Q 1.

A person has the following material in his factory : Raw materials - Rs 10,000,00
; Finished Goods - Rs. 16,000,00 ; Semi Finished Goods - Rs 4,00,000. There is a
bank mortgage of Rs 10,000,00 on these stocks. What is the value of goods he
has to insure ?
Rs 16,000,00
Rs 30,000,00
Rs 20,000,00
Rs 10,000,00
Rs 40,000,00

UnAttempted

CORRECT ANSWER:

Rs 30,000,00

Explanation:

Value to be insured or SI is the total value of material at risk. The total cost of material in
this case is raw material, semi-finished goods & finished goods. Total of all the three is Rs
30,000,00 hence this is the value to be insured. Bank mortgage is not material for
insurance. However the insurance cannot be for less than the mortgage amount else the
bank would not mortgage.

Q 2. Individual fidelity guarantee policies are usually issued for temporary

contracted ______ employees
Private
NGO’s
Public Sector Bank
Government
Non Government

UnAttempted

CORRECT ANSWER:

Non Government

Explanation:

The individual fidelity guarantee policies are more relevant to non-government employees.
It is primarily because the infidelity of employees can lead the non-govt. organizations
towards bankruptcy. They require financial protection against fraud of the employees, more
than anyone else.

Q 3. The Premium Register copy is must for _____.

Underwriting bank statements
 Underwriting loans
Underwriting returns
Underwriting balance sheet
Underwriting services

UnAttempted

CORRECT ANSWER:

Underwriting returns

Explanation:

The primary business of an insurance company is generating premium income & paying
claims. Payment of claims is the prime reason why the insurers are in business.
Underwriting returns are computed on the basis of premium register.

Q 4. To what extent are the reimbursement expense for a damaged private car’s
protection is limited to ?
Rs 1000
Rs 1500
Rs 2000
Rs 2200
Rs 2500

UnAttempted

CORRECT ANSWER:

Rs 2500

Q 5. What will be an appropriate sum insured for death cover under PA policy ?
3 years income
5 year income
7.5 years income
Annual income
No limit

UnAttempted

CORRECT ANSWER:

5 year income

Explanation:

The PA policy fixes the SI compared with the monthly income of the insured. As a thumb
rule, it is generally granted for an amount equivalent to 5 to 6 yrs. of yearly income.
 However the practice of fixing SI differs between insurers.

Q 6. __________ tends to be a package of covers picking up more traditional covers

of Employee thefts, Premises coverage, Depositors forgery, Computer fraud etc.
Bankers blanket insurance
Crime insurance
Cyber insurance
Office package insurance
SME package insurance

UnAttempted

CORRECT ANSWER:

Crime insurance

Explanation:

The Crime insurance which is prevalent in the western countries is a new concept in the
Indian market. It’s a package policy consisting of 5 perils bundled into one policy covering
the employee theft, premises coverage, transit, computer fraud & depositor’s forgery.

Q 7. Which of the following cannot be insured under Cyber Liabilities ?

Losses because Third Parties could not access the system
Losses arising from hacking into insured's server
Liability for the insured spreading virus to the third party
Deliberate malicious lies from the insured to Third Parties
All of the above

UnAttempted

CORRECT ANSWER:

Deliberate malicious lies from the insured to Third Parties

Explanation:

Deliberate malicious lies from the insured to Third Parties would not be covered.

Q 8. The renewal receipt can also be issued by ______.

Specifying the discount in premium
Acknowledging receipt of renewal premium
Specifying the term of the further period insurance
Analysis of the clause of insurance
Specifying the terms of agreement
 UnAttempted

CORRECT ANSWER:

Acknowledging receipt of renewal premium

Explanation:

The renewal receipt is the acknowledgement of having received the premium. Once the
receipt is issued, the insurers would be on risk. The receipt serves the purpose, pending
issue of policy. The receipt is a proof of payment for obtaining tax rebate if any (under
appropriate sections of the IT Act).

Q 9. The Janta Personal Accident (JPA) policy is specifically designed for________.

Higher sections of the society
Weaker sections of the society
All sections of the society
Common sections of the society
Public sections of the society

UnAttempted

CORRECT ANSWER:

Weaker sections of the society

Explanation:

The policy is primarily designed for weaker section of the society. Any person irrespective
of sex, occupation and profession in the age group of 10 to 70 years may be covered under
Janata Personal Accident Policy. The premium is only Rs 15 for a SI of Rs 25000.

Q 10. If the insurer is not interested in the renewal of policy, it has to give _______.
Actual notice
Meeting notice
Prior notice
Public notice
Expired notice

UnAttempted

CORRECT ANSWER:

Prior notice
 Explanation:

The prior notice is usually given by an insurer to an insured if they are not interested in
renewal of the policy. It is given in advance enabling the insured to arrange the insurance
elsewhere before the expiry of the current policy.

Q 11. When the Money transit insurance is renewed, the premium is calculated on the
basis of ______.
Only money
Money in transit
Actual money in transit
Insurance policy
Contract basis

UnAttempted

CORRECT ANSWER:

Money in transit

Explanation:

This cover is also known as Money Insurance which actually refers to money in transit &
money in the premises. Since the actual value of money in transit for the policy period
cannot be ascertained in advance, estimated money in transit is kept as a SI & the premium
adjustment is done at the end.

Q 12. The cargo clause comes under the category of _______.

