Ic11,100mcq III

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Q 1. A person has the following material in his factory : Raw materials - Rs 10,000,00 ; Finished
Goods - Rs. 16,000,00 ; Semi Finished Goods - Rs 4,00,000. There is a bank mortgage of
Rs 10,000,00 on these stocks. What is the value of goods he has to insure ?
Rs 16,000,00
Rs 30,000,00
Rs 20,000,00
Rs 10,000,00
Rs 40,000,00
UnAttempted
CORRECT ANSWER:
Rs 30,000,00
Explanation:
Value to be insured or SI is the total value of material at risk. The total cost of material in this case is
raw material, semi-finished goods & finished goods. Total of all the three is Rs 30,000,00 hence this is
the value to be insured. Bank mortgage is not material for insurance. However the insurance cannot be
for less than the mortgage amount else the bank would not mortgage.
Q 2. Individual fidelity guarantee policies are usually issued for temporary contracted ______
employees
Private
NGO’s
Public Sector Bank
Government
Non Government
UnAttempted
CORRECT ANSWER:
Non Government
Explanation:
The individual fidelity guarantee policies are more relevant to non-government employees. It is
primarily because the infidelity of employees can lead the non-govt. organizations towards bankruptcy.
They require financial protection against fraud of the employees, more than anyone else.
Q 3. The Premium Register copy is must for _____.

Underwriting bank statements
Underwriting loans
Underwriting returns
https://top4sure.in/exam-test/ic-11-practice-of-general-insurance-27-3-50799.aspx 1/42
Underwriting balance sheet

Underwriting services
UnAttempted
CORRECT ANSWER:
Underwriting returns
Explanation:
The primary business of an insurance company is generating premium income & paying claims.
Payment of claims is the prime reason why the insurers are in business. Underwriting returns are
computed on the basis of premium register.
Q 4. To what extent are the reimbursement expense for a damaged private car’s protection is
limited to ?
Rs 1000
Rs 1500
Rs 2000
Rs 2200
Rs 2500
UnAttempted
CORRECT ANSWER:
Rs 2500
Q 5. What will be an appropriate sum insured for death cover under PA policy ?
3 years income
5 year income
7.5 years income
Annual income
No limit
UnAttempted
CORRECT ANSWER:
5 year income
Explanation:
The PA policy fixes the SI compared with the monthly income of the insured. As a thumb rule, it is
generally granted for an amount equivalent to 5 to 6 yrs. of yearly income. However the practice of
fixing SI differs between insurers.
Q 6. __________ tends to be a package of covers picking up more traditional covers of

Employee thefts, Premises coverage, Depositors forgery, Computer fraud etc.
Bankers blanket insurance
Crime insurance
Cyber insurance
Office package insurance
SME package insurance
UnAttempted
CORRECT ANSWER:
Crime insurance
Explanation:
The Crime insurance which is prevalent in the western countries is a new concept in the Indian market.
It’s a package policy consisting of 5 perils bundled into one policy covering the employee theft,
premises coverage, transit, computer fraud & depositor’s forgery.
Q 7. Which of the following cannot be insured under Cyber Liabilities ?

Losses because Third Parties could not access the system
Losses arising from hacking into insured's server
Liability for the insured spreading virus to the third party
Deliberate malicious lies from the insured to Third Parties
All of the above
UnAttempted
CORRECT ANSWER:
Deliberate malicious lies from the insured to Third Parties
Explanation:
Deliberate malicious lies from the insured to Third Parties would not be covered.
Q 8. The renewal receipt can also be issued by ______.

Specifying the discount in premium
Acknowledging receipt of renewal premium
Specifying the term of the further period insurance
Analysis of the clause of insurance
Specifying the terms of agreement
UnAttempted
CORRECT ANSWER:
Acknowledging receipt of renewal premium
Explanation:
The renewal receipt is the acknowledgement of having received the premium. Once the receipt is
issued, the insurers would be on risk. The receipt serves the purpose, pending issue of policy. The
receipt is a proof of payment for obtaining tax rebate if any (under appropriate sections of the IT Act).
Q 9. The Janta Personal Accident (JPA) policy is specifically designed for________.

Higher sections of the society
Weaker sections of the society
All sections of the society
Common sections of the society
Public sections of the society
UnAttempted
CORRECT ANSWER:
Weaker sections of the society
Explanation:
The policy is primarily designed for weaker section of the society. Any person irrespective of sex,
occupation and profession in the age group of 10 to 70 years may be covered under Janata Personal
Accident Policy. The premium is only Rs 15 for a SI of Rs 25000.
Q 10. If the insurer is not interested in the renewal of policy, it has to give _______.
Actual notice
Meeting notice
Prior notice
Public notice
Expired notice
UnAttempted
CORRECT ANSWER:
Prior notice
Explanation:
The prior notice is usually given by an insurer to an insured if they are not interested in renewal of the
policy. It is given in advance enabling the insured to arrange the insurance elsewhere before the expiry
of the current policy.
Q 11. When the Money transit insurance is renewed, the premium is calculated on the basis of
______.
Only money
Money in transit
Actual money in transit
Insurance policy
Contract basis
UnAttempted
CORRECT ANSWER:
Money in transit
Explanation:
This cover is also known as Money Insurance which actually refers to money in transit & money in the
premises. Since the actual value of money in transit for the policy period cannot be ascertained in
advance, estimated money in transit is kept as a SI & the premium adjustment is done at the end.
Q 12. The cargo clause comes under the category of _______.

