Ic s01 Motor Insurance

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
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QUESTIONS BASED ON
‘MOTOR INSURANCE’

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AND SURVEY AND LOSS ASSESSMENT
QUESTIONS BASED ON ‘MOTOR INSURANCE’

Question 1 What are those claims called in which policy particulars are not available despite all
efforts by insurance company who has been served the summons?
(a) Orphan claims
(b) Lost claims
(c) Void claims
(d) Disabled claims
(e) Paternal claims
Correct Answer Orphan claims

Answer Explanation Orphan claims are those claims where policy particulars are not available despite all
efforts by insurance company who has been served the summons. A separate list is
maintained for such claims & provisions are made in the claims register. 1/3rd of the
provision are added to the figure of outstanding motor claims in the insurer’s final
accounts.
Question 2 Methods of detecting underwriting fraud in early stage include _________ .

1. Seizure memo
2. 64 VB Compliance Certificate
3. Investigation report
4. Copy of cover produced by the applicant in MACT in support of the claim
(a) 1 and 3
(b) 2 and 4
(c) 1,2 and 3
(d) 1, 2 and 4
(e) All 1,2,3 and 4
Correct Answer All 1,2,3 and 4

Answer Explanation The methods of detection of underwriting fraud in early stage includes the
investigation report, the seizure memo, 64 VB Compliance Certificate & the copy of
cover produced by the applicant in MACT in support of the claim. It may also include
if there is any complaint received in the office.
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Question 3 Although each case has to be weighed upon its own individual merit but an award
may be decided based on a similar case, to avoid criticism and dissatisfaction in
general community. This is as per _______ .
(a) Principle of uniformity
(b) Principle of binding precedent
(c) Principle of predictability
(d) Principle of utmost good faith
(e) Principle of faithful representation
Correct Answer Principle of uniformity

Answer Explanation Principle of uniformity means that each case has to be weighed upon its own
individual merit. Such awards may be decided based on a similar case, to avoid
criticism and dissatisfaction in general community.
Question 4 Which are the three broad classifications of Motor Vehicles for the purpose of
insurance?
(a) Motorcycles, Private cars and Rickshaws
(b) Bicycles, Motorcycles and Rickshaws
(c) Private cars, Motorcycles and Commercial vehicles
(d) Private cars, Motorcycles and Tricycles
(e) Commercial vehicles, Private cars and Bicycles
Correct Answer Private cars, Motorcycles and Commercial vehicles

Answer Explanation The motor vehicles have been classified under 3 categories i.e. Private Cars, Motor
Cycles / Scooters & Commercial Vehicles. Commercial Vehicles are further classified
under various classes depending upon its usages.
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Question 5 Which of these statement(s) is/are true with regards to display of premium?
1. Own Damage and liability components of premium are required to be rounded off
to nearest rupee.
2. All permissible loadings on / discounts are required to be displayed separately
3. The own damage and liability component may be clubbed together in package
policy schedule
(a) Both 1 and 2
(b) Both 2 and 3
(c) Both 1 and 3
(d) Only 3
(e) All 1, 2 and 3
Correct Answer Both 1 and 2

Answer Explanation As per GR 13 with regards to display of premium, all permissible loadings on /
discounts from tariff rates are required to be displayed separately in policy schedule
& the Own Damage and liability components of premium are required to be rounded
off to the nearest rupee.
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Question 6 Describe CASH LESS insurance?

(a) It’s an agreement by the insurers with preferred garages to repair the damaged
insured vehicles by charging for the inadmissible costs only and admissible claim costs
are paid by insurance company directly to the repairer
(b) It’s an agreement by the insurers with preferred garages to repair the damaged
insured vehicles by charging both for the inadmissible costs and admissible costs both
which paid by insurance company directly to the repairer
(c) It’s an agreement by the insurers with preferred garages to repair the damaged
insured vehicles by bearing on their own by the owner the inadmissible costs and
admissible costs both which paid by insurance company directly to the repairer
(d) It’s an agreement by the insurers with preferred garages to repair the damaged
are paid by insurance company directly to the repairer from the Solatium Fund
(e) None of the above
Correct Answer It’s an agreement by the insurers with preferred garages to repair the damaged
Answer Explanation Insurers enter into agreement with preferred garages and authorized service centers
to repair the insured vehicles by charging for the inadmissible costs only and the
admissible claim costs are directly to the repairer.
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Question 7 Kishan has purchased a new car and wants to avail motor insurance for it. While
buying the insurance cover, Kishan has to disclose details like the model, make, value,
type etc. in complete details to the insurer. This is according to which principle of
insurance?
(a) Principle of indemnity
(b) Principle of Utmost Good Faith
(c) Principle of trust
(d) Principle of contribution
(e) Principle of proximate cause
Correct Answer Principle of Utmost Good Faith

Answer Explanation The principle of Utmost Good Faith is also known as Uberrimae Fides. It means that
both the policyholder and the insurer need to disclose all material and relevant
information to each other before commencement of the contract.
Question 8 Which of the following is NOT a code of conduct for a surveyor, prescribed by the
Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and
Code of Conduct Regulations) 2000 Chapter IV?
(a) To behave ethically and with integrity implying fairness and truthfulness
(b) To work as per the instructions of insurer company and so that the claims approval is
minimum
(c) To provide free professional training
(d) To strive for objectivity
(e) To carry out his work with due diligence, care and skill
Correct Answer To work as per the instructions of insurer company and so that the claims approval is
minimum
Answer Explanation Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and
Code of Conduct Regulations) 2000 Chapter IV gives code of conduct gives code of
conduct, is not required to work as per the instructions of insurer company. He is an
independent professional.
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Question 9 What is Cash Less insurance?

(a) It’s an agreement by the insurers with preferred garages to repair the damaged
insured vehicles by charging both for the inadmissible costs and admissible costs both
which paid by insurance company directly to the repairer
(b) It’s an agreement by the insurers with preferred garages to repair the damaged
(c) It’s an agreement by the insurers with preferred garages to repair the damaged
are paid by insurance company directly to the repairer from the Solatium Fund
(d) It’s an agreement by the insurers with preferred garages to repair the damaged
insured vehicles by bearing on their own by the owner the inadmissible costs and
admissible costs both which paid by insurance company directly to the repairer
Correct Answer It’s an agreement by the insurers with preferred garages to repair the damaged
Answer Explanation Insurers enter into agreement with preferred garages and authorized service centers
to repair the insured vehicles by charging for the inadmissible costs only and the
admissible claim costs are directly to the repairer.
Question 10 On which of the following factors is the rate of premium in motor insurance
dependent upon? 1. Profits 2. Expenses 3. Commission 4. Claims cost
(a) Only 1,2 and 4
(b) Only 2,3 and 4
(c) Only 1 and 2
(d) Only 3 and 4
(e) All 1, 2, 3 and 4
Correct Answer All 1, 2, 3 and 4

Answer Explanation The overall premium must be equal to expected cost of all claims + Expenses +
required profit margin for all risks underwritten. Expenses include commission also.
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Question 11 MACT passes an order to issue an award to the concerned parties. Once an order is
passed, within what time frame should the award be settled?
(a) Within 5 days from the date of award
(b) Within 15 days from the date of award
(c) Within 21 days from the date of award
(d) Within 30 days from the date of award
(e) Within 45 days from the date of award
Correct Answer Within 30 days from the date of award

