Insurance and Assurance Quiz

What is the purpose of insurance?

• To make the insured worse off than before

• To prevent the insured from suffering any loss

• To make the insured better off than before

• To restore the insured to his original position

What is the difference between insurance and assurance?

• Insurance covers risks that may occur, assurance covers events that will occur

• Insurance covers only theft, assurance covers only fire

• Insurance covers events that will occur, assurance covers risks that may occur

• Insurance and assurance are the same

What is the price charged for insurance called?

• Charge

• Premium

• Tax

• Fee

What principle states that the insured must have a vested interest in what is being insured?

• Proximate Cause

• Utmost Good Faith

• Insurable interest

• Indemnity

Which principle prevents persons from insuring identical risks on the same property with several companies?

• Indemnity

• Subrogation

• Average Clause

• Contribution

What principle states that the insured should be reinstated to his exact position before the loss?

• Subrogation

• Indemnity

• Utmost Good Faith

• Insurable interest

How do insurance companies operate to compensate clients for loss?

• By charging high premiums

• By not compensating anyone

• By pooling premiums from many persons with the same risks

• By refusing to pay claims

What does the Average Clause set a limit to?

• The number of insurance policies a person can have

• The number of claims an insured can make

• The size of the compensation based on the true value of the asset

• The premium charged by the insurance company

What principle states that the insured must be truthful concerning the information pertaining to the policy contract?

• Indemnity

• Insurable interest

• Utmost Good Faith

• Proximate Cause

What is the contract between the insurer and the insured known as?

• Agreement

• Policy

• Deal

• Bond