Sec A B C
Sec 1
Sec 3
Sec B D S
Sec B C D
UnAttempted
CORRECT ANSWER:
Sec A B C
Explanation:
The cargo losses by different risks can be covered under different clauses. These clauses are known
as Institute Cargo Clauses (ICC). There are three clauses for the purpose i.e. ICC (A), ICC (B) and ICC
(C). Each of these clauses covers different risks. ICC (A) is the widest clause which covers certain
additional risks covered under ICC (B) & ICC (C).
Q 13. Concentrated efforts should be made by the insurance companies to review and reduce
the _______.
Normal expenses ratio

Fluctuating expenses ratio
Management expenses ratio
General expenses ratio
Expenses ratio
UnAttempted
CORRECT ANSWER:
Management expenses ratio
Explanation:
The profitability of an insurance company depends upon controlling expenses. Expenses comprises of
claim expenses & management expenses. Since the claims are unpredictable, an insurer would do well
if it is able to control its management expense ratio.
Q 14. The full form of ALOP is ______ .

Advance loss of property
Advance loss of penalty
Advance loss of policy
Advance loss of profits
Advance loss of pension
UnAttempted
CORRECT ANSWER:
Advance loss of profits
Explanation:
ALOP is an abbreviation for Advance loss of Profit policy issued under the engineering insurance. It is
designed to cover losses associated with the delays in commissioning of a project due to an insured
peril.
Q 15. A Certificate of Insurance is issued in addition to the policy in motor insurance. This is
required by ______ .
General Insurance act
Consumer act
Property Insurance act
LIC act
Motor Vehicles act
UnAttempted
CORRECT ANSWER:
Motor Vehicles act
Explanation:
The motor insurance being a compulsory insurance requires a certificate of insurance which provides
that the policy is being issued as per the provisions of the MV Act. The concerned authorities therefore
rely upon the certificate of insurance.
Q 16. Some risks are considered as extra hazardous and are therefore declined. These are
called ______.
Speculative Risk
Damage risk
Declined risk
Hazardous risk
Destruction risk
UnAttempted
CORRECT ANSWER:
Declined risk
Explanation:
Extra hazardous ricks which cannot be insured in spite of loading the premium or by any appropriate
clause are called declined risk.
Q 17. Traders can suffer losses by reason of insolvency of or protracted default in payment on
the part of ________.
Sellers
Vendors
Consumers
Buyers
Suppliers
UnAttempted
CORRECT ANSWER:
Buyers
Explanation:
Cash flow problems arises if for example, the customers/ buyers fail to pay money they owe to the
traders, that mean traders cannot pay their debts as they fall due.
Q 18. Which authority can intervene in the affairs of an insurer?

Any legal regulatory body
IRDAI
Central Government
Policy holder
State Government
UnAttempted
CORRECT ANSWER:
IRDAI
Explanation:
IRDA is a sole authority which can intervene in any affairs of an insurer i.e. both Life as well as Non-life
insurers. Its authority is derived through an Act of Parliament, thus the recommendations are binding
on insurers.
Q 19. Which of these terms refer to 'Partially Damaged Property' ?

Claim
Risk
Damage
Premium
Salvage
UnAttempted
CORRECT ANSWER:
Salvage
Explanation:
Partially damaged property is known as salvage. The salvage is can either be sold to the salvage
buyers or its value is deducted from the claim amount.
Q 20. Super heaters, steam pipes, boilers, economizers and other steam or air pressure are
insurable under _____.
Fire insurance
Boiler insurance
Aviation insurance
Engineering insurance
Marine insurance
UnAttempted
CORRECT ANSWER:
Boiler insurance
Explanation:
The policy is known as Boiler and Pressure Plant Insurance (BPP) which covers damages to boilers,
economizers, super heaters, steam pipes, air recovers and other steam or air pressure caused by
explosion. The damages would not be payable if the loss is caused by fire.
Q 21. Incurred claims are the value of paid and outstanding claims for the year after deduction
of ________ at the end of the previous year.
Brought over balances
Surplus balances
Fiscal deficit
Claims outstanding
Prepaid claims
UnAttempted
CORRECT ANSWER:
Claims outstanding
Explanation:
Incurred claim includes all paid claims during the period plus a reasonable estimate of unpaid
liabilities. It is calculated by adding paid claims and unpaid claims minus the estimate of unpaid claims
(Claims outstanding) at the end of the prior valuation period.
Q 22. When does an insurance policy become legally enforceable ?

When it is accepted by policy holder
When it is delivered to policy holder
When it is recorded in policy register
When it is Stamped
When it is Signed
UnAttempted
CORRECT ANSWER:
When it is Stamped
Explanation:
Any document can be said to be legal when it is enforceable at law. Insurance policy document
becomes legally enforceable only when it is stamped. Without the stamp the insurers although honors
the contract/ policy, it becomes legal only when a govt. revenue by way of stamp is affixed thereof (like
revenue stamp on receipts).
Q 23. To whom will all the insurers in India inform while devising their re-insurance programme
every year ?
RBI
GIC
LIC
IRDAI
SEBI
UnAttempted
CORRECT ANSWER:
IRDAI
Explanation:
Reinsurance is basically a mechanism enabling retaining & developing insurance capacity in India.
Each insurer has to inform & take prior approval about their reinsurance programme every year.
Q 24. The annual premiums are calculated on the basis that they are received in _____.
Premium
Prepaid
Advance
Arrears
Cash
UnAttempted
CORRECT ANSWER:
Advance
Explanation:
The income of an insurer depends upon underwriting & investment profits. Underwriting profit cannot
be predicted in advance whereas investment profit can be projected based upon the investment
criteria. This can only be done if the money is available for investment in advance.
Q 25. The General insurance Corporation is also commonly known as ________.

