MOTOR CAR INSURANCE

1. Under a Commercial Vehicle Comprehensive Policy, the company shall be liable to pay for, among other,
a. damage caused by overloading or strain
b. damage to tires
c. consequential loss, depreciation, wear and tear, mechanical electrical breakdown, failures and
breakage
d. damage whilst in transit (including the process of loading and unloading incidental to such transit) by
road, rail inland waterway, lift or elevator

2. Under the “No-Fault” provisions of the CMVLI in case of disagreement as to the extent of claim
a. payment is suspended
b. indemnity must be made not exceeding P 15,000
c. indemnity must be made not exceeding P 5,000
d. none of the above

3. The territorial definitions of the commercial vehicle insurance comprehensive policy issued in the
Philippines limits protection in
a. the United States, its territories or possessions
b. the Philippines and Japan
c. the Philippines
d. both a & c

4. Which among the following is not important when rating for Motor Insurance?
a. the geographical location in which the automobile is principally garaged
b. age of the automobile
c. the age of the driver
d. use of the automobile

5.Indicate which of the following situations would not be covered by the comprehensive portion of the
automobile insurance policy
a. falling object denting a car top
b. broken windshield
c. frozen radiator
d. stolen car

6. The No Fault Provision in the CMVLI refers to payment of claim for death or bodily injury to any
passenger
a. conditioned that the fault or negligence of any kind is proven by the aggrieved party
b. provided the person making claim is not also negligent
c. without need of proving fault or negligence of any kind
d. none of the above

7. In Compulsory Motor Vehicle Liability Insurance, action or suit for recovery of damage due to loss or
injury must be brought through cases, with the Commissioner or he courts with the competent
jurisdiction, within
a. one year from the date of accident
b. six months from the date of accident
c. ninety days from the date of accident
d. one month form the date of accident
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8. A Commercial Vehicle Comprehensive Policy usually covers which among the following:
a. use for the hauling and carrying of logs
b. use in connections with the insured's business
c. use for hire and reward
d. none of the above

9. Even if the Insured drives recklessly and against the speed limits, as a general rule
a. the motor car policy is suspended
b. the motor car policy is not liable for the bodily injury or death of pedestrians
c. the motor car policy is liable for bodily injury, death, or damage to the property of third persons
d. none of the above

10. One in whose name a Motor Vehicle is registered with the Land Transportation Commission as the
actual, legal owner thereof is called an/a
a. motor vehicle owner
b. land transportation operator
c. automobile pilot
d. none of the above

11. Under the “No-Fault” provision of the CMVLI, in the event of liability for death or bodily injury on one
hand and liability for damage to the property on the other hand
a. the former has priority for settlement over the latter
b. the latter has priority for settlement over the former
c. both will equally share
d. none of the above

12. A passenger, under the LTO Insurance

a. is always a fare paying person being transported and conveyed by a motor vehicle for transportation
of passenger for compensation
b. need not necessarily be a fare paying passenger
c. combination of a & b
d. none of the above

13. A “No-Fault” claim can be made

a. against more than one motor vehicle in case more than one vehicle figured in the accident
b. against only one motor vehicle even if more than one vehicle figured in the accident
c. combination of a & b
d. none of the above

14. For the purpose of the CVMLI, a third party is

a. a private car passenger
b. any person other than a commercial vehicle passenger
c. combination of a & b
none of the above

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15. A pedestrian run over and injured by an insured vehicle should:
a. file a claim directly against the owner of the insured vehicle
b. file a claim directly against the Motor Pool
c. file a claim directly against the Insurance Company
d. Combination of the above

16.The main benefit under he loss or damage cover of the Motor Car Policy on the car insured is
a. if there is a collision, the policy will be liable for damage to another person's car or property
b. if the insured car meets an accident, the insurer will pay for the repairs (less the amount of
deductible)
c. combination of a & b
d. none of the above

17. An insured carries a family Automobile Policy that affords protection fro Bodily Injury and Property
Damage Liability. He runs into the rear wall of a neighbor's garage. Coverage would be afford for:
a. damage to the garage
b. damage to the Insured's automobile
c. bodily injury to a passenger
d. both b & c

18. Under the Automobile Liability Insurance policy, the costs which the insurance company may incur in
defending any suit brought against the Insured
a. shall be paid in addition to the applicable limits of liability
b. shall be deducted from the applicable limits of liability
c. shall be borne by the Insured
d. may be covered by endorsement

19. A comprehensive motor car policy is

a. liable for passenger claims
b. liable for all kinds of death or bodily injury and property damage
c. not as comprehensive as it may seem
d. none of the above

20. Under Compulsory Motor Vehicle Insurance, the basis for determining the amount if insurance required
for passenger
a. Horse power
b. Displacement capacity
c. Number of passenger capacity
d. Unladen Weight

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MARINE HULL

1. What information would an insurance company need from a shipowner applying for Hull Insurance?
I. Name of the vessel
II. Value to be insured
III. Conditions of insurance required
IV. Trades to be engaged in
V. Recent survey report
a. I, III & IV
b. II, IV & V
c. I, IV & V
d. all of the above

2. Protection and Indemnity Clubs are:

a. international night clubs
b. marine insurance clubs in the Philippines such as the Manila Marine Association
c. associations of shipowners who are liable for certain marine losses
d. none of the above

3. A vessel was insured for one year. Suppose during the same year, the vessel will undertake 12 voyages.
When must the ship be seaworthy?
a. at the commencement of the risk
b. at the beginning and at the end of the voyage
c. at the commencement of each of the 12 voyages
d. at the end of the voyage

