LIABILITY INSURANCE

1 Under which of the following policy compensation is fixed exactly as per Law ( Act )
a) Public Liability ( Non Industrial)
b) Public Liability Insurance (Act) Policy
c) Motor “Act Only” Policy
d) None of the above

2 How many Risk Groups are there in Public Liability ( Indl & Non-Indl.) Policy
a) 2
b) 4
c) 6
d) 8

3 Public liability insurance act 1991 stipulates maximum sum insured for AOA is
a) Rs. 5 Cr.
b) Rs. 10 Cr.
c) Rs. 15 Cr.
d) Rs. 20 Cr.

4 The law of Tort is product of

a) British quotes
b) Indian Quotes
c) Common Law
d) None of the above

5 Public liability section is available under the following policies except -

a) House Holders Insurance
b) Shop Keepers Insurance
c) Office Umbrella Policy
d) Fidelity Guarantee Policy

6 In a claims made basis liability policy the claim is payable only when the accident
occurred -
a) Before retroactive date and before expiry date of the current policy

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 1 Oriental RTC Chandigarh

 LIABILITY INSURANCE

b) During extended claim reporting period

c) During the period of currency of the existing policy
d) After retroactive date and before expiry of the current policy

7 A Product Recall Policy would not normally cover

a) Product performance Guarantee
b) Cost of bringing back the defective product by Manufacturer
c) Cost of advertisement to public – providing information about defective product
d) None of above

8 Professional Indemnity Policy is issued to cover the

a) The normal performance of a Professional
b) The Property of a Professional
c) Legal Liability to pay loss due to negligence in the performance of Professional Duty /
skill by a professional
d) None of the above

9 What is the amount of Contribution to Environment Relief Fund under Public Liability
Act Policy.
a) Rs.25000/-
b) Rs.100000/-
c) Equivalent amount of premium without service tax
d) Equivalent amount of premium with service tax

10 Under Public Liability ( Indl./non-indl.) policy “PREMISES” include pipelines running

outside the premises for discharge of treated effluents / wastes at a disposal point
situated within a distance of
a) Half Kilometre
b) One Kilometre
c) Five Kilometre
d) None of the above

11 Under Public Liability ( indl./non-indl.) the loss due to ‘PRODUCT’ is covered when
a) The Product is still in the custody & control of the Insured

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 2 Oriental RTC Chandigarh

 LIABILITY INSURANCE

b) The Product after it has left the custody & control of the insured
c) The product before & after the custody of the insured
d) None of the above

12 One employee consumed food supplied by the Insured at his staff canteen & suffered
death due to Food poisoning- what is the status of claim under Public Liability
( Indl./Non Indl.)
a) Claim is not payable since Food is not a Product within the meaning of the definition
b) Claim is payable since food is supplied in the staff canteen as a staff benefit by the
insured
c) Claim is payable on Non-Standard Basis.
d) None of the above

13 Product Liability policy covers the liability of

a) Performance Guarantee of the Product
b) Product recall due to defect from the market or consumers
c) Accidental death / bodily injury/disease/ property damage to Third party due to the
defect in the product
d) None of the above

14 A Car Manufacturer supplied a car with defective tyres. One day the tyre burst causing
a collision which resulted injuries to Pedestrians & owner of the car– What will be the
status of claim under Product Liability Policy
a) All expenses are payable including Pedestrian & owner injuries, replacement of
defective tyre & repair of the car
b) Only replacement of defective tyre & repair of the car is payable
c) Only liability for the Pedestrian & Car Owner’s injuries are payable.
d) Only Liability for the Pedestrian’s injuries is payable

15 A Burglary Alarm failed to function at the time when burglar broke into premises and
committed theft – What is the status of claim under Product Liability Policy.
a) The claim of theft alongwith the cost of defective Burglary Alarm is payable
b) This is a commercial & Trade risk which is not payable under the Policy
c) Only the Cost of the defective burglary alarm is payable
d) None of the above

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 3 Oriental RTC Chandigarh

 LIABILITY INSURANCE

16 The retroactive date of one of the Product Liability Policy was 01.01.2011. The policy
period was 1.1.2011 to 31.12.2011. The product left the custody & Control of the
insured on 31.12.2010. The same product found defective & causes accident on
31.03.2011 resulted in death of a third party – status of the claim
a) Admissible since the accident occurred in Policy Period
b) Not admissible since the defective product has left the custody of the insured prior to
retroactive date
c) Claim can be paid on Non-standard basis
d) None of the above

17 In a Compressor manufacturing factory one compressor exploded in the factory

premises and damaged the machinery & caused injuries to employees – status of claim
under Product Liability Policy
a) Only the employees injuries are payable under the policy
b) All expenses i.e cost of Compressor, repair of damaged machine & liability of
employees injuries are payable
c) Loss not covered since the defective property was in the custody & control of the
insured
d) None of the above

