Tag: meaning and definition of insurance

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Questions Related to meaning and definition of insurance

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

State the following statement is True or False:
The principle of insurance under which the compensation paid to the insured which is equal to the actual loss is indemnity.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
According to the concept of indemnity, the insurer undertakes to put the insured, in the event of loss, in the same position that he occupied immediately before the happening of the uncertain event. In other words the insurer undertakes to compensate the insured for the loss caused to him/her due to damage or destruction of property insured. 
The compensation payable and the loss suffered are to be measured in terms of money. The principle of indemnity is not applicable to life insurance.
Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

State the following statement is True or False:
Through insurance the risk is divided among many people.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Insurance is a form of risk management. It is a substitution of the premium for a risk of large possible loss. Such loss is spread over a large number of policyholders exposed to the same risk.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

State the following statement is True or False:
A document containing terms and conditions of insurance contract is called policy.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Insurance policy is a formal and legal document issued by the insurance company to the insured. It describes the terms and conditions relating to the particular policy. 

It includes details about the risks covered, duration of coverage, amount of premium, mode of payment of premium, etc.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

One who calculates insurance and annuity premium is known as _____.

  1. Investor

  2. Insurer

  3. Actuary

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

One who calculate insurance and annuity premium is known as actuary. Actuary basically deals with management and measurement of risks and uncertainty. An actuary is often described as an business professional.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

An agent is_________between his principal and the third party.

  1. Connecting link

  2. Sub agent

  3. Partner

  4. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An agent is not a connecting link, sub agent or partner between his principal and the third party. An agent can be referred as a person who acts on behalf of some other person. Agent always take an active role in order to create a specific effect on an activity.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

The abbreviation 'AAR' stands for _______________.

  1. Annual Average Risk

  2. Annual All Return

  3. Against All Risks

  4. Against Average Risk
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The abbreviation "AAR' stands for Against All Risk. AAR is related with insurance companies. AAR insurance is primarily referred to a health insurance company of Kenya which started its operations in the year of 1984.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

Which one of the following generalisations can be drawn from the principle of subrogation?

  1. It is the principle by which the insurer, after having paid the loss to the insured, steps into the shoes of the insured person and acquires all rights and remedies as the insured would have enjoyed regarding the said loss

  2. A person who keeps a stock of inflammable material in his premises

  3. The insured can get only the compensation against the actual loss and he can't make profit out of insurance

  4. In marine insurance the immediate cause and not the remote cause shall be considered for bearing the loss
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In principle of subrogation the insurer, after having paid the loss to the insured, steps into the shoes of the insured and acquires all rights and remedies as the insured would have enjoyed regarding the said loss. 


It basically means that insurer has a legal right to claim any future gains from the property after the said loss for any recovery/settlement. 

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance kinds of insurance re-insurance and double insurance risks in business - insurable and non-insurable

Insurance is based on the principle of ______________.

  1. Co-operation

  2. Democracy

  3. Equality

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

Insurance operates on the principle of pooling risks among many people, which is a form of social co-operation to mitigate individual financial loss.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

Insurance and garage rent is _______.

  1. fixed charges

  2. maintenance charges

  3. operating charges

  4. running charges
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Insurance and garage rent are costs that do not change with the distance traveled or usage of the vehicle, making them fixed charges.

Multiple choice organization of commerce and management business risks and insurance meaning, importance and principles of insurance features and principles of insurance meaning and definition of insurance

The general insurance corporation of India established under the ____________________.

  1. Indian Companies Act,1956

  2. Banking Regulation Act,1949

  3. General Insurance Corporation of India Act,1972

  4. Life Insurance Corporation of India Act, 1956
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The General Insurance Corporation of India was established under the General Insurance Business (Nationalisation) Act, 1972.