Answer Explanation As per Section 168 (3) of the M V Act, the award needs to be settled within 30 days
from the date of the award.
Question 12 Sumeet had purchased a car 8 months back and it met with an accident. What
depreciation will be deducted for parts replaced due to the accident?
(a) 2.50%
(b) 5%
(c) 10%
(d) 15%
(e) 20%
Correct Answer 5%
Answer Explanation In case age of vehicle is exceeding 6 months but not exceeding 1 year, there will 5 %
depreciation that will be deducted for parts replaced following an accident. However,
there would be 50% depreciation for rubber parts.
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Question 13 Abhishek has taken a learner's driving license for a two wheeler. What does the
Motor Vehicle Act 1988 state with respect to driving a two wheeler by a learner’s
license holder?
(a) Abhishek cannot ride himself in public places unless accompanied by a pillion rider
who holds a permanent driver’s license
(b) Abhishek cannot ride himself unless accompanied by a pillion rider who holds a
permanent driver’s license
(c) Abhishek can ride the two wheeler himself but if there is a pillion rider than the
pillion rider should have a permanent driver’s license
(d) Abhishek can ride himself and if he has a pillion rider, than it is not necessary for the
pillion rider to hold a permanent driver’s license
(e) To drive the two wheeler, Abhishek needs to obtain a no objection letter from local
RTO to drive in public areas
Correct Answer Abhishek cannot ride himself unless accompanied by a pillion rider who holds a
Answer Explanation The position of law under the MV Act 1988 with regards to driving a two wheeler by a
learner’s license holder is that Abhishek cannot ride himself unless accompanied by a
pillion rider who holds a permanent driver’s license.
Question 14 With respect to 'Principle of Subrogation', identify the correct option below-
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(a) The right of subrogation is not applicable to policies which are contracts of indemnity
(b) The purpose of subrogation is to make sure that the assured will not profit out of a
loss for which he has been indemnified by the insurers
(c) The purpose of subrogation is to make sure that the assured will not profit out of a
loss for which he has been not been indemnified by the insurers
(d) Subrogation applies only on occurrence of loss in motor insurance
(e) Subrogation applies only at the time of concluding a contract of insurance in motor
insurance
Correct Answer The purpose of subrogation is to make sure that the assured will not profit out of a
loss for which he has been indemnified by the insurers
Answer Explanation The insured is entitled for the amount of loss suffered by him after an incident
covered under the policy. Any recovery from Third Party would be to the benefit of
insurers having paid the loss. It enables that that the assured shall not make a profit
out of a loss in respect of which he has been indemnified by the insurers.
Question 15 What is Insured Declared Value - IDV?
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(a) It is the sum insured agreed at the commencement of policy between insurer and the
insured, based on the market price of old vehicle at the time of claim subject to
depreciation, as provided in the Motor policy document
(b) It is the sum insured agreed at the time of claim between insurer and the insured,
based on the market value of the vehicle
(c) It is the sum insured agreed at the time of claim between insurer and the insured, as
per manufacturer’s price of the new vehicle subject to depreciation at agreed rates as
provided in the Motor policy document
(d) It is the sum insured agreed at the time of claim between insurer and the insured, as
per the market value of the vehicle at that point of time, less appropriate
depreciation as agreed at the commencement of insurance
(e) It is the sum insured agreed at the time of commencement of policy, between insurer
and the insured, as per the manufacturer’s price of the new vehicle subject to
depreciation at agreed rates as provided in the Motor policy document
Correct Answer It is the sum insured agreed at the time of commencement of policy, between insurer
and the insured, as per the manufacturer’s price of the new vehicle subject to
depreciation at agreed rates as provided in the Motor policy document
Answer Explanation IDV is fixed on the basis of the manufacturer's listed selling price at the
commencement of insurance/renewal and is adjusted for depreciation as per given
rates.
Question 16 Mr. Dev gave a cheque to the insurance company for his motor insurance premium.
However, due to lack of funds, the cheque got dishonored. In reaction to this, the
insurance company sends notices to the insured and the RTO informing about the
cancellation of the policy. What is the legal position of the insurer in such a case?
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(a) The insurer has to pay in public interest

(b) The insurer cannot cancel the policy as it has to give the insured a second chance to
pay
(c) The insurer is only 50% liable
(d) The insurer is liable to pay in public interest but can recover damages from Mr. Dev
(e) The insurer is not liable to pay at all
Correct Answer The insurer is not liable to pay at all

Answer Explanation Where due to lack of funds the cheque was dishonored & the insurance company sent
notices to insured and RTO about the cancellation of policy, the Supreme Court held
that the fact of dishonor of cheque is within the knowledge of the insured& no special
notice to the insured is required. The liability of the Insurance Company ceases.
Question 17 _____ is the transfer of rights from the insured to the insurer when the loss or
damage to the vehicle is caused by negligence of another person.
(a) Indemnity
(b) Right of abandonment
(c) Right of claiming Total Loss
(d) Subrogation
(e) Right of refusal to pay claim
Correct Answer Subrogation

Answer Explanation Subrogation is the transfer of rights from the insured to the insurer when the loss or
damage to the vehicle is caused by negligence of another person. Insurers' exercise
the rights to recover the loss from the person responsible under common law. The
doctrine of subrogation operates only after the claim is paid.
Question 18 A permit has to be taken for _______ .
1. Private cars
2. Transport vehicles
3. Vehicles of Central Government
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(a) Only 1
(b) Only 2
(c) Only 1 and 3
(d) Only 2 and 3
(e) All 1,2 and 3
Correct Answer Only 2

Answer Explanation Section 66 (1) of the Motor Vehicle Act, 1988 mandates for the necessity of permit for
transport vehicles.
Question 19 Which of the following factor(s) is/are considered for computing the indemnity for
claims for repair of the vehicle?
1. Usage of vehicle
2. Nature of parts
3. Age of the parts
(a) Only 1
(b) Only 2
(c) Only 1 and 2
(d) Only 2 and 3
(e) All 1,2 and 3
Correct Answer Only 2 and 3

Answer Explanation According to GR 9: Depreciation on parts has to be deducted according to nature and
age of the parts being allowed for replacement by the surveyor. The indemnity would
be based upon applying appropriate depreciation.
Question 20 Mr. Mohit unfortunately met with a car accident and died. The following damage
claims were submitted by his family. Which of these will NOT be payable?
1. Expenses for medical treatment prior to death
2. Loss of dependency
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3. Expenses on funeral
(a) All 1, 2 and 3

(b) Only 1
(c) Only 3
(d) Both 1 and 2 only
(e) None of them
Correct Answer None of them

Answer Explanation In case of death, all of the above i.e. Loss of dependency, Funeral expenses
& Expenses for medical treatment prior to death, will be payable.
Question 21 The rate of premium in motor insurance is dependent upon ______.