Sec A B C
Sec 1
Sec 3
Sec B D S
Sec B C D

UnAttempted

CORRECT ANSWER:

Sec A B C

Explanation:

The cargo losses by different risks can be covered under different clauses. These clauses
are known as Institute Cargo Clauses (ICC). There are three clauses for the purpose i.e. ICC
(A), ICC (B) and ICC (C). Each of these clauses covers different risks. ICC (A) is the widest
clause which covers certain additional risks covered under ICC (B) & ICC (C).
Q 13. Concentrated efforts should be made by the insurance companies to review and
reduce the _______.
Normal expenses ratio
Fluctuating expenses ratio
Management expenses ratio
General expenses ratio
Expenses ratio

UnAttempted

CORRECT ANSWER:

Management expenses 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 14. The full form of ALOP is ______ .

Advance loss of property
Advance loss of penalty
Advance loss of policy
Advance loss of profits
Advance loss of pension

UnAttempted

CORRECT ANSWER:

Advance loss of profits

Explanation:

ALOP is an abbreviation for Advance loss of Profit policy issued under the engineering
insurance. It is designed to cover losses associated with the delays in commissioning of a
project due to an insured peril.

Q 15. A Certificate of Insurance is issued in addition to the policy in motor insurance.

This is required by ______ .
General Insurance act
Consumer act
Property Insurance act
LIC act
Motor Vehicles act
 UnAttempted

CORRECT ANSWER:

Motor Vehicles act

Explanation:

The motor insurance being a compulsory insurance requires a certificate of insurance

which provides that the policy is being issued as per the provisions of the MV Act. The
concerned authorities therefore rely upon the certificate of insurance.

Q 16. Some risks are considered as extra hazardous and are therefore declined.
These are called ______.
Speculative Risk
Damage risk
Declined risk
Hazardous risk
Destruction risk

UnAttempted

CORRECT ANSWER:

Declined risk

Explanation:

Extra hazardous ricks which cannot be insured in spite of loading the premium or by any
appropriate clause are called declined risk.

Q 17. Traders can suffer losses by reason of insolvency of or protracted default in

payment on the part of ________.
Sellers
Vendors
Consumers
Buyers
Suppliers

UnAttempted

CORRECT ANSWER:

Buyers
 Explanation:

Cash flow problems arises if for example, the customers/ buyers fail to pay money they
owe to the traders, that mean traders cannot pay their debts as they fall due.

Q 18. Which authority can intervene in the affairs of an insurer?

Any legal regulatory body
IRDAI
Central Government
Policy holder
State Government

UnAttempted

CORRECT ANSWER:

IRDAI

Explanation:

IRDA is a sole authority which can intervene in any affairs of an insurer i.e. both Life as well
as Non-life insurers. Its authority is derived through an Act of Parliament, thus the
recommendations are binding on insurers.

Q 19. Which of these terms refer to 'Partially Damaged Property' ?

Claim
Risk
Damage
Premium
Salvage

UnAttempted

CORRECT ANSWER:

Salvage

Explanation:

Partially damaged property is known as salvage. The salvage is can either be sold to the
salvage buyers or its value is deducted from the claim amount.

Q 20. Super heaters, steam pipes, boilers, economizers and other steam or air
pressure are insurable under _____.
 Fire insurance
Boiler insurance
Aviation insurance
Engineering insurance
Marine insurance

UnAttempted

CORRECT ANSWER:

Boiler insurance

Explanation:

The policy is known as Boiler and Pressure Plant Insurance (BPP) which covers damages
to boilers, economizers, super heaters, steam pipes, air recovers and other steam or air
pressure caused by explosion. The damages would not be payable if the loss is caused by
fire.

Q 21. Incurred claims are the value of paid and outstanding claims for the year after
deduction of ________ at the end of the previous year.
Brought over balances
Surplus balances
Fiscal deficit
Claims outstanding
Prepaid claims

UnAttempted

CORRECT ANSWER:

Claims outstanding

Explanation:

Incurred claim includes all paid claims during the period plus a reasonable estimate of
unpaid liabilities. It is calculated by adding paid claims and unpaid claims minus the
estimate of unpaid claims (Claims outstanding) at the end of the prior valuation period.

Q 22. When does an insurance policy become legally enforceable ?

When it is accepted by policy holder
When it is delivered to policy holder
When it is recorded in policy register
When it is Stamped
When it is Signed
 UnAttempted

CORRECT ANSWER:

When it is Stamped

Explanation:

Any document can be said to be legal when it is enforceable at law. Insurance policy
document becomes legally enforceable only when it is stamped. Without the stamp the
insurers although honors the contract/ policy, it becomes legal only when a govt. revenue
by way of stamp is affixed thereof (like revenue stamp on receipts).

Q 23. To whom will all the insurers in India inform while devising their re-insurance
programme every year ?
RBI
GIC
LIC
IRDAI
SEBI

UnAttempted

CORRECT ANSWER:

IRDAI

Explanation:

Reinsurance is basically a mechanism enabling retaining & developing insurance capacity

in India. Each insurer has to inform & take prior approval about their reinsurance
programme every year.

Q 24. The annual premiums are calculated on the basis that they are received in
_____.
Premium
Prepaid
Advance
Arrears
Cash

UnAttempted

CORRECT ANSWER:

Advance
 Explanation:

The income of an insurer depends upon underwriting & investment profits. Underwriting
profit cannot be predicted in advance whereas investment profit can be projected based
upon the investment criteria. This can only be done if the money is available for investment
in advance.