18 How many Risk Groups are there in Product Liability Policy

a) 2
b) 4
c) 7
d) 8

19 North American Jurisdiction extension clause refers to

a) Products exported to USA & Canada only.
b) Indemnity to be granted i.r.o judgement or award made within countries which operate
under the laws of USA or Canada
c) This extension prohibits payment of any award under the laws of USA and Canada
d) None of the above

20 The Vendor’s Clause refers to

a) Product Liability Policy issued to Vendors' of the Product - involved in Export

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 4 Oriental RTC Chandigarh

 LIABILITY INSURANCE

Include the Vendor’s Liability in Product Liability policy alongwith the person insured
b) only for distribution or sale of the product - involved in Export.
c) No liability of Vendors can be included through this clause
d) None of the above

21 After a claim the status of the Limit of Indemnity under Liability Policies will be
a) Reduced the AOY limit to the extent of Claim paid & no reinstatement of SI is allowed
b) The AOY limit can be reinstated after deducting reinstatement premium
c) The AOY limit is fixed and cannot be reduced after a claim payment.
d) None of the above

22 The Commercial General Liability policy is a combination of

a) Professional Indemnity and Public Liability
b) Public Liability & Product Liability
c) Motor Act Only Policy & Public Liability
d) None of the above

23 Which of the Maximum Indemnity Ratio can be given under PLI ( Act) Policy.
a) 1:1
b) 1:2
c) 1:3
d) 1:4

24 Which is not a NON-INDUSTRIAL RISK under Public Liability Policy?

a) HOTEL
b) LIBRARY
c) MATCH FACTORY
d) SHOP

25 Claim settling authority in case of claims under PLI Act Policy is

a) Divisional Manager/ Sr. Divisional Manager
b) Regional Manager/ Chief regional Manager
c) General Manager

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 5 Oriental RTC Chandigarh

 LIABILITY INSURANCE

d) District Magistrate/ Collector

26 Environment Relief Fund is collected by

a) A Public Sector Banker
b) State Treasury
c) Wild Life Society
d) Insurance Company

27 Premium computation under Public Liability Policy depends on

a) Risk Group
b) Limit of Indemnity
c) Ratio of AOA:AOY
d) All of the above

28 Extension of Claims reporting time after expiry or Cancellation of Public Liability

Policy is
a) 90 days
b) 30 days
c) 180 days
d) None of the above

29 The Cross Liability Clause is applicable

a) When More than one insured is covered under the policy
b) When only one insured is covered under the policy
c) When the Policy is issued in the name of Principal
d) None of the above

30 Claim Series Clause means

a) Various Claims received by one accident & added together & considered one claim
b) Various Claims received by various accidents
c) Claims are put in a series for numbering purposes
d) None of the above

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 6 Oriental RTC Chandigarh

 LIABILITY INSURANCE

31 Under Professional Indemnity Policy which one is covered

a) Any act committed in violation of any law
b) Services rendered while under the influence of intoxicant
c) Claim arising from/related to AIDS
d) Professional negligence may result in bodily injury/fatal/otherwise

32 Workmen Compensation Act came in force in the year

a) 1855
b) 1921
c) 1923
d) 1931

33 What is the maximum salary to be considered while calculating compensation under

Employer Liability Policy
a) Rs.2000/-
b) Rs.3000/-
c) Rs.4000/-
d) Rs.8000/-

34 Under Section 3 of the Public Liability Insurance Act Policy the schedule incorporated
in the Act, the amount payable in case of death is
a) Rs.6000/-
b) Rs.12500/-
c) Rs.25000/-
d) Rs.50000/-

35 Which one of the following is normally covered under the Bankers’ Indemnity Policy.
a) Losses caused by incendiarism ( Act of setting fire )
b) Trading losses
c) Loss attributable to faulty computer program or fraudulent use of computer program
d) None of the above

36 The Public Liability Insurance Act came into force by

a) 1993

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 7 Oriental RTC Chandigarh

 LIABILITY INSURANCE

b) 1923
c) 1972
d) 1991

37 The Product Liability Insurance Policy does not cover liability for claims
a) Loss due to accident
b) Loss due to injury/damage due to collision
c) Cost arising out of recall of any product or part thereof.
d) None of the above

38 In Public Liability Policy, “res ipsa loquitur” means

(i) The accident constitutes prima facie evidence of negligence

(ii) The accident is more probably due to the negligence than to any other cause and the
circumstances leading to the accident are within the control and management of the
defendant
a) Statement (i) is correct
b) Statement (ii) is correct
c) Both (i) & (ii) are correct
d) Both (a) & (b) are incorrect