4. In case of partial loss of ship or its equipment, the old materials cannot be sold to help pay for the new
materials.
a. True
b. False

5. Joel insured his ship for P 100,000. The vessel was damaged to such an extent as to reduce its value by
more than three-fourths. The Insured gave notice of abandonment but the insurer refused to accept
the abandonment. What can Joel recover from the insurer.
a. the Insured can recover double the amount of loss
b. the Insured cannot recover anything
c. the Insured can recover a partial loss
d. the Insured can recover a constructive total loss

6. In marine insurance, this is known as the fraudulent act of the master or mariner against the
shipowner's interest:
a. Jettison
b. Barratry
c. Risk
d. Peril of the sea

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 7. A Canadian Steamer with a defective compass was navigating Canadian water in a fog. Eventually, it
became stranded on an island and was abandoned. Is the insurer of the vessel liable?
a. yes, because there was no improper deviation from the agreed voyage
b. no, because the vessel was not seaworthy
c. no, because the vessel was engaging in an illegal venture
d. no, because there was abandonment

8. Three-fourths value clause provides that the limit of liability of the company is three-fourths of the total
loss sustained.
a. True
b. False

MARINE CARGO INSURANCE

1. Loss or damage due to civil war, revolution, rebellion, insurrection, or civil strike are covered by the
a. Institute Classification Clause “B”
b. Institute War Clause
c. Institute Classification Clause “A”
d. none of the above

2. An actual loss in the standard marine cargo insurance may be caused by any of the following except:
a. damage to the thing insured which renders it valueless to the owner for the purpose for which he
held it
b. irretrievable loss of the thing insured by sinking or being broken up
c. total destruction of the thing insured
d. stranding of the vessel

3. A cargo of rice is insured under ICC “B”. During the voyage, seawater entered the compartment where
the cargo was stored through a defective drainpipe, and damaged the rice. Will the insurer be liable?
a. yes, because entry of seawater is covered under ICC “B”
b. no, because the defect in the pipe was a result of the lack of necessary repairs
c. The insurer should pay the claim out f the goodness of his heart
d. none of the above

4. In Marine Cargo Insurance, a policy which is a continuous contract covering automatically all shipments
to and form stated parts of the world is called
a. marine cargo note
b. special marine policy
c. open policy
d. none of the above

5. The bill of lading in a Marine Cargo Insurance Policy

a. the receipt of the shipowner for the goods shipped on board his vessel, and states the terms and
condition on which they are to be carried
b. the draft or order drawn by the seller on the buyer, requiring the latter to pay the stated sum on
sight, to the person named on his order
c. an indication that the goods are fully insured against loss or damage by marine perils with approved
underwriters
d. none of the above

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 6. Patrick insured his cargo to be delivered from Manila to Brazil. The cargo was loaded and the vessel left
the port of Manila. While the vessel was docking in the port of Brazil, Patrick surrendered the policy and
asked for a cancellation. Would hr be entitled to a refund.
a. yes, because the cargo was not damaged
b. no, the risk was already exposed to perils and the entire voyage
c. yes, the customer always gets what he wants
d. none of the above

7. Under a marine policy, the falsity of statement of the time when the vessel will sail, the nature of the
cargo to be shipped, the amount of the profit will not void the policy
a. true
b. false
c. true, in the absence of fraud
d. false, because these are not mere statements of expectation

MORE QUESTIONS: MARINE CARGO

1. The Institutes Cargo Clause With Average (WA) – as the name implies:
a. pays total loss only
b. pays partial loss, as a general rule
c. pays all risk, losses
d. none of the above

Answer : B – pays partial loss, as a general rule

2. Losses or damage due to heavy weather are covered by:

a. Institute Cargo Clause (FPA)
b. Institute Cargo Clause (WA)
c. Freight Insurance
d. none of the above

Answer : B – Institute Cargo Clause (WA)

Before ICC “A”, “B”, and “C” were invented, Marine Cargo underwriters used Institute Cargo Clause All Risk
(AR), Institute Cargo Clause With Average (WA), an Institute Cargo Clause Free from Particular Average
(FPA). Although these three are already outdated, the exam might still ask about them so it would help to
remember questions 2 to 4 above.

3. In the Philippines, the period of cover available to the Insured under the Transit Clause (Incorporating
the Warehouse Clause) is:
a. 60 days from midnight of the day of discharge from vessel at port of destination
b. 15 days from midnight of the day of discharge from vessel at port of destination
c. no limit
d. none of the above

Answer : B – 15 days from midnight of the day of discharge from vessel at port of destination

We said that the standard cover is from warehouse to warehouse. When the cargo is unloaded at the port
of destination, the cargo owner needs to have it brought to the warehouse of destination within 60 days.
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 Otherwise, the insurance stops. In the Philippines, insurers feel there is less security so they reduced the 60-
day window to only 15 days.