Government Re-insurer
Trusted reinsurer
Reinsurer
National reinsurer
Global reinsurer
UnAttempted
CORRECT ANSWER:
National reinsurer
Explanation:
GIC or General insurance Corporation is national reinsurer is an approved Indian reinsurer set up to
retain maximum reinsurance business in India to conserve the precious foreign exchange & to develop
the reinsurance capacity.
Q 26. Which two records are maintained for claims ?

Claims paid and claims intimated
Policy assured and policy document
Client details and policy document
Basic details and policy documents
Accounts info and premium statements
UnAttempted
CORRECT ANSWER:
Claims paid and claims intimated
Explanation:
Claims paid and claims intimated give fairly accurate picture of financial position of the insurers. It
guides the insurers for the future strategy towards the product pricing & arranging the reinsurance.
Q 27. The major life insurers in the world are located in which continent ?
Asia
Europe
North America
South America
Africa
UnAttempted
CORRECT ANSWER:
Europe
Explanation:
In the global insurance market, UK is the largest market for insurance. The market share of insurance
business is to the extent of $1, 753 Billion against the North America whose business is $1, 346 Billion.
Q 28. The special declaration deposit premium of 100% of the premium on the sum insured
based on the __________ (Marine Insurance).
Current year’s turnover
First year’s turnover
Next year’s turnover
Last year’s turnover
Previous year’s turnover
UnAttempted
CORRECT ANSWER:
Previous year’s turnover
Explanation:
This policy is issued to client’s whose estimated annual turnover exceeds 2 crores. The SI is based on
previous year turnover for existing clients & estimated turnover for a new client.
Q 29. What is the term used for loss or damage to buildings, machinery, stocks etc. by fire and
other perils ?
Loss of personnel
Loss of legal liabilities
Loss of assets
Loss of profit
Loss of finance
UnAttempted
CORRECT ANSWER:
Loss of assets
Explanation:
Fire policy covers two types of losses i.e. Loss of capital & Loss of revenue. Revenue losses are
covered under loss of profit policy i.e. Fire Loss of Profit, whereas capital losses are covered under
Fire policy. Assets are listed against the capital in the balance sheet of any company. Building,
machinery stocks etc. all forms the assets.
Q 30. In which year was the Insurance Act passed ?

1928
1938
1948
1952
1962
UnAttempted
CORRECT ANSWER:
1938
Q 31. Claims under Industrial All Risk insurance are computed on the basis of ______ .
premium
disability
contract
material damage
risks
UnAttempted
CORRECT ANSWER:
material damage
Explanation:
The subject matter of Industrial All Risk insurance is material damage. Therefore the claim computation
would be based upon the material damage only.
Q 32. An open cover is not a policy but is more like a _______.

Document note
Debit note
Bank note
Agreement
Credit note
UnAttempted
CORRECT ANSWER:
Agreement
Explanation:
Open cover is an unstamped document in the form of an agreement wherein there is no sum insured
defined. Insured may send any number of consignments on the mutually agreed terms.
Once a consignment is sent, a separate policy or certificate of insurance may be issued for the same.
Q 33. What happens to the risk if the deposit to the credit of the insured is insufficient to cover
a consignment in transit ?
The risk is terminated
The risk is equal to the entire amount of the policy value
The risk is equal to the entire amount of commission
The risk is equal to the entire amount of discount
The risk is equal to the entire amount of premium paid
UnAttempted
CORRECT ANSWER:
The risk is terminated
Explanation:
Section 64 VB of Insurance Act 1938 refers to advance payment of premium, guaranteed to be paid or
until deposit of premium. Therefore if the premium is insufficient or is not guaranteed, the policy
terminates.
Q 34. What is the validity period of a cover note in Motor Insurance ?

20 days
40 days
60 days
80 days
100 days
UnAttempted
CORRECT ANSWER:
60 days
Explanation:
Initial validity of the cover note is 15 days & it could be extended up to 60 days.
It is expected that the policy would be issued within this period & the cover note would be invalid
thereafter. Cover note is issued when the policy cannot be issued for any reason i.e. vehicle
registration number.
Q 35. Which one these perils is covered under Institute cargo clause (B) ?
Bursting / tearing of bags
Hook damage
Volcanic eruption
Theft pilferage
Partial loss of package
UnAttempted
CORRECT ANSWER:
Volcanic eruption
Explanation:
Volcanic Eruption is an inbuilt cover under ICC (B) where as other risks to the cargo can be covered on
payment of additional premium.
Q 36. Business risk is an ________ .

Insurable
Non insurable
Hazardous
Uncontrollable
Controllable
UnAttempted
CORRECT ANSWER:
Non insurable
Explanation:
Insurance is relevant only when there is uncertainty about the risk. A business on the other hand
inherently would result either into loss or profit. Hence the business risk is non-insurable. Insurers can
insure the external risks/ perils not the inherent risks/ perils.
Q 37. On which act are the transaction of general insurance business in India based on ?
Motor vehicles act
Fire insurance act
Insurance act 1938 and IRDAI act 1999
Liability insurance act
Marine insurance act
UnAttempted
CORRECT ANSWER:
Insurance act 1938 and IRDAI act 1999
Explanation:
A comprehensive act known as Insurance Act 1938, was introduced to control both life & non-life
insurance in India. In 1999, further act was passed by the parliament to regulate, promote & to ensure
orderly growth of insurance as well as reinsurance business.
Q 38. In which insurance are the rights of subrogation commonly enforced ?

