PCE PART B - SET D

Sample Questions with Answers

1. Fire and Accident insurance is normally contracted on ____________.

A annual basis
B long term basis
C half yearly basis
D monthly basis

2. Performance Bond involves the following 3 parties:

A Employer, contractor and surety
B Employer, contractor and agent
C Employer, surety and agent
D Contractor, surety and agent

3. Which of the following statement can’t be found in the proposal form of Personal Accident
Insurance?
A Name of proposer
B Age and occupation of proposer
C Management of factory
D Address of proposer

4. Mr.Samy bought a car insurance policy of RM20,000. He met with an accident and a claim
was paid out for RM10,000. What will happen to his insurance policy?
A the policy will have to be returned to the insurer before any claim payment can be made
B the balance of the sum insured shall be RM10,000
C no change in the sum insured
D he has to pay additional premium to reinstate the sum insured to RM20,000

5. Performance Bond and Contractor Bond is _______________.

A to give coverage for items supplied by the contractor
B to give guarantee to the principals on contractual performance to build and to supply
C to give guarantee to the insured for satisfactory performance of the contract
D as payment guarantee to the insured

6. Comprehensive Aviation Insurance Policy provides coverage to the insured which can be
summarized as providing coverage for_______________.
 A loss or damage to aircraft, legal liability to third party and passengers
B all liabilities which may occur at airport
C all liabilities which occur due to improper maintenance of aircraft
D all liabilities to passenger aircraft during and after take-off

7. Encik Ahmad is a lawyer and his friend Mr Lee is an architect. If you were approached by
them for coverage on liabilities that might result from professional negligence, what kind of
insurance coverage would you propose to them?
A Fidelity Guarantee
B Product Liability Insurance
C Professional Indemnity
D All Risks Insurance

8. Which type of policies provide coverage against any claims and damages due to products
manufactured?
A Personal Accident Policy
B All Risk Insurance
C Product Liability Insurance
D Health Insurance Policy

9. Employer’s legal liability for death or injuries to employees during course of work is stated in
__________.
A Employment Act
B SOCSO and Common Law
C Employee Provident Fund (EPF)
D Trade Union Act

10. Personal Accident Policy provides remedy for the following:

A To indemnify insured for death or injuries due to accident
B To indemnify insured for loss of personal property
C To allow insured to continue his profitable business
D To indemnify insured against third party claims

11. Third Party coverage in motor insurance means

A Coverage as required in Ordinance only
B Coverage provided for in Road Transport Act 1987 and third party property damage only
C Coverage for third party and property damage due to theft
 D None of the above

12. Comprehensive motor policy DOES NOT cover _______________.

A private car
B damage to vehicle whilst in transit
C failure and damage due to mechanical or electrical
D theft of the car

13. Which of the following is NOT covered in motor tariff?

A Third party only
B Fire and theft
C Comprehensive
D Property damage only

14. Explosion is an insured peril under Standard Fire. It is restricted to ____________.

A any type of explosion beside nuclear explosion
B explosion of gas used for illuminating and domestic purposes only
C explosion due to industry boiler
D explosion due to war

15. Which of the following is NOT a marine policy?

A Freight
B Hull Policy
C Building Risk Policy
D All Risks Policy

16. The compulsory form of indemnity required by the Road Transport Act 1987 (amended) is:
A Car damage due to accident
B Liability to third party property
C Legal liability for death or bodily injury to any third party
D None of the above

17. Pre acceptance survey for a risk is usual for ____________.

A Motor Insurance
B Personal Accident Insurance
C Fire and Engineering Insurance
D Marine Cargo Insurance
18. Mr.Tham’s Fire Insurance protects him from all losses incurred by fire, storm and flood. All
these are classified as ____________.
A separate perils
B perils not insured
C insured perils
D exclusion perils

19. Principle of indemnity is not applied in _______________.

A Fire Insurance
B Motor Insurance
C Personal Accident Insurance
D All Risk Insurance