1. Commission 2. Expenses 3. Claims Costs
(a) Only 3
(b) Only 1 and 3
(c) Only 1 and 2
(d) Only 2 and 3
(e) All 1, 2 and 3
Correct Answer All 1, 2 and 3

Answer Explanation Rating factors are those factors which have direct impact on outgo of insurers. It
includes Claims cost, Commission and Expenses.
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Question 22 What is the 'Roadside Assistance Service' provided under a motor insurance policy ?
(a) Roadside assistance service is a service that provides necessary tracking and GPS
services to the insured
(b) Roadside assistance service is a service that provides necessary help in case when the
insured is met with an accident
(c) Roadside assistance service is a service that provides snacks and beverages to insured
at different points of their journey
(d) Roadside assistance service is a service that provides necessary resting points for the
insured drivers and passengers
(e) Roadside assistance service is a service that provides help in case an insured is
stranded on the road when his car breaks down
Correct Answer Roadside assistance service is a service that provides help in case an insured is
stranded on the road when his car breaks down
Answer Explanation Roadside assistance is a service that provides necessary help in case an insured is
stranded on the road when his car breaks down.
Question 23 Mr. Jay has taken a double insurance for his motor car from different offices of the
same insurer - What is the provision of law in this situation?
(a) Jay can take maximum 3 insurance policies for the same vehicle
(b) The policy starting later is to be cancelled by the insurer and 100% refund of premium
is allowed by the insurer
(c) The policy starting later is to be cancelled by the insurer and this premium can be
used to extend the validity of the existing policy
(d) The policy commencing later is to be cancelled by the insurer and 50% refund of
premium is allowed by the insurer
(e) Jay can have as many insurance policies he wants for the same vehicle
Correct Answer The policy starting later is to be cancelled by the insurer and 100% refund of premium
is allowed by the insurer
Answer Explanation As per GR 24, in case of double insurance in respect of motor car from different
offices of the same insurers, the policy commencing later is to be cancelled by the
insurer and 100% refund of premium thereon is to be allowed by the insurer.
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Question 24 Under which circumstances the contract of motor insurance does permits the insurer
to avoid its liability?
1. The Driving License is INVALID
2. The motor vehicle has remained unidentified
3. The Vehicle was used for the purpose other than the purpose for which it was
insured
(a) Only 1
(b) Only 3
(c) Both 1 and 2
(d) Both 1 and 3
(e) All 1, 2 and 3

Answer Explanation Under Section 149 (2), the contract of motor insurance permits the insurer to avoid its
liability in certain circumstances. The circumstances being: 1. ‘Vehicle used for the
purpose other than the purpose for which it was insured’ and 2. ‘Driving license is
invalid’.
Question 25 In India, motor insurance has to be compulsorily taken as per Section _____ of the
Motor Vehicles Act 1988.
(a) 110
(b) 125
(c) 138
(d) 146
(e) 160
Correct Answer 146

Answer Explanation
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Question 26 The Indian motor insurance laws are primarily based on the laws of which country?
(a) Greece
(b) USA
(c) France
(d) England
(e) Germany
Correct Answer England

Answer Explanation Motor insurance laws in India primarily are based on the laws of UK or England.
Question 27 The Own Damage premium for private cars is based on –

1. The Cubic Capacity of the Car
2. Zone of registration of the vehicle
3. Age of the driver
4. Age of the vehicle
(a) Only 1, 2 and 3
(b) Only 2, 3 and 4
(c) Only 1, 2 and 4
(d) Only 1
(e) All 1, 2 3 and 4
Correct Answer Only 1, 2 and 4

Answer Explanation The premium charged as per Motor Tariff consists of includes -
1. Zone of registration of vehicles - Zone 1 Major cities and Zone 2 Rest of India
2. Cubic capacity of car - Below 100cc, 100 to 1500cc and over 1500cc
3. Age of vehicle - Below 5 years, 5 to 10 years and over 10 years
Age of the driver as of now is not material for rating purposes.
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Question 28 The 'No claim bonus' is applicable to which of the following policies? 1. Private Car
Policy 2. Road risk: Internal risks 3. Road transit risks 4. Motor trade policies
(a) Only 1
(b) Only 2
(c) Only 3
(d) Only 2 and 4
(e) All 1,2,3 and 4

Answer Explanation No claim bonus is applicable to own damage section of the Package policy for Private
cars. No-claim bonus cannot be provided for Motor trade policies, Road transit risks
and Road risk Internal risks policies.
Question 29 What are the conditions for getting a learners license for driving a transport vehicle?
1. The minimum age should be 18 years
2. The minimum age should be 20 years
3. The Person should hold a driving license to drive a light motor vehicle for at least
one year
(a) Only 1
(b) Only 2
(c) Only 1 and 3
(d) Only 2 and 3
(e) Only 3

Answer Explanation For obtaining a transport vehicle learners license, the age should be minimum 20
years and person holds a driving license to drive a light motor vehicle for at least one
year.
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Question 30 When a motor insurance policy is cancelled, the refund of premium is subject to –
1. Retention of some minimum premium as prescribed under India Motor Tariff
2. Retention of 50% of the total premium paid due to such cancellation by the insurer
3. There should be no claims under the policy
(a) Only 2
(b) Only 1 and 2
(c) Only 1 and 3
(d) Only 2 and 3
(e) All 1, 2 and 3

Answer Explanation As per GR 24, refund of premium on cancellation of motor insurance policy will be
subject to:
- No claim under policy,
- Retention of minimum premium prescribed under India Motor Tariff.
Question 31 A liability only policy does NOT cover _____ .

1. Any damage to vehicle insured
2. Third party liability in case of death
3. Third party liability for injuries to body
(a) Only 1
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1,2 and 3

Answer Explanation The liability only policy covers only the legal liabilities associated with the use of the
vehicle in respect of third party bodily injuries & death. It does not cover damages to
the vehicle.
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Question 32 Which are the fundamental principles on which motor insurance contracts are based
on?
(a) Utmost good faith, Proximate clause, Subrogation, Insurable interest, Indemnity and
Contribution
(b) Utmost good faith, Faithfulness, Proximate clause, Reliability, Indemnity and
Contribution
(c) Utmost good faith, Accessibility, Proximate clause, Insurable interest, Subrogation
and Profit
(d) Utmost good faith, Faithfulness, Reliability, Insurable interest, Accessibility and Profit
(e) Utmost good faith, Faithfulness , Reliability, Insurable interest, Indemnity and
Contribution
Correct Answer Utmost good faith, Proximate clause, Subrogation, Insurable interest, Indemnity and
Contribution
Answer Explanation Utmost good faith, Proximate clause, Insurable interest, Indemnity, Subrogation and
Contribution are the fundamental principles that motor insurance (all general
insurance contracts) contracts are based upon.
Question 33 Identify the feature(s) in a ‘file and use guidelines’ laid down by IRDA for Motor OD
policies –
1. Proper data and sound technical justification should be the base of pricing
2. All insurers have to comply with the rights of IRDAI (Protection of Policy Holders
interest) Regulation 2002
3. The wordings used in insurance literature should be in simple language
(a) Only 3
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1,2 and 3
Correct Answer All 1,2 and 3

Answer Explanation IRDA - the insurance regulator has laid down certain guidance under File & Use. There
are in all 11 guidelines which include the above three.
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Question 34 No Claim Bonus will be available to the insured, only if he can produce evidence that
he was entitled to No claim bonus from his previous insurance company. This
evidence can be in the form of:
1. Written declaration from the insured
2. Renewal notice
3. Letter from previous insurer confirming No claim bonus
(a) Only 1
(b) Only 2
(c) Both 1 and 2 only
(e) All 1, 2 and 3

Answer Explanation The No Claim Bonus will be available to the insured, provided he can produce
evidence that he was entitled to No claim bonus from his previous insurance
company. Evidence can be in form of: ‘A renewal notice’, ‘A letter from previous
insurer confirming NCB’ and ‘A written declaration from the insured’.
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Question 35 An allegation of negligence may be rebutted by which of the following defenses that
is which of these can be valid defenses against negligence in a motor accident?
1. Inevitable accident i.e. accident which happens despite reasonable care
2. Act of God
3. The injury has been caused to a person who has deliberately placed himself in a
situation of imminent danger to himself
(a) Only 1
(b) Only 3
(c) Only 1 and 2
(d) Only 2 and 3
(e) All 1,2 and 3

Answer Explanation Act of God, inevitable accident which occurs despite reasonable care and if the injury
is caused to a person who has deliberately placed himself in a situation of imminent
danger to himself, all are valid defenses against negligence’s in a motor accident.
Question 36 An individual who commits a wrongful act that causes injury to another and for which
the law provides a legal right to seek relief a defendant in a civil tort action is known
as a ________.
(a) Culprit
(b) Convicted
(c) Plaintiff
(d) Tortfeasor
(e) Accused
Correct Answer Tortfeasor

Answer Explanation Tortfeasor is the individual, company, or entity that is found to have committed
wrongdoing. Tortfeasors are said to have committed a civil offense – a tort - rather
than a criminal offense.
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Question 37 For which of the following items of personal injury, claims are awarded in a motor
insurance?
1. Loss of beauty due to dis-figuration
2. Medical and incidental expenses
3. Shortened expectancy of life
(a) All 1, 2 and 3
(b) Both 1 and 2
(c) Both 2 and 3
(d) Only 1
(e) Only 2

Answer Explanation Loss of beauty due to disfiguration, Medical and incidental expenses & Shortened life
expectancy are the heads under which personal injury claims are awarded in a motor
insurance claim.
Question 38 ______ is not covered under road side assistance service.