4. As a general rule, the Institute Cargo Clause – Free of Particular Average

a. pays all losses
b. pays particular loss only
c. pays total loss only
d. none of the above

Answer : C – pays total loss only

OVERVIEW OF MARINE INSURANCE

1. After a Constructive Total Loss, the Insured declares the relinquishment to the insurer of his interest in
the subject matter insured. This act is called
a. insurable interest
b. deviation
c. abandonment
d. none of the above

2. Jettison, in Marine Insurance

a. refers to temporary detainment of property with a view to ultimate release
b. refers to throwing overboard of cargo or part of a vessel equipment order to relieve a vessel when
she is in peril
c. includes in every wrongful act willfully committed by the master or crew t the prejudice of the owner
or the character
d. none of the above

3. Any proper deviation undertaken by the master or owner of the ship for the purpose of saving life does
not affect the insurance.
a. True
b. False

4. The fundamental principles of Marine Insurance include the following except:

a. insurable interest
b. profits
c. indemnity
d. good faith

5. Which among the following is not a requirement for General Average?

a. intentional
b. preserve from peril
c. sacrifice
d. none of the above

6. In marine Insurance, the warranty that the vessel will not engage in illegal ventures must be expressed
in the contract.
a. True
b. False

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 7. “Average”, in marine parlance, means:
a. the score attained by a shipowner specifying the median of a ship's several voyages
b. the points achieved by an Insured for preventing or minimizing loss
c. loss or damage
d. none of the above

8. Abandonment, in Marine Insurance is:

a. the act of the Insured by which, after a constructive total loss, decline the relinquishment to the
insurer of his right to the thing insured
b. the act of the Insured by which, after a constructive total loss he relinquishes his right to the thing
insured
c. the act by which the owner waives all the benefits derived from the chartering of his ship or its
employment for the carriage of goods by sea
d. all of the above

9. Fortuitous accidents or casualties of the seas and for which certain marine policies may be liable in the
event of loss due thereto are known as:
a. perils of the marine insurance
b. perils of the sea
c. perils of sea urchins
d. none of the above

10.War risks in Marine Insurance include:

a. act of enemy agent in blowing up a vessel
b. loss by explosion caused by a drifting mine in territories of war
c. loss due to collision with an enemy submarine
d. all of the above

11.Which of the following statements in Marine insurance on “abandonment” is false?

a. it is an 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
b. it can be partial or conditional
c. it is equivalent to a transfer by the Insured of his interest in the thing insured
d. it can be sustained only upon cause specified in the notice of abandonment

12.A deviation is proper in Marine Insurance, under the following circumstances, except
a. when caused by circumstances over which neither the master or the owner of the ship has any
control
b. when necessary to avoid
c. when the master of the ship would like to visit a friend he has not seen for quite some time
d. for the purpose of relieving another vessel in distress

MORE QUESTIONS: MARINE OVERVIEW

8
 1. “Perils of the seas” include every cause of loss to the shipowner.
a. True
b. False
Answer : B – false

The sea can be a dangerous place. A maritime adventure is exposed to hundred of different perils so some
sources have segregated them into groups. “Perils of the seas” usually refers to sinking, capsizing,
stranding, and grounding.

2. Perils of the ship as distinguished from perils of the sea include the following, except
a. losses or damages resulting from the natural and inevitable action of the sea
b. losses or damages that could not be foreseen and not attribute to the fault of anybody
c. losses or damages resulting from ordinary wear and tear of a ship
d. losses or damages due to the negligent failure of the ship's owner to provide the vessel with proper
equipment to convey the cargo under ordinary conditions

Answer : A - losses or damages resulting from the natural and inevitable action of the sea

“Perils of the ship” refers to perils inherent to the ship and not due to its voyage on the sea.

3. In connection with the Ocean Marine Contract, the Assured must have an interest in the subject matter
insured at the time of the loss, though he need not have an interest while the insurance is in effect.
a. True
b. False

Answer : A – true

As a general rule, insurers will only insure someone if he can prove that he has insurable interest in the
property to be insured. However, the Assured can theoretically have insurable interest when he has the
policy issued, lose insurable interest while the policy is in effect, and gain back insurable interest just before
the loss occurs. In such a case, the policy may still respond.

This is applicable to all lines of insurance, not just Marine. There are some questions in the exam that have
extra information; so don't be fooled by the part about the “Ocean Marine Contract.”

FIRE INSURANCE

1. In fire insurance, the company is required to pay the Assured cash for all legitimate losses.
a. True
b. False

2. As defined, the term Fire Insurance

a. is an agreement whereby the insurer, in return for the premium undertakes to indemnify the Insured
for direct loss or damage to the latter's property by fire or lightning
b. shall include insurance against loss by fire, lightning, windstorm, tornado or earthquake and other
allied risks when such risks are covered by extension to fire insurance policies or under separate policies
c. all of the above
d. none of the above

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 3. Gloria gets fire Insurance from PISC to cover her house. Mike the electrician accidentally starts a fire and
Gloria's house burns down. PISC pays Gloria. Can Gloria also collect from Mike?
a. yes
b. no, Mike has already escaped to another country
c. no, because her right to sue must be assigned to the Insurance company (to the extent of its payment
of the loss)
d. none of the above

4. If an insured property becomes vacant for a period of more than 30 days,

a. the insurance coverage continues
b. the insurance ceases to attach
c. the insured is liable to pay additional premium
d. the insurance company may not charge additional premium

5. Rates of premium applied to buildings are affected by the following factors, except
a. occupancy
b. type of construction
c. actual cash value of building
d. location

6. The insurable interest in a property covered by a Fire policy may not be transferred to the new owner.
a. True
b. False

7. Which of the following is covered under the Standard Fire Policy?

a. loss due to subterranean fire
b. loss due to spontaneous combustion
c. loss due to volcanic eruption
d. loss due to lighting

8. Which factor(s) in a building's construction affect the fire rating?

a. inner walls and materials used
b. materials used in both inner and exterior walls
c. exterior walls and materials used
d. none of the above

9. An alteration in the use or condition of a thing insured in violation of the provisions of the Fire Insurance
Policy but without increasing the risk, entitles the insurer to rescind the contract.
a. True
b. False

