Which of the following is a function of the insurance broker?
An insurance broker acts as an intermediary representing the client, advising on suitable covers, and arranging policies with insurers. Underwriting is the insurer's role, claims settlement involves adjusters, and premium investment is by the insurer.
The principle of indemnity ensures that the insured receives
Indemnity restores the insured to their pre-loss financial position, compensating exactly for the proven loss without profit. Fixed sums apply to life assurance, not indemnity-based policies.
In life assurance, the proposer must have insurable interest at the time of
For life assurance, insurable interest must exist at the policy's inception (proposal) to prevent wagering, but not necessarily at claim time, unlike property insurance.
A policy that covers risks for a specific period and pays only on death during that period is
Term assurance provides temporary cover for a fixed period, paying the sum assured only if death occurs within the term; no maturity benefit if survival.
The Insurance Act in Nigeria requires insurers to maintain
Nigeria's Insurance Act (2003) mandates a solvency margin (minimum capital relative to liabilities) to ensure insurers can meet claims, regulated by NAICOM.
Which of the following is excluded under standard motor insurance?
Standard motor policies exclude cover if the driver is under the influence of alcohol or drugs, as it constitutes negligence. Other perils like collision, theft, and fire are typically included.
The document that amends the terms of an insurance policy is called
An endorsement (or rider) modifies policy terms, adding, deleting, or altering cover. Both terms are used interchangeably in insurance documentation.
Crop insurance falls under
Agricultural insurance covers farm risks like crop failure due to weather or pests, distinct from marine (shipping), fire (property), or liability (third-party claims).
The insured's duty to take reasonable steps to minimize loss is based on
Mitigation of loss requires the insured to prevent or reduce damage post-event, upholding indemnity by avoiding unnecessary claims.
A joint life policy covers
Joint life policies insure multiple lives (e.g., spouses) under one contract, paying on the first death, for shared financial dependencies.
In fire insurance, riots and strikes are covered under
Extended perils in fire policies include riots, strikes, and malicious damage, beyond basic fire, lightning, and explosion.
The premium calculation is based on
Actuarial science uses statistics to assess risks and calculate premiums ensuring profitability and solvency, considering probability and loss severity.
Professional indemnity insurance protects against claims for
Professional indemnity covers legal liability for errors, omissions, or negligence in advice/services, e.g., for doctors or lawyers.
The grace period for premium payment in life policies is usually
A 30-day grace period allows continued cover despite late premium, preventing immediate lapse; common in life policies.
Sinking fund policy is used to
Sinking fund policies accumulate value to replace depreciating assets like machinery, combining assurance with savings.
Which is a feature of non-life insurance?
Non-life (general) insurance policies renew annually or periodically, unlike life policies which are long-term without renewal.
The National Insurance Commission (NAICOM) in Nigeria regulates
NAICOM oversees insurance market conduct, solvency, and consumer protection under the Insurance Act 2003.
A valued policy specifies the
Valued policies pre-agree the sum insured as the value, simplifying claims for items like art, avoiding disputes.
Money insurance covers loss of
Money insurance protects against theft or loss of cash during transit or in safes/vaults.
The doctrine of causa proxima means
Causa proxima (proximate cause) holds the insurer liable for the dominant, effective cause; remote causes are irrelevant, and proof is on the insured.
Travel insurance typically includes cover for
Travel policies cover trip-related risks like medical treatment, evacuation, and lost baggage abroad.
In reinsurance, a treaty is
Reinsurance treaties automatically cede entire classes of risks to reinsurers, unlike facultative for individual risks.
The insured must notify the insurer of a change in risk under
Utmost good faith (uberrimae fidei) requires disclosing material changes; material alterations trigger notification to adjust cover.
Plate glass insurance covers
Plate glass policies insure fixed glass in buildings/shops against breakage, not fire/theft/flood which have separate covers.
A lapsed policy can be revived through
Revival clauses allow reinstatement within a period (e.g., 5 years) by paying arrears and health declaration.
Credit insurance protects
Credit (or trade credit) insurance indemnifies against non-payment by debtors, aiding cash flow for sellers/lenders.
The sum assured in life policies decreases in
Money-back policies pay periodic survival benefits, reducing the outstanding sum assured over time.
Boiler insurance is a type of
Engineering insurance covers machinery breakdowns, including boilers, against explosion or failure.
Misrepresentation in insurance proposals leads to
Material misrepresentation allows avoidance of the contract, premium adjustments, or claim denials, depending on severity.
The cooling-off period allows the insured to
Cooling-off (e.g., 14-30 days) lets policyholders cancel without penalty and receive full refund, protecting against mis-selling.
Product liability insurance covers manufacturers against
It indemnifies against third-party claims for injury/damage from faulty products, including legal defense.
In marine insurance, general average is
General average involves intentional sacrifice or expenditure (e.g., jettisoning cargo) for the vessel/cargo's common safety, shared proportionally.
The broker's remuneration is usually
Brokers earn commissions from insurers on premiums and may charge client fees for services.
Personal accident insurance pays for
It provides fixed benefits for accidental death, injury, or disablement, not illness or property risks.
Unvalued policy in marine insurance pays
Unvalued policies settle based on actual market value at loss time, unlike valued which use pre-agreed amount.
The principle of contribution prevents
Contribution prorates claims among multiple insurers when over-insured, preventing profit from duplicate covers.
Directors and officers liability insurance covers
D&O insurance protects executives against claims for mismanagement, breach of duty, or errors.
The waiting period in health insurance avoids claims for
Waiting periods (e.g., 30 days to 4 years) exclude immediate claims on pre-existing conditions to manage adverse selection.
All risks policy in property insurance covers
All-risks policies cover fortuitous losses unless specifically excluded (e.g., war, wear/tear), broader than named perils.
The ombudsman scheme in insurance is for
The insurance ombudsman mediates complaints between policyholders and insurers for fair, cost-free resolution.
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