Erection all risk insurance
Burglary insurance
Marine cargo insurance
Motor TP insurance
Fire insurance
UnAttempted
CORRECT ANSWER:
Marine cargo insurance
Explanation:
Although subrogation rights are enforced in each class of business, it is more relevant under marine
cargo insurance since losses could be attributed by various carriers of the goods being transported
who may be responsible for the loss.
Q 39. What is the process called wherein the risk of damage by flooding is avoided by moving
the factory to another safer site ?
Risk evaluation
Risk avoidance
Risk detection
Risk control
Risk identification
UnAttempted
CORRECT ANSWER:
Risk avoidance
Explanation:
It’s a risk management technique where in the losses of high severity & high frequency are best dealt
in a manner of just avoiding it. No insurer would insure such risk/ losses & none could manage it of its
own.
Q 40. On which basis are the reinsurance arrangements of the insurance companies decided
upon ?
Weekly basis
Quarterly basis
Half yearly basis
Annual basis
Monthly basis
UnAttempted
CORRECT ANSWER:
Annual basis
Explanation:
The insurers have to plan their strategy in advance on yearly basis to arrange for reinsurance
arrangement. It has to obtain prior approval for such arrangement from the authority i.e. from IRDA.
Q 41. Motor vehicles classified in to ____ major categories.

1
2
3
4
5
UnAttempted
CORRECT ANSWER:
Explanation:
Motor vehicles are categorized under 3 categories as per the Motor Vehicles Act, 1988. However under
commercial vehicles, there is further classification in respect to Goods carrying vehicles, Passenger
carrying vehicles & Miscellaneous vehicles.
Q 42. The Dumpers and tippers are insured under _________.

Motor
Fire insurance
Machinery breakdown
Marine cargo
Marine hull
UnAttempted
CORRECT ANSWER:
Motor
Explanation:
Commercial vehicles are insured under India Motor Tariff. These are further classified into
miscellaneous vehicles. Dumpers & tippers come under the preview of this class of vehicles.
Q 43. The first phase of customer service comprise of _______ .

Dealing with customers demand
Dealing with the problems of customers
Pre sales service
Identification of customers need
Identification of customers
UnAttempted
CORRECT ANSWER:
Identification of customers need
Explanation:
The insurance protection can only be granted to an insured based upon his risk exposure. The insurer
has to identify the customer’s exact need for insurance before a solution can be offered.
Q 44. Proprietary concerns are owned by ________ .

Single individual
Group of individuals
The public
Board of directors
Body corporate
UnAttempted
CORRECT ANSWER:
Single individual
Explanation:
A sole-proprietorship concern shall be set up by an Individual.
If more than one person wants to start a business, they have to choose among other options such as
partnership firm, limited liability partnership (LLP) or a company.
Q 45. Damage to machinery or machine breakdown may result in business interruption and is
termed as ________.
Loss of finance
Loss of profit
Loss of personnel
Loss of legal liability
Losses of assets
UnAttempted
CORRECT ANSWER:
Loss of profit
Explanation:
Under engineering insurance Machinery Breakdown (MBD) covers material damage losses. The
damage to machinery may result into business interruption causing loss of profit. This can be covered
under MLOP ( Machinery Loss of Profit) policy.
Q 46. The social scenario of ________ has caused an increase in burglaries.

Deflation
Unemployment
Down fall in markets
Boom
Economic depression
UnAttempted
CORRECT ANSWER:
Economic depression
Explanation:
Poverty is the root cause of crimes & it’s linked with the economic depression. Under economic
depression, not enough employment could be generated. Burglaries consequent upon poverty &
unemployment may be controlled to a greater extent with the growth of economy.
Q 47. In which year was the Employee’s State Insurance Act enacted ?
1928
1938
1948
1953
1963
UnAttempted
CORRECT ANSWER:
1948
Q 48. What is the amount of claim payable under franchise limit is 400 when the amount of loss
is Rs 580?
Rs. 400
Rs. 580
Rs 200
Rs 290
NIL
UnAttempted
CORRECT ANSWER:
Rs. 580
Explanation:
Franchise is a qualifying amount under which if the pre-determined limit (franchise limit) is crossed,
the claim is paid in full without any deduction.
Q 49. As per IRDAI, which document is compulsory for acceptance of all insurances except
Marine Cargo ?
Proposal form
Endorsement
Renewal notice
Policy form
Claim form
UnAttempted
CORRECT ANSWER:
Proposal form
Explanation:
As per IRDA regulations, proposal forms are required to be used in all classes of insurance except
marine cargo. However it is required in case of marine hull insurance. Sometimes it is usual to obtain a
questionnaire duly completed.
Q 50. ________ is an example of packaged products.

Horse insurance
Marine insurance
Micro insurance
Burglary insurance
UnAttempted
CORRECT ANSWER:
Explanation:
The rest of the options are individual cover designed to protect the specific risk. Under Bankers
Blanket Insurance, several specific covers are provided covering virtually every risk associated with a
bank. It’s a package of various risks squeezed in one policy.
Banker's Indemnity Insurance or Bankers blanket insurance is a combination of several specific

covers, such as fire, burglary, money-in-transit, fidelity guarantee etc. The policy provides indemnity
for direct loss of money and / or securities sustained by the insured and discovered during the period
specified in the policy.
Q 51. Under which clause is the cover for costs related to i) Cost of controlling the blow out ii)
Cost of Cleaning Up iii) Pollution Liability etc. provided ?
Blow out clause
All risk clause
Energy explosion and development clause
Launch clause
Pre-operation clause
UnAttempted
CORRECT ANSWER:
Energy explosion and development clause
Explanation:
This is also known as EED (Energy explosion and development) clause. The perils stated above forms
the part of Oil and Energy Risk Insurance. Under the policy, apart from physical damage to the assets,
if an oil well goes out of control, all of the above expenses would have to be incurred. The EED clause
covers these expenses.
Q 52. How is the premium to be paid calculated under Declaration policy ?

