Motor Insurance (CH.8) RISK 112

What is the purpose of the Principle of Utmost Good Faith in motor insurance?

• To ensure the insured profits from claims

• To require full disclosure of relevant information by both parties

• To allow multiple insurers to share the claim cost

• To minimize repair costs after an accident

Which principle ensures that the insured cannot profit from a loss?

• Principle of Indemnity

• Principle of Contribution

• Principle of Subrogation

• Principle of Proximate Cause

What does the Principle of Insurable Interest require?

• The insured must have a financial stake in the insured vehicle

• The insured must disclose all past accidents

• The insurer must pay for all damages

• The insured must minimize losses after an accident

If a vehicle is covered by multiple policies, which principle determines how claims are paid?

• Principle of Utmost Good Faith

• Principle of Contribution

• Principle of Subrogation

• Principle of Loss Minimization

What does the Principle of Subrogation allow an insurer to do?

• Pay for all damages without investigation

• Recover claim amounts from a third party responsible for the loss

• Increase premiums after a claim

• Cancel the policy immediately

Which principle determines whether a loss is directly caused by an insured peril?

• Principle of Indemnity

• Principle of Contribution

• Principle of Proximate Cause

• Principle of Loss Minimization

What is the insured's responsibility under the Principle of Loss Minimization?

• To repair the vehicle at any cost

• To take reasonable steps to prevent further damage

• To file a claim for all possible damages

• To avoid disclosing past accidents

What happens if the insured violates the Principle of Utmost Good Faith?

• The insurer must pay double the claim amount

• The policy may be invalidated or the claim denied

• The insured receives additional benefits

• The insurer is fined by the government

Under the Principle of Indemnity, what does the insurer compensate the insured for?

• The cost of a new vehicle

• The actual cash value of the damaged vehicle

• Future income losses

• Emotional distress

Which principle prevents the insured from collecting more than the actual loss?

• Principle of Utmost Good Faith

• Principle of Contribution

• Principle of Subrogation

• Principle of Indemnity