C03 Principles of Insurance MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on C03 Principles of Insurance, a fundamental topic in the field of IC38 Life Insurance Agent Exam. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our C03 Principles of Insurance MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of C03 Principles of Insurance mcq questions that explore various aspects of C03 Principles of Insurance problems. Each MCQ is crafted to challenge your understanding of C03 Principles of Insurance principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC38 Life Insurance Agent Exam tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our C03 Principles of Insurance MCQs are your pathway to success in mastering this essential IC38 Life Insurance Agent Exam topic.

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C03 Principles of Insurance MCQs | Page 6 of 7

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Q51.
What is the primary principle behind the Principle of Indemnity in non-life insurance policies?

a.

To provide a profit to the insured

b.

To compensate the insured beyond the actual loss

c.

To restore the insured to their financial position before the loss

d.

To maximize the insurer's profits

Discuss
Answer: (c).To restore the insured to their financial position before the loss Explanation:The Principle of Indemnity aims to restore the insured to their financial position as it was before the occurrence of the loss event.
Q52.
How does the insurance company determine the indemnity to be paid under the Principle of Indemnity?

a.

By offering a profit to the insured

b.

By assessing the economic value of the loss suffered

c.

By paying the full sum insured irrespective of the loss

d.

By making the insured negotiate the settlement

Discuss
Answer: (b).By assessing the economic value of the loss suffered Explanation:The insurance company assesses the economic value of the loss suffered and compensates accordingly.
Q53.
Which of the following is an example of the Principle of Indemnity in action?

a.

The insurer pays the insured more than the loss they suffered.

b.

The insurer repairs a damaged item.

c.

The insured receives the full sum insured even if it exceeds the loss.

d.

The insurer compensates the insured to restore their financial position.

Discuss
Answer: (d).The insurer compensates the insured to restore their financial position. Explanation:The Principle of Indemnity ensures that the insured is compensated to restore their financial position.
Q54.
In what situation is the 'Agreed Value' principle adopted in insurance?

a.

When the value of the subject matter is easily estimated.

b.

When the property's value is overestimated.

c.

When the value of the subject matter cannot be easily estimated at the time of loss.

d.

When the property is lost during shipping.

Discuss
Answer: (c).When the value of the subject matter cannot be easily estimated at the time of loss. Explanation:The 'Agreed Value' principle is adopted when the value of the subject matter cannot be easily estimated at the time of loss.
Q55.
What is "underinsurance" in the context of non-life insurance?

a.

When the insurer agrees to pay an excessive amount to the insured.

b.

When the insurance policy covers only certain types of losses.

c.

When the insured claims an amount exceeding the actual loss.

d.

When the property has not been insured for its full value.

Discuss
Answer: (d).When the property has not been insured for its full value. Explanation:Underinsurance occurs when the property has not been insured for its full value, and the insured can claim only in proportion to their insurance coverage.
Q56.
What is subrogation in the context of insurance?

a.

It's the process of transferring rights and remedies from the insurer to the insured.

b.

It's the process of transferring insurance policies between insurers.

c.

It's the process of switching insurers during a policy term.

d.

It's the process of transferring insurance claims from the insured to the insurer.

Discuss
Answer: (d).It's the process of transferring insurance claims from the insured to the insurer. Explanation:Subrogation involves transferring rights and remedies for insurance claims from the insured to the insurer.
Q57.
When does subrogation occur in insurance contracts?

a.

Only in cases of life insurance policies.

b.

In all insurance policies, regardless of the type.

c.

Only in cases of benefit policies.

d.

Only in cases of contracts of indemnity.

Discuss
Answer: (d).Only in cases of contracts of indemnity. Explanation:Subrogation arises in cases of contracts of indemnity, not in benefit policies like life insurance.
Q58.
How does subrogation prevent the insured from collecting more than the loss?

a.

By reducing the amount paid by the insurer to the insured.

b.

By preventing the insured from making a claim.

c.

By allowing the insured to collect from both the insurer and the third party.

d.

By shifting the insured's rights to the insurer, limiting the amount the insured can collect from the third party.

Discuss
Answer: (d).By shifting the insured's rights to the insurer, limiting the amount the insured can collect from the third party. Explanation:Subrogation shifts the insured's rights to the insurer, limiting the amount the insured can collect from a third party.
Q59.
When does subrogation typically occur in insurance contracts?

a.

Only when there's a dispute between the insured and the insurer.

b.

Whenever the insured requests it.

c.

After a claim has been paid by the insurer to the insured.

d.

During the initial policy issuance.

Discuss
Answer: (c).After a claim has been paid by the insurer to the insured. Explanation:Subrogation typically occurs after a claim has been paid by the insurer to the insured.
Q60.
What is the principle of 'Contribution' in insurance?

a.

It refers to the process of transferring claims from one insurer to another.

b.

It specifies that a policyholder can claim the full value of the insurance from each insurer.

c.

It dictates how the liability is to be met when the insured has multiple insurance policies.

d.

It only applies to life insurance policies.

Discuss
Answer: (c).It dictates how the liability is to be met when the insured has multiple insurance policies. Explanation:Contribution is the principle that guides how the liability is to be met when the insured has taken insurance from more than one insurer.
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