (e.g. watchmen, burglar alarm), previous claims experience, etc.

Multiple choice

Which of the following is not covered under “Multi Peril Policy for L.P.G. Dealers”?

  1. Gas cylinders in transit

  2. Theft and burglary

  3. Risk of fire

  4. Value of property exceeding Rs. 5 Lacs
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

“Multi Peril Policy for L.P.G. Dealers” covers the following:

  1.     Risk of fire and allied perils for building and contents
  2.     Theft and burglary
  3.     Gas cylinders in Transit
  4.     Cash-in-transit/Safe/Cash box
  5.     Fidelity guarantee
  6.     Pedal cycle
  7.     Public liability
  8.     Personal accident
  9.     Personal accident to customers
  10.   Workmen's compensation
  11.    Plate glass
  12.    Neon sign/Glow sign

This cover cannot be given when the value of property exceeds Rs. 5 lakh. 

Multiple choice

In underwriting, “Uberrima Fides” refers to

  1. utmost good faith

  2. insurable interest

  3. trust of the insured

  4. proposal form
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Core principles of underwriting are utmost good faith (Uberrima Fides) and the insurable interest. Thus, Uberrima Fides refers to utmost good faith. This phrase is used to express that a contract must be made in perfect good faith, concealing nothing; as in the case of insurance, the insured must observe the most perfect good faith towards the insurer.

Multiple choice

Who among the following represents the people who want insurance and connect them to insurance companies?

  1. insurance agent

  2. insurance broker

  3. third party administrator

  4. insurance web aggregator
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Insurance brokers may be individuals or corporates and work independently for insurance companies. They represent the people who want insurance and connect them to insurance companies obtaining best possible insurance covers at best possible premium rates. They also assist the insuring people during times of loss and making insurance claims.

Multiple choice

Which of the following is/are covered in Institute Cargo Clause B?

  1. Collapse of bridges in inland transit

  2. Sling loss in case of ocean transit

  3. Act of God (AOG) perils

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Institute Cargo Clause B is wider than Institute Cargo Clause C. Apart from the perils covered in Clause C, it also covers loss or damage due to the following:

i.    Act of God (AOG) perils like earthquake, volcanic eruption and lightning ii.   Collapse of bridges in Inland transit iii.  Washing overboard and sling loss in case of ocean transit iv.  Entry of water into the vessel

Multiple choice

Which of the following is not covered under a money insurance policy?

  1. Losses occurred while handling cash

  2. Losses occurred while handling postal orders

  3. Losses occurred while handling postal stamps

  4. Loss of money that has been entrusted to other than authorised person
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Money insurance policy is designed to cover the losses that may occur while handling cash, cheques, postal orders or postal stamps. The policy normally provides cover under two sections.

Multiple choice

Raj is involved in a car accident. His car is insured under a motor insurance policy. Which among the following is the most appropriate thing for Raj to do?

  1. Notify the insurer of the loss as soon as reasonably possible

  2. Notify the insurer at the time of insurance renewal

  3. Damage the car further so as to receive a bigger compensation

  4. Ignore the damage for the avoidable time period
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Policyholders should notify their insurer about a potential claim as soon as reasonably possible. The courts have clarified that solicitors should advise their clients to check whether they have "before the event" legal expenses insurance, before entering into costly private-fee arrangements.

Multiple choice

Which of the following denotes insurance of the same subject matter with two different companies or with the same company under two different policies?

  1. Nature of contract

  2. Principle of subrogation

  3. Double insurance

  4. Principle of proximate cause
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Double insurance denotes insurance of the same subject matter with two different companies or with the same company under two different policies. Insurance is possible in case of indemnity contract like fire, marine and property insurances.

Multiple choice

A comprehensive cover drafted for the banks, NBFCs and other institutions who deal with operations involving money is known as

  1. Bankers indemnity policy

  2. Money insurance policy

  3. Burglary policy

  4. Consequential loss (CL) policy
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Bankers indemnity policy is a comprehensive cover drafted for the banks, NBFCs and other institutions who deal with operations involving money, considering the special risks faced by them regarding money and securities.

Multiple choice

Which of the following policies has the main feature as Agreed Value policy?

  1. Fire policy

  2. Burglary policy

  3. Marine cargo insurance

  4. Engineering policy
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cargo policies are essentially voyage policies, i.e. they cover the subject matter from one place to another. However, the insured is required to always act with reasonable care in all circumstances within his control. The main feature of this policy is that it's an Agreed Value policy. The valuation is agreed between the insurer and the insured, and is not subject to revaluation later unless fraud is suspected. Another unique feature is that the policy is freely assignable.