The 2017 WAEC Insurance examination paper tests students on foundational commercial risk management principles, policy documentation, and the operational framework of the insurance industry. Key recurring topics covered in these questions include motor and comprehensive vehicle insurance calculations, life and endowment policy structures, core insurance principles like indemnity and contribution, and local regulatory bodies operating within Nigeria. To get the most out of this practice page, focus on understanding the underlying calculation steps and legal principles behind each scenario rather than just memorizing final answers.
Topics in this paper
Eke bought a new car for N1.5M. The practice in the insurance industry is to pay 10% of the value of the vehicle as premium for comprehensive cover and 2.5% additional cover for strike, riot and civil commotion. Eke was issued a document and two weeks later, he was issued another document different from the first document issued. What is the premium payable for the comprehensive cover
Option D might be chosen by erroneously adding the optional 2.5% strike cover, but the base premium is calculated strictly as 10% of the vehicle's N1,500,000 value, giving N150,000. The additional cover for riots is an optional add-on and does not form part of the basic comprehensive premium calculation. Common mistake: Including optional add-on percentages when calculating base comprehensive insurance premiums.
Eke bought a new car for N1.5M. The practice in the insurance industry is to pay 10% of the value of the vehicle as premium for comprehensive cover and 2.5% additional cover for strike, riot and civil commotion. Eke was issued a document and two weeks later, he was issued another document different from the first document issued. The document issued to Eke within one week of the contract is
A student might select option B by confusing the application phase with policy issuance, but a cover note is a temporary document issued immediately upon proposal acceptance. It provides interim protection until the full policy document is prepared, typically within a week. Common mistake: Confusing the initial application form with the temporary insurance binder.
Eke bought a new car for N1.5M. The practice in the insurance industry is to pay 10% of the value of the vehicle as premium for comprehensive cover and 2.5% additional cover for strike, riot and civil commotion. Eke was issued a document and two weeks later, he was issued another document different from the first document issued. The second document issued to the Eke is
Option A might look correct if one mistakes the final document for a settlement receipt, but the certificate of insurance is the formal document that follows the cover note. It confirms cover details and is legally required for motor vehicles to prove third-party liability coverage. Common mistake: Confusing the statutory vehicle liability certificate with a satisfaction or claim note.
Adekunle bought a car for N2,000,000. he insured it with musa insurance company and okon insurance company for N600,000 and N800,000 respectively. on his way to his office, he had an accident which destroyed his windscreen valued at N30,000 and kayode's shop valued at N15,000. The maximum amount to be paid for kayode's shop that was damaged is
Students might mistakenly choose option C or D by trying to apply contribution formulas to third-party losses, but under the principle of indemnity, compensation is limited to the actual financial loss suffered. Since the damage to Kayode's shop is valued at N15,000, that is the maximum amount payable regardless of insured sums. Common mistake: Applying the contribution principle to third-party liability claims instead of actual loss limits.
Adekunle bought a car for N2,000,000. he insured it with musa insurance company and okon insurance company for N600,000 and N800,000 respectively. on his way to his office, he had an accident which destroyed his windscreen valued at N30,000 and kayode's shop valued at N15,000. The claims on kayode's shop would be paid by
Option D is incorrect because the owner does not pay third-party claims out of pocket when insurance is active. Because the vehicle is insured with two companies, the principle of contribution applies, meaning both insurers share the third-party liability claim pro-rata based on their respective sums insured. Common mistake: Overlooking dual-insurance sharing rules for third-party damages.
Adekunle bought a car for N2,000,000. he insured it with musa insurance company and okon insurance company for N600,000 and N800,000 respectively. on his way to his office, he had an accident which destroyed his windscreen valued at N30,000 and kayode's shop valued at N15,000. The policy cover with musa insurance is
A student might pick option B by assuming any active policy is fully covered, but the vehicle's true value is N2,000,000 while Musa insured it for only N600,000. Because this sum is less than the full value, the policy is under-insured, meaning the average clause will reduce any own-damage payout. Common mistake: Failing to compare the insured sum against the actual market value of the asset.
The insurance cover a businessman who buys goods from lagos and wants to transport it to kano would require is
Students might mistakenly choose Business interruption insurance or Theft insurance, thinking they cover general commercial troubles, but moving commodities across regions specifically requires protection against transit hazards. By safeguarding commodities against damage or loss throughout transportation via road or rail within a country, this coverage suits moving merchandise between cities like Lagos and Kano. Common mistake: Confusing general business operational protection with specialized transit risk coverage.