(a) Fuel supply
(b) Minor repairs
(c) Towing services in case of riots
(d) Battery jump start
(e) Message relay
Correct Answer Towing services in case of riots

Answer Explanation Towing in case of riots is not covered under road side assistance service offered. All
other assistance is a part of under road side assistance service.
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Question 39 No claim bonus is earned only on the Own damage section of the Package policy
covering all classes of vehicle except Motor trade policies, _______ .
(a) Road Transit Risks
(b) Road Risks
(c) Internal Risks
(d) All of the above
Correct Answer All of the above

Answer Explanation No claim bonus is earned only on the Own damage section of the Package policy
covering all classes of vehicle except Motor trade policies, Road Transit Risks ; Road
Risks ; Internal Risks.
Question 40 Analytics relies on the simultaneous application of ________ to quantify

performance.
1. Operation research 2. Statistics 3. Computer programming
(a) Only 2
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3

Answer Explanation Analytics relies on the simultaneous application of Statistics, Computer programming
and Operation research to quantify performance and often favors data visualisation
to communicate insight.
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Question 41 ________ risks are not within the scope of Indian Motors Tariff Act 2002.
1. Risks of motor body manufacturers
2. Risks of petrol filling stations
3. Risks of motor body builders
(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Both 2 and 3
(e) All 1, 2 and 3

Answer Explanation The erstwhile India Motor Tariff 2002 terms & conditions are still in force. However,
the risks of ‘motor body builders’ and ‘petrol filling stations’ are not within the scope
of Indian Motors Tariff Act 2002.
Question 42 A 24 year old girl Reena meets with a road accident and gets an ugly scar on her face.
Which of the following damages will be payable to her? 1. Loss of marital prospects 2.
Future unhappiness 3. Future medical expenses
(a) Only 3
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3

Answer Explanation Reena would be entitled to get compensation for - Future unhappiness and loss of
amenities, Future medical expenses & Loss of marital prospects. However, these
would depend upon gravity of the injuries.
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Question 43 The minimum age for obtaining a valid driving license as per the Motor Vehicles Act
1988 is ______.
(a) 16 years
(b) 18 years
(c) 21 years
(d) 23 years
(e) 24 years
Correct Answer 18 years

Answer Explanation The minimum age under the Motor Vehicles Act 1988 for obtaining a valid driving
license is 18 years. However, driving a particular type of vehicle, the age varies e.g. 20
years for transport vehicle in any public place.
Question 44 What is meant by NO CLAIM BONUS?

(a) It is a discount on premium of the Own Damage portion of vehicle when a policy is
renewed, subject to insured has not made any claim during the last policy period of
one year
(b) It increase the cover provided by insurance company when a policy is renewed,
provided insured has not made any claim during the last policy period of one year
(c) It is a discount on premium of the Own Damage portion of vehicle when a policy is
renewed for five or more vehicles
(d) It is a discount on premium of the Own Damage portion and third party cover of
vehicle when a policy is renewed, subject to insured has not made any claim during
the last policy period of one year
Correct Answer It is a discount on premium of the Own Damage portion of vehicle when a policy is
one year
Answer Explanation NCB is uniform for all types of vehicles. No Claim Bonus is a discount on premium of
the Own Damage portion of vehicle when a policy is renewed, subject to insured has
not made any claim during the last policy period of one year.
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Question 45 The principle of _____________ states that ‘BUYER BEWARE'.

(a) Principle of Indemnity
(b) Principle of Buycare
(c) Principle of Caveat Emptor
(d) Principle of Utmost Good faith
(e) Principle of Uniformity
Correct Answer Principle of Caveat Emptor

Answer Explanation 'Caveat Emptor' is a Latin term that means "let the buyer beware." As per
the principle of Caveat Emptor, the buyer alone is responsible for checking the quality
and suitability of goods before a purchase is made.
Question 46 A person holding a driving license can get his license revoked by the licensing
authority if _____.
1. He is under the age of 18 years
2. He is a regular / habitual offender
3. He has used a motor vehicle in a cognizable offence
(a) Only 2
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3

Answer Explanation A licensing authority can disqualify a person from holding driving license or revoke
the same person if he is involved in any of the three irregularities mentioned above.
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Question 47 When the owner of a vehicle submits the summons to insurance company then a
________ should be also obtained from him along with driving license and other
documents of the vehicle.
(a) FIR
(b) Vakalatnama
(c) Panchnama
(d) Written statement
(e) Affidavit
Correct Answer Vakalatnama

Answer Explanation "Vakalatnama", is a document, by which the party filing the case authorizes the
Advocate to represent on their behalf.
Question 48 Some type of non-life insurers are not allowed to participate in the pooling of risk of
third party covers. Identify-
1. Health Insurers 2. Motor Insurers 3. Re-insurers
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 3
(e) All 1,2 and 3

Answer Explanation Under Section 110G of the Insurance Act, all non-life insurers are required to
participate in the pooling arrangement for motor insurance including reinsurance.
The health insurers are not required/ allowed to participate in the pooling of risk.
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Question 49 The rules of third party cover under the Motor Vehicle Act 1988 are applicable to
which of the following vehicles?
1. Vehicles which are owned by the Central Government
2. Vehicles which are owned by the State Transport
3. Commercial vehicles
(a) Only 1
(b) Only 3
(c) Both 1 and 2
(d) Both 2 and 3
(e) All 1, 2 and 3

Answer Explanation The rules of third party cover under the MV Act 1988 are applicable to commercial
vehicles but the same is not required in case of vehicles owned by Central
Government & owned by State Transport Authority. They are exempted to have the
Third Party insurance under certain circumstances.
Question 50 _________ is defined as the active and efficient cause that sets in motion a train of
events which brings about a result, without the intervention of any force started and
working actively from a new and independent source.
(a) Proximate cause
(b) Uberrima Fidae
(c) Subrogation
(d) Concurrent cause
(e) Particular average
Correct Answer Proximate cause

Answer Explanation Proximate cause is an active and efficient cause that sets in motion a train of events
which brings about a result, without the intervention of any force started and
working actively from a new and independent source. The doctrine also applies on
Third Party Claims also.
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Question 51 Mohit was planning to go outstation for a year and he has given a written declaration
that his car will not be in use for one year. He wishes to cover his vehicle for theft for
this one year period without liability only cover. What is the minimum premium he
will have to pay to get this cover?
(a) 0.25% of IDV
(b) 0.50% of IDV
(c) 0.75% of IDV
(d) 1% of IDV
(e) 2% of IDV
Correct Answer 0.50% of IDV