On the basis of sum insured
On the basis of damage caused
On the basis of risk involved
On the basis of property
On the basis of cost of replacement
UnAttempted
CORRECT ANSWER:
On the basis of sum insured
Explanation:
The policy is issued for certain minimum SI & the insured has to declare the monthly SI of the stocks
which are seasonal in nature. At the end of the policy period, refund of premium is granted subject to
minimum 50% retention of premium.
Q 53. Services of _________ are used to assess property losses.

Investigator
Underwriter
TPA
Claim technician
Surveyor and loss assessor
UnAttempted
CORRECT ANSWER:
Surveyor and loss assessor
Explanation:
Under Section 64UM of the Insurance Act, 1938, for property losses of Rs. 20,000 & above, it is
mandatory to appoint an independent loss assessor for assessment of loss.
These assessors are licensed by IRDA.
Q 54. The full form of MACT is _______ .

Major Accident Claim Tribunal
Motor & Aviation Claim Tribunal
Maximum Action Core Team
Motor Accident Claim Tribunal

Motor accident Cause tribunal
UnAttempted
CORRECT ANSWER:
Motor Accident Claim Tribunal
Explanation:
Third party claims are being dealt by MACT which awards the compensation to the victims of motor
vehicles accidents.
Q 55. What is the maximum weekly amount which can be claimed under the temporary total
disablement benefit of a PA policy?
Rs 3000
Rs 4000
Rs 5000
Rs 8000
Rs 10000
UnAttempted
CORRECT ANSWER:
Rs 3000
Explanation:
Weekly payment on account of Temporary Total Disablement (TTD) is paid @ 1% of the capital sum
insured subject to a maximum of Rs 3000 per week for 100 weeks irrespective of the policy SI.
Q 56. The fourth phase of customer service comprise of __________ .

Actual preparation of the policy and other documents
Customer satisfaction
Dealing with customers demand
Dealing with problems of customers
Pre sales service
UnAttempted
CORRECT ANSWER:
Dealing with problems of customers
Explanation:
Having served the customer by accepting the risk, issuing the policy documents, dealing with the
customers demand, it is now the time to sort out the problems that are being faced by the customers.
Q 57. The Janta Personal Accident (JPA) policy contracts are for _______.
Annual basis
Long term basis
Annual or long term basis
Agreement basis
Schedule basis
UnAttempted
CORRECT ANSWER:
Annual or long term basis
Explanation:
JPA is issued to any person irrespective of sex & occupation. The policy can be issued on annual or
long term (2 to 5 yrs. with discount in premium) basis.
Q 58. The companies should review the rates frequently in light of changing claims experience
in _______.
Classes of risks
Continuous classes of risk
Sudden classes of risks
General classes of risks
Various classes of risks
UnAttempted
CORRECT ANSWER:
Various classes of risks
Explanation:
The profitability of insurers depends upon proper pricing (underwriting) based upon claims
experience. It is therefore essential that the companies must review the ever changing claims
experience in various classes of business.
Q 59. On what is the cover of stop loss treaty is based on ?

Claims ratio
Sum insured
Premium
Loss amount
Size of loss
UnAttempted
CORRECT ANSWER:
Claims ratio
Explanation:
Stop Loss covers are related to the total amount of claims in a year over and above a particular limit or
Loss Ratio.
Reinsurance may be related to single loss amount per risk or per event. Stop loss are related to total
amount of claims in a year over & above a particular limit or loss ratio. For an example, when an
insurer agrees to 65% claim ratio, reinsurer would step in for the balance claim ratio up to his limit.
Q 60. What is the maximum amount of sum insured under Janta Personal Accident policy ?
Rs. 25000
Rs. 50000
Rs. 75000
Rs. 100000
Rs. 150000
UnAttempted
CORRECT ANSWER:
Rs. 100000
Explanation:
The minimum SI under the JPA is Rs 25000 & the maximum SI per person per annum can be Rs 100000
as per the scheme.
Q 61. The Insurance Policy is a formal document which provides ______ of the contract of
insurance.
Intimation
Facts
Information
Details
Evidence
UnAttempted
CORRECT ANSWER:
Evidence
Explanation:
Insurance is a contract between two different parties. The terms & conditions of the contract is
evidenced through the legal document enforceable at law i.e. the Insurance Policy.
Q 62. What are the broad functions of Tariff advisory committee ?

Regulate share values
Regulate market rates
Regulate policy rates
Regulate claim value
Regulate the premium rates
UnAttempted
CORRECT ANSWER:
Regulate the premium rates
Explanation:
Tariff Advisory Committee (TAC) in India - controls and regulates the rates, advantages, terms and
conditions that may be offered by insurers in respect of Indian General Insurance Business relating to
Fire, Marine (Hull), Motor, Engineering & Workmen Compensation.
Q 63. Settlement of claims is one of the important functions in an ________.

Service organization
Insurance organization
NGO
Industrial organization
Government organization
UnAttempted
CORRECT ANSWER:
Insurance organization
Explanation:
Insurers are in the business of taking risk at a cost. Cost is the premium to be paid by the insured and
the risk is paying the claims for the subject matter when the same is damaged/ destroyed by the
insured peril. None of the other stated options fits the role of insurance organization.
Q 64. The natural peril covered under a standard fire policy is______.
Storm
Riot & strike
Malicious damage
Aircraft damage
Explosion
UnAttempted
CORRECT ANSWER:
Storm
Explanation:
Natural perils are the losses which are beyond the capabilities of any human being. Storm cannot be
caused by humans whereas rest of the perils is man-made perils caused by human interventions.
Q 65. What is the primary source of income for an insurer?

