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Insurance Code MCQ

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The insured possesses an interest of some kind susceptible of pecuniary estimation known as a. b. c. d. Insurers interest Insurable interest Assumption of risk Assumption of loss

2. The following are characteristics of an insurance contract except for one: a. b. c. d. Aleatory contract Contract of indemnity Personal contract Special contract

3. The phrase doing an insurance business includes the following cases except for one: a. Making or prosing to make, as insurer, any insurance contract. b. Making or proposing to make, as surety, any contract of suretyship as a vocation and not as merely incidental to any other legitimate business or activity. c. A party guarantees the performance by another of an obligation or undertaking in favor of a third person. d. Doing any kind of business, including reinsurance business, specifically recognized as constituting the doing of an insurance business.

4. Which of the following statements is not correct? a. A past event may be covered by insurance provided the loss is unknown to both parties and they expressly stipulated that prior loss is insured by the policy. b. A past event cannot be covered by insurance if the loss is unknown to both parties and they expressly stipulated that prior loss is insured by the policy. c. A married woman may insure her own life and that of her children without the consent of the husband. d. A married woman may insure her separate property without the consent of the husband as she has the right to administer the same.

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5. Anyone may be insured except a. b. c. d. A public enemy A partnership A corporation An association

6. What are the effects of insurance procured by the mortgagor without assigning the loss to the mortgagee? a. Only the mortgagor may recover from the insurer since the policy taken by the mortgagor shall be applied exclusively to his interest. b. The mortgage constituted shall not extend to the proceeds of the indemnity paid by the insurer of the mortgaged property. c. Both the mortgagor and the mortgagee may recover from the loss. d. The mortgagor cannot recover from the loss.

7. Every person has insurable interest on the life and health of the following except for one: a. b. c. d. Of himself, of his spouse and of his children Of any person on whom he depends wholly or in part for education or support Of any insurer whom he has taken the insurance Of any person under a legal obligation to him for the payment of money or respecting property or services

8. Anyone may be designated as beneficiary in life insurance contract even though he is a stranger and has no insurable interest in the life of the insured except those who are forbidden by law to receive donation from the insured such as the following excluding one: a. Those made between persons guilty of adultery or concubinage at the time of the designation b. Those made between persons found guilty of the same criminal offense in consideration thereof c. Those made to a public officer or his wife, descendants, ascendants, by reason of his office d. Those made to illegitimate children born out of illicit relations

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9. In case of failure to designate a beneficiary or the beneficiary designated is disqualified a. b. c. d. The life insurance proceeds should accrue to the spouse alone The life insurance proceeds should accrue to the children alone The life insurance proceeds should accrue to the estate of the insured The life insurance proceeds should accrue to the estate of the beneficiary

10. What is the effect of the death of the original owner of a life insurance policy covering the life of a minor? a. The death of the original owner of the policy vests in the minor all rights, title and interest in the policy. b. The death of the original owner of the policy does not vests in the minor all the rights, title and interest in the policy. c. The death of the original owner of the policy vests all the rights, title and interest in the estate of the minor. d. The death of the original owner of the policy does not vest all the rights, title and interest in the estate of the minor.

11. Except for one, an insurable interest in property may consist in a. b. c. d. An existing interest An inchoate interest founded on an existing interest An expectancy not founded on any existing interest in property An expectancy, coupled with an existing interest in that out of which the expectancy arise

12. Which of the following is not true with respect to insurable interest in property? a. b. c. d. It is based on pecuniary interest. The interest must exist at the time the policy takes effect and at the time of the loss. It is limited to the actual value of the damage the insured may suffer. There is no limit on the amount of insurable interest.

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13. Thor is the owner of a house which he insured against fire. During the existence of the policy, Thor died and the house was inherited by his only daughter, Jane. The house was then destroyed by fire one month after Thor died. May Jane recover from the insurer? a. No, she cannot recover because when she inherited the house, the fire insurance policy was not automatically transferred to her. b. Yes, she may recover because when she inherited the house, the fire insurance policy was automatically transferred to her. c. No, she cannot recover because she does not have an insurable interest over the property insured. d. Yes, she may recover because she has an insurable interest over the property insured.

14. The following are void stipulations in an insurance contract except for one: a. For the payment of loss whether the person insured has or not any insurable interest in the subject matter of insurance. b. The policy shall be received as proof of such interest. c. The policy executed by way of gaming or wagering. d. The policy will inure to the benefit of those who during the continuance of the risk may become the owner of the interest insured.

