Insurance & Risk Management Quiz

What does the Principle of Utmost Good Faith require from both parties in an insurance contract?

• To pay premiums on time

• To disclose all material facts truthfully

• To avoid filing claims

• To agree on compensation beforehand

What is the main goal of the Principle of Indemnity?

• To allow profit from insurance

• To restore the insured to their original financial position

• To punish the responsible party

• To increase the insurer's revenue

Which principle ensures that the insured has a legitimate financial interest in the insured item or person?

• Subrogation

• Contribution

• Insurable Interest

• Proximate Cause

What does the Principle of Proximate Cause help determine?

• The amount of premium

• The root cause of the loss

• The insured's financial status

• The insurer's liability

What is the purpose of the Principle of Subrogation?

• To allow double compensation

• To transfer risk to another insurer

• To recover losses from the responsible third party

• To avoid paying claims

When does the Principle of Contribution apply?

• When the insured has multiple policies covering the same risk

• When the insurer refuses to pay

• When the insured profits from the loss

• When the loss is not financial

What is the insured expected to do under the Principle of Loss Minimisation?

• Increase the value of the claim

• Take steps to reduce or prevent further loss

• Cancel the policy

• Transfer the risk

Which type of risk involves only the possibility of loss and is insurable?

• Speculative Risk

• Pure Risk

• Fundamental Risk

• Non-financial Risk

Which of the following is considered an uninsurable risk?

• Fire damage to a house

• Injury from a car accident

• Investing in the stock market

• Theft of property

What are the key components of risk management in insurance?

• Premium calculation and claim settlement

• Identification, Assessment, Mitigation, Monitoring

• Policy writing and underwriting

• Legal compliance and marketing