CH 3: Investment Insurance

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What is the primary purpose of insurance in a business context?

Providing protection against potential losses (correct)

Ensuring tax compliance

Promoting competition

Generating profits for the business

In an insurance contract, who is the insurer?

The insurance company providing coverage (correct)

The government regulatory body

The insured individual or business

The insurance agent selling the policy

What is the role of premiums in an insurance policy?

Compensating the insured for losses

Ensuring tax deductions for the business

Maximizing insurance company profits

Paying for the coverage provided by the policy (correct)

Which term refers to a formal request by the insured to the insurer for payment due to a loss covered by the policy?

Claim Signup and view all the answers

Why is it crucial for businesses to understand insurance policies' terms and conditions?

To maximize benefits and coverage Signup and view all the answers

What differentiates compulsory insurance from non-compulsory insurance?

Mandatory requirement by law Signup and view all the answers

Who agrees to compensate the insured for financial losses in an insurance contract?

Insurer (insurance company) Signup and view all the answers

'Policy' in an insurance context refers to:

'Terms and conditions of coverage' Signup and view all the answers

'Claim' is best described as:

'Formal request for payment due to a loss' Signup and view all the answers

What is the role of premiums in an insurance policy?

Paying for the coverage provided by the policy Signup and view all the answers

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 Signup and view all the answers

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) Signup and view all the answers

Which type of insurance covers damage or loss of business property due to events like fire, theft, and natural disasters?

Property Insurance Signup and view all the answers

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 Signup and view all the answers

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 Signup and view all the answers

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 Signup and view all the answers

Which insurance policy protects against claims resulting from injuries and damage to people or property?

Liability Insurance Signup and view all the answers

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 Signup and view all the answers

Which insurance policy covers legal and court costs of defending any claims of bodily harm caused by defective products?

Product Liability Insurance Signup and view all the answers

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 Signup and view all the answers

What is the primary function of insurance in a business context?

To provide financial compensation for losses incurred due to unforeseen circumstances Signup and view all the answers

Which party is responsible for paying premiums in an insurance contract?

The insured (individual or business) Signup and view all the answers

What is the primary purpose of a claim in an insurance context?

To formally request payment from the insurer due to a covered loss Signup and view all the answers

Which principle in insurance contracts requires both parties to act honestly and disclose all relevant information?

Principle of Utmost Good Faith (Uberrima Fides) Signup and view all the answers

What is the term used when the value of the insurance coverage exceeds the actual value of the insured item?

Overinsurance Signup and view all the answers

Which type of insurance typically covers legal and court costs associated with defending claims of bodily harm caused by defective products?

Liability Insurance Signup and view all the answers

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 Signup and view all the answers

Which type of insurance typically covers damage or loss of business property due to events like fire, theft, and natural disasters?

Property Insurance Signup and view all the answers

What is the primary distinction between compulsory insurance and non-compulsory insurance?

Compulsory insurance is mandatory by law, while non-compulsory insurance is optional Signup and view all the answers

In an insurance contract, who is considered the insurer?

The insurance company providing the coverage Signup and view all the answers

Which of the following is NOT a compulsory insurance policy mentioned in the text?

Professional Indemnity Insurance Signup and view all the answers

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 Signup and view all the answers

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. Signup and view all the answers

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 Signup and view all the answers

Which type of insurance policy covers legal and court costs of defending claims of bodily harm caused by defective products?

Product Liability Insurance Signup and view all the answers

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 Signup and view all the answers

Which principle in insurance policies requires both parties (insurer and insured) to act honestly and disclose all material facts?

Utmost Good Faith (Uberrima Fides) Signup and view all the answers

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 Signup and view all the answers

Which of the following statements about insurance in a business context is NOT true?

Insurance is solely a regulatory or legal requirement for businesses. Signup and view all the answers

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 Signup and view all the answers

Which principle in insurance contracts ensures that the insured does not profit from the occurrence of an insured event?

Principle of Indemnity Signup and view all the answers

What is the primary purpose of the Average Clause in insurance policies?

To prevent over-insurance by reducing the claim payout proportionally Signup and view all the answers

Which insurance principle dictates that the insured must have an insurable interest in the subject matter of the insurance contract?

Principle of Insurable Interest Signup and view all the answers

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 Signup and view all the answers

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 Signup and view all the answers

What is the term used to describe a situation where the insured holds multiple insurance policies covering the same risk or loss?

Double Insurance Signup and view all the answers

Which principle in insurance contracts requires both parties to act honestly and disclose all material facts?

Principle of Utmost Good Faith Signup and view all the answers

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 Signup and view all the answers

Which insurance principle dictates that the insured cannot recover more than the actual loss or damage sustained?

Principle of Indemnity Signup and view all the answers

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 Signup and view all the answers

Which principle ensures that the insured is compensated for the actual financial loss suffered, neither more nor less?

Indemnity Signup and view all the answers

If a business owner insures their property for an amount higher than its actual value, what is this situation called?