Q 25. The General insurance Corporation is also commonly known as ________.

Government Re-insurer
Trusted reinsurer
Reinsurer
National reinsurer
Global reinsurer

UnAttempted

CORRECT ANSWER:

National reinsurer

Explanation:

GIC or General insurance Corporation is national reinsurer is an approved Indian reinsurer

set up to retain maximum reinsurance business in India to conserve the precious foreign
exchange & to develop the reinsurance capacity.

Q 26. Which two records are maintained for claims ?

Claims paid and claims intimated
Policy assured and policy document
Client details and policy document
Basic details and policy documents
Accounts info and premium statements

UnAttempted

CORRECT ANSWER:

Claims paid and claims intimated

Explanation:

Claims paid and claims intimated give fairly accurate picture of financial position of the
insurers. It guides the insurers for the future strategy towards the product pricing &
arranging the reinsurance.
Q 27. The major life insurers in the world are located in which continent ?
Asia
Europe
North America
South America
Africa

UnAttempted

CORRECT ANSWER:

Europe

Explanation:

In the global insurance market, UK is the largest market for insurance. The market share of
insurance business is to the extent of $1, 753 Billion against the North America whose
business is $1, 346 Billion.

Q 28. The special declaration deposit premium of 100% of the premium on the sum
insured based on the __________ (Marine Insurance).
Current year’s turnover
First year’s turnover
Next year’s turnover
Last year’s turnover
Previous year’s turnover

UnAttempted

CORRECT ANSWER:

Previous year’s turnover

Explanation:

This policy is issued to client’s whose estimated annual turnover exceeds 2 crores. The SI
is based on previous year turnover for existing clients & estimated turnover for a new
client.

Q 29. What is the term used for loss or damage to buildings, machinery, stocks etc.
by fire and other perils ?
Loss of personnel
Loss of legal liabilities
Loss of assets
 Loss of profit
Loss of finance

UnAttempted

CORRECT ANSWER:

Loss of assets

Explanation:

Fire policy covers two types of losses i.e. Loss of capital & Loss of revenue. Revenue
losses are covered under loss of profit policy i.e. Fire Loss of Profit, whereas capital losses
are covered under Fire policy. Assets are listed against the capital in the balance sheet of
any company. Building, machinery stocks etc. all forms the assets.

Q 30. In which year was the Insurance Act passed ?

1928
1938
1948
1952
1962

UnAttempted

CORRECT ANSWER:

1938

Q 31. Claims under Industrial All Risk insurance are computed on the basis of ______
.
premium
disability
contract
material damage
risks

UnAttempted

CORRECT ANSWER:

material damage

Explanation:

The subject matter of Industrial All Risk insurance is material damage. Therefore the claim
computation would be based upon the material damage only.
Q 32. An open cover is not a policy but is more like a _______.
Document note
Debit note
Bank note
Agreement
Credit note

UnAttempted

CORRECT ANSWER:

Agreement

Explanation:

Open cover is an unstamped document in the form of an agreement wherein there is no

sum insured defined. Insured may send any number of consignments on the mutually
agreed terms.

Once a consignment is sent, a separate policy or certificate of insurance may be issued for
the same.

Q 33. What happens to the risk if the deposit to the credit of the insured is insufficient
to cover a consignment in transit ?
The risk is terminated
The risk is equal to the entire amount of the policy value
The risk is equal to the entire amount of commission
The risk is equal to the entire amount of discount
The risk is equal to the entire amount of premium paid

UnAttempted

CORRECT ANSWER:

The risk is terminated

Explanation:

Section 64 VB of Insurance Act 1938 refers to advance payment of premium, guaranteed to

be paid or until deposit of premium. Therefore if the premium is insufficient or is not
guaranteed, the policy terminates.

Q 34. What is the validity period of a cover note in Motor Insurance ?

20 days
40 days
60 days
 80 days
100 days

UnAttempted

CORRECT ANSWER:

60 days

Explanation:

Initial validity of the cover note is 15 days & it could be extended up to 60 days.

It is expected that the policy would be issued within this period & the cover note would be
invalid thereafter. Cover note is issued when the policy cannot be issued for any reason i.e.
vehicle registration number.

Q 35. Which one these perils is covered under Institute cargo clause (B) ?
Bursting / tearing of bags
Hook damage
Volcanic eruption
Theft pilferage
Partial loss of package

UnAttempted

CORRECT ANSWER:

Volcanic eruption

Explanation:

Volcanic Eruption is an inbuilt cover under ICC (B) where as other risks to the cargo can be
covered on payment of additional premium.

Q 36. Business risk is an ________ .

Insurable
Non insurable
Hazardous
Uncontrollable
Controllable

UnAttempted

CORRECT ANSWER:

Non insurable
 Explanation:

Insurance is relevant only when there is uncertainty about the risk. A business on the other
hand inherently would result either into loss or profit. Hence the business risk is non-
insurable. Insurers can insure the external risks/ perils not the inherent risks/ perils.

Q 37. On which act are the transaction of general insurance business in India based
on ?
Motor vehicles act
Fire insurance act
Insurance act 1938 and IRDAI act 1999
Liability insurance act
Marine insurance act

UnAttempted

CORRECT ANSWER:

Insurance act 1938 and IRDAI act 1999

Explanation:

A comprehensive act known as Insurance Act 1938, was introduced to control both life &
non-life insurance in India. In 1999, further act was passed by the parliament to regulate,
promote & to ensure orderly growth of insurance as well as reinsurance business.