Answer Explanation As per GR 45 A, when a written declaration is made that the motor car will not be in
use for next one year, the premium for theft cover without liability only cover would
be 0.50% of IDV (Insured Declared Value)
Question 52 'Tachographs' which are installed in the vehicles provide what type of information?
1. The braking pattern of the vehicle
2. The distance covered by the vehicle
3. The stoppages done by the vehicle
(a) Only 1
(b) Only 2
(c) Both 1 and 3
(d) Both 2 and 3
(e) All 1, 2 and 3

Answer Explanation A tachograph is a device fitted to a vehicle that automatically records its speed and
distance, together with the driver's activity selected from a choice of modes. The
drive mode is activated automatically when the vehicle is in motion. It thus, can
record ‘Distance travelled’, ‘Stoppages’ and ‘Braking pattern’.
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Question 53 The surveyor will assess the claim on a Constructive Total Loss (CTL) basis under
which of these circumstance(s) ?
(a) When a surveyor finds that a vehicle is beyond repairs
(b) When a surveyor finds that the cost of loss repair exceeds 50% of the IDV
(c) When a surveyor finds that the cost of loss repair exceeds 75 % of the IDV
(d) Both 1 and 3

Answer Explanation Whenever a surveyor finds that a vehicle is either beyond repairs or the cost of loss
repair exceeds 75 % of the IDV (Insured Declared Value), he assesses the claim on
a Constructive Total Loss (CTL) basis.
In insurance claims, a total loss write-off is a situation where the lost value, repair
cost or salvage cost of a damaged property exceeds its insured value. Such a loss may
be an "actual total loss" or a "constructive total loss".
Question 54 Good Deed Insurance Company Ltd. is a reputed insurance company giving the
promised service levels to its customers and also is prompt in claim dispute redressal.
Which principle of customer service is the insurance company following?
(a) Good Faith
(b) Responsiveness
(c) Reliability
(d) Assurance
(e) Empathy
Correct Answer Reliability

Answer Explanation The basic elements of customer service include - Assurance, Empathy,
Reasonableness, Reliability, Responsiveness, Tangibility & Problem solving.
Reliability addresses customer’s needs, providing promised service levels and
promptness in claim dispute redresses among his many other needs.
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Question 55 ______ is the discovery and communication of meaningful patterns in data, especially
valuable areas which are rich with recorded information.
(a) Artificial Intelligence
(b) Analytics
(c) Statistics
(d) Cloud computing
(e) Business intelligence
Correct Answer Analytics

Answer Explanation
Question 56 Rajeev is 25 years old and wishes to apply for a driving licence to drive his personal
car. What is the maximum validity under the MV Act 1988 for such a licensing?
(a) 10 years
(b) 20 years
(c) 22.5 years
(d) 25 years
(e) 30 years
Correct Answer 20 years

Answer Explanation Under the Motors Vehicle Act 1988 the driving licenses for cars are issued for a period
of 20 years or till the person attains the age of 50 years whichever is earlier.
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Question 57 Mohit insures a motor vehicle that does not belong to him. Which principal of
insurance has been breached?
(a) Principle of Uberrimae fides
(b) Principle of Insurable interest
(c) Principle of Indemnity
(d) Principle of Utmost good faith
(e) Principle of Subrogation
Correct Answer Principle of Insurable interest

Answer Explanation Contract of motor insurance is governed by various doctrines. Insurable interest is the
insured’s legal right to insure. A person has an insurable interest in something when
loss of or damage to that thing would cause the person to suffer a financial or other
kind of loss. Normally, insurable interest is established by ownership, possession, or
direct relationship.
Principal of ‘insurable interest’ is breached if a person insures motor vehicle that does
not belong to him.
Question 58 _______ damages are awarded by insurance companies in a third party liability.
1. Legal Costs 2. Incurred Damages 3. Interest Component
(a) Only 1
(b) Only 3
(c) Only 1 and 2
(d) Only 1 and 3
(e) All 1, 2 and 3

Answer Explanation Insurance companies have to pay for ‘Incurred damages, Interest component and
Legal costs’ by way of compensation in case of a third party liability claim.
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Question 59 Which of these documents are provided to independent Automobile Surveyors to

assess the cause and extent of the loss?
1. Claim form 2. Copy of policy 3. Repairers estimate
(a) Only 1
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3

Answer Explanation Independent automobile surveyors are assigned the task of assessing the cause and
extent of loss where the loss is more than Rs. 20,000/- (as per insurance Act 1938).
They are provided with a copy of the policy, the claim form and the repairer's
estimate.
They inspect the damaged vehicle, discuss the cost of repair or replacement with the
repairer and submit their survey report.
Question 60 ______ is / are included in the Proposal Form with regards to the proposer.
1. The name of the proposer
2. The occupation of the proposer
3. The address of the proposer
(a) Only 1
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3

Answer Explanation The proposal form is the basis of motor insurance contract. It contains all necessary
information for proper evaluation & rating of the risk & includes proposer’s name, his
address & occupation among various other details.
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Question 61 Madhukar had a road accident and he suffered simple injuries. Which of these claim
for damages will NOT be payable by the insurance company?
1. Fixed Global Compensation
2. Cost of X-ray taken
3. Loss of Dependency
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 3
(e) All 1, 2 and 3

Answer Explanation In case of simple injuries, loss of dependency is not a factor to reckon with. Only cost
of X ray & fixed global compensation is payable.
Loss of dependency is considered in case of death.
Question 62 Describe the principle of ‘NO FAULT’?

(a) The claimant needs to get a statement from traffic police certifying that he is at no
fault. Liability is automatic
(b) The claimant need not prove negligence on part of the motorist. Liability arises once
it is established
(c) The claimant need not prove negligence on part of the motorist. Liability is automatic
(d) The claimant needs to be at no fault in all cases
Correct Answer The claimant need not prove negligence on part of the motorist. Liability is automatic
Answer Explanation Under the principle of ‘No Fault’, the claimant need not prove negligence on the part
of the motorist. Liability is automatic.
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Question 63 A vehicle has been classified as class 'A-1’ as per the categorization of vehicles into
classes. Which of the below vehicle is this class 'A-1' vehicle?
(a) Private Carriers
(b) Public Carriers
(c) Trailers
(d) MISC & SP Type
(e) Public passenger service vehicles for hire or reward
Correct Answer Public Carriers

Answer Explanation The motor vehicles have been classified under 3 categories i.e. Private Cars, Motor
Cycles / Scooters & Commercial Vehicles. Commercial Vehicles are further classified
under various classes depending upon its usages. Class 'A-1' pertains to Public
Carriers.
Question 64 Identify the correct statement(s) with respect to motor insurance industry in India :
1. Motor insurers are allowed to file add-on covers over and above the erstwhile tariff
covers in Motor OD
2. Motor insurers are not allowed to cancel existing insurance products to replace
them by the revised products
3. Motor insurers are not permitted to file variations in deductibles from those
prescribed in Motor OD tariff
(a) Only 2
(b) Only 1 and 2
(c) Only 1 and 3
(d) Only 2 and 3
(e) All 1, 2 and 3

Answer Explanation IRDAI has withdrawn the India Motor Tariff w.e.f. 1st April 2009. However the insurers
are permitted to file add-on covers over and above the erstwhile tariff covers in
Motor OD but they are not permitted to cancel/withdraw existing insurance products
to replace them by the revised products. In addition, insurers are permitted to file
variations in deductibles from those prescribed in Motor OD tariff.
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Question 65 A 'Package Policy' covers _______ .