15. Except for one, the following are true with respect to concealment. a. To be guilty of concealment, the party must have knowledge of the fact concealed at the time of the effectivity of the policy. b. Concealment presupposes knowledge of the fact concealed on the part of the party charged with concealment. c. Concealment of material facts before reinstatement of a lapsed policy does not entitle the other to rescind the contract. d. Failure to communicate information acquired after the effectivity of the policy will not be a ground to rescind the contract on the ground of concealment.

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16. Each party is bound to communicate to the other all facts that meet the following requisites excluding one: a. b. c. d. He makes warranty as to such facts Such facts must be within his knowledge Must be material to the contract. Other party has not the means of ascertaining such fact

17. Neither party to a contract of insurance is bound to communicate information of the matters following, except in answer to the inquiries of the other a. Those which the other did not know b. Those of which the other should divulge c. Those which prove or tend to prove the existence of risks not excluded by a warranty, and which are material d. Those which in the exercise of ordinary care, the other ought to know, and of which the former has no reason to suppose him ignorant

18. The oral or written statement of a fact or a condition affecting the risk made by the insured to the insurance company, tending to induce the insurer to assume the risk is known as a. b. c. d. Concealment Warranty Representation Communication

19. Which of the following statements is not correct with respect to representation? a. Representation must be presumed to refer to the date on which the contract goes into effect. b. Representation must be literally true and correct in every respect. c. Representation may be altered, withdrawn before the insurance is effected but not afterwards. d. Representation is a mere collateral inducement to a contract and not a part of the policy.

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20. Denise represented that she never had cancer or tumor or undergone operation notwithstanding the fact that two months before the issuance of the policy, she was operated on for cancer. May the insurer rescind the contract? a. b. c. d. Yes, because the insured was guilty of misrepresentation of a material fact. No, because the insurer is bound to assume the risk for failure to make additional inquiry. Yes, because the insured was guilty of dishonesty. No, because the insured conceal a fact not material to the contract.

21. The following are the requisites for incontestability except for one: a. b. c. d. The policy must be a life insurance policy. It must be payable on the death of the insured The insurer must have insurable interest in the subject matter of the insurance. It must have been in force during the lifetime of the insured for a period of two years.

22. A written memorandum of the important terms of a preliminary contract of insurance intended to give temporary protection pending the investigation of the risk by the insurer or until the issuance of a formal policy is known as a. b. c. d. Policy of insurance Rider Cover note Provisional policy

23. It contemplates successive insurances, and which provides that the object of the policy may be from time to time defined, especially as to the subjects of insurance, by additional statements or endorsements. a. b. c. d. Running policy Open policy Valued policy Provisional policy

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24. Is one in which the value of the things insured is not agreed upon, but is left to be ascertained in case of loss. a. b. c. d. Running policy Open policy Valued policy Provisional policy

25. Is one which expresses on its face an agreement that the things insured shall be valued at a specified sum. a. b. c. d. Running policy Open policy Valued policy Provisional policy

26. What is the period of prescription in motor vehicle insurance? a. b. c. d. one year from the date of accident one year from the time one applied for insurance one year from denial of the claim one year from the time the cause of action accrues

27. It is a written statement or stipulation inserted on the face of the contract itself, or clearly incorporated therein as part thereof by proper words of reference, whereby the insured expressly contracts as to the existence of certain facts, circumstances or conditions, the literal truth of which is essential to the validity of the contract of insurance. a. Cover note b. Policy c. Provisional Policy d. Warranty

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28. Which of the following is true with respect to representation? a. b. c. d. While they precede the contract, they are collateral thereto not a part thereof Actually and must be part of the contract Made only by the insured Must be strictly and literally performed

29. Which of the following is not true with respect to warranty? a. b. c. d. While they precede the contract, they are collateral thereto not a part thereof Is actually and must be part of the contract Is made only by the insured Must be strictly and literally performed

30. The amount of money the insurer agrees to pay to the holder of the policy if he surrenders it and releases his claim upon it. a. b. c. d. Overdue premium Cash surrender value Paid up capital Loan value

31. It means that no more payments are required, and consists of insurance for life in such an amount as the sum available therefore, considered as a single and final premium, will purchase. a. b. c. d. Paid up insurance Extended insurance Cash surrender value Automatic loan clause

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32. It is a stipulation in the policy providing that upon default in the payment of premium, the same shall be paid from the loan value of the policy until that value is consumed. a. b. c. d. Paid up insurance Extended insurance Cash surrender value Automatic loan clause

33. Is where the insurance originally contracted for is continued for such period as the amount available therefore will pay when it will terminate. a. b. c. d. Paid up insurance Extended insurance Cash surrender value Automatic loan clause

34. Except for one, the insured is entitled to a return of the premium paid in the following instances: a. When no part of the interest in the thing insured is exposed to any of the perils insured against. b. Where the insurance is made for a definite period of time and the insured surrenders his policy before the expiration of that period. c. In case of over-insurance. d. When by no default of the insured other than actual fraud, the insurer occurred any liability under the policy.