20. Contribution principle is applied in _______________.

A Fire Insurance
B Health Insurance
C Personal Accident Insurance
D All of the above

21. Tariff DOES NOT stipulate _______________.

A table for minimum rates for different classes of risk
B standard wording for all policies
C additional premiums for special hazards
D uniform method of handling claims

22. Schedule B in the Workers’ Compensation Policy indemnifies employers in respect of their
liability at:
A Common Law
B Workers’ Compensation Act
C Manufacturing Act
D Industrial Act

23. In motor tariff, what is the scale used to calculate premium for period of 6 months?
A 5/8 from annual rate
B 3/4 from annual rate
C 7/8 from annual rate
D 4/8 from annual rate
24. According to fire insurance tariff, what is the scale used to calculate premium for coverage for
the period of 6 months?
A 50% from annual rate
B 60% from annual rate
C 70% from annual rate
D 85% from annual rate

25. Factors for consideration when classifying risk in fire tariff are_______________.
A type of occupancy
B location of risk
C accommodation management
D A and B

26. If two types of work is being done at the same time in the same building, which rate will be
used in the fire tariff?
A Rate charged according to the type of work with the higher rate
B Rate charged according to the type of building
C Average rate for all types of work
D Special rate

27. After receiving proposal form, an underwriter can _______________.

A accept the risk
B change the risk
C increase the risk
D reduce the risk

28. A situation where an applicant who knows that he has a very high probability of loss submits
a proposal for insurance is called____________.
A a good selection
B insurer’s selection
C selection of an agent
D antiselection

29. Which of the following document needs to be stamped according to Stamp Act?
A Cover Note
B Policy Form
C Certificate of Insurance
 D Proposal Form

30. A proposal form must be signed by ____________.

A agent
B insurance broker
C proposer
D insurer

31. If the insured and insurer intend to modify the terms and conditions, they can do so by
____________.
A attaching an endorsement to the policy
B issuing an alternate policy
C issuing a cover note to notify the changes
D Any one of the above

32. Which section in a policy insurance states the information related to a contract?
A Preamble
B Schedule
C Condition
D Declamation

33. A certificate of insurance is generally issued in relation to motor policy to ____________.

A inform the insured that he has not paid the premium
B provide evidence of insurance as stipulated in the Road Transport Act
C confuse the insured with additional forms
D allow the authorized person to claim

34. Which of the following can be found in a proposal form?

A Previous and Present Insurance
B Name and Address
C Loss Experience
D All of the above

35. When a person buys insurance, he will need to complete a document. What is that
document?
A Cover Note
B Renewal Notice
 C Policy
D Proposal Form

36. If the insured concealed material facts, which section of the policy provides that the insurer
has the right to repudiate liability?
A Conditions / Exclusion
B Attestation Clause
C Recital Clause
D Operative Clause

37. Which of the following is incorrect?

A Insurer is obligated to send a renewal notice
B All general insurance policy ends at midnight at the expiry date
C Renewal makes the contract anew and a new contract is formed
D Insurer has the option to reject or insert new conditions during renewal

38. Reason for a renewal notice is _______________.

A to avoid bad risk
B to provide a good businesslike practice
C expected by law
D to avoid over insurance

39. A temporary policy is known as _______________.

A stamp book
B register insurance
C cover note
D risk card

40. A renewal certificate is usually _______________.

A an endorsement
B a cover note
C a new policy
D A and C

41. Under policy conditions, all changes must be informed _______________.

A during negotiation of insurance
B at the time of insurance takes place
 C during renewal of contract
D during negotiation, at the time and during renewal of the contract C12

42. Why is Arbitration preferred as compared to court jurisdiction?

A Insured can be paid off at a higher rate under arbitration
B Insurer will pay at a lower rate under arbitration
C Claim settlement is faster and not too expensive under arbitration
D Insured will try to avoid court jurisdiction

43. A claim will only be paid out if _______________.

A loss is caused by a peril insured under the policy
B notification of loss was done without unnecessary delay
C policy is still inforce at the time of loss
D All of the above