Q 38. In which insurance are the rights of subrogation commonly enforced ?

Erection all risk insurance
Burglary insurance
Marine cargo insurance
Motor TP insurance
Fire insurance

UnAttempted

CORRECT ANSWER:

Marine cargo insurance

Explanation:

Although subrogation rights are enforced in each class of business, it is more relevant
under marine cargo insurance since losses could be attributed by various carriers of the
goods being transported who may be responsible for the loss.
Q 39. What is the process called wherein the risk of damage by flooding is avoided by
moving the factory to another safer site ?
Risk evaluation
Risk avoidance
Risk detection
Risk control
Risk identification

UnAttempted

CORRECT ANSWER:

Risk avoidance

Explanation:

It’s a risk management technique where in the losses of high severity & high frequency are
best dealt in a manner of just avoiding it. No insurer would insure such risk/ losses & none
could manage it of its own.

Q 40. On which basis are the reinsurance arrangements of the insurance companies
decided upon ?
Weekly basis
Quarterly basis
Half yearly basis
Annual basis
Monthly basis

UnAttempted

CORRECT ANSWER:

Annual basis

Explanation:

The insurers have to plan their strategy in advance on yearly basis to arrange for
reinsurance arrangement. It has to obtain prior approval for such arrangement from the
authority i.e. from IRDA.

Q 41. Motor vehicles classified in to ____ major categories.

1
2
3
4
5
 UnAttempted

CORRECT ANSWER:

Explanation:

Motor vehicles are categorized under 3 categories as per the Motor Vehicles Act, 1988.
However under commercial vehicles, there is further classification in respect to Goods
carrying vehicles, Passenger carrying vehicles & Miscellaneous vehicles.

Q 42. The Dumpers and tippers are insured under _________.

Motor
Fire insurance
Machinery breakdown
Marine cargo
Marine hull

UnAttempted

CORRECT ANSWER:

Motor

Explanation:

Commercial vehicles are insured under India Motor Tariff. These are further classified into
miscellaneous vehicles. Dumpers & tippers come under the preview of this class of
vehicles.

Q 43. The first phase of customer service comprise of _______ .

Dealing with customers demand
Dealing with the problems of customers
Pre sales service
Identification of customers need
Identification of customers

UnAttempted

CORRECT ANSWER:

Identification of customers need

Explanation:
 The insurance protection can only be granted to an insured based upon his risk exposure.
The insurer has to identify the customer’s exact need for insurance before a solution can
be offered.

Q 44. Proprietary concerns are owned by ________ .

Single individual
Group of individuals
The public
Board of directors
Body corporate

UnAttempted

CORRECT ANSWER:

Single individual

Explanation:

A sole-proprietorship concern shall be set up by an Individual.

If more than one person wants to start a business, they have to choose among other
options such as partnership firm, limited liability partnership (LLP) or a company.

Q 45. Damage to machinery or machine breakdown may result in business

interruption and is termed as ________.
Loss of finance
Loss of profit
Loss of personnel
Loss of legal liability
Losses of assets

UnAttempted

CORRECT ANSWER:

Loss of profit

Explanation:

Under engineering insurance Machinery Breakdown (MBD) covers material damage losses.
The damage to machinery may result into business interruption causing loss of profit. This
can be covered under MLOP ( Machinery Loss of Profit) policy.
Q 46. The social scenario of ________ has caused an increase in burglaries.
Deflation
Unemployment
Down fall in markets
Boom
Economic depression

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 47. In which year was the Employee’s State Insurance Act enacted ?
1928
1938
1948
1953
1963

UnAttempted

CORRECT ANSWER:

1948

Q 48. What is the amount of claim payable under franchise limit is 400 when the
amount of loss is Rs 580?
Rs. 400
Rs. 580
Rs 200
Rs 290
NIL

UnAttempted

CORRECT ANSWER:

Rs. 580
 Explanation:

Franchise is a qualifying amount under which if the pre-determined limit (franchise limit) is
crossed, the claim is paid in full without any deduction.

Q 49. As per IRDAI, which document is compulsory for acceptance of all insurances
except Marine Cargo ?
Proposal form
Endorsement
Renewal notice
Policy form
Claim form

UnAttempted

CORRECT ANSWER:

Proposal form

Explanation:

As per IRDA regulations, proposal forms are required to be used in all classes of insurance
except marine cargo. However it is required in case of marine hull insurance. Sometimes it
is usual to obtain a questionnaire duly completed.

Q 50. ________ is an example of packaged products.

Bankers blanket insurance
Horse insurance
Marine insurance
Micro insurance
Burglary insurance

UnAttempted

CORRECT ANSWER:

Bankers blanket insurance

Explanation:

The rest of the options are individual cover designed to protect the specific risk. Under
Bankers Blanket Insurance, several specific covers are provided covering virtually every
risk associated with a bank. It’s a package of various risks squeezed in one policy.