39 Under Public liability insurance the general damages does not include
a) Loss of enjoyment of life and loss of amenities
b) Pain, suffering and distress
c) Loss of recreational abilities
d) Funeral expenses

40 If a person voluntarily consent to run a risk, he has no right of action against any one
for injuries suffered is known as
a) Inevitable accident
b) Contributory negligence
c) Voluntary non-fit injuria
d) Own damage

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 8 Oriental RTC Chandigarh

 LIABILITY INSURANCE

41 Period of insurance under Liability policy means

(i) The period commencing from the retro-active date
(ii) The period commencing from the effective date
a) Statement (i) is correct
b) Statement (ii) is correct
c) Statement (i) & (ii) are correct
d) Statement (i) & (ii) are incorrect

42 “Claims Series Clause” shall mean

a) One claim from one injured person
b) Several claim from more than one person
c) Several claims in one incident or added together for Anyone Accident
d) All of the above

43 The main exclusion under the Public Liability Insurance Policy insurance is
(i) Contractual liability
(ii) Employer Liability Liability
a) Statement (i) is correct
b) Statement (ii) is correct
c) Statement (i) & (ii) are correct
d) Statement (i) & (ii) are incorrect

44 Premium computation under Public Liability Policy depends on

a) Risk Group
b) Limit of Indemnity
c) Ratio of AOA:AOY
d) All of the above

45 Payment of Contribution to Environment Relief fund is compulsory under

a) Public Liability Policy
b) Professional Indemnity Policy
c) Public Liability Insurance (Act) Policy
d) Workmen Compensation Policy

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 9 Oriental RTC Chandigarh

 LIABILITY INSURANCE

46 Under which policy compensation is fixed exactly as per Statute

a) Employees’ Compensation Policy
b) Public Liability Insurance (Act) Policy
c) Motor “Act Only” Policy
d) Both under a) & b) policies

47 Public Liability Insurance Act Policy stipulates maximum sum insured (AOA:AOY)
a) 5 Crore:5 Crore
b) 5 Crore:10 Crore
c) 5 Crore: 15 Crore
d) 5 Crore:20 Crore

48 Employees’ Compensation Insurance is governed by the law of

a) Contract
b) Respondent Superior
c) Negligence
d) Law of Tort

49 In Employees’ Compensation policy following are not covered

(i) Influence of drugs
(ii) Willful disobedience
(iii) Willful disregard of any safety devices provided for safety
(iv) The employee is taking rest during the recess time
a) All are correct
b) Statement (i), (ii) & (iii) are not incorrect
c) Statement (i) is only correct
d) Except (ii), all are correct

50 Compulsory Public liability insurance for handling hazardous substances the cover is :
(i) No fault liability
(ii) Anyone loss should not exceed Rs.5 Crores
(iii) Anyone year loss should not be more than Rs.20 Crores

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 10 Oriental RTC Chandigarh

 LIABILITY INSURANCE

(iv) There is no compensation beyond the sum insured

a) Statement (i) & (ii) are correct
b) Statement (iii) & (iv) are correct
c) Statement (i) & (iv) only correct
d) All are correct

51 (i) Earthquake risk is automatically covered under the public liability Policy
(ii) Earthquake risk has to be charged extra
(iii) Workmen of his own also covered under the PLI
a) Statement (i) is correct
b) Statement (ii) is not correct
c) Statement (i) & (iii) are correct
d) Statement (ii) is only correct

52 (i) In PLI policy where bodily injury and/or property damage are reported in a series, only
each injury/damage is taken as one loss
(ii) All the injury claims/damage are taken as one claim upto 1 year
(iii) All the injury claims/damage are taken as one claim upto 3 years
a) (i) is only correct
b) Statement (ii) is only correct
c) Statement (iii) is only correct
d) None is correct

53 Compulsory excess under Non-Industrial PLI policy is:

(i) ¼ % of the limit of AOA subject to maximum Rs.1 Lac
(ii) 0.25% of the limit of AOA subject to minimum Rs.1000
(iii) 0.50% of the limit of AOA subject to maximum Rs.1 Lac
(iv) 1.00% of the limit of AOA subject to maximum Rs.1 Lac
a) Statement (i) & (ii) both are correct
b) Statement (ii) is correct
c) Statement (iii) is correct
d) All are correct

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 11 Oriental RTC Chandigarh

 LIABILITY INSURANCE

54 The Name of the W.C. Insurance Policy is now amended to

a) Workmen’s Compensation Act, 1923
b) Workers’ Compensation Act’1923
c) Employees’ Compensation Act, 1923
d) Employer’s Liability Act,1923

55 What is the maximum wages to be considered while calculating compensation under

Employees’ Compensation Policy
a) Rs.5000 per month
b) Rs.6000 per month
c) Rs.8000 per month
d) Rs.4000 per month

