Insurance – Principles, Types, Insurable Risks Quiz - ICSE Class 12 Commerce

Free practice quiz: Insurance – Principles, Types, Insurable Risks (ICSE Class 12 Commerce). 48 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

This ICSE Class 12 Commerce practice quiz has 48 multiple-choice questions on Insurance – Principles, Types, Insurable Risks, and 48 of them come with an explanation. Try the 5 sample questions below (tap an option to check yourself), then play the full quiz online. No sign-up needed.

Sample questions

1. Which of the following is a fundamental principle of insurance that states that the insured must have a financial interest in the subject matter of insurance?

   1. Utmost Good Faith (Uberrimae Fidei)
   2. Indemnity
   3. Insurable Interest
   4. Subrogation
   Show answer

   Answer: C. Insurable Interest

   Insurable interest is the principle that requires the insured to suffer a financial loss if the insured event occurs. Without insurable interest, a contract of insurance is generally considered a wager and is void.

2. The risk of a company's assets being damaged or destroyed by natural calamities like earthquakes or floods falls under which category of insurable risks?

   1. Personnel Risks
   2. Liability Risks
   3. Property Risks
   4. Financial Risks
   Show answer

   Answer: C. Property Risks

   Property risks involve the potential for loss or damage to physical assets, such as buildings, machinery, and inventory, due to events like natural disasters, fire, theft, or vandalism.

3. What is the core difference between a 'named perils' policy and an 'all risks' policy in property insurance?

   1. A named perils policy covers all risks except those specifically excluded, while an all risks policy only covers listed perils.
   2. A named perils policy covers only the perils listed in the policy, while an all risks policy covers all perils except those specifically excluded.
   3. An all risks policy is always cheaper than a named perils policy.
   4. A named perils policy is mandatory for all types of property.
   Show answer

   Answer: B. A named perils policy covers only the perils listed in the policy, while an all risks policy covers all perils except those specifically excluded.

   In a named perils policy, coverage is restricted to the specific causes of loss listed in the policy. An 'all risks' policy (often referred to as 'all-risk' or 'open perils') provides broader coverage, insuring against any cause of loss not specifically excluded.

4. What is the primary purpose of 'Burglary Insurance'?

   1. To cover losses due to fire and explosion.
   2. To cover losses of cash or valuables stolen by force from premises.
   3. To cover losses from natural disasters.
   4. To cover losses due to employee dishonesty.
   Show answer

   Answer: B. To cover losses of cash or valuables stolen by force from premises.

   Burglary insurance provides cover against loss or damage to property caused by burglary, which typically involves forced entry into the premises.

5. Which of the following is a direct consequence of the principle of 'Indemnity'?

   1. The insured is compensated for emotional distress.
   2. The insured can claim more than the actual loss.
   3. The insured is placed back in the financial position they occupied before the loss.
   4. The insurer profits from the loss.
   Show answer

   Answer: C. The insured is placed back in the financial position they occupied before the loss.

   The principle of indemnity ensures that the compensation received does not exceed the actual financial loss incurred, thereby preventing the insured from making a profit from the loss.

More questions in this quiz

Answers and explanations are in the full quiz.

1. The principle of 'Utmost Good Faith' in insurance implies that:
2. When the insured, after receiving compensation from the insurer, has the right to pursue a third party who caused the loss, this principle is known as:
3. The principle of Indemnity aims to:
4. In the context of insurance, 'Proximate Cause' refers to:
5. Which type of insurance provides coverage for losses due to fire, theft, and other specified perils to property?
6. A policy that pays a fixed sum of money upon the occurrence of a specific event, such as death or disability, irrespective of the actual financial loss, is characteristic of:
7. Marine insurance can be broadly categorized into Hull Insurance, Cargo Insurance, and:
8. What is the primary purpose of health insurance?
9. A company being sued for damages due to faulty products or negligence faces which type of insurable risk?
10. The risk of losing profit or revenue because a business cannot operate due to a covered event (e.g., fire destroying a factory) is known as:
11. In life insurance, 'Mortal Risk' refers to:
12. Which of the following is NOT typically considered an insurable risk?
13. The principle of 'Contribution' in insurance states that:
14. A policy that covers the legal liability of a professional (e.g., doctor, lawyer) for negligence or errors in their professional capacity is known as:
15. Which of the following is NOT a characteristic of an insurable risk?
16. The risk of an individual's earnings being reduced or lost due to death or disability is the subject of:
17. In marine insurance, 'Sue and Labour' clause imposes an obligation on the insured to:
18. The principle that an insurance contract is a contract of 'good faith' underscores the importance of:
19. Which of the following is a key characteristic of an insurable interest in property insurance?
20. A company insures its delivery vehicles against damage and theft. This is an example of insuring against:
21. Which type of insurance is designed to protect a business from losses arising from an employee's fraudulent or dishonest acts?
22. The principle of 'Indemnity' is not strictly applicable to which type of insurance?
23. A policy that covers the legal obligation of a person or company to pay damages to a third party for injury or damage caused by their actions is known as:
24. The risk of a company losing its customers due to the actions of a competitor is an example of:
25. Which principle ensures that the insured, when claiming compensation, cannot recover more than the actual loss suffered?
26. The risk of damage to goods in transit due to accidents like vehicle capsizing or collision is covered under:
27. Which principle of insurance states that the insured should be compensated for a loss up to the extent of the sum insured?
28. A policy that covers risks associated with air travel and the aircraft itself is known as:
29. The risk of an employee being injured on the job and the employer's liability to compensate them is a key concern addressed by:
30. When a fire destroys a building insured under a valued policy, the insurer is liable to pay:
31. The 'Hazard' in insurance refers to:
32. In the context of subrogation, the insured must not do anything that:
33. Which type of insurance covers the financial loss resulting from the failure of a debtor to repay a loan?
34. The risk of an organization's computer systems being compromised, leading to data loss or financial damage, falls under:
35. A policy that covers the legal liability of a company for damages or injuries caused to the public as a result of its operations is known as:
36. The risk of a business being unable to continue its operations due to damage to its premises by fire is classified as:
37. When an insured has multiple policies covering the same risk, and one insurer pays the full claim, that insurer can claim contribution from the other insurers. This is an application of the principle of:
38. The risk of damage to a building from a lightning strike is an example of:
39. In an insurance contract, the insured's obligation to disclose all material facts before the policy is issued is a demonstration of which principle?
40. What is the primary function of 'Travel Insurance'?
41. The principle of 'Proximate Cause' is applied to determine:
42. The risk of an individual's financial stability being threatened by unforeseen circumstances like accidents or illnesses is broadly categorized as:
43. What is the primary purpose of a 'deductible' in an insurance policy?

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