Over-insurance Signup and view all the answers

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) Signup and view all the answers

If an asset is insured for less than its actual value, which clause is used to calculate the compensation?

Average Clause Signup and view all the answers

Which principle requires both the insurer and the insured to disclose all material facts relevant to the insurance policy?

Utmost Good Faith (Uberrima Fides) Signup and view all the answers

Which type of insurance policy protects businesses against claims resulting from injuries and damage to people or property caused by their operations?

Liability Insurance Signup and view all the answers

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 Signup and view all the answers

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) Signup and view all the answers

Which insurance policy offers compensation to employees who are injured or contract diseases through their employment?

Compensation for Occupational Injuries and Diseases Act (COIDA) Signup and view all the answers

What is the primary role of insurance in ensuring business sustainability?

Enabling businesses to withstand financial shocks and maintain operational continuity Signup and view all the answers

CH 3: Investment Insurance

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Questions and Answers

What is the primary purpose of insurance in a business context?

In an insurance contract, who is the insurer?

What is the role of premiums in an insurance policy?

Which term refers to a formal request by the insured to the insurer for payment due to a loss covered by the policy?

Why is it crucial for businesses to understand insurance policies' terms and conditions?

What differentiates compulsory insurance from non-compulsory insurance?

Who agrees to compensate the insured for financial losses in an insurance contract?

'Policy' in an insurance context refers to:

'Claim' is best described as:

What is the role of premiums in an insurance policy?

What is the primary purpose of the Unemployment Insurance Fund (UIF)?

Which insurance policy compensates individuals injured in road accidents for medical expenses and loss of earnings?

Which type of insurance covers damage or loss of business property due to events like fire, theft, and natural disasters?

What is the principle of Utmost Good Faith (Uberrima Fides) in insurance policies?

What is the purpose of the Average Clause in insurance policies?

What is the term used to describe a situation where the value of the insurance coverage exceeds the value of the insured item?

Which insurance policy protects against claims resulting from injuries and damage to people or property?

What is the term used when the insurer chooses to reinstate or replace the damaged property instead of paying out the claim in cash?

Which insurance policy covers legal and court costs of defending any claims of bodily harm caused by defective products?

What is the principle of Insurable Interest in insurance policies?

What is the primary function of insurance in a business context?

Which party is responsible for paying premiums in an insurance contract?

What is the primary purpose of a claim in an insurance context?

Which principle in insurance contracts requires both parties to act honestly and disclose all relevant information?

What is the term used when the value of the insurance coverage exceeds the actual value of the insured item?

Which type of insurance typically covers legal and court costs associated with defending claims of bodily harm caused by defective products?

What is the primary purpose of the Average Clause in insurance policies?

Which type of insurance typically covers damage or loss of business property due to events like fire, theft, and natural disasters?

What is the primary distinction between compulsory insurance and non-compulsory insurance?

In an insurance contract, who is considered the insurer?

Which of the following is NOT a compulsory insurance policy mentioned in the text?

What is the purpose of the Indemnity principle in insurance policies?

Which of the following statements about Over-insurance is correct?

What is the purpose of the Average Clause in insurance policies?

Which type of insurance policy covers legal and court costs of defending claims of bodily harm caused by defective products?

What is the term used when the insurer chooses to reinstate or replace the damaged property instead of paying out the claim in cash?

Which principle in insurance policies requires both parties (insurer and insured) to act honestly and disclose all material facts?

What is the purpose of the Insurable Interest principle in insurance policies?

Which of the following statements about insurance in a business context is NOT true?

What is the primary purpose of the Road Accident Fund (RAF)/Road Accident Benefit Scheme (RABS)?

Which principle in insurance contracts ensures that the insured does not profit from the occurrence of an insured event?

What is the primary purpose of the Average Clause in insurance policies?

Which insurance principle dictates that the insured must have an insurable interest in the subject matter of the insurance contract?

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?

Which insurance principle allows the insurer to recover the amount paid to the insured from a third party responsible for the loss?

What is the term used to describe a situation where the insured holds multiple insurance policies covering the same risk or loss?

Which principle in insurance contracts requires both parties to act honestly and disclose all material facts?

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?

Which insurance principle dictates that the insured cannot recover more than the actual loss or damage sustained?

What is the term used when the insurer chooses to reinstate or replace the damaged property instead of paying out the claim in cash?

Which principle ensures that the insured is compensated for the actual financial loss suffered, neither more nor less?

If a business owner insures their property for an amount higher than its actual value, what is this situation called?

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?

If an asset is insured for less than its actual value, which clause is used to calculate the compensation?

Which principle requires both the insurer and the insured to disclose all material facts relevant to the insurance policy?

Which type of insurance policy protects businesses against claims resulting from injuries and damage to people or property caused by their operations?

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?

Which insurance policy compensates individuals injured in road accidents for medical expenses, loss of earnings, and provides support to dependents in case of death?

Which insurance policy offers compensation to employees who are injured or contract diseases through their employment?

What is the primary role of insurance in ensuring business sustainability?

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