10. The open policy clause in the fire policy

a. is similar to a cover note
b. is the same as a marine cargo open policy
c. requires that in the event of loss, the amount of loss shall be subject to adjustment, limiting the
liability of the insurer to actual loss of the Insured
d. none of the above

11. A fire policy takes effect

a. when it specifies the commencement date
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 b. when it specifies the beginning time
c. when it specifies both the commencement date and the beginning time
d. none of the above

12. The insurance company is not liable for a loss that occurs after the described building or premises is
unoccupied for a period of 30 consecutive days.
a. True
b. False

13. Under the Standard Fire Policy, the insurance company has right to
a. take all the damaged property and pay the Insured for his loss
b. repair the damaged property
c. take part of the damaged property and pay the Insured for his lioss
d. all of the above

14. Under the average clause of the fire policy, the Insured
a. is not bound to insure the property at its sound value
b. shall be paid the full value of his loss
c. shall be considered a self-insurer of the uninsured portion if the policy is underinsured
d. none of the above

15. Insurable value in Fire Insurance is the expense it would be to the Insured, at the time of the
commencement of the fire, to replace the thing lost or to bring it back to the condition it was in.
a. True
b. False

16. The premium paid for a Fire Insurance Policy is supposed to cover
a. services rendered by the insurer
b. risk assumed by the insurer
c. both risk assumed and services rendered by the insurer
d. none of the above

17. Does the Standard Fire Policy cover

I. Smoke damage from a hostile fire in a neighboring building
II. Breakage of a valuable vase while being removed from the premises t save it from fire damage
III. Water damage caused by firemen in extinguishing a hostile fire in another building
IV. Theft of a typewriter from the building during a fire

a. all are covered

b. all are covered except I & II
c. all are covered except II & IV
d. all covered except IV

18. Earthquake-Fire as an extraneous peril covers the Insured against loss

a. due to tremors of an earthquake
b. by fire which ensues after an earthquake
c. by both fire and earthquake whichever occurs first
d. none of the above

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19. The typhoon and flood endorsement to the Philippine Standard Fire Policy covers among others:
a. loss by windstorm and/or the common street flood
b. loss by typhoon damaging the building externally and/or loss due to the rising of navigable waters in the
case of flood
c. it is enough that there exists a typhoon and/or flood
none of the above

20. In Fire Insurance, policyholders are not allowed to turn over their damaged property to the insurance
company.
a. True
b. False

21. Under the Standard Fire Policy, the insurance company has the right to take part of the damaged
property and pay the insured for his loss.
a. True
b. False

22. The Philippine Standard Fire Policy covers basically

a. fire only
b. fire and lightning
c. fire and other extraneous perils
d. none of the above

MORE QUESTIONS: FIRE INSURANCE

1. With respect to a Standard Fire Policy, the term “vacancy” means

a. unfurnished and not lived in
b. furnished but not lived in
c. lived but not furnished
d. none of the above

Answer : A - unfurnished and not lived in

“Unoccupied” means the place is not lived in but it may be furnished.

“Vacant” means it is both unfurnished and not lived in.

2. According to the terms of the “loss clause” (which is contained in the coverage from attached to a fire
policy), must an Insured request for the reinstatement of his insurance after a loss has occurred?
a. yes, if the loss exceeds 5%
b. not until the premises have been restored
c. no, the insurance company will reinstate the coverage automatically
d. no, the coverage is not reduced by the occurrence (for payment of loss)

Answer : B - not until the premises have been restored

First of all, choices (B) and (D) are not correct because fire coverage is reduced by each loss and the
insurance company will not automatically reinstate coverage. Choice (A) is wrong because the size of the
loss does not matter.

12
Wait until the premises have been repaired before you ask for a reinstatement of your coverage. There is no
guarantee that the insurer will grant your request but he does, there will most likely be additional premium
involved.

3. A clause in the Property Damage Fire Form states that the insurance contract will not be prejudice by
the act or neglect of a person other than the Insured if the act or neglect is not within the control of the
Insured. This clause known as the
a. automatic sprinkler clause
b. control of property clause
c. work and material clause
d. liberation clause

Answer : B - control of property clause

We would like to study all of the possible clauses in order to answer questions like this. However, you can
also look also for clues in the question to identify the answer among the choices. In this case, the word
“control” should serve as your clue.

4. A provision in the Standard Fire Policy that states that the Assured must declare all other insurance
covering the property.
a. average clause
b. control of property clause
c. other insurance clause
d. waiver clause

Answer : C - other insurance clause

Similar to question # 3, look for clues in the question to identify the answer. Note that this is different from
the Other Insurance condition found in the standard Fire Insurance policy jacket.

5. The “other insurance” clause in the fire insurance policy provides that
a. in case of loss, the amount payable shall be shared by several insurance companies
b. the Insured at his election may be allowed to buy any other insurance or additional insurance on the
same property
c. no other insurance on the aside from the granted shall be allowed without the insurer's consent by
written endorsement
d. none of the above

Answer : C - no other insurance aside from the one granted shall be allowed without the insurer's consent
by written endorsement

This question just turns question # 4 around. Be on the look out for two or more questions in the exam
might be talking about the same thing.