Banker's Indemnity Insurance or Bankers blanket insurance is a combination of several

specific covers, such as fire, burglary, money-in-transit, fidelity guarantee etc. The policy
provides indemnity for direct loss of money and / or securities sustained by the insured
and discovered during the period specified in the policy.
Q 51. Under which clause is the cover for costs related to i) Cost of controlling the
blow out ii) Cost of Cleaning Up iii) Pollution Liability etc. provided ?
Blow out clause
All risk clause
Energy explosion and development clause
Launch clause
Pre-operation clause

UnAttempted

CORRECT ANSWER:

Energy explosion and development clause

Explanation:

This is also known as EED (Energy explosion and development) clause. The perils stated
above forms the part of Oil and Energy Risk Insurance. Under the policy, apart from
physical damage to the assets, if an oil well goes out of control, all of the above expenses
would have to be incurred. The EED clause covers these expenses.

Q 52. How is the premium to be paid calculated under Declaration policy ?

On the basis of sum insured
On the basis of damage caused
On the basis of risk involved
On the basis of property
On the basis of cost of replacement

UnAttempted

CORRECT ANSWER:

On the basis of sum insured

Explanation:

The policy is issued for certain minimum SI & the insured has to declare the monthly SI of
the stocks which are seasonal in nature. At the end of the policy period, refund of premium
is granted subject to minimum 50% retention of premium.

Q 53. Services of _________ are used to assess property losses.

Investigator
Underwriter
TPA
 Claim technician
Surveyor and loss assessor

UnAttempted

CORRECT ANSWER:

Surveyor and loss assessor

Explanation:

Under Section 64UM of the Insurance Act, 1938, for property losses of Rs. 20,000 & above,
it is mandatory to appoint an independent loss assessor for assessment of loss.

These assessors are licensed by IRDA.

Q 54. The full form of MACT is _______ .

Major Accident Claim Tribunal
Motor & Aviation Claim Tribunal
Maximum Action Core Team
Motor Accident Claim Tribunal
Motor accident Cause tribunal

UnAttempted

CORRECT ANSWER:

Motor Accident Claim Tribunal

Explanation:

Third party claims are being dealt by MACT which awards the compensation to the victims
of motor vehicles accidents.

Q 55. What is the maximum weekly amount which can be claimed under the
temporary total disablement benefit of a PA policy?
Rs 3000
Rs 4000
Rs 5000
Rs 8000
Rs 10000

UnAttempted

CORRECT ANSWER:

Rs 3000
 Explanation:

Weekly payment on account of Temporary Total Disablement (TTD) is paid @ 1% of the

capital sum insured subject to a maximum of Rs 3000 per week for 100 weeks irrespective
of the policy SI.

Q 56. The fourth phase of customer service comprise of __________ .

Actual preparation of the policy and other documents
Customer satisfaction
Dealing with customers demand
Dealing with problems of customers
Pre sales service

UnAttempted

CORRECT ANSWER:

Dealing with problems of customers

Explanation:

Having served the customer by accepting the risk, issuing the policy documents, dealing
with the customers demand, it is now the time to sort out the problems that are being faced
by the customers.

Q 57. The Janta Personal Accident (JPA) policy contracts are for _______.
Annual basis
Long term basis
Annual or long term basis
Agreement basis
Schedule basis

UnAttempted

CORRECT ANSWER:

Annual or long term basis

Explanation:

JPA is issued to any person irrespective of sex & occupation. The policy can be issued on
annual or long term (2 to 5 yrs. with discount in premium) basis.
Q 58. The companies should review the rates frequently in light of changing claims
experience in _______.
Classes of risks
Continuous classes of risk
Sudden classes of risks
General classes of risks
Various classes of risks

UnAttempted

CORRECT ANSWER:

Various classes of risks

Explanation:

The profitability of insurers depends upon proper pricing (underwriting) based upon claims
experience. It is therefore essential that the companies must review the ever changing
claims experience in various classes of business.

Q 59. On what is the cover of stop loss treaty is based on ?

Claims ratio
Sum insured
Premium
Loss amount
Size of loss

UnAttempted

CORRECT ANSWER:

Claims ratio

Explanation:

Stop Loss covers are related to the total amount of claims in a year over and above a
particular limit or Loss Ratio.

Reinsurance may be related to single loss amount per risk or per event. Stop loss are
related to total amount of claims in a year over & above a particular limit or loss ratio. For
an example, when an insurer agrees to 65% claim ratio, reinsurer would step in for the
balance claim ratio up to his limit.
Q 60. What is the maximum amount of sum insured under Janta Personal Accident
policy ?
Rs. 25000
Rs. 50000
Rs. 75000
Rs. 100000
Rs. 150000

UnAttempted

CORRECT ANSWER:

Rs. 100000

Explanation:

The minimum SI under the JPA is Rs 25000 & the maximum SI per person per annum can be
Rs 100000 as per the scheme.

Q 61. The Insurance Policy is a formal document which provides ______ of the
contract of insurance.
Intimation
Facts
Information
Details
Evidence

UnAttempted

CORRECT ANSWER:

Evidence

Explanation:

Insurance is a contract between two different parties. The terms & conditions of the
contract is evidenced through the legal document enforceable at law i.e. the Insurance
Policy.

Q 62. What are the broad functions of Tariff advisory committee ?

Regulate share values
Regulate market rates
Regulate policy rates
Regulate claim value
Regulate the premium rates
 UnAttempted

CORRECT ANSWER:

Regulate the premium rates

Explanation:

Tariff Advisory Committee (TAC) in India - controls and regulates the rates, advantages,
terms and conditions that may be offered by insurers in respect of Indian General
Insurance Business relating to Fire, Marine (Hull), Motor, Engineering & Workmen
Compensation.

