Insurance PO

What is the purpose of insurance?

• To compensate persons insured who suffer loss

• To make the insured worse off than before the loss

• To make the insured better off than before the loss

• To prevent the insured from suffering any loss

What is the principle of indemnity based on?

• To make the insured better off than before the loss

• To compensate persons insured who suffer loss

• To make the insured worse off than before the loss

• To prevent the insured from suffering any loss

What is the principle of insurable interest?

• The insured must have an interest in someone else's property

• The insured must have an interest in a random property

• The insured must have a vested interest in what is being insured

• The insured must not have any interest in what is being insured

What does the principle of utmost good faith require from the insured?

• To be truthful concerning the information pertaining to the policy contract

• To be secretive concerning the information pertaining to the policy contract

• To be indifferent concerning the information pertaining to the policy contract

• To be untruthful concerning the information pertaining to the policy contract

What does the principle of proximate cause state?

• The damage caused must be uncertain

• The damage caused must be close or proximate to the event insured against

• The damage caused must be unrelated to the event insured against

• The damage caused must be far from the event insured against

What does the principle of contribution prevent?

• Prevents persons from insuring identical risks on the same property with several companies

• Encourages persons to insure different risks on the same property with several companies

• Encourages persons to insure identical risks on the same property with several companies

• Prevents persons from insuring different risks on the same property with several companies

What does the average clause set a limit to?

• The size of the compensation, which depends on the proportion of the false value of the asset paid up by the insurer

• The size of the compensation, which depends on the proportion of the true value of the asset paid up by the insured

• The size of the compensation, which depends on the proportion of the true value of the asset paid up by the insurer

• The size of the compensation, which depends on the proportion of the false value of the asset paid up by the insured

What does the principle of subrogation state?

• The insured should be indifferent to his position before the loss

• The insured should be reinstated to his exact position before the loss

• The insured should be made worse off than before the loss

• The insured should be made better off than before the loss

How are insurance companies able to pay its clients large sums of money to compensate them for loss?

• By not compensating the clients for loss

• By charging extremely high premiums

• By not predicting the percentage of losses based on past data

• By operating on the basis of risk pooling

What is the importance of insurance to businesses?

• It does not facilitate trade between countries

• It provides a source of capital for business investors

• It does not provide coverage against personal risk when an individual is not able to manage it

• It discourages enterprise or industry by covering risk of business firms