Bonus
Remuneration
Commission
Premium
Discount in premium
UnAttempted
CORRECT ANSWER:
Premium
Explanation:
Income & expenditure are two sides of any business. Insurance business is no exception. Income of an
insurance company is derived from the premium collected from the proposers who becomes insured
after the issue of the insurance policy.
Q 66. Self ignition damage is covered under which standard policy ?

Personal accident
Motor package
Fire
Marine hull
Machinery loss of profit
UnAttempted
CORRECT ANSWER:
Motor package
Explanation:
Self-ignition is an original cover under the motor policy. This peril covers loss or damage to the vehicle
by fire, explosion, self-ignition or lightening.
Q 67. The amount above the ‘per loss’ will be recovered from the _______.
Reinsurer
Agent
Policy holder
Company
Insurer
UnAttempted
CORRECT ANSWER:
Reinsurer
Explanation:
The insurer enters into an agreement with a reinsurer to protect loss as incurred by him. The reinsurer
agrees to pay an amount of loss over & above a certain predetermined amount of any loss.
Q 68. Under which head are the General Reserves categorized ?

Liabilities
Contingency reserve
Capital reserves
Reserve and surplus
Loans and advances
UnAttempted
CORRECT ANSWER:
Liabilities
Explanation:
The general reserves are the retained earnings of a company which are kept aside out of company's
profits to meet future (known or unknown) obligations (Liabilities).
Q 69. The premium payable for Public Liability Act policy is _______ including ERF.
1.5 times
2 times
2.5 times
3 times
4 times
UnAttempted
CORRECT ANSWER:
2 times
Explanation:
Under Public Liability policy drafted as per The Public Liability Insurance Act, 1991, an amount equal to
the premium is to be paid to the insurer to by the insured. This amount is insured’s contribution to the
Environment Relief Fund set up by the Govt. to be utilized under certain circumstances.
Q 70. The margin for commission built into the rates should be that level at which the ______
will be paid.
Commission
Premium
Claim
Cash
Bonus
UnAttempted
CORRECT ANSWER:
Premium
Explanation:
Premium consists of cost of taking the risk & management expenses. The management expenses
include all costs including commission.
Q 71. Refrigeration plant insurance covers indemnity of _________.

Factories
Shops
Cold storage
Warehouses
Godown
UnAttempted
CORRECT ANSWER:
Cold storage
Explanation:
This policy is issued under engineering insurance for covering the losses form the stocks stored in the
cold storage. This policy is popularly known as Deterioration of Stock policy.
Q 72. Obtaining detailed information of clients business is the duty of _______.

Sales agents
Indirect brokers
Business agents
Direct brokers
Traders
UnAttempted
CORRECT ANSWER:
Direct brokers
Explanation:
Direct brokers came into the insurance market after IRDA (Insurance Brokers) Regulations, 2002. They
act as an intermediary between insured &the insurers to obtain client’s detailed information for
insurance.
Q 73. Premium is the consideration paid by the insured under _______ of insurance.
Body
Terms
Agreement
Contract
Framework
UnAttempted
CORRECT ANSWER:
Contract
Explanation:
The payment of premium (consideration) & subsequent issuing the insurance policy concludes the
contract of insurance. This may be known as offer & acceptance under the Contract Act, 1872.
Q 74. Whose functions are identification and acceptance of risk based on factual information,
evaluation and acceptance?
Underwriters
Agents
Surveyors
Brokers
Claim technicians
UnAttempted
CORRECT ANSWER:
Underwriters
Explanation:
An insurance underwriter decides if applications for insurance cover (risks) should be accepted and, if
so, what the terms and conditions of that acceptance are. He will assess the risk of insuring a person
or company according to the likelihood of a claim being made.
Q 75. _________ is not considered as a Consignment Note ?

Airway bill
Goods receipt
Bill of exchange
Bill of lading
Railway receipt
UnAttempted
CORRECT ANSWER:
Bill of exchange
Explanation:
Bill of exchange is a document guaranteeing the payment of a specific amount of money. All other
documents are related to good receipt issued by respective carries of the goods.
Q 76. Warehousing facilities and Loading/unloading conditions are things to be looked in a

______.
Lift insurance
Public liability insurance
Store insurance
Hull insurance
Cargo insurance
UnAttempted
CORRECT ANSWER:
Cargo insurance
Explanation:
Cargo refers to the goods carried upon vessels of any description. Conditions pertaining to loading,
unloading & warehousing are vital underwriting parameters. The condition of port of origin & port of
discharge also plays vital role in deciding the premium rates for cargo insurance under marine
insurance policies. These are equally important for inland transit or import & exports.
Q 77. Which policy is issued to business premises covering stock in trade, goods held in trust
or on Commission and cash in locked safe?
Bhavishya Arogya policy
Mediclaim insurance policy
Liability only policy
Burglary insurance policy
Universal health insurance policy
UnAttempted
CORRECT ANSWER:
Burglary insurance policy
Explanation:
The burglary insurance policy is meant for business premises. It covers damages to the premises
(immovable assets like fixtures & fittings) caused by the burglars & burglary of cash in safe
(immovable assets).
Q 78. Who issues the Bill of Lading ?