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SURETYSHIP

1. The bond required under Section 7 & 8 of Rep. Act 26, guarantees the payment of loss or damage which
might be sustained by the buyer or mortgagor of the property the Torrens title to which had been
reconstituted is called
a. payment bond
b. rule 74 bond
c. reconstituted title bond
d. none of the above

2. The main undertaking of this type of bonds, in general, is to guarantee the payment of customs taxes,
duties and other charges on imported, exported goods. They are called collectively as
a. Judicial Bonds
b. Guaranteed Payment Bonds
c. Customs Bonds
d. none of the above

3. The three C's of bonding are

a. character, capital, cash
b. capability, cooperation, character
c. character, capacity, culture
d. capital, capacity, character

4. The bond required by the court of the person appointed by it to guarantee the proper management
and disposition of the property of a minor or incompetent heirs, is called
a. Heirs Bond
b. General Importers Bond
c. Guardian's Bond
d. none of the above

5. Under a Surety Bond, the surety company has the right to deny liability in the event that a material
change has been made in the arrangement between the principal and obligee.
a. True
b. False

6. When the obligee requires contractors, suppliers, and others to submit proposals for competitive
bidding, the bond that undertakes that the principal shall, if he wins the bid, enter into the resulting
contract is called
a. Performance Bond
b. Surety Bond
c. Bidder's Bond
d. none of the above

7. A license or permit bond required of a person applying for or possessing firearms in the Philippines is
known as
a. a firearms bond
b. an attachment bond
c. an administrator's bond
d. a surety bond
14
8. A surety Bond, by reason of its formality
a. may be oral
b. can arise by implication
c. must explicitly be in writing
d. none of the above

9. A bond executed in behalf of a person appointed by a court to a position of trust, guarantees

performance of statutory duties and proper accounting
a. bail bond
b. bidder's bond
c. firearm
d. fiduciary bond

10.The Surety, as a party to the Surety Bond

a. is primarily liable to perform some legal obligation
b. is the beneficiary of the bond
c. guarantees the performance of an undertaking or obligation
d. none f the above

11.A lending company seizes Tony's property because of an alleged debt. If Tony desires to secure the
return of his property through a court action, he needs to file
a. an injunction bond
b. a counter-replevin bond
c. a replevin bond
d. a seizure bond

12. The deed of Indemnity is a contract:

a. whereby the signatories thereof bind themselves to pay the claims against the bond
b. whereby signatories bind themselves to reimburse and/or indemnify the surety for losses sustained
in consequence of the issuance of the bond
c. combination of a & b
d. none of the above

13. In a court action to regain possession of his personal property,the plaintiff files a bondknown as a
a. replevin bond
b. attachment bond
c. seizure bond
d. requisition bond

14. Bonds which undertake to answer for the obligee's loss of money or other property by reason of
the dishonest acts of his employees are called
a. guaranty bond
b. surety bond
c. fidelity bond
d. none of the above

15
15. The employer can pay for the premium of the fidelity bond that guarantees an employee's
honesty. The statement is
a. false
b. true
c. true, if he obligee consents
d. false, the obligee pays the premium

16. Bonds conditioned to answer for non-performance of contractual obligations are classified as
a. surety bonds
b. guaranty bonds
c. fidelity bonds
d. none of the above

17. One of the most common types of judicial bonds is known as

a. review bond
b. petition bond
c. retrial bond
d. appeal bond

18. The obligee, as a party to the Surety Bond

a. is primarily liable to perform a legal obligation
b. is the beneficiary thereof
c. guarantees
d. none of the above

19. The type of Custom's Bond which guarantees that the principal shall produce the required
authenticated document/s which did not accompany the merchandise which arrived into the country
a. Ship's Side Bond
b. General Importers Bond
c. General Documentary Bond
d. none of the above

20. A Surety Bond is an agreement

a. between 2 parties
b. among 3 parties
c. unilaterally executed by the Surety Insurance Co.
d. none of the above

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GENERAL ACCIDENT

1. Burglary insurance covers the following except

a. office tables
b. computers
c. refrigerators
d. cash

2. Fidelity Guarantee insures you against

a. inside jobs
b. infidelity of your spouse
c. cruelty of your boss
d. all of the above

3. The term “floater” is used because the insurance

a. cover boats
b. is a valued policy rather than an open policy
c. follows the property insured wherever it may be
d. none of the above

4. Which of the following statements is not true about “inherent vice” under the Inland Marine
Insurance?
a. it is a defect within the object itself that will cause damage to the object under certain conditions
b. it is peculiar to gamblers
c. loss due to inherent vice is normally excluded
d. losses due to decay in fruits and vegetables fall under inherent vice

5. What type of insurance would protect a house owner if his house catches fire and he finds out that his
insurance broker forgot to get him insurance?
a. earning insurance
b. extra expense
c. errors and omissions
d. all of the above

PERSONAL ACCIDENT

1. A man would be considered totally disabled if he couldn't:

a. perform any and all of his important duties
b. perform any and all of his usual duties
c. attend to his business for 50% or more of his usual time
d. perform one or more of his important daily duties

2. If the Insured changes to a less hazardous occupation

a. he can get a return of part of the premium ha has paid
b. he can get a return of all premium he has paid
c. the policy must be cancelled
d. there is a reduction of benefits

17
 3. Personal Accident Insurance
a. provides indemnity by computing for the value of a persons life
b. provides compensation for expenses or loss of income caused by death or bodily injury arising from
violent, external, visible and accidental means
c. provides compensation for injury when the person tries to commit suicide but does not die
d. all of the above

4. Jack has a full-time 40-hour week position as an office worker and a part-time position of 20-hours a
week as a construction worker. Which occupation would have a greater effect on the rate?
a. office worker
b. the full-time position
c. construction worker
d. both jobs have an equal effect

5. Total disability refers to

a. the inability to engage in any occupation for which the person is fitted by education and training
b. the inability of the insured to engage in his occupation for a period specified in the policy
c. the insured is not able to perform any gainful occupation
d. all of the above