35. A obtained a fire insurance policy for one year. He paid premium amounting to P2,400.00 a year. On the sixth month, he surrendered the policy. How much should be return to the insured? a. He is entitled to a return of the premium corresponding to the unexpired period of six months or one-half of the premium paid, or P1,200.00. b. He is entitled to a return of the whole premium paid. c. He is not entitled to the premium because the policy did not yet reach one year. d. He is not entitled to the premium because he did not fully paid the policy.

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36. Premiums are recoverable in the following instances except a. If the peril insured against has existed, and the insurer has been liable for any period, the peril being entire and indivisible. b. In life insurance. c. In property insurance. d. When the insured is guilty of fraud or misrepresentation.

37. The following are true as to the liability of the insurer with respect to losses except a. b. c. d. Loss of which a peril insured against was not the proximate cause. Loss caused by efforts to rescue the thing insured from a peril insured against it. Loss caused by the negligence of the insured. Loss, the immediate cause of which the peril insured against unless the proximate cause thereof was excepted in the contract.

38. Except for one, the insurer will not be subrogated to the rights of the insured in the following instances a. In life insurance because subrogation exists only when the insurance is a contract of indemnity. b. When the proximate cause of the damage was the negligence of the insurer himself. c. When the insurer pays to the insured a loss not covered by the policy. d. When the insured failed to comply with the legal or stipulated condition precedent prior to the filing of an action against the wrongdoer.

39. It exists where the same person is insured by several insurers separately in respect to the same subject and interest. a. b. c. d. Reinsurance Subrogation Double insurance Over-insurance

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40. It is when an insured obtains a policy in an amount exceeding the value of his insurable interest. a. b. c. d. Reinsurance Subrogation Double insurance Over-insurance

41. Is one by which the insurer procures a third person to insure him against loss or liability by reason of such original insurance. a. b. c. d. Reinsurance Subrogation Double insurance Over-insurance

42. Which is not true with respect to double insurance? a. b. c. d. The insurer remains as insurer. The subject matter is property. The same interest and risk are insured with the insurer. It is the insurers risk or liability.

43. Which is true with respect to reinsurance? a. b. c. d. The insurer remains as insurer. The subject matter is property. The same interest and risk are insured with the insurer. It is the insurers risk or liability.

44. Except for one, perils of the ship are losses or damages resulting from a. Negligent failure of the ships owner to provide the vessel with proper equipment to convey the cargo under ordinary condition. b. Ordinary wear and tear of the ship c. One that could not be foreseen and not attributable to the fault of anybody d. Natural and inevitable action of the sea

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45. It signifies all the benefits derived by the owner either from the chartering of the ship or its employment for the carriage of his goods or of those others. a. b. c. d. Freightage Insurable interest Loan on bottomry Loan on respondentia

46. The following except for one are warranties implied in marine insurance a. Where the nationality or neutrality of a ship or cargo is expressly warranted, the ship will carry the requisite documents to show such nationality or neutrality b. The ship is unseaworthy c. No improper deviation from the voyage will be made d. The vessel will not engage in illegal venture

47. A deviation is proper in the following instances except a. When in good faith, for the purpose of saving human life, or relieving another vessel in distress b. When caused by circumstances over which the master or the owner of the ship has any control c. When necessary to comply with a warranty or avoid a peril, whether or not the peril is insured against d. When made in good faith, and upon reasonable grounds of belief in its necessity to avoid a peril

48. It includes all expenses and damages caused to the vessel or to her cargo which have not inured to the common benefit and profit of all the persons interested in the vessel and her cargo. a. b. c. d. General or gross average Technical or total loss Simple or particular average Constructive total loss

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49. It includes all the damages and expenses which are deliberately caused in order to save the vessel, its cargo, or both at the same time, from real and known risk. a. b. c. d. General or gross average Technical or total loss Simple or particular average Constructive total loss

50. It is the act of the insured by which after a constructive total loss, he declares the relinquishment to the insurer of his interest in the thing insured. a. b. c. d. Alteration Indemnity Valuation Abandonment

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