1. Third party liability in case of death
2. Damage to vehicle insured
3. Third party liability for bodily injuries
(a) Only 1 and 3
(b) Only 2
(c) Only 1 and 2
(d) Only 2 and 3
(e) All 1, 2 and 3

Answer Explanation The package policy under motor insurance covers loss or damage to the insured
vehicle in addition to the third party liabilities for death & injuries to the third parties.
Question 66 Under 'Own Damage Section' of Private Car insurance policy, which of the following
risk(s) is /are covered?
1. Nuclear Explosion 2. Earthquake 3. War
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 2
(e) Both 2 and 3

Answer Explanation The own damage section for two wheelers and four wheelers under motor package
policy provides cover against earthquake risk (fire & shock damage). However,
‘Nuclear explosion and ‘War’ is excluded.
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Question 67 Identify the correct statement(s) –

1. In case of an accident, if the vehicle is totally beyond repairs and has to be
scrapped then the RC book with the keys will have to be sent to the registering
authority for cancellation
2. In case of an accident, a vehicle is treated as total loss when it is considered that its
economical repairs are not possible
3. In case of an accident, if a surveyor finds that a vehicle is either beyond repairs or
the cost of repairs exceeds 75% of the IDV, he assesses the claim on a CTL basis
(a) Only 1
(b) Only 3
(c) Only 1 and 2
(d) Only 2 and 3
(e) All 1, 2 and 3

Answer Explanation A vehicle is treated as total loss mainly when it is considered that its economical repairs
are not possible. Whenever a surveyor finds that a vehicle is either beyond repairs or the
cost of repairs exceeds 75% of the IDV, he assesses the claim on a CTL basis.
If the vehicle is beyond repairs and has to be scrapped the R.C. Book and the keys will
have to be returned to the Registering Authority for cancellation.
Question 68 Payment is made to the repairer of motor vehicle only after a _____ is received from
the insured that the vehicle has been repaired to his/her satisfaction.
(a) Confirmation letter
(b) Claims log register
(c) Claim form
(d) Satisfaction note
(e) OD Note
Correct Answer Satisfaction note
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Answer Explanation On receipt of final bill after completion of repairs and a satisfaction note or discharge
voucher from the insured that the vehicle has been repaired to his satisfaction,
payment is made to the repairer.
Question 69 When does the owner of a motor vehicle, by virtue of his title and possession, has an
insurable interest?
1. At the time of making a claim
2. At the time of taking insurance
3. At the time of renewal of policy
(a) Only 2
(b) Only 3
(e) All 1, 2 and 3

Answer Explanation The owner of a motor vehicle by virtue of his title and possession has an insurable
interest & the same must be existing throughout the ownership of the vehicle i.e. ‘At
the time of taking insurance’, At the time of claim’ and ‘At the time of renewal of
policy’.
Question 70 There are various factors which are considered for assessment of damages to
compensate the dependents. Which of these is NOT to be considered?
(a) Amount that the deceased would have contributed to the dependents during that
period
(b) Life expectancy of the deceased
(c) Life expectancy of the dependents
(d) Amount that the deceased would have earned during the remainder of his life
(e) Amount of income of the person who has caused the accident
Correct Answer Amount of income of the person who has caused the accident
Answer Explanation Amount that the deceased would have earned during the remainder of his life,
amount that he would have contributed to the dependents during that period, life
expectancy of the deceased and life expectancy of the dependents are considered as
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factors to be considered as a factor for assessment of damages to compensate the

dependents. The only factor which cannot be considered for assessment of damages
to compensate the dependents is amount of income of the person who has caused
the accident.
Question 71 As per India Motor Tariff, private cars are those which have a capacity of ____ .
(a) Below 1000 cc
(b) Between 1000 to 1500 cc
(c) Above 1500 cc
(d) All of the above
Correct Answer All of the above

Answer Explanation Private cars are classified in to 3 categories
1. Not exceeding 1000 cc
2. Exceeding 1000 cc but not exceeding 1500 cc
3. Exceeding 1500 cc
Question 72 If there is a grievous injury, then the assessment for the damages is made under
which of the following categories as per the permissible heads of assessment?
1. Third party damages
2. Loss of dependency
3. Compensation for suffering and pain
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 2 and 3
(e) All 1, 2 and 3
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Answer Explanation If there is a grievous injury, then the assessment for the damages is made under -
Compensation for suffering and pain only. Rest of the factors are not relevant for
injury cases.
Question 73 What should be considered in fixing the IDV of a motor vehicle?

1. The adjustment for depreciation
2. The listed selling price of the car by manufacturer
3. The IDV of accessories and side cars fitted
(a) Only 2
(b) All 1, 2 and 3
(c) Only 1 and 2
(d) Only 2 and 3
(e) Only 1 and 3

Answer Explanation IDV (Insured's Declared Value) is the amount for which the vehicle is insured &
deemed to be the Sum Insured for the policy period. It includes: Manufacturers listed
selling price of a car, IDV of side cars and accessories fitted and is Adjustment for
depreciation.
Question 74 What is the basis of motor insurance contract?

(a) Premium receipt
(b) Policy document
(c) Certificate of insurance
(d) Proposal form
(e) Operative Clause
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Correct Answer Proposal form

Answer Explanation Proposal form is the basis of motor insurance contract. It contains all necessary
information for proper evaluation & rating of the risk.
Question 75 Describe No Claim Bonus -

(a) It is a discount on premium of the Own Damage portion and third party cover of
vehicle when a policy is renewed, subject to insured has not made any claim during
the last policy period of one year
(b) It is a discount on premium of the Own Damage portion of vehicle when a policy is
one year
(c) It is a discount on premium of the Own Damage portion of vehicle when a policy is
renewed for five or more vehicles
(d) It increase the cover provided by insurance company when a policy is renewed,
provided insured has not made any claim during the last policy period of one year
Correct Answer It is a discount on premium of the Own Damage portion of vehicle when a policy is
one year
Answer Explanation NCB is uniform for all types of vehicles. No Claim Bonus is a discount on premium of
the Own Damage portion of vehicle when a policy is renewed, subject to insured has
not made any claim during the last policy period of one year.
Question 76 An example of a pecuniary loss is __________ .

(a) Damages for mental and physical shock
(b) Loss of marriage prospects
(c) Loss of conjugal happiness
(d) Discontinuance of any business
(e) Loss due to mental stress
Correct Answer Discontinuance of any business

Answer Explanation Pecuniary Damages are also known as ‘Special Damages’ and are designed to make
good the pecuniary loss (monetary loss). The same must be capable of being
calculated in terms of money. Discontinuance of any business is capable of being
calculated in terms of money is an example of pecuniary loss.
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(Loss of earning capacity may include incapacity to earn in future and also incapacity
in the labor market, loss on account of termination of service or discontinuation of
any trade, business or profession)
Question 77 Gaurav wanted to get his car insured so he approached XYZ Insurance Company. In
the process of filling up the proposal form, he did not mention an accident which
occurred recently due to his motor car. Which principle of insurance did he violate?
(a) Subrogation
(b) Indemnity
(c) Proximate cause
(d) Utmost good faith
(e) Insurable interest
Correct Answer Utmost good faith

Answer Explanation Contract of motor insurance is governed by the doctrine of ‘Uberrimae Fides’ i.e.
‘Utmost good faith’. It imposes a legal obligation on the proposer to disclose all
material fact to the insurer. By not disclosing an accident which occurred recently to
the motor car, principles of ‘Utmost good faith’ has been violated.
Question 78 As per the Motor Vehicles Act, 1988, the owner of a motor vehicle will register the
vehicle with which authority / agency?
(a) National Transport Authority
(b) Registering Transport Authority
(c) The State Government
(d) Insurance company
(e) The Authorized Car Dealer
Correct Answer Registering Transport Authority

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Answer Explanation The Motor vehicles Act, 1988 stipulates that the owner of a motor vehicle shall
arrange for the registration of the vehicle with the Registering Transport Authority.
There has to be an evidence of valid insurance for registration.
Question 79 What is the status of motor insurance being compulsory in India?

