Sample Questions

IC 01 Principles of Insurance Mock Tests — 5 random MCQs with answers & explanations

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These 5 questions are randomly selected (standard MCQs only, not case-based).

Q1 Which of the following is NOT classified as a consequential (indirect) loss?

  • A. Loss of rental income
  • B. The cost of the insurance premium Correct Answer
  • C. Loss of business production
  • D. Expenses for clearing debris
Explanation:
Consequential losses are indirect results of a disaster, such as lost rent or production. The insurance cost (premium) is a direct business expense, not a loss caused by a specific event.

Marks: 1

Q2 Which of these factors is generally NOT relevant when deciding the price (premium) of an insurance policy?

  • A. Market competition
  • B. Recent legal judgments affecting coverage
  • C. A change in the company's CEO Correct Answer
  • D. Reinsurance rate increases
Explanation:
Pricing is based on risk factors, competition, and costs like reinsurance. Changing a CEO is a management event and does not directly change the statistical risk of the people or property being insured.

Marks: 1

Q3 Which specific branch of insurance has a law that explicitly defines its core principles?

  • A. Fire Insurance
  • B. Life Insurance
  • C. Marine Insurance Correct Answer
  • D. Motor Insurance
Explanation:
The Marine Insurance Act of 1963 is a specific piece of legislation that clearly outlines the principles and rules governing marine insurance contracts.

Marks: 1

Q4 Which of the following statements regarding "Common Law" is incorrect?

  • A. It is only used in India. Correct Answer
  • B. It is based on previous court decisions.
  • C. Lower courts must follow the rulings of higher courts.
  • D. Many insurance principles come from Common Law.
Explanation:
Common Law is a legal system used in many countries worldwide, not just in India.

Marks: 1

Q5 When an insurance company tries to estimate future losses, the result is typically:

  • A. Exactly what will happen
  • B. Close to the expected average Correct Answer
  • C. Completely random
  • D. Unrelated to past data
Explanation:
By studying large amounts of past data, insurers can make very good estimates that are usually close to the actual future results.

Marks: 1

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