Road transporters
Shipping companies
Couriers
Railways
Airlines
UnAttempted
CORRECT ANSWER:
Shipping companies
Explanation:
The consignment note issued by the shipping companies is known as Bill of Lading. All others have
their respective name i.e. goods receipt for road transport, airway bill for airlines etc.
Q 79. _______ policies provide cover against loss of profits (machinery) insurance / advance
loss of Profits?
Marine insurance
Fire insurance
Burglary insurance
Floating insurance
UnAttempted
CORRECT ANSWER:
Explanation:
Loss of Profit (machinery or MLOP) & Advance Loss of Profit (ALOP) are the subject matter of
Engineering Insurance. Under these policies, the claim would only be payable if the losses are payable
under other engineering policies.
Q 80. In case of fire and marine cargo insurance, the percentage of premium that the insurer is
required to provide for as reserves is _____ .
25%
30%
50%
75%
100%
UnAttempted
CORRECT ANSWER:
50%
Explanation:
As per Section 64V (1) of the Insurance Act, 1938, for fire & marine cargo the reserve to be kept is 50%.
Q 81. What do 'Reserves' refer to in insurance accounting ?

Estimate for future liabilities
Funds for future expansions
Funds available for investments
Invested funds
Funds for future dividends
UnAttempted
CORRECT ANSWER:
Estimate for future liabilities
Explanation:
Insurance industry operations involve the costs which are uncertain and delayed. Such costs can only
be estimated & reserve has to be kept for such future liabilities.
Q 82. Which policy gives indemnity to the insured in respect of his/her legal liability to pay
compensation to his/ her employees who sustain personal injury by accident ?
Compulsory public liability policy
Legal liability policy
Workmen’s compensation policy
Professional indemnities policy
Public liability policy
UnAttempted
CORRECT ANSWER:
Workmen’s compensation policy
Explanation:
The legal liabilities of an insured towards his workers are covered under The Workmen’s
Compensation Policy. All other policies referred above covers the legal liabilities of third parties other
than workers.
Q 83. Risk premium is calculated on the basis of ________.

Number of people insured
Average loss ratio
Profit ratios
Number of vehicles insured
Average life of property
UnAttempted
CORRECT ANSWER:
Average loss ratio
Explanation:
The loss ratio is the difference between the ratios of premiums paid to an insurance company and the
claims settled by the company. The loss ratio is the total losses paid by an insurance company in the
form of claims.
The premium calculation principle is one of the main objectives of study for actuaries. There seems to
be full agreement among the leading theoreticians in the field that the insurance premium should
reflect both the expected claims and certain loadings.
Q 84. ILU stands for _______.

Institute of London universities
Institute of London underwriters
Institute of London undertakers
Institute of London UNICEF
Institute of London unified
UnAttempted
CORRECT ANSWER:
Institute of London underwriters
Explanation:
For import/ export policies under marine cargo insurance, the risk coverage’s are defined under the
Institute Cargo Clauses which are drafted by Institute of London underwriters.
Q 85. What does the insurer incorporates in order to reduce physical hazard ?
Appropriate rules
Appropriate agreements
Appropriate contracts
Appropriate clauses
Appropriate certificate
UnAttempted
CORRECT ANSWER:
Appropriate clauses
Explanation:
Appropriate clauses serve the purpose of risk management thereby reducing the loss potential of any
given risk. The clauses restrict the coverage/ payment of any loss.
Q 86. Policy under Group Health insurance scheme can be accepted in _________.
EMI
Debentures
Loans
Mortgages
Installments
UnAttempted
CORRECT ANSWER:
Installments
Explanation:
The group health insurance policies are issued to corporates etc. where the premium is usually very
substantial. Insurers offer the policy to such insured’s by offering the premium payment in
installments.
Q 87. What is the cause of Hit and Run accidents ?

Marathon Runners
Pedestrians
Watercraft
Motor vehicles
Cycles
UnAttempted
CORRECT ANSWER:
Motor vehicles
Explanation:
Where the vehicle after an accident ran away & in spite of the reasonable efforts by the police
authorities, the vehicle remains untraced, the event is known as Hit & Run. This event has to be
covered under all motor policies due to provisions of Section 163 of The Motor Vehicles Act, 1988.
Q 88. In which of these insurance is cashless facility available?

Motor insurance
Aviation insurance
Hull insurance
Cargo insurance
Fire insurance
UnAttempted
CORRECT ANSWER:
Motor insurance
Explanation:
Motor insurance & health insurance are top selling products of any Non-life insurers. Both products
constitute the largest share of insurer’s portfolio. The competition & loss control measures, prompted
the insurers to offer cashless service for these products.
Q 89. The Balance Sheet of companies represent ________ .