(a) Motor insurance is compulsory in India
(b) Motor insurance is not compulsory in India
(c) Motor insurance is voluntary in India
(d) Motor insurance is compulsory only for private motor vehicles
(e) Motor insurance is compulsory only for commercial motor vehicles
Correct Answer Motor insurance is compulsory in India

Answer Explanation Motor insurance compulsory in India for covering the Third Party liability as per M V
Act, 1988 for all vehicles running on public roads. It’s a punishable offence to drive
any vehicle on road without a mandatory TP cover.
Question 80 Before cancellation of insurance policy by the insurer, which of the following
conditions must be satisfied?
1. The original certificate of insurance is surrendered for cancellation
2. Minimum seven day’s notice is served before cancellation
3. The vehicle is insured elsewhere, at least for the liability cover
(a) Only 2
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3

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Answer Explanation All of the above conditions must be satisfied before cancellation of insurance policy
by the insurer.
Question 81 The buyer acquires an insurable interest on _______, as per the laws of motor
insurance.
1. On possession of the vehicle
2. On registering the vehicle in his name
3. On completion of the contract of sale
(a) Only 1
(b) Only 2
(c) Only 3
(d) Both 1 and 3
(e) All 1, 2 and 3

Answer Explanation As per the motor insurance laws, a buyer acquires insurable interest on completion of
contract of sale, though he may not be in possession of the vehicle.
Question 82 Whenever, a surveyor has to be appointed for assessing a loss / claim, it shall be so
done within _____ of the receipt of intimation from the insured.
(a) 24 hours
(b) 36 hours
(c) 48 hours
(d) 60 hours
(e) 72 hours
Correct Answer 72 hours
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Answer Explanation Whenever, a surveyor has to be appointed for assessing a loss / claim, it shall be so
done within 72 hours of the receipt of intimation from the insured.
Question 83 What is the agreement known which is between auto insurers, that in the event of an
accident, each insurance company will pay for the damage to the vehicle insured with
it, without attempting to establish blame for the accident.
(a) Cartel agreement
(b) Stop loss agreement
(c) Knock for knock agreement
(d) Tik Tok agreement
(e) Reinsurance agreement
Correct Answer Knock for knock agreement

Answer Explanation As per the 'Knock for knock' agreement, irrespective of who was negligent, provided
the damage is covered under the policy, the insurers covering the damage will not
exercise subrogation rights against the party involved in the accident. Instead, they
will indemnify their insured subject to the terms of policy.
The main benefit of this is that the insurers avoid intercompany litigation and thereby
save costs.
Question 84 Claims for death or disability due to negligence of the driver of a vehicle can be
claimed by which of the following persons?
1. Fare paying passengers
2. Pedestrians
3. Persons who are travelling in other vehicles
(a) Only 2
(b) Only 3
(c) Only 2 and 3
(d) Only 1 and 2
(e) All 1,2 and 3
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Answer Explanation Persons who are travelling in other vehicles, Pedestrians and Fare paying passengers
all can prefer claims for death or disability due to negligence of the driver of a vehicle.
Question 85 What is the significance of IDV in motor insurance ?

(a) IDV is the value which the insurer is ready to reimburse any time
(b) IDV is the recoverable value of the vehicle
(c) IDV is the replacement cost of the vehicle
(d) IDV is the amount for which the vehicle is insured
(e) IDV is the premium amount paid during the year
Correct Answer IDV is the amount for which the vehicle is insured
Answer Explanation Insured Declared Value - IDV is the amount for which the vehicle is insured which is
deemed to be the Sum Insured for the policy period.
Question 86 _______ is covered under third party liability.

1. Damage to own motor vehicle
2. Damage to other person’s property
3. Damage to other person’s vehicle
(a) Only 1
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3
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Answer Explanation There are two types of policies under motor insurance i.e. Liability only & Package
policy. The Package policy covers damage to own car in addition to Third Party
liability. Thus, under third party liability (Liability only), damage to other person’s
property & damage to other person’s vehicle is covered.
Question 87 Damage to third party property can also be insured under motor insurance. What can
such property comprise of?
1. Live stock 2. Vehicle 3. Building
(a) Only 3
(b) Only 2
(c) Only 1 and 2
(d) Only 2 and 3
(e) All 1,2 and 3

Answer Explanation Under motor insurance, damage to third party property can be insured. The property
comprises of vehicle, livestock & building. The owner is 1st party and the insurer
would be 2nd party. All other would be considered to be 3rd party. The term property
includes livestock, vehicle, building etc.
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Question 88 Rishi has taken a learner's driving license for a two-wheeler. What do the Motor
Vehicle Act 1988 state with respect to driving a two wheeler by a learner’s license
holder?
(a) Rishi cannot ride himself unless accompanied by a pillion rider who holds a
(b) Rishi can ride the two-wheeler himself but if there is a pillion rider than the pillion
rider should have a permanent driver’s license
(c) To drive the two-wheeler, Rishi needs to obtain a no objection letter from local RTO
to drive in public areas
(d) Rishi cannot ride himself in public places unless accompanied by a pillion rider who
holds a permanent driver’s license
(e) Rishi can ride himself and if he has a pillion rider, then it is not necessary for the
pillion rider to hold a permanent driver’s license
Correct Answer Rishi cannot ride himself unless accompanied by a pillion rider who holds a
Answer Explanation The position of law under the MV Act 1988 with regards to driving a two-wheeler by a
learner’s license holder is that Rishi cannot ride himself unless accompanied by a
pillion rider who holds a permanent driver’s license.
Question 89 Identify the cases in which compensation for loss of future unhappiness and loss of
amenities is awarded –
1. Loss of tooth
2. Loss of vision of one eye
3. Amputation of a limb
(a) Only 3
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3

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Answer Explanation The compensation for loss of future unhappiness and loss of amenities is awarded
depending upon the nature of lasting disability or disfigurement.
It could amputation of limb, loss of vision of one eye, total impairment of hearing
capacity of one ear, any ugly visible scar, mal-union of fractures or limping.
Question 90 The 'No claim bonus' is applicable to which of the following policies?
1. Private Car Policy
2. Road risk: Internal risks
3. Road transit risks
4. Motor trade policies
(a) Only 1
(b) Only 3
(e) All 1, 2, 3 and 4

Answer Explanation No claim bonus is applicable to own damage section of the Package policy for Private
cars. No-claim bonus cannot be provided for Motor trade policies, Road transit risks
and Road risk Internal risks policies.
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Question 91 In case of vehicles fitted with bi-fuel system such as Petrol/Diesel and CNG /LPG,
permitted by the concerned RTA, the CNG/LPG kit fitted to the vehicle can be insured
separately at an additional premium of ____.
(a) 4% on the value of such kit
(b) 4% of IDV
(c) 6% on the value of such kit
(d) 6% of IDV
(e) 8.5% on the value of such kit
Correct Answer 4% on the value of such kit

Answer Explanation In case of vehicles fitted with bi-fuel system such as Petrol/Diesel and CNG /LPG,
permitted by the concerned RTA, the CNG/LPG kit fitted to the vehicle is to be insured
separately at an additional premium @ 4% on the value of such kit to be specifically
declared by the insured in the proposal form and/or in a letter forming part of the
proposal form.
Where the vehicle is fitted with only CNG/ LPG engine or where the vehicle is fitted
with bi-fuel system referred above but the value of the CNG / LPG kit is not separately
available, reference is to be made to TAC for advice on rating of Own Damage cover.
An additional premium of Rs. 60/- per vehicle to be charged towards Liability Only
covers on account of CNG/ LPG system.
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Question 92 Principle of Insured Declared Value is applied to which of the following –