INSURANCE AGENT

1. A licensed agent may legally accept commissions only from the company/companies for which he is
licensed.
a. True
b. False

2. A certificate issued by the Insurance Commission which serves as evidence that the holder thereof is
duly authorized by law to act as an insurance agent is called
a. Certificate of Graduation
b. Certificate of Brokerage
c. Certificate of Authority
d. none of the above

3. The government agency that issues Certificates of Authority to agents is the

a. Office of the President
b. Secretary of Finance
c. Insurance Commission
d. all of the above

4. A type of risk, which the insurer will not accept from its agent, is usually called a
a. prohibited risk
b. assigned risk
c. financial risk
d.compensated risk

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 5. An insurance agent's license can be revoked for
a. fraudulent practices
b. violation of any provision of the Insurance Code
c. misrepresentation in the application for license
d. any or all of the above

6. Penalty for a person criminally prosecuted for selling insurance without a license is
a. P 10,000 fine
b. death
c. deportation
d. none of the above

7. Any person who for compensation solicits or obtains insurance on behalf of any insurance company or
transacts for a person other than himself an application for a policy or contract of insurance to or
from such company shall be known as a/an
a. insurance agent
b. general agent
c. insurance broker
d. reinsurance broker

8. To retain an old client, Agent gives half of his commission to his Insured. This is called
a. rebating
b. inequitable
c. twisting
d. misrepresenting

NONLIFE INSURANCE

1. If the property covered by Fire Insurance is sold, the new owner

a. is automatically covered
b. has an insurable interest and therefore has fire protection
c. should have the policy endorsed in his name, if coverage is desired
d. both a & b

2. Over-insurance exists when

a. an Insured has a large amount coverage
b. too many people have insurance
c. an Insured transfers his coverage from one hospital to another
d. an Insured stands to make a profit on his hospitalization or income insurance

3. A misrepresentation is not material unless it led the insurance company to issue coverage that would
not have been issued if the facts had been known. This statement is
a. true
b. true only if there was a witness
c. false
d. false; a misrepresentation is always material

4. The hazard that pertains to an Insured's character and reputation. If these are negative, the insurance
19
application may be rejected.
a. underwriting hazard
b. physical hazard
c. moral hazard
d. fire hazard

5. A statement of fact in the fire policy or in its endorsement relating to the property insured upon, which
the truth or fulfillment or validity depends on, is called
a. clause
b. warranty
c. an endorsement
d. none of the above

6. If there is more than one company insuring the same property, the liability of each company in the
event of loss
a. shall be the total sum insured in the policy
b. shall be the actual loss of the insured
c. shall be its ratable proportion of such loss
none of the above

7. In an open policy, upon occurrence of loss, proof of value is no longer necessary while in valued policy
the Insured must prove the value of the thing lost
a. true
b. false
c. true, in certain cases
d. false, in certain cases

8. Why must an Insured have an insurable interest in the property insured?

a. to obtain a measurement of the insured's loss
b. guard against moral hazard
c. prevent wagering
d. all of the above

9. The office that regulates and supervises the insurance industry is now called the
a. Office of the Insurance Commissioner
b. Insurance Commission
c. Insurance and Surety Association of the Philippines
d. all of the above

10. A misstatement in the application was discovered only after two years. The insured is barred from
recovery in the event of a claim
a. True
b. False

11. There is constructive total loss when

a. the loss is constructed
b. subject matter is so damaged it is no longer the thing of the kind insured
c. subject matter could not be preserved from actual loss without an expenditure which could exceed
its value when recovered
d. none of the above
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12. After the insurance company has paid the loss, the assignment to the company of the Insured's right
against a liable third party is called
a. concurrence
b. third party liability
c. assignment
d. subrogation

13. There is actual loss when

a. subject matter could not be preserved from actual loss without an expenditure which would exceed
its value when recovered
b. subject matter is so damaged it is no longer the thing of the kind insured
c. the item is 80% damaged
d. none of the above

14. The existence of mortgage on the insured property affects the validity of the policy.
a. True
b. False

15. An insurable interest in non-life insurance is

a. that part of your interest in property that may be insured
b. the interest on your insurance
c. any interest which could be insured
d. every interest in property or relation thereto, or liability in respect thereof, of such a nature that
contemplated peril might direct damnify the insured

16. A property valued at Ps 50,000 is insured for Ps 100,000. In case of a total loss,
a. the company is liable for only Ps 50,000
b. the company is liable for Ps 100,000
c. the company can validly refuse to pay
d. the company is liable fro Ps 100,000 because it received the corresponding premium coverage

17. A son can insure his expectancy on the property he will later inherit.
a. True
b. False

18. Property damage insurance protects the property of the insured.

a. True
b. False

19. A written instrument in which a contract of insurance is set forth is called

a. surety bond
b. insurance policy
c. both a & b
d. none of the above

20. If the insured intentionally did not disclose a material fact about the property, this is called
a. misrepresentation
b. fraud
c. concealment
d. none of the above
21
 21. The term Casualty Insurance includes but is not limited to
a. Fire Insurance
b. Life Insurance
c. Motor Vehicle Liability Insurance
d. Marine Insurance

22. Any interest in property, real or personal, of such a nature that the contemplated peril against might
indemnify the Insured is called
a. warranty
b. misrepresentation
c. concealment
d. insurable interest

23. All of the following statements on a non-life insurance policy are true except:
a. the value of the thing insured is not agreed upon in an open policy at inception date
b. a policy is always valued
c. in a value policy, the value of the thing insured is expressed on the face of the policy
d. successive insurances are contemplated in a running policy