Company position
Legal status of the company
Company status
Debt position of the company
Financial position of the company
UnAttempted
CORRECT ANSWER:
Financial position of the company
Explanation:
The purpose of the balance sheet is to provide an idea of a company’s financial position. It does so by
outlining the total assets that a company owns and any amounts that it owes to lenders or banks, for
example, as well as the amount of equity.
Q 90. A businessman has the following policies covering stocks: Policy A for 800000; Policy B
for 1000000; Policy C for 200000. The stocks to the tune of 200000 are damaged due to
rioters. What is the claim payable under policy A?
Rs 200000
Rs 100000
Rs 80000
Rs 65000
NIL
UnAttempted
CORRECT ANSWER:
Rs 80000
Explanation:
As per the Contribution Clause, each company would pay claim in the same proportion in which
insurance has been taken by the customer.
Total Insurance taken is for Rs. 8 lakhs plus Rs. 10 lakhs plus Rs. 2 lakhs = Rs. 20 Lacs.
Share of Company A = 8 Lacs / 20 Lacs = 40%
Hence, company A would pay 40% of the loss amount i.e. 40% of Rs 2 lakhs = Rs. 80000
Q 91. From the time the machinery leaves the _______ , the Marine cum Erection insurance
starts.
Forehead
Supervisors
Factory inspectors
Production head
Manufacturer
UnAttempted
CORRECT ANSWER:
Manufacturer
Explanation:
This is an Erection All Risk (EAR) policy with the transportation risk is also granted. It is therefore
called Marine-Cum-Erection (MEC) policy. The cover is granted of erection of machinery & starts right
from the time the machinery leaves the manufacturer’s warehouse & continues until the project is
over.
Q 92. The amount of relief fixed under Compulsory Public Liability policy in case of death and
Permanent total liability is ___________ ,
Rs 20000
Rs 25000
Rs 30000
Rs 35000
Rs 50000
UnAttempted
CORRECT ANSWER:
Rs 25000
Explanation:
This policy arises out of The Public Liability Insurance Act, 1991. The act imposes a liability based
upon the principle of ‘No Fault’. Any undertaking handling hazardous substance has to compulsorily
insure & pay according to the act for death or injury to any person (other than workmen) & damage to
the property.
Q 93. With whom has the Premium rates, Policy terms and Underwriting guidelines have to be
filed ?
Insurance regulator
RBI
Controller of insurance
Policy holders association
Finance ministry
UnAttempted
CORRECT ANSWER:
Insurance regulator
Explanation:
Insurance regulator i.e. IRDA is the sole authority on all aspects of insurance business in India. The
IRDA is the watch dog of insurance activities working under the Finance ministry.
Q 94. The long term insurance policies are suitable for _________.
Industrial customers
SME’s customers
Multinational customers
Retail customers
Commercial customers
UnAttempted
CORRECT ANSWER:
Retail customers
Explanation:
The risk associated with retail customer does not undergo major changes for a long time. For an
example in case of fire, coverage required for a dwelling (residential building), the risk/ valuation more
or less remains constant, long term policy can be issued. The long term means where is policy is
sought for more than 12 months (as under JPA long term policy).
Q 95. It is possible to provide the reserve for each policy separately by calculating _______.
Number of period
Number of days
Number of year
Number of weeks
Number of months
UnAttempted
CORRECT ANSWER:
Number of days
Explanation:
Although the policies are issued for 1 year, certain policies like dwellings under fire insurance can be
issued for more than one year. The reserve therefore has to be provided keeping number of years the
policy would be effective.
Q 96. Under Compulsory Public Liability policy in case of permanent partial disablement, the
amount of relief fixed is _______ .
Rs 10000
Rs 12500
Rs 15000
Rs 12000
Rs 14500
UnAttempted
CORRECT ANSWER:
Rs 12500
Explanation:
The actual medical expenses fixed is upto a maximum of Rs 12500 in various cases like permanent
total disability, temporary partial disablement etc.
Q 97. Speculative risk is also known as _______ .

Company risk
Trade risk
Insured risk
Declined risk
Business risk
UnAttempted
CORRECT ANSWER:
Trade risk
Explanation:
Q 98. Which commission entertains disputes, where goods / services and the compensation
claimed exceeds Rs 100 Lakhs ?
Central Commission
National Commission
State Commission
District forum
Local Commission
UnAttempted
CORRECT ANSWER:
National Commission
Explanation:
As per consumer Protection Act 1986, National Commission is the final authority who has the
jurisdiction to settle dispute above 100 lacs.
Q 99. Fire insurance for residential properties is classified as _______.

Storage risk
Manufacturing risk
Simple risk
Hazardous risk
Institution risk
UnAttempted
CORRECT ANSWER:
Simple risk
Explanation:
Residential properties fall under the categories of dwellings. Dwellings are considered to be simple
risk as compared to other complex risks such as Industrial All Risk or FLOP (Fire Loss Of Profit
Insurance).
Q 100. What is issued by the insurers a month in advance before the date of expiry ?
Warning
Declaration
Renewal notice
Notice
Order
UnAttempted
CORRECT ANSWER:
Renewal notice
Explanation:
Renewal notice solicits the payment of premium for renewal of the expiring policy. It’s done in advance
enabling insured to arrange for the payment. It is although not obligatory, but it is considered to be a
healthy business practice to remind about the expiring policy as a matter of courtesy.
Out of 100 questions 100 are un attempted.

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12/8/23, 10:18 PM Welcome to Top4Sure

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

Underwriting balance sheet

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

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

Deliberate malicious lies from the insured to Third Parties

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

Acknowledging receipt of renewal premium

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

Weaker sections of the society

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

Normal expenses ratio

Management expenses ratio

Q 14. The full form of ALOP is ______ .

Advance loss of profits

Motor Vehicles act

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

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

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

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

Q 26. Which two records are maintained for claims ?

Claims paid and claims intimated

Previous year’s turnover

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

Q 32. An open cover is not a policy but is more like a _______.

The risk is terminated

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

Q 36. Business risk is an ________ .

Insurance act 1938 and IRDAI act 1999

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

Marine cargo insurance

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

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

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

Identification of customers need

Q 44. Proprietary concerns are owned by ________ .

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

Q 46. The social scenario of ________ has caused an increase in burglaries.

Q 50. ________ is an example of packaged products.

Bankers blanket insurance

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

Energy explosion and development clause

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

On the basis of sum insured

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

Surveyor and loss assessor

These assessors are licensed by IRDA.

Q 54. The full form of MACT is _______ .

Motor Accident Claim Tribunal

Motor Accident Claim Tribunal

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

Dealing with problems of customers

Annual or long term basis

Various classes of risks

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

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

Regulate the premium rates

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