1. Theft claims 2. Total loss 3. Constructive total loss
(a) Only 2
(b) Only 1 and 2
(c) Only 2 and 3
(d) Only 1 and 3
(e) All 1, 2 and 3

Answer Explanation The principle of Insured Declared Value is applied to all i.e. Total loss Constructive
total loss and Theft claims because Insured Declared Value is the limit of liability &
claim has to be based upon Insured Declared Value.
Question 93 The EXCLUSIONS as prescribed under the 'own damage' section of an insurance policy
as per India Motor Tariff is /are _______.
1. Damage to tyres only
2. Electric or Mechanical breakdown
3. Breakages
(a) Only 2
(b) Both 2 and 3
(c) Both 1 and 2
(d) Both 1 and 3
(e) All 1, 2 and 3
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Answer Explanation ‘Electric or Mechanical breakdown’, ‘Breakages’ and ‘Damage to tyres only’ are
excluded under the own damage section of an insurance policy as per India Motor
Tariff. Damage to tyres is covered only if the vehicle is also damaged at the same
time.
Question 94 In case of third party claims, some frauds which take place includes frauds like –
1. Multiple cases
2. Conversion of non-road traffic accidents
3. Conversion of medical cases for wrongful gains
4. Frauds in road accidents
(a) 1, 2 and 4
(b) 2 and 3
(c) 2, 3 and 4
(d) 1 and 3
(e) All 1, 2, 3 and 4
Correct Answer All 1, 2, 3 and 4

Answer Explanation Conversion of non-road traffic accidents - Eg. Slipping from a tree buy claiming to
have injured in a road accident. Conversion of medical cases for wrongful gains Eg. -
Old permanent disability shown as arising out of road accident. Frauds in road
accidents - Eg. Substitution of uninsured vehicle by an insured vehicle. Multiple cases
- Eg. Multiple cases for same accident at different tribunals or places or time. These
are the types of frauds that take place in case of third party claims. They form the
highest amount of claims among all departments.
Question 95 The principles governing determination of compensation in injury disablement claims

are ________.
1. Principles of Utmost good faith
2. Principles of Uniformity
3. Principles of Assessability
(a) Only 1 and 2
(b) Only 1 and 3
(c) Only 2 and 3
(d) All 1, 2 and 3
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Answer Explanation There are three basic principles governing determination of compensation in injury
disablement claims i.e. Principles of Assessability, Principles of Uniformity & Principle
of Predictability. A principle of Utmost good faith is principle of insurance.
Question 96 As per the Principle of Indemnity, __________.

(a) the insured will be paid exactly the face amount of the policy
(b) the insured should be paid for the loss he has suffered and neither more nor less
(c) only the indemnity companies can issue contracts of indemnity
(d) the insurance premiums cannot be too high or too low
(e) the person who has caused the accident should pay for the loss due to the accident
Correct Answer the insured should be paid for the loss he has suffered and neither more nor less
Answer Explanation The principle of indemnity provides that the insured should be paid only for the loss
he or she suffered. This is to ensure that the insured does not make a profit out of
their loss.
Question 97 A cover for daily allowance is available when there is damage to the vehicle by an
insured peril and time is taken to repair the damages. Which of the following options
is INCORRECT for availing benefits under this cover?
(a) The repairs to be done at the insurers authorized repairers
(b) Claim for damage to windscreen or glass only is admissible for this cover
(c) The repair time should be more than 3 days
(d) The policy covers incurred costs for hired transport up to 15 days in case of TL/CTL
losses
(e) The coverage is for payment of costs incurred for hired transport up to 10 days
Correct Answer Claim for damage to windscreen or glass only is admissible for this cover
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Answer Explanation Daily allowance cover is available in the event of damage to the vehicle by an insured
peril wherein time is taken to repair the damages or recovery. This daily allowance
cover is not available in case of claims for damage to windscreen or glass because the
replacement of WS Glass requires a very shorter duration.
Question 98 ________ is NOT included in ‘File and Use guidelines’ as laid down by the insurance
regulator for Motor OD policies?
1. The pricing should be as per the tariff suggested by IRDAI
2. The language used should be simple for all insurance literature
3. Insurers can make fancy products with different wordings across different products
but they should be simple
(a) Only 1
(b) Only 1 and 2
(c) Only 1 and 3
(d) Only 2 and 3
(e) All 1, 2 and 3

Answer Explanation As per ‘file and use guidelines’ as laid down by the insurance regulator for Motor OD
policies, it is required that simple language to be used in all insurance literature & the
terms should be clearly defined simple & easy language. However, it is not expected
that the insurers may make fancy products with different wordings across different
products as far as they are simple. The pricing is not controlled/ suggested by IRDAI.
Question 99 The motor insurance would be issued under whose name if the car was purchased
under hire purchase arrangement?
(a) In the name of the hire purchase financer only
(b) In the name of the user of the motor vehicle only
(c) In the name of the hire purchase financer and later transferred by an affidavit
(d) In the name of the user incorporating financers interest clause
(e) In the name of the financer incorporating user interest clause
Correct Answer In the name of the user incorporating financers interest clause
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Answer Explanation When a motor car is purchased under hire purchase arrangement, the insurance
policy is issued in the name of the USER incorporating financers’ interest clause. This
is done to protect the financier’s interest in case of damage to the motor vehicle. It is
done by incorporating IMT 5 & 6 as per GR 19 & 20.
Question 100 Mr. Madan has purchased a new car. Due to some reason he forgot to take an
insurance cover when he purchased the car. Can he drive this car in public places
without an insurance cover?
(a) No, he cannot drive the car
(b) Yes, he can drive the car
(c) Yes, he can drive if he has a valid driving license
(d) Yes, he can drive but only in metro cities
(e) Yes, he can drive if all the proper purchase papers are with him
Correct Answer No, he cannot drive the car

Answer Explanation As per Motor Vehicle Act, 1988, it is not permissible to drive any vehicle without
insurance on public road where the public has a right of access. It’s a punishable
offence.
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IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

WWW.TEXT.IN AND SURVEY AND LOSS ASSESSMENT

WE WISH YOU ALL THE BEST!

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

QUESTIONS BASED ON ‘MOTOR INSURANCE’

Correct Answer Orphan claims

Question 2 Methods of detecting underwriting fraud in early stage include _________ .

Correct Answer All 1,2,3 and 4

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer Principle of uniformity

Correct Answer Private cars, Motorcycles and Commercial vehicles

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer Both 1 and 2

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Question 6 Describe CASH LESS insurance?

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer Principle of Utmost Good Faith

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Question 9 What is Cash Less insurance?

Correct Answer All 1, 2, 3 and 4

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer Within 30 days from the date of award

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Question 15 What is Insured Declared Value - IDV?

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

(a) The insurer has to pay in public interest

Correct Answer The insurer is not liable to pay at all

Correct Answer Subrogation

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer Only 2

Correct Answer Only 2 and 3

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

(a) All 1, 2 and 3

Correct Answer None of them

Question 21 The rate of premium in motor insurance is dependent upon ______.

Correct Answer All 1, 2 and 3

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer Both 1 and 3

Correct Answer 146

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer England

Question 27 The Own Damage premium for private cars is based on –

Correct Answer Only 1, 2 and 4

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer Only 1

Correct Answer Only 2 and 3

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer Only 1 and 3

Question 31 A liability only policy does NOT cover _____ .

Correct Answer Only 1

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer All 1,2 and 3

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer All 1, 2 and 3

IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

Correct Answer All 1,2 and 3