Chapter 12 & 13

What is an insurance contract?

• A loan agreement.

• A personal savings plan.

• A legal agreement that transfers risk from the insured to the insurer.

Who is the person that transfers the risk to the insurance company?

• Insured

• Insurer

• Beneficiary

Which of the following is not a principle of insurance?

• Insurable Interest

• Utmost Good Faith

• Profit Maximization

What does the principle of ‘Utmost Good Faith’ require?

• The insured must disclose all material facts.

• The insured must lower their premiums each year.

• The insurer must pay all claims regardless of circumstances.

What does indemnity in insurance ensure?

• The insured can profit from their loss.

• The insured is returned to the same financial position as before the loss.

• The insurer increases premiums after each claim.

What does subrogation allow the insurer to do?

• Cancel a policy after a claim.

• Claim from a third party after compensating the insured.

• Increase the premium after compensation.

Which principle prevents the insured from profiting from their loss?

• Indemnity

• Proximate Cause

• Contingency Insurance

What is proximate cause in insurance?

• The nearest insurance office to the insured.

• The most significant or dominant cause of a loss.

• The least significant factor in a loss.

What is life insurance?

• A policy that covers property damage.

• A contract that provides financial protection against the risk of death.

• A plan to invest in property.

Which type of insurance provides coverage for medical treatment and hospitalization?

• Fire Insurance

• Motor Insurance

• Medical & Health Insurance