24. An agreement whereby one undertakes for a consideration to pay the Insured against loss, damage or
liability arising from an unknown or contingent event is called
a. contract of suretyship
b. contract of indemnity
c. contract of insurance
d. none of the above

25. An act made to deceive an insurance company in order to obtain the benefits therein unlawfully such as
intentionally overstating the claim against the property insured is called
a. misrepresentation
b. concealment
c. fraud
d. none of the above

MORE QUESTIONS: NON LIFE INSURANCE

1. Under the provision of the Insurance Code, a cancellation notice to the Insured from the insurer, to be
effective shall be based on the occurrence of any of the following, except:
a. non-payment for premium
b. discovery of fraud or material misrepresentation
c. verbal notice to the Insured
d. physical changes in the property insured making property uninsurable

Answer : A - verbal notice to the Insured

All the other choices are called reasons for the insurer to cancel the policy, as per the insurance code.
(Sec.64) The insurance code also states that such cancellation must be written. (Sec.65)

2. The government regulates and supervises the insurance industry because

a. the industry perform acts of charity
b. some companies collect excessive premiums
22
 c. company officials are engaged in various enterprises
d. industry activities concern public interest

Answer : D - industry activities concern public interest

3. If several insurers are insuring the same risk against the same perils for the same Insured, this is a case
of reinsurance.
a. True
b. False

Answer : B – false

It's supposed to be a case of double insurance.

In an attempt to describe reinsurance in simple terms, it is when an insurance company gets insurance for
itself it thinks losses will be too high. To avoid confusion, reinsurance will not be discussed in this manual.

DIRECTION : On your answer sheet, mark X under the column which corresponds to your answer. Should you
decide to change your answer, darken the column and put an X mark on it, then choose another letter of your
answer.

1. Which of the following statements in marine insurance on Abandonment is false?

a. It is an 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.
b. It can be partial or conditional
c. It is equivalent to a transfer by the Insured of is interest in the thing insured
d. It can be sustained only upon cause specified in the notice of abandonment

2.There is constructive total loss when

a. The loss is constructed
b. Subject matter is so damaged that it is no longer the thing of the kind insured
c. Subject matter could not be preserved from actual loss without an expenditure which could exceed its
value when recovered
d. None of the above

3. All of the following are true except:

a. A surely bond cannot be made a substitute for an insurance policy as cover for a motor vehicle under
CMVLI
b. A Certificate of Cover issued to an operator or motor vehicle may serve as proof of coverage
c. A Certificate of Cover can be presented to government agents in charge of enforcing traffic laws
d. Certificate of cover maybe issued in lieu of a certificate of insurances

4. With respect to a Standard Fire Policy, the term “vacancy” means

a. Unfurnished and not lived in
b. Furnished but not lived in
c. Lived in but not furnished
d. None of the above

5. An insured property being shipped maybe stationary temporarily at a certain location. The property will
eventually continue on its way to the destination. This kind of shipment in insurance is known as:
23
 a. F.O.B
b. CIF
c. On conveyance
d. In the course of transit

6. A passenger under LTO Insurance

a. Is always a fare paying person being transported and conveyed by a motor vehicle for transportation of
passenger for compensation
b. Need not necessarily be fare paying passenger
c. Combination of letters “a” and “b”
d. None of the above

7. According to the terms of the “Loss Clause” which is contained in the coverage form attached to a fire policy,
must an insured request the reinstatement of his insurance after a loss has occurred?
a. Not until the premises have been restored
b. Yes, if the loss exceeds 5%
c. No, the coverage is not reduced by the occurrence (or payment) of a loss
d. No, the insurance company will reinstate the coverage automatically

8. The open policy Clause in the fire policy

a. Is similar to a cover note
b. Is the same as a marine cargo open policy
c. Requires that in the event of loss, the amount of loss shall be subject to adjustment, limiting the liability
of the insurer to actual loss of the insured
d. None of the above

9. The “other insurance” clause in the fire insurance policy provides that
a. In case of loss, the amount payable shall be shared by several insurance companies
b. The Insured as his election may be allowed to buy any insurance or additional insurance on the same
property
c. No other insurance aside from the one granted shall be allowed without the insurer's consent by written
endorsement
d. None of the above

10. If the property covered by Fire Insurance is sold, the new owner
a. Is automatically covered
b. Has an insurable interest and therefore has fire protection
c. Should have the policy endorsed in his name, if coverage is desired
d. Both a and b

11. “Average”, in marine parlance, means:

a. The score attained by a shipowner specifying the median of a ship's several voyages
b. The points achieved by an Insured for preventing or minimizing loss
c. Loss or damage
d. None of the above

24
12. Why must an Insured have a Insurable interest in the property insured?
a. To obtain a measurement of the Insured's loss
b. Guard against moral hazard
c. Prevent wagering
d. All of the above

13. Under the LTO Insurance, required for the third party liability is the
a. Unladen weight
b. Horse power
c. Displacement Capacity
d. None of the above

14. Bonds which undertake to answer for the obligee's loss of money or other property by reason of the
dishonest acts of his employees are called
a. Guaranty Bonds
b. Surety Bonds
c. Fidelity Bonds
d. None of the above

15. Under the insurance law, a fund was created to be used in the payment of allowed claims against an
insurance company authorizing to transact business in the Philippines, remaining unpaid by reasons of
insolvency of such company. The fund is the
a. Security Fund
b. Mutual Fund
c. Charitable Trust Fund
d. Variable Contract Fund

16. Any interest in property, real or personal, of such a nature that the contemplated peril against it might
indemnify the Insured is called
a. Warranty
b. Misrepresentation
c. Concealment
d. Insurable Interest

17. In Marine Cargo Insurance, a policy which is a continuous contract covering automatically all shipments to
and from stated parts of the world is called
a. Marine cargo note
b. Special marine policy
c. Open policy
d. None of the above

18. The fundamental principles of Maine Insurance include the following except:
a. Insurable Interest
b. Profits
c. Indemnity
d. Good Faith

25
19. An agreement whereby one undertakes for a consideration to pay the Insured against loss, damage or
liability arising from an unknown or contingent event is called
a. Contract of Suretyship
b. Contract of Indemnity
c. Contract of Insurance
d. None of the above

20. Under the average clause of the fire policy, the Insured
a. Is not bound to insure the property at its sound value
b. Shall be paid the full value of his loss
c. Shall be considered as self insurer of the uninsured portion if the policy is underinsured
d. None of the above

21. Under the liability failure of an automobile policy, the term “upper limit means the
a. Extent of the liability for any accident involving more than one person
b. Extent of the liability for one person injured or killed in an accident
c. Amount of the company will pay for the property damage
d. Amount of the company will pay property damage and medical payments coverage

22. If there is more than on company insuring the same property, the liability of each company in the event of
loss
a. shall be total sum insured in the policy
b. shall be the actual loss of the insured
c. shall be its ratable proportion of such loss
d. none of the above

23. In fidelity or Surety Bonds, the word indemnity refers to:

a. An agreement to protect both the principal and oblige
b. An agreement to protect the surety
c. An agreement to protect the principal
d. An agreement to protect the obligee

24. The obligee as a party to the surety bond ...

a. is primarily liable to perform a legal obligation
b. is the beneficiary thereof
c. guarantees
d. none of the above

25. The insurance law specifically prohibits misrepresentation by agents with regard to which of the following
matters :

I. The terms, benefits or advantages of any policy

II. The dividends to be paid by the insurance company
III. The financial condition of any company
IV. The dividends previously paid by the insurance company

a. I and III
b. I, II, and III
c. A
d. All of the above
26
26. Which of the following perils are not covered under the Standard Fire Policy
a. Rebellion
b. Civil War
c. Enemy Attack
d. All of the above

27. In marine insurance, jettison

a. Refers to a temporary detainment of property with a view to ultimate release
b. Refers to throwing overboard of cargo or part of a vessel equipment in order to relieve a vessel when
she is in peril
c. Includes every wrongful act willfully committed by the master or crew to the prejudice of the owner or
the character
d. None of the above

28. In a court action, to regain possession of his personal property, the plaintiff files a bond known as a
a. replevin bond
b. attachment bond
c. seizure bond
d. requisition bond

29.With respect to Co-insurance Average or Contribution Clause, which of the following statement is true?
a. The insured is never penalized
b. The insured is always penalized
c. Under some circumstances, the insurer is penalized
d. None of the above

30. If several insure are insuring the same risk against the same perils for the same Insured, this is a case of
a. Reinsurance
b. Double Insurance
c. Co-Insurance
d. None of the above

27
DIRECTION : Under column A of your answer sheet, write T if the statement is true and F if the statement is
false.

_________31. In the context of motor insurance, the passenger and drivers are also considered third parties.

_________32. A licensed agent may legally accept commissions only from the company/ies for which he is
licensed.

_________33. Warranty in Marine Insurance is a stipulation forming part of the policy as to some fact,
condition or circumstances relating to the risk.

_________34. An alteration in the use or condition of a thing insured in violation of the provisions of the Fire
Insurance Policy, but without increasing the risk, entitles the insurer to rescind the contract.

_________35. All risks policies include all perils.

_________36. When the insurance company spreads the risk that , and adds to the capacity of the company to
reinsure it is called double insurance.

_________37. Personal accident insurance does not provide compensation for loss of income caused by death
or bodily injury arising from violent, external, visible and accidental means.

_________38. Insurable value in Fire Insurance is the expense it would be to the Insured, at the time of the
commencement of the fire, to replace the thing loss or bring it back t the condition it was in.

_________39. “Perils of the seas” include every clause loss to the shipowner.

_________40. A misstatement in the application is discovered only after two years. The insured is barred from
recovery in the event of a claim.

28
DIRECTION : Match Column A with Column B. Write your answers on the first column (Column A) of your
answer sheet.

Column A Column B

_________41. Written evidence of provisional insurance contracts which are to A. Surety Bond
be issued only when regular fire policies cannot be granted for certain valid
reason. B. Physical Hazard

_________42. Insurance effected in property either in one or several C. Over-insurance

companies to an amount which separately or in aggregate exceeds the actual
cash value of the insured's in the property. D. Loss of voyage

_________43. Form of coverage which primarily concerned with the protection E. Injunction Bond
of goods in transit and the means of transportation.
F. Double Insurance
_________44. Indicates that the title will pass from the shipper's to the
consignee at the specified point in transit. G. Co-Insurance

_________45. Exists when the same risk is insured by several insures H. Warranty
separately in respect to the same subject and interest.
I. Replevin Bond
_________46. Bond to prevent an individual from committing a specified act
that will injure him such as selling a business. J. Particular Average

_________47. Agreement among three parties whereby a surety company K. Marine Insurance
guarantees of goods in transit and the means of transportation.
L. Insurance Contract
_________48. Statement by the insured, the truth of which becomes a
condition of the validity of the policy. M. F.O.B

_________49. Term used in marine insurance which means partial loss. N. Cover Notes

_________50. A provision which specifies that the insurance company will pay
only a part of a loss and requires policy holder to pay the balance himself.

29