NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Insurance
Caselet: Ms. Kavita Rao insures her car with an own-damage policy. At claim time she discovers she had not disclosed that the car was earlier used commercially, a fact material to the insurer's risk decision. Which principle is most directly breached?
The principle breached is utmost good faith. The proposer must disclose all material facts that affect the insurer's decision to accept the risk or set the premium, and hiding earlier commercial use of the car is a material non-disclosure.
- AInsurable interest
- BUtmost good faithCorrect
- CProximate cause
- DContribution
Explanation
Insurance contracts require full disclosure of material facts by the proposer. Non-disclosure of earlier commercial use breaches utmost good faith (uberrimae fidei). Insurable interest concerns financial stake; proximate cause concerns cause of loss; contribution concerns multiple policies.
Did you get it right without looking?
One question tells you little. A timed set on Basics of Insurance shows your real accuracy, how long you take and where you lose marks.
More Basics of Insurance questions
- In insurance, the principle of 'subrogation' allows the insurer, after paying a covered indemnity claim, to do which of the following?
- In insurance, the principle of 'subrogation' allows the insurer, after paying a loss claim under an indemnity contract, to:
- Mr. Raman's car, worth Rs 8,00,000, is stolen. His policy has an insured declared value of Rs 8,00,000. He also had a second policy of Rs 8,…
- In insurance, the principle of subrogation allows an insurer who has paid a claim under an indemnity contract to:
- Under the principle of utmost good faith (uberrimae fidei), which statement is correct for a life insurance proposal?
- In insurance, the principle of 'insurable interest' requires that the person buying a property insurance policy must: