Which of the following clauses is useful for insuring antiques?
Reinstatement Clause
"New for Old " Clause
Limit of Liability Clause
Agreed Value Clause
Which of the following is most often included in a Householder's Insurance policy?
"New for Old" Clause
Deductible Clause
Franchise Clause
What of the following is defined as "the right of one person (the insurer) to take over the rights of another (the insured)"?
Subrogation
Sublet
Right of Lien
Assignment
Which of the following is used to make sure that an insured person does not get more than an indemnity by claiming for the same loss or damage from both the insurance policy and another source or sources?
Under common law, the insurer must ________ the insured before they can exercise subrogation rights.
insure
inform
indemnify
None of the others
With regards to subrogation, if there is any surplus after the insurers have recovered their money, the ________ is entitles to keep it.
insurer
insured
split equality amongst the insurer and the insured
Subrogation is applicable only to:
Contracts of Indemnity
Motor Insurance
Reinsurance
Marine Cargo Insurance
Which of the following situations is also known as ex-gratia payment?
A payment made by an insurer outside the terms of the policy
The premiums an insurer pays to a reinsurer
The premiums forfeited by the insurer due to fraud by the insured
The payment a third party (in the case of subrogation) is obligated to pay
Subrogation rights most frequently arise in:
tort
Contract
reinsurance
All of the others
Waiver of subrogation rights most frequently arise in:
Life insurance
Motor insurance
All of ther others
In common law, which requirement must be satisfied before contribution arises?
two or more policies of indemnity must exist
the policies must cover a common interest
the policies must be liable for the loss
Which of the following clauses when added to a policy will cause the policy not to contribute if there is another insurance in force?
Non-Contribution Clause
Cancel-out Clause
Common Interest Clause
Basis of Contribution Clause
Which of the following is NOT a category of peril?
Insured Peril
Pecuniary Peril
Unnamed Peril
Exluded Peril
Which of the following is TRUE regarding a Fire Insurance policy which excludes damage from explosion?
A falling tree branch lands on some electrical circuitry and causes an electrical fault, which in turns starts a fire. The fire damage is covered.
The fire reaches a gas cylinder and causes an explosion. The resulting damage is not covered.
The falling tree branch damages part of the property. The resulting damage is not covered.
All of the others.
Suppose a Householder's Insurance policy covers a direct physical loss to a property resulting from fire or lightning. A fire occurred in a bedroom of a house. Fireman sprayed the other rooms to keep the fire from spreading. The water causes damage to the furniture, antiques, etc. In such a case:
the entire loss is covered, including the water damage
the entire loss is covered, excluding the water damage
nothing is covered
Duties of an Agent to the Principal include all the following except:
Obey the principal's instruction under all circumstances
Act in good faith towards the principal
Account for money received on behalf of the principal
Exercise proper care and skill
An agent should not delegate his duties except where the delegation:
is expressly consented by the principal
is to be implied from the circumstances of the case
relates to some purely administrative act for which no special skill or discretion is required
Agents must act within the scope of their authority which can be classified into all of the following except:
actual authority
implied authority
temporary authority
apparent authority
Which of the following authorities is exercised when an insurance agent collects the premium from the insured?
express authority
customary authority
Which of the following authorities is exercised when a broker negotiates with the insurer on the insured's behalf without given authority?
Apparent authority is also known as:
Express authority
Implied authority
Usual authority
Ostensible authority
Where an agent has acted outside the scope of what is permitted in the terms of the agency agreement, and the principal accepts the acts as having been done on his behalf, this is called:
Waiver
Estoppel
Ratification
The following are rules in relation to a valid ratification, except
The agent who performed the act must have purported to act on behalf of the principal
The principal should only ratify the affected parts of the contract
The client must have believed that he was dealing with an authorized agent of the principal
The agent must have represented himself as an agent of the principal
The voluntary relinquishment of a known legal right is known as:
Retification
Leonard has a motor insurance policy and its premium is due. He calls the insurance agent and asks for an extension of time. The insurance agent assured him that the insurer has a 10 day grace period for overdue premiums. If Leonard has an accident during the grace period, the insurer cannot deny liability, because of the law of ________, designed to prevent persons from changing their minds to the detriment of another party.
Indemnity
If an agent incurs liability or pays out money in the performance as an agent, he has a right to be indemnified by the principal except when:
his act is not authorized by the principal
he is in breach of his duties as an agent
he incurs money or expends money solely as a result of his own fault
Which of the following describes the Right of Lien?
An agent may have the right to retain goods belonging to his principal if there is any money outstanding in his favour
A principal may have the right to revoke an agent's authority
An agent may have the right of renouncing the agency
An agent may have the right to act as a middle-man between the principal and a third-party
An agency may be terminated by which of the following acts?