The first insurance company to establish its branch office in Nigeria is
Options like Norwich insurance company might seem plausible due to British naming conventions of colonial-era firms, but historical records point elsewhere. Formal insurance operations in the country began when Royal Exchange Assurance opened as the earliest foreign firm to establish a branch office in Nigeria back in 1921. Common mistake: Mixing up the pioneering foreign insurer with later entrants into the Nigerian market.
The policy which covers either death or disability resulting from an injury is
Learners could confuse this with Sickness insurance, assuming all health-related policies cover injuries, or Motor insurance if they misread accident contexts. Personal accident insurance applies here by providing fixed financial benefits for temporary incapacity, permanent disability, or accidental death resulting from an unforeseen injury, without requiring proof of financial loss. Common mistake: Assuming sickness policies cover physical injuries resulting from accidents.
The document used by the insurer to ask questions about a risk to be covered is
One might lean toward Policy form or Schedule, assuming the contract itself gathers underwriting details, but those documents are issued after agreement. The proposal form is completed by the proposer, who acts as the insured, to provide detailed information about the risk, enabling the insurer to assess and underwrite the proposal. Common mistake: Confusing the initial inquiry questionnaire with the final policy document.
A life policy that pays the sum assured if the policy holder dies anytime within the policy period is
Candidates might guess Whole life insurance, assuming all lifetime arrangements pay out at any time of death, but whole life lacks a fixed term limit. Term assurance provides coverage for a specified period; the sum assured is paid only if death occurs within that term, offering pure protection without savings element. Common mistake: Failing to distinguish between lifetime coverage and temporary term protection.
A policy that covers a trader against the risk of payment default by customer is
Stock insurance or Fidelity insurance might look correct if the student associates them with general business assets or employee trust, but neither covers buyer default. Credit insurance indemnifies the trader against non-payment by buyers due to insolvency, protracted default, or political risks, protecting cash flow. Common mistake: Confusing protection against customer default with employee dishonesty coverage.
which of the following professionals is an operator in the reinsurance market?
Students could easily pick Agent or Adjuster, thinking they handle large-scale risk transfers, but those roles deal with primary sales or claims. Insurance brokers act as intermediaries in the reinsurance market, placing risks with reinsurers on behalf of primary insurers and negotiating terms. Common mistake: Confusing primary sales intermediaries with specialized reinsurance market brokers.
The part of a policy that describes the event that led to a loss is
Recital clause or Heading might catch a student's eye if they confuse the introductory parts of a contract with its operational core. The operative clause specifies the perils or events covered that, if occurring, trigger the insurer's liability to pay a claim. Common mistake: Mistaking introductory recitals for the core insuring clause.
The type of life insurance policy where the premium goes towards the policy with no interest element is
Endowment policy could seem plausible because it is also a life contract, but endowments include an investment or savings portion that earns interest. Term insurance is a pure protection policy where premiums fund only the risk cover without any investment or interest accumulation, unlike endowment or whole life policies. Common mistake: Assuming all life policies accumulate cash value or interest.
The body that regulates the activities of insurance market in Nigeria
Learners might select Nigeria insurers Association, mistaking an operator trade group for a government regulator. The National Insurance Commission is the federal regulatory body responsible for supervising, regulating, and developing the insurance industry in Nigeria. Common mistake: Confusing industry trade associations with statutory regulatory authorities.
Life policies can be used as a collateral for loan when the policy has?
Options like policy being temporarily suspended might look right if the student thinks any policy modification unlocks cash value. Once a life policy acquires a surrender value after paying premiums for a certain period, it can be assigned or pledged as collateral for loans, as it has a cash value. Common mistake: Believing a policy can serve as loan collateral before it builds a surrender value.
The expert who uses statistics to develop the premium payable in a life contract is an
An Assessor or Adjuster might be chosen by students thinking of post-loss evaluations, but those professionals deal with claims rather than mathematical pricing. An actuary applies mathematical and statistical methods to assess mortality, morbidity, and other risks to calculate premiums and reserves for life insurance contracts. Common mistake: Confusing claims assessors with statistical pricing professionals.
The factor which increases the possibility of loss that emanates from the insured attitude is?
Physical hazard might be mistakenly selected if the student conflates environmental conditions with personal behavior. Moral hazard refers to the increased risk of loss due to the insured's dishonest or careless behavior, such as taking undue risks knowing coverage exists. Common mistake: Confusing physical environmental risks with behavioral attitude risks.
The insured who suffered a loss would be entitled to the amount of compensation payable for the loss under the principle of?
Insurable interest or Contribution might be picked if the student confuses the foundation of a contract with its compensation limit. The principle of indemnity ensures the insured is restored to the financial position before the loss, compensating exactly for the proven loss without profit. Common mistake: Confusing the legal right to insure with the financial compensation limit.
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