60 Questions
What is the primary purpose of insurance in a business context?
Providing protection against potential losses
In an insurance contract, who is the insurer?
The insurance company providing coverage
What is the role of premiums in an insurance policy?
Paying for the coverage provided by the policy
Which term refers to a formal request by the insured to the insurer for payment due to a loss covered by the policy?
Claim
Why is it crucial for businesses to understand insurance policies' terms and conditions?
To maximize benefits and coverage
What differentiates compulsory insurance from non-compulsory insurance?
Mandatory requirement by law
Who agrees to compensate the insured for financial losses in an insurance contract?
Insurer (insurance company)
'Policy' in an insurance context refers to:
'Terms and conditions of coverage'
'Claim' is best described as:
'Formal request for payment due to a loss'
What is the role of premiums in an insurance policy?
Paying for the coverage provided by the policy
What is the primary purpose of the Unemployment Insurance Fund (UIF)?
To provide short-term relief to workers who become unemployed or unable to work due to specific reasons
Which insurance policy compensates individuals injured in road accidents for medical expenses and loss of earnings?
Road Accident Fund (RAF)/Road Accident Benefit Scheme (RABS)
Which type of insurance covers damage or loss of business property due to events like fire, theft, and natural disasters?
Property Insurance
What is the principle of Utmost Good Faith (Uberrima Fides) in insurance policies?
Both parties, the insurer and the insured, are expected to act honestly and disclose all material facts relevant to the insurance policy
What is the purpose of the Average Clause in insurance policies?
To calculate compensation when an asset is under-insured, based on the proportion of the coverage to the actual value of the asset
What is the term used to describe a situation where the value of the insurance coverage exceeds the value of the insured item?
Over-insurance
Which insurance policy protects against claims resulting from injuries and damage to people or property?
Liability Insurance
What is the term used when the insurer chooses to reinstate or replace the damaged property instead of paying out the claim in cash?
Reinstatement Value
Which insurance policy covers legal and court costs of defending any claims of bodily harm caused by defective products?
Product Liability Insurance
What is the principle of Insurable Interest in insurance policies?
The insured must have a legal or financial interest in the object of insurance, ensuring they stand to suffer a financial loss if the insured event occurs
What is the primary function of insurance in a business context?
To provide financial compensation for losses incurred due to unforeseen circumstances
Which party is responsible for paying premiums in an insurance contract?
The insured (individual or business)
What is the primary purpose of a claim in an insurance context?
To formally request payment from the insurer due to a covered loss
Which principle in insurance contracts requires both parties to act honestly and disclose all relevant information?
Principle of Utmost Good Faith (Uberrima Fides)
What is the term used when the value of the insurance coverage exceeds the actual value of the insured item?
Overinsurance
Which type of insurance typically covers legal and court costs associated with defending claims of bodily harm caused by defective products?
Liability Insurance
What is the primary purpose of the Average Clause in insurance policies?
To limit the insurer's liability in case of partial losses or underinsurance
Which type of insurance typically covers damage or loss of business property due to events like fire, theft, and natural disasters?
Property Insurance
What is the primary distinction between compulsory insurance and non-compulsory insurance?
Compulsory insurance is mandatory by law, while non-compulsory insurance is optional
In an insurance contract, who is considered the insurer?
The insurance company providing the coverage
Which of the following is NOT a compulsory insurance policy mentioned in the text?
Professional Indemnity Insurance
What is the purpose of the Indemnity principle in insurance policies?
To compensate the insured for the exact financial loss suffered, no more, no less
Which of the following statements about Over-insurance is correct?
It refers to a situation where the value of the insurance coverage exceeds the value of the insured item.
What is the purpose of the Average Clause in insurance policies?
To calculate compensation when an asset is under-insured, based on the proportion of the coverage to the actual value of the asset
Which type of insurance policy covers legal and court costs of defending claims of bodily harm caused by defective products?
Product Liability Insurance
What is the term used when the insurer chooses to reinstate or replace the damaged property instead of paying out the claim in cash?
Reinstatement Value
Which principle in insurance policies requires both parties (insurer and insured) to act honestly and disclose all material facts?
Utmost Good Faith (Uberrima Fides)
What is the purpose of the Insurable Interest principle in insurance policies?
To require the insured to have a legal or financial interest in the insured object, ensuring they stand to suffer a financial loss if the insured event occurs
Which of the following statements about insurance in a business context is NOT true?
Insurance is solely a regulatory or legal requirement for businesses.
What is the primary purpose of the Road Accident Fund (RAF)/Road Accident Benefit Scheme (RABS)?
To compensate individuals injured in road accidents for medical expenses, loss of earnings, and in the case of death, provide support to dependents
Which principle in insurance contracts ensures that the insured does not profit from the occurrence of an insured event?
Principle of Indemnity
What is the primary purpose of the Average Clause in insurance policies?
To prevent over-insurance by reducing the claim payout proportionally
Which insurance principle dictates that the insured must have an insurable interest in the subject matter of the insurance contract?
Principle of Insurable Interest
In the context of insurance, what is the term used to describe a situation where multiple insurers share liability for the same risk or loss?
Contribution
Which insurance principle allows the insurer to recover the amount paid to the insured from a third party responsible for the loss?
Principle of Subrogation
What is the term used to describe a situation where the insured holds multiple insurance policies covering the same risk or loss?
Double Insurance
Which principle in insurance contracts requires both parties to act honestly and disclose all material facts?
Principle of Utmost Good Faith
In the context of insurance, what is the term used to describe a situation where the value of the insurance coverage exceeds the actual value of the insured item?
Over-insurance
Which insurance principle dictates that the insured cannot recover more than the actual loss or damage sustained?
Principle of Indemnity
What is the term used when the insurer chooses to reinstate or replace the damaged property instead of paying out the claim in cash?
Reinstatement
Which principle ensures that the insured is compensated for the actual financial loss suffered, neither more nor less?
Indemnity
If a business owner insures their property for an amount higher than its actual value, what is this situation called?
Over-insurance
Which insurance policy is designed to provide short-term financial relief to workers who become unemployed or are unable to work due to specific circumstances?
Unemployment Insurance Fund (UIF)
If an asset is insured for less than its actual value, which clause is used to calculate the compensation?
Average Clause
Which principle requires both the insurer and the insured to disclose all material facts relevant to the insurance policy?
Utmost Good Faith (Uberrima Fides)
Which type of insurance policy protects businesses against claims resulting from injuries and damage to people or property caused by their operations?
Liability Insurance
Which principle requires the insured to have a legal or financial interest in the object of insurance to ensure they stand to suffer a financial loss if the insured event occurs?
Insurable Interest
Which insurance policy compensates individuals injured in road accidents for medical expenses, loss of earnings, and provides support to dependents in case of death?
Road Accident Fund (RAF)/Road Accident Benefit Scheme (RABS)
Which insurance policy offers compensation to employees who are injured or contract diseases through their employment?
Compensation for Occupational Injuries and Diseases Act (COIDA)
What is the primary role of insurance in ensuring business sustainability?
Enabling businesses to withstand financial shocks and maintain operational continuity
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