Completion of the business or specific act
Agreement between parties to the contract
Death of either the principal or the agent
Which of the following is NOT true with regards to the role of agent during claims?
The agent must give prompt advice to the insured of the claims requirement
The agent must be careful not to give any indication of acceptance or rejection of the claim
The agent cannot inform the insurer of any potential claims without consent from the insured
The agent must make clear to the insured that the insurer's investigation and processing of a claim is not prejudiced
Which of the following is NOT true about the description or definition of a contract?
An agreement enforceable by law
A legally binding agreement between two or more parties
An agreement involving a promise or a set of promises to perform one or more acts whereby the promise must be made by all parties of the contract
An agreement governing the obligations of the insurer and the rights of the insured.
Which of the following are elements for a contract to be valid? 1) Intention to create legal ralationship 2) Offer and acceptance 3) Consideration 4) Capacity to contract
1) and 2)
1) and 4)
1), 2), and 4)
All of them
Which of the following is NOT a characteristic of group insurance?
There is a master contract
There is an experience rating
There is no eligibility requirements
It is cost effective
The amount returned by an insurer to a group policyholder when the claims experienced of a particular group has been more favourable than anticipated is known as the:
Excess
Experience refund
Voluntary benefits
No-claim discount
Which of the following is an advantage of a voluntary group insurance compared to a compulsory one?
Ease of administration since there is no payroll deduction to monitor
Lower cost owing to less administrative work involved
Generates interest and appreciation from the participating employees in the insurance plan
Greater pooling effect or risks
Third party policies do not require insurable interest between the proposer and insured.
What is a Cover Note?
A document highlighting any additional coverage added to the policy
A temporary cover before an insurance policy is issued
The cover page of an insuranc policy
A note from the insurer to the insured
Certificate of Insurance are normally used in all the following except:
Work injury compensation
Marine insurance
The following is true of a cover note except:
It is valid only for a certain period
It is subject to the usual terms and conditions of the insurance policy for that class of business
It is subject to any further special clauses (if applicable)
It is subject to the insurance policy being in force and issued
The certificate of insurance for motor insurance must be kept by the ______ at all times.
Traffic Police
Government
Motorist
Insurer
In marine insurance, insureds have regular shipments of cargo and it is sometimes inconvenient for the insurer to issue an insurance policy giving the details of all the classes for each and every shipment. What sort of Master policy is issued to solve this problem?
Broad cover
Miscellaneous cover
Open cover
All cover
What is the 'contra proferetum' rule?
The policy must be issued within the fixed period of time as promised by the insurer
It is a rule in marine insurance that the policy must cover broad definitions of the quality of the vessels, basis of valuation and limits, together with a rating structure
The responsibility of the insured to make sufficient copies of a Certificate of Insurance for display at all business premises
The person drawing up a legal document is responsible for any defects in it and cannot profit from such defects
What is the Preamble Clause?
This clause sets out in details, precisely what the policy is insuring
This clause states the parties to the contract
This clause states that it is the insured's responsibility to establish that a loss falls within the policy contract
This clause sets of the exlucsions or exceptions in a policy document
Which type of warranties do not appear in the policy but are understood to automatically apply in the contract of insurance?
Express Warranties
Implied Warranties
Both Express Warranties and Implied Warranties
The statement "In witness whereof, this Policy has been signed by and on behalf of the Company", is known is:
Attestation clause
Express Warranty
Implied Warranty
Endorsement
Conditions precedent to liability are conditions which must be fulfilled:
before the contract can become valid
if the contract is to continue once it becomes binding
before the insured is legally entitled to recover under the contract
An insured has a policy with Insurer X for $75,000 and Insurer Y for $25,000. A loss arises to the sum of S$40,000, under the Independent Liability method of calculation, how much should Insurer X pay for?
$10,000
$15,385
$24,615
$30,000
An insured has a policy with Insurer X for $75,000 and Insurer Y for $25,000. A loss arises to the sum of S$40,000, under the Respective Sums Insured, how much should Insurer Y pay for?
An agreement whereby one or more reinsurers automatically accept all reinsurance which falls within pre-detemined limits is known as:
Facultative reinsurance
Treaty reinsurance
proportional reinsurance
Non-proportional reinsurance
An insurer insures a risk on a sum insured of $10M and his retention on his risk is $2M. It reinsures the risk under a Facultative Excess of Loss cover of $8M in excess of $2M. If the loss is $5M, what is payable by the reinsurer?
Nothing
$2M
$3M
$5M
An insurer insures a risk on a sum insured of $10M and his retention on this risk is $2M. It reinsures the risk under a Facultative Excess of Loss cover of $8M in excess of $2M. If the loss is $1M, what is payable by the insurer?
$1M
$6M