44. Issue of a claim form:

A only indicates acceptance of claim
B constitute an admission of liability on the art of insurer
C does not mean liability is admitted under the policy
D None of the above

45. Which of the following best describes Arbitration?

A Out of court settlement
B A Channel to settle dispute relating to quantum as provided in policy contract
C Settle dispute through discussion for an amicable compromise
D Take court action

46. If at the time of loss, the value of the property is higher than sum insured, ____________ will
be applied.
A current value of the risk
B sum insured value
C average
D double indemnity value

47. Which of the following is NOT usually found in certificate of insurance of Motor Insurance?
A Limitation as to use
B Authorized drivers
 C Registration
D Panel workshop

48. When an insurer decides to terminate the motor insurance policy, it has to:
A give fourteen (14) days notice with registered mail to the insured’s last known address
and return the premium on a pro-rated basis
B give thirty (30) days notice to the insured and return the premium on a pro-rated basis
C give verbal notice to the insured
D give notice to the agent and the insured C14

49. Some perils are excluded in the standard fire policy because
A the risk cannot be insured
B insurer is willing to give the coverage with additional premiums
C the excluded perils are more suitably covered under other types of policy
D All the answers above

50. No Claim Discount (NCD) for private cars is around _______________.

A 15% to 50%
B 20% to 45%
C 25% to 55%
D 35% to 55%

51. The insured can cancel his fire policy, however he must notify the insurer ____________.
A within 14 days
B within 28 days
C within 7 days
D immediately

52. Which part of the policy provides that the insurer can effect settlement of claim by cash
payment, repair, replacement or reinstatement?
A Operative Clause
B Recital Clause
C Conditions
D Attestation Clause

53. Which section of the policy stipulates that the insured has paid or agreed to pay the
premium?
 A Cancellation Clause
B Schedule
C Operative Clause
D Recital Clause

54. Heading of a policy consists of _______________.

A name and the registered address of insurer
B advertisement
C name and address of insured
D type of policy

55. Standard fire policy is divided into _______________.

A Heading and Recital Clause
B Operative Clause and Attestation Clause
C The Schedule, Conditions and Exclusions
D All of the above

56. When will the assignment of Fire Policy take effect?

A After the insured has released his interest over the subject matter
B Before the insured releases his interest over the subject matter
C At anytime
D After the policy has been issued

57. Which of the following is not stated under the Inter-Company Agreement on Motor Tariff?
A Member companies have to follow strictly on the No Claim Discount (NCD)
B An underwriting agent can be paid additional 5% commission
C No part of the commission may be discounted to the policyholder
D Policy document must be sent to the insured within thirty (30) days of the risk
commencement

58. Cash Before Cover in motor insurance means _______________.

A insured has to pay premium before commencement of coverage
B insured has to pay half of the premium to insurer before policy can be issued
C insured has to pay a quarter of the premium to the insurer before insurance certificate
can be issued
D insured does not need to pay to the insurer any premium at the commencement of the
coverage but pay when the coverage expires
59. Maximum commission for motor insurance paid to the agents is _______________.
A 5% of gross tariff rate
B 10% of gross tariff rate
C 15% of gross tariff rate
D 5% of nett tariff rate

60. During renewal, discount for fleet of vehicle will be according to _______________.
A MII formula
B PIAM formula
C Insurer’s formula
D KPI Office
ANSWERS (PCE Part B Set D):

1. A 21. D 41. D
2. A 22. A 42. C
3. C 23. B 43. D
4. C 24. C 44. C
5. C 25. D 45. B
6. A 26. A 46. C
7. C 27. A 47. D
8. C 28. D 48. A
9. B 29. B 49. D
10. A 30. C 50. C
11. B 31. A 51. D
12. C 32. B 52. A
13. D 33. B 53. D
14. B 34. D 54. A
15. D 35. D 55. D
16. C 36. A 56. A
17. C 37. A 57. D
18. C 38. B 58. A
19. C 39. C 59. B
20. A 40. C 60. B