Q 63. Settlement of claims is one of the important functions in an ________.

Service organization
Insurance organization
NGO
Industrial organization
Government organization

UnAttempted

CORRECT ANSWER:

Insurance organization

Explanation:

Insurers are in the business of taking risk at a cost. Cost is the premium to be paid by the
insured and the risk is paying the claims for the subject matter when the same is damaged/
destroyed by the insured peril. None of the other stated options fits the role of insurance
organization.

Q 64. The natural peril covered under a standard fire policy is______.
Storm
Riot & strike
Malicious damage
Aircraft damage
Explosion

UnAttempted

CORRECT ANSWER:

Storm
 Explanation:

Natural perils are the losses which are beyond the capabilities of any human being. Storm
cannot be caused by humans whereas rest of the perils is man-made perils caused by
human interventions.

Q 65. What is the primary source of income for an insurer?

Bonus
Remuneration
Commission
Premium
Discount in premium

UnAttempted

CORRECT ANSWER:

Premium

Explanation:

Income & expenditure are two sides of any business. Insurance business is no exception.
Income of an insurance company is derived from the premium collected from the proposers
who becomes insured after the issue of the insurance policy.

Q 66. Self ignition damage is covered under which standard policy ?

Personal accident
Motor package
Fire
Marine hull
Machinery loss of profit

UnAttempted

CORRECT ANSWER:

Motor package

Explanation:

Self-ignition is an original cover under the motor policy. This peril covers loss or damage to
the vehicle by fire, explosion, self-ignition or lightening.
Q 67. The amount above the ‘per loss’ will be recovered from the _______.
Reinsurer
Agent
Policy holder
Company
Insurer

UnAttempted

CORRECT ANSWER:

Reinsurer

Explanation:

The insurer enters into an agreement with a reinsurer to protect loss as incurred by him.
The reinsurer agrees to pay an amount of loss over & above a certain predetermined
amount of any loss.

Q 68. Under which head are the General Reserves categorized ?

Liabilities
Contingency reserve
Capital reserves
Reserve and surplus
Loans and advances

UnAttempted

CORRECT ANSWER:

Liabilities

Explanation:

The general reserves are the retained earnings of a company which are kept aside out of
company's profits to meet future (known or unknown) obligations (Liabilities).

Q 69. The premium payable for Public Liability Act policy is _______ including ERF.
1.5 times
2 times
2.5 times
3 times
4 times

UnAttempted

CORRECT ANSWER:
 2 times

Explanation:

Under Public Liability policy drafted as per The Public Liability Insurance Act, 1991, an
amount equal to the premium is to be paid to the insurer to by the insured. This amount is
insured’s contribution to the Environment Relief Fund set up by the Govt. to be utilized
under certain circumstances.

Q 70. The margin for commission built into the rates should be that level at which the
______ will be paid.
Commission
Premium
Claim
Cash
Bonus

UnAttempted

CORRECT ANSWER:

Premium

Explanation:

Premium consists of cost of taking the risk & management expenses. The management
expenses include all costs including commission.

Q 71. Refrigeration plant insurance covers indemnity of _________.

Factories
Shops
Cold storage
Warehouses
Godown

UnAttempted

CORRECT ANSWER:

Cold storage

Explanation:

This policy is issued under engineering insurance for covering the losses form the stocks
stored in the cold storage. This policy is popularly known as Deterioration of Stock policy.
Q 72. Obtaining detailed information of clients business is the duty of _______.
Sales agents
Indirect brokers
Business agents
Direct brokers
Traders

UnAttempted

CORRECT ANSWER:

Direct brokers

Explanation:

Direct brokers came into the insurance market after IRDA (Insurance Brokers) Regulations,
2002. They act as an intermediary between insured &the insurers to obtain client’s detailed
information for insurance.

Q 73. Premium is the consideration paid by the insured under _______ of insurance.
Body
Terms
Agreement
Contract
Framework

UnAttempted

CORRECT ANSWER:

Contract

Explanation:

The payment of premium (consideration) & subsequent issuing the insurance policy
concludes the contract of insurance. This may be known as offer & acceptance under the
Contract Act, 1872.

Q 74. Whose functions are identification and acceptance of risk based on factual
information, evaluation and acceptance?
Underwriters
Agents
Surveyors
Brokers
Claim technicians
 UnAttempted

CORRECT ANSWER:

Underwriters

Explanation:

An insurance underwriter decides if applications for insurance cover (risks) should be

accepted and, if so, what the terms and conditions of that acceptance are. He will assess
the risk of insuring a person or company according to the likelihood of a claim being made.

Q 75. _________ is not considered as a Consignment Note ?

Airway bill
Goods receipt
Bill of exchange
Bill of lading
Railway receipt

UnAttempted

CORRECT ANSWER:

Bill of exchange

Explanation:

Bill of exchange is a document guaranteeing the payment of a specific amount of money.

All other documents are related to good receipt issued by respective carries of the goods.

Q 76. Warehousing facilities and Loading/unloading conditions are things to be

looked in a ______.
Lift insurance
Public liability insurance
Store insurance
Hull insurance
Cargo insurance

UnAttempted

CORRECT ANSWER:

Cargo insurance

Explanation:
 Cargo refers to the goods carried upon vessels of any description. Conditions pertaining to
loading, unloading & warehousing are vital underwriting parameters. The condition of port
of origin & port of discharge also plays vital role in deciding the premium rates for cargo
insurance under marine insurance policies. These are equally important for inland transit or
import & exports.

