NONLIFE EXAM REVIEWER PART 1

A term which refers to a relative division of risk between the insurer and the insured, depending upon the relative amount of the policy and the actual value of the property insured and takes effect only when the actual loss is partial and less than the amount of the policy is

• Re-insurance

• Co-insurance

• Double insurance

• Over insurance

Explosion to be recoverable as extraneous risk written in conjunction with the standard fire policy must be:

• Explosion from pressure vessels

• Any explosion

• Chemical explosion, as in the case of gas used for lighting or domestic purposes

• None of the above

With respect to Co-insurance Average or Contribution Clause which of the following statements are true

• The insured is never penalized

• The insured is always penalized

• Under some circumstances, the insured is penalized

• None of the above

According to the term of the "Loss Clause" (which is contained in the coverage form attached to a Fire Policy) must an insured request the reinstatement of his insurance after a loss has occured?

• Not until the premises have been restored

• Yes, if the loss exceeds 5%

• No, the coverage is not reduced by the occurrence (or payment) of a loss

• No, the insurance company will reinstate the coverage automatically

Why must an insured have an insurable interest in the property insured?

• To obtain a measurement of the insured's loss

• Guard against moral hazard

• Prevent wagering

• All of the above

Under the Insurance Law, a fund was created to be used in the payment of allowed claims against an insurance company authorized to transact business in the Philippines, remaining unpaid by reason of insolvency of such company. The fund is the

• Security fund

• Mutual fund

• Charitable trust fund

• Variable contract fund

Under the provision of the Insurance Code, a cancelation notice to the insured from the insurer, to be effective, shall be based on the occurrence of any of the following, except:

• Non-payment of premium

• Verbal notice to be insured

• Discovery of fraud or material misrepresentation

• Physical changes in the property insured making the property uninsurable

In Health insurance, Total Disability is taken to mean

• A complete inability of the insured to engage in his occupation for a period specified in the policy

• Inability to engage in any gainful occupation for which he is fitted by the education and training

• The insured is not able to perform any gainful occupation

• All of the above

An insurable interest exist in the following instances:

I. In the love and affection of personas related by blood or by law

II. If a person is interested in the well-being of another person

III. If a person is interested in buying insurance on another person

IV. If a person has an economic interest in the insured even though he is not related to the insured

• I, II, and III

• I and IV

• I, III, and IV

• I, II, III, and IV

An insured property being shipped may be stationary temporarily at a certain location. The property will eventually continue on its way to its destination. The kind of shipment in insurance is known as

• F.O.B.

• C.I.F.

• On consignment

• In due course of transit