56 The Minimum Compensation Limit in Employees’ Compensation for Death and PTD
respectively is
a) Rs.80,000 & Rs.90,000
b) Rs.1,00,000 & Rs.2,00,000
c) Rs.1,20,000 & Rs.1,40,000
d) None of the above

57 The Medical Expenses payable under the Employees’ Compensation Policy are
a) Rs.2400 Per Annum
b) Rs.5000 Per Annum
c) Actual (Full ) medical expenses
d) None of the above

58 Death claim under Employees’ Compensation Policy is settled by following method

a) As per the age factors under Employees’ Compensation Act,1923 & submitted to
concerned WC Commissioner
b) Directly paid to Family of the Deceased
c) As per settlement arrived at with Trade Unions
d) Always paid by insured and later on claimed from insurance Company.

59 A death claim is lodged under the Employees’ Compensation policy. At the time of

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 12 Oriental RTC Chandigarh

 LIABILITY INSURANCE

claim process it is observed that actual wages paid by the insured on the date of loss
had exceeded the Sum Insured under the policy. If so the status of the claim will be
a) The claim is not payable
b) Claim is payable after charging extra premium from the Insured
c) Claim is payable as non standard basis
d) Claim is payable after imposition of penalty

60 Which of the following is an exclusion under the Workmen’s Compensation policy?

a) Insured's liability to employees of contractors.
b) Liability in respect of employees of insured.
c) Liability in respect of workmen contracting any disease whilst discharging their duties.
d) None of the above.

61 Which one of the following statement is not correct in respect of the Public liability
Insurance covers
a) It covers Civil Liability arising under Common Law
b) It covers Civil liability arising under Statutory Law
c) It covers both (a) and (b) above
d) It covers neither (a) nor (b) above.

62 Which one of the following is correct under the Public liability Policy
a) Policy period and period of insurance are always different.
b) Policy period and period of insurance are always the same.
c) Policy period and period of insurance may or may not be the same
d) There is no difference between Policy Period and Period of Insurance

63 Public Liability Insurance Act Policy came into force in the year
a) 1923
b) 1947
c) 1991
d) None of the above

64 Public liability Act policy refers to

a) Govt.’s policy regarding public liability.

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 13 Oriental RTC Chandigarh

 LIABILITY INSURANCE

b) Liability Policy taken by general Public.

c) Public Liability (Non-Industrial)
d) Compulsory Liability Policy for Industries using Hazardous material

65 Retroactive date is the inception / starting date of

a) Policy Period
b) Period of Insurance without break
c) Both the above
d) None of the above

66 Under Section 3 of the Public Liability Insurance Act Policy the schedule incorporated
in the Act, the amount payable in case of death is
a) Rs.6000/- per person
b) Rs.12500/- per person
c) Rs.25000/- per person.
d) Rs.50,000/- per person

67 The main exclusion under the Public Liability Insurance Policy insurance is
(i) Contractual liability
(ii) Employer Liability
a) Statement (i) is correct
b) Statement (ii) is correct
c) Statements (i) & (ii) both are correct.
d) Statements (i) & (ii) both are not correct

68 Environment Relief fund is not charged alongwith premium from the following policies
except
a) Public Liability Policy ( Industrial )
b) Professional Indemnity Policy ( Doctors & Medical Estb.)
c) Public Liability Insurance (Act) Policy
d) Employees’ Compensation Policy

69 In liability insurance indemnity is based on AOA and AOY ratio. Under which of the
following ratio limit of indemnity may get exhausted after one accident

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 14 Oriental RTC Chandigarh

 LIABILITY INSURANCE

a) 1:1
b) 1:2
c) 1:3
d) 1:4

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 15 Oriental RTC Chandigarh

 LIABILITY INSURANCE

Q. no. Answer Q. No. Answer Q. No. Answer

1 B 24 C 47 C

2 B 25 D 48 B

3 A 26 D 49 B

4 C 27 D 50 A

5 D 28 A 51 A

6 D 29 A 52 C

7 A 30 A 53 A

8 C 31 D 54 C

9 C 32 C 55 C

10 B 33 D 56 C

11 B 34 C 57 C

12 A 35 A 58 A

13 C 36 D 59 B

14 C 37 C 60 A

15 D 38 C 61 C

16 B 39 D 62 C

17 C 40 C 63 C

18 C 41 A 64 D

19 B 42 C 65 B

20 B 43 C 66 C

21 A 44 D 67 C

22 B 45 C 68 C

23 C 46 B 69 A

ओरिएण्टल कक्षेत्षेत्रीय प्रशिक्षणीय प्रशिकण करद, चंडषेत्रीगढ 16 Oriental RTC Chandigarh