Q 77. Which policy is issued to business premises covering stock in trade, goods
held in trust or on Commission and cash in locked safe?
Bhavishya Arogya policy
Mediclaim insurance policy
Liability only policy
Burglary insurance policy
Universal health insurance policy

UnAttempted

CORRECT ANSWER:

Burglary insurance policy

Explanation:

The burglary insurance policy is meant for business premises. It covers damages to the
premises (immovable assets like fixtures & fittings) caused by the burglars & burglary of
cash in safe (immovable assets).

Q 78. Who issues the Bill of Lading ?

Road transporters
Shipping companies
Couriers
Railways
Airlines

UnAttempted

CORRECT ANSWER:

Shipping companies

Explanation:

The consignment note issued by the shipping companies is known as Bill of Lading. All
others have their respective name i.e. goods receipt for road transport, airway bill for
airlines etc.
Q 79. _______ policies provide cover against loss of profits (machinery) insurance /
advance loss of Profits?
Marine insurance
Fire insurance
Engineering insurance
Burglary insurance
Floating insurance

UnAttempted

CORRECT ANSWER:

Engineering insurance

Explanation:

Loss of Profit (machinery or MLOP) & Advance Loss of Profit (ALOP) are the subject matter
of Engineering Insurance. Under these policies, the claim would only be payable if the
losses are payable under other engineering policies.

Q 80. In case of fire and marine cargo insurance, the percentage of premium that the
insurer is required to provide for as reserves is _____ .
25%
30%
50%
75%
100%

UnAttempted

CORRECT ANSWER:

50%

Explanation:

As per Section 64V (1) of the Insurance Act, 1938, for fire & marine cargo the reserve to be
kept is 50%.

Q 81. What do 'Reserves' refer to in insurance accounting ?

Estimate for future liabilities
Funds for future expansions
Funds available for investments
Invested funds
Funds for future dividends

UnAttempted
 CORRECT ANSWER:

Estimate for future liabilities

Explanation:

Insurance industry operations involve the costs which are uncertain and delayed. Such
costs can only be estimated & reserve has to be kept for such future liabilities.

Q 82. Which policy gives indemnity to the insured in respect of his/her legal liability to
pay compensation to his/ her employees who sustain personal injury by
accident ?
Compulsory public liability policy
Legal liability policy
Workmen’s compensation policy
Professional indemnities policy
Public liability policy

UnAttempted

CORRECT ANSWER:

Workmen’s compensation policy

Explanation:

The legal liabilities of an insured towards his workers are covered under The Workmen’s
Compensation Policy. All other policies referred above covers the legal liabilities of third
parties other than workers.

Q 83. Risk premium is calculated on the basis of ________.

Number of people insured
Average loss ratio
Profit ratios
Number of vehicles insured
Average life of property

UnAttempted

CORRECT ANSWER:

Average loss ratio

Explanation:

The loss ratio is the difference between the ratios of premiums paid to
an insurance company and the claims settled by the company. The loss ratio is the total
 losses paid by an insurance company in the form of claims.

The premium calculation principle is one of the main objectives of study for actuaries.
There seems to be full agreement among the leading theoreticians in the field that the
insurance premium should reflect both the expected claims and certain loadings.

Q 84. ILU stands for _______.

Institute of London universities
Institute of London underwriters
Institute of London undertakers
Institute of London UNICEF
Institute of London unified

UnAttempted

CORRECT ANSWER:

Institute of London underwriters

Explanation:

For import/ export policies under marine cargo insurance, the risk coverage’s are defined
under the Institute Cargo Clauses which are drafted by Institute of London underwriters.

Q 85. What does the insurer incorporates in order to reduce physical hazard ?
Appropriate rules
Appropriate agreements
Appropriate contracts
Appropriate clauses
Appropriate certificate

UnAttempted

CORRECT ANSWER:

Appropriate clauses

Explanation:

Appropriate clauses serve the purpose of risk management thereby reducing the loss
potential of any given risk. The clauses restrict the coverage/ payment of any loss.
Q 86. Policy under Group Health insurance scheme can be accepted in _________.
EMI
Debentures
Loans
Mortgages
Installments

UnAttempted

CORRECT ANSWER:

Installments

Explanation:

The group health insurance policies are issued to corporates etc. where the premium is
usually very substantial. Insurers offer the policy to such insured’s by offering the premium
payment in installments.

Q 87. What is the cause of Hit and Run accidents ?

Marathon Runners
Pedestrians
Watercraft
Motor vehicles
Cycles

UnAttempted

CORRECT ANSWER:

Motor vehicles

Explanation:

Where the vehicle after an accident ran away & in spite of the reasonable efforts by the
police authorities, the vehicle remains untraced, the event is known as Hit & Run. This
event has to be covered under all motor policies due to provisions of Section 163 of The
Motor Vehicles Act, 1988.

Q 88. In which of these insurance is cashless facility available?

Motor insurance
Aviation insurance
Hull insurance
Cargo insurance
Fire insurance
 UnAttempted

CORRECT ANSWER:

Motor insurance

Explanation:

Motor insurance & health insurance are top selling products of any Non-life insurers. Both
products constitute the largest share of insurer’s portfolio. The competition & loss control
measures, prompted the insurers to offer cashless service for these products.

