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B Com Exam  >  B Com Tests  >  Principles of Insurance  >  Test: Insurance Contract - 2 - B Com MCQ

Test: Insurance Contract - 2 - B Com MCQ


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10 Questions MCQ Test Principles of Insurance - Test: Insurance Contract - 2

Test: Insurance Contract - 2 for B Com 2024 is part of Principles of Insurance preparation. The Test: Insurance Contract - 2 questions and answers have been prepared according to the B Com exam syllabus.The Test: Insurance Contract - 2 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Insurance Contract - 2 below.
Solutions of Test: Insurance Contract - 2 questions in English are available as part of our Principles of Insurance for B Com & Test: Insurance Contract - 2 solutions in Hindi for Principles of Insurance course. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free. Attempt Test: Insurance Contract - 2 | 10 questions in 10 minutes | Mock test for B Com preparation | Free important questions MCQ to study Principles of Insurance for B Com Exam | Download free PDF with solutions
Test: Insurance Contract - 2 - Question 1
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Which principle of insurance ensures that the insured is put back into the same financial position as before the loss?

Detailed Solution for Test: Insurance Contract - 2 - Question 1
The principle of indemnity asserts that on the happening of a loss, the insured shall be put back into the same financial position as he used to occupy immediately before the loss. This principle ensures that the insured does not receive more or less than the actual amount of loss sustained. It is important to keep the business of insurance on track and free from wagering. This principle also checks the moral hazard of a man and allows him to get the actual amount of loss and not more than that.
Test: Insurance Contract - 2 - Question 2
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What is the principle of insurance that states if a risk is insured by multiple carriers, and one carrier has paid out a claim, that carrier is entitled to collect proportionate coverage from other carriers?

Detailed Solution for Test: Insurance Contract - 2 - Question 2
The principle of contribution in insurance states that if a risk is insured by multiple carriers and one carrier has paid out a claim, that carrier is entitled to collect proportionate coverage from other carriers. This ensures that the total amount insured does not exceed the amount of damage or loss incurred, in accordance with the principle of indemnity. It applies primarily to property and casualty insurance claims, such as fire and marine claims.
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Test: Insurance Contract - 2 - Question 3
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Which principle of insurance requires both the insured and the insurer to act in good faith and disclose all material facts related to the risk?

Detailed Solution for Test: Insurance Contract - 2 - Question 3
The principle of utmost good faith requires both the insured and the insurer to act in good faith and disclose all material facts related to the risk. It is the duty of the insured to disclose all facts related to the risk to be covered, while the insurer must inform the insured of all the terms of the contract. This principle ensures that there is transparency and fairness in the insurance contract, and that both parties have the necessary information to make informed decisions.
Test: Insurance Contract - 2 - Question 4
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Which principle of insurance determines the actual cause of loss or damage and whether it is a result of an insured peril?
Detailed Solution for Test: Insurance Contract - 2 - Question 4
The principle of proximate cause determines the actual cause of loss or damage and whether it is a result of an insured peril. It looks for the active, efficient cause that sets in motion a train of events which brings about a result. Proximate cause is the immediate cause and not the remote cause. It is the cause that actually brought about the result. This principle helps in deciding the playability of a claim and to what extent it is payable, especially in complex situations where multiple perils are involved.
Test: Insurance Contract - 2 - Question 5
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Which principle of insurance requires companies to disclose information about their financial condition, operating results, and management compensation?
Detailed Solution for Test: Insurance Contract - 2 - Question 5
The principle of utmost good faith requires companies to disclose information about their financial condition, operating results, and management compensation. This is a requirement for publicly traded companies and is part of the disclosure requirements imposed by the Securities and Exchange Commission (SEC). Companies must prepare and issue annual reports, known as 10-Ks, which provide detailed information about their financial performance and other important areas. This ensures transparency and allows investors to make informed decisions.
Test: Insurance Contract - 2 - Question 6
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Which principle of insurance ensures that information is adequately disseminated by a company, so everyone is on an even playing field?
Detailed Solution for Test: Insurance Contract - 2 - Question 6
The principle of disclosure ensures that information is adequately disseminated by a company, so everyone is on an even playing field. It requires companies to release all relevant information that may influence an investment decision, both good and bad. This principle was established to prevent selective disclosures that would put some investors at a disadvantage. By requiring companies to disclose information, it promotes fairness and transparency in the investing process.
Test: Insurance Contract - 2 - Question 7
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Which principle of insurance requires the insured to disclose all material facts related to the risk and the insurer to inform the insured of all the terms of the contract?
Detailed Solution for Test: Insurance Contract - 2 - Question 7
The principle of utmost good faith requires the insured to disclose all material facts related to the risk and the insurer to inform the insured of all the terms of the contract. It ensures transparency and fairness in the insurance contract, allowing both parties to make informed decisions. This principle imposes a duty on the insured to provide accurate and complete information, while the insurer must provide all relevant information about the terms of the contract. It helps maintain trust and integrity in the insurance industry.
Test: Insurance Contract - 2 - Question 8
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Which principle of insurance requires brokerage firms and analysts to disclose any information that may influence investment decisions?
Detailed Solution for Test: Insurance Contract - 2 - Question 8
The principle of utmost good faith requires brokerage firms and analysts to disclose any information that may influence investment decisions. This includes disclosing any equities that they own to limit conflict of interest issues. It is important for analysts to provide unbiased and transparent information to investors, allowing them to make informed decisions. This principle ensures fairness in the investment process and helps maintain trust in the financial markets.
Test: Insurance Contract - 2 - Question 9
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Which principle of insurance ensures that a claim is payable based on the active, efficient cause that sets in motion a train of events leading to the loss?
Detailed Solution for Test: Insurance Contract - 2 - Question 9
The principle of proximate cause ensures that a claim is payable based on the active, efficient cause that sets in motion a train of events leading to the loss. It looks for the immediate cause of the loss and not the remote cause. The proximate cause is the actual cause that brought about the result. This principle helps in determining the playability of a claim and to what extent it is payable, especially in complex situations where multiple perils are involved.
Test: Insurance Contract - 2 - Question 10
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What is the act of releasing all relevant information pertaining to a company that may influence an investment decision?
Detailed Solution for Test: Insurance Contract - 2 - Question 10
Disclosure is the act of releasing all relevant information pertaining to a company that may influence an investment decision. Companies are required to disclose both good and bad information to ensure fairness and transparency in the investing process. Disclosure requirements were implemented to prevent selective disclosures that would put investors and company stakeholders at a disadvantage. It is a necessary requirement for companies listed on major stock exchanges and helps create an even playing field for all investors.
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