Q 89. The Balance Sheet of companies represent ________ .

Company position
Legal status of the company
Company status
Debt position of the company
Financial position of the company

UnAttempted

CORRECT ANSWER:

Financial position of the company

Explanation:

The purpose of the balance sheet is to provide an idea of a company’s financial position. It
does so by outlining the total assets that a company owns and any amounts that it owes to
lenders or banks, for example, as well as the amount of equity.

Q 90. A businessman has the following policies covering stocks: Policy A for 800000;
Policy B for 1000000; Policy C for 200000. The stocks to the tune of 200000 are
damaged due to rioters. What is the claim payable under policy A?
Rs 200000
Rs 100000
Rs 80000
Rs 65000
NIL

UnAttempted

CORRECT ANSWER:

Rs 80000
 Explanation:

As per the Contribution Clause, each company would pay claim in the same proportion
in which insurance has been taken by the customer.

Total Insurance taken is for Rs. 8 lakhs plus Rs. 10 lakhs plus Rs. 2 lakhs = Rs. 20 Lacs.

Share of Company A = 8 Lacs / 20 Lacs = 40%

Hence, company A would pay 40% of the loss amount i.e. 40% of Rs 2 lakhs = Rs. 80000

Q 91. From the time the machinery leaves the _______ , the Marine cum Erection
insurance starts.
Forehead
Supervisors
Factory inspectors
Production head
Manufacturer

UnAttempted

CORRECT ANSWER:

Manufacturer

Explanation:

This is an Erection All Risk (EAR) policy with the transportation risk is also granted. It is
therefore called Marine-Cum-Erection (MEC) policy. The cover is granted of erection of
machinery & starts right from the time the machinery leaves the manufacturer’s warehouse
& continues until the project is over.

Q 92. The amount of relief fixed under Compulsory Public Liability policy in case of
death and Permanent total liability is ___________ ,
Rs 20000
Rs 25000
Rs 30000
Rs 35000
Rs 50000

UnAttempted

CORRECT ANSWER:

Rs 25000
 Explanation:

This policy arises out of The Public Liability Insurance Act, 1991. The act imposes a liability
based upon the principle of ‘No Fault’. Any undertaking handling hazardous substance has
to compulsorily insure & pay according to the act for death or injury to any person (other
than workmen) & damage to the property.

Q 93. With whom has the Premium rates, Policy terms and Underwriting guidelines
have to be filed ?
Insurance regulator
RBI
Controller of insurance
Policy holders association
Finance ministry

UnAttempted

CORRECT ANSWER:

Insurance regulator

Explanation:

Insurance regulator i.e. IRDA is the sole authority on all aspects of insurance business in
India. The IRDA is the watch dog of insurance activities working under the Finance ministry.

Q 94. The long term insurance policies are suitable for _________.
Industrial customers
SME’s customers
Multinational customers
Retail customers
Commercial customers

UnAttempted

CORRECT ANSWER:

Retail customers

Explanation:

The risk associated with retail customer does not undergo major changes for a long time.
For an example in case of fire, coverage required for a dwelling (residential building), the
risk/ valuation more or less remains constant, long term policy can be issued. The long
term means where is policy is sought for more than 12 months (as under JPA long term
policy).
Q 95. It is possible to provide the reserve for each policy separately by calculating
_______.
Number of period
Number of days
Number of year
Number of weeks
Number of months

UnAttempted

CORRECT ANSWER:

Number of days

Explanation:

Although the policies are issued for 1 year, certain policies like dwellings under fire
insurance can be issued for more than one year. The reserve therefore has to be provided
keeping number of years the policy would be effective.

Q 96. Under Compulsory Public Liability policy in case of permanent partial

disablement, the amount of relief fixed is _______ .
Rs 10000
Rs 12500
Rs 15000
Rs 12000
Rs 14500

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 97. Speculative risk is also known as _______ .

Company risk
 Trade risk
Insured risk
Declined risk
Business risk

UnAttempted

CORRECT ANSWER:

Trade risk

Explanation:

Q 98. Which commission entertains disputes, where goods / services and the
compensation claimed exceeds Rs 100 Lakhs ?
Central Commission
National Commission
State Commission
District forum
Local Commission

UnAttempted

CORRECT ANSWER:

National Commission

Explanation:

As per consumer Protection Act 1986, National Commission is the final authority who has
the jurisdiction to settle dispute above 100 lacs.

Q 99. Fire insurance for residential properties is classified as _______.

Storage risk
Manufacturing risk
Simple risk
Hazardous risk
Institution risk

UnAttempted

CORRECT ANSWER:

Simple risk
 Explanation:

Residential properties fall under the categories of dwellings. Dwellings are considered to
be simple risk as compared to other complex risks such as Industrial All Risk or FLOP (Fire
Loss Of Profit Insurance).

Q 100. What is issued by the insurers a month in advance before the date of expiry ?
Warning
Declaration
Renewal notice
Notice
Order

UnAttempted

CORRECT ANSWER:

Renewal notice

Explanation:

Renewal notice solicits the payment of premium for renewal of the expiring policy. It’s done
in advance enabling insured to arrange for the payment. It is although not obligatory, but it
is considered to be a healthy business practice to remind about the expiring policy as a
matter of courtesy.

Out of 100 questions 100 are un attempted.