FIRE INSURANCE

1. Long Term policies (for three years & above) can be given for
a) Industrial Plants b) Dwellings
c) Godowns d) Tank farms
1. The minimum Sum insured and retention of premium under floater declaration policy is
a) Rs. 1 Crore & 50% respectively
b) Rs. 1 Crore & 80% respectively
c) Rs. 2 Crore & 50% respectively
d) Rs. 2 Crore & 80% respectively

3. Excess under Standard and Special Perils policy for other than AOG peril
a) Rs.10,000/- b) Rs.15,000/-
c) Rs.2,500/- d) 5% of claim

4. Under Fire tariff, Earthquake zones are classified as

a) Zone I & Zone II
b) Zone I, Zone II & Zone III
c) Zone I, Zone II, Zone III & Zone IV
d) Zone I, Zone II, Zone III, Zone IV & Zone V

5. Mid-term increase in Sum insured can be done

a. By charging premium on short period basis
b) by charging full premium from inception
c) Charging premium on pro-rata basis
d) Sum insured cannot be increased mid-term

6. Waiting period for mid-term STFI cover is

a) 5 days b) 10 days
c) 15 days d) 20 days

7. Sequence followed under Fire Claims

a. Depreciation, under insurance, excess, salvage
b. Under insurance, salvage, Depreciation, excess
c. Under insurance, salvage, excess, Depreciation
d. Depreciation, salvage, under insurance, excess

8 Under declaration policy, minimum retention of premium is

a) 35% b) 50%
c) 65% d) 80%

9. Minimum Sum insured under Industrial All Risk policy is

a) Rs. 50 Crores b) Rs.100 Crores
c) Rs.150 Crores d) Rs.200 Crores
10. Compulsory deductibles under IAR policy is
a) 5% of claim amount subject to minimum Rs.3 lacs & maximum Rs.50 lacs
b) 5% of claim amount subject to minimum Rs.4 lacs & maximum Rs.50 lacs
c) 5% of claim amount subject to minimum Rs.5 lacs & maximum Rs.50 lacs
d) 5% of claim amount subject to minimum Rs.6 lacs & maximum Rs.50 lacs

11. Which of the following is not an ‘Add-on’ peril?

a) Architect, Surveyors & Consulting Engineers Fees
b) Storm, Tempest, Flood & Inundation
c) Earthquake
d) Spontaneous Combustion

12. Following perils can be excluded from the fire policy with consequent rate reduction
a) Subsidenc, Landslide & Rockslide
b) STFI & RSMTD
c) Impact damage, Vehicle damage
d) Explosion, Implosion

13. Fire policies under which no depreciation is deducted are known as

a) Market Value policies
b) Agreed Value policies
c) Depreciated Value policies
d) Reinstatement Value policies

14. For a fire to occur, which of the following is required

a) Oxygen
b) Heat Source
c) Material capable of burning
d) All of the above

15. Which of the following is irrelevant with regard to IAR policies

a) Fire LOP is compulsory
b) Declaration facility is allowed
c) MBLOP cover is optional
d) Entire machinery excluding piping & cables needs to be covered

16. Fire Loss of Profit policies can be issued on

a) Output basis b) Turnover basis
c) Difference basis d) Any of the above

17. PML stands for

a) Possible Maximum Loss
b) Probable Major Loss
c) Possible Minimum Loss
d) Probable Maximum Loss

18. Contents of following sections can not be covered ‘per se’

 a) Dwellings
b) Industrial Risks
c) Multiple Occupancy Industrial estates
d) All of the above

19. As per Escalation Clause in the Fire Policy

a) The selected percentage increase shall not exceed 10% of the S.I.
b) The selected percentage increase shall not exceed 15% of the S.I.
c) The selected percentage increase shall not exceed 20% of the S.I.
d) The selected percentage increase shall not exceed 25% of the S.I.

20 Which of the following is taken into consideration for arriving at the adequacy of
sum insured under Fire Consequential loss insurance policy
a. Gross profit of the current policy
b. Previous financial year Turnover
c. Standard Turnover
d. Annual Turnover

21. Which of the following statement(s) is/are not relevant to Industrial all risk Policy
I IAR policy can be issued for a petrochemical risk having sum insured more than
Rs.100 crores
II No depreciation applied on partial and total losses arising out of Machinery
Breakdown claims
III Selection of machinery is permitted under Machinery breakdown sum Insured
IV Fire Loss of profit cover is compulsory and Machinery Loss of profit cover is
Optional

a. (i) and (iii)

b. only (ii)
c. (ii) and (iv)
d. only (i).

22. Which of the following statement is incorrect in case of Reinstatement value policies.
a. Reinstatement of the affected property should be completed with in 12 month
from the date of loss
b. In case reinstatement not effected, then the claim can be settled on Market value
policy basis
c. Value at the risk at the time loss will be taken to arrive the adequacy of sum
insured
d. It permits to settle the Claim on market value basis.

23 Under Standard Fire consequential loss insurance the Time Excess applicable is
e. 5% of the claim amount or first 3 days of gross profit which ever is higher
f. 5% of the claim amount or first 7 days of gross profit which ever is less
g. As applicable Material Damage policy
h. Nil

24.The sequence to be followed in the fire claim settlement is

a. Assessed loss less Depreciation, pro-rata average, salvage and
 Excess
b. Assessed loss less salvage, depreciation, pro-rata average and excess
c. Assessed loss less depreciation, salvage, pro-rata average and excess
d. Assessed loss less pro-rate average, depreciation and excess.

25.Under Electronic equipment policy there is no coverage available for

a. Integral to the built in software
b. Application software
c. Punched tapes
d. Increased cost of working

26. An Advanced Loss of Profit policy indemnifies the Principal or the project
owner for
a. The loss of revenue arising out of delay in the completion of the project due to other
contractor’s delay which is not in the scope of the policy holder.
b. The loss of revenue arising out of delay in receipt of project consignment due to accident
during transit period
c. The loss of revenue arising out of delay in completion of project due to operation of an
insured peril covered under SCE/CAR policies
d. The loss of revenue arising out of delay in completion of project due to Speculative or
trade risks which relates to political, social or economic reasons or shortcomings in the
management

27. An Insured has taken Standard Fire and Special Perils Policy covering his fixed assets
and stocks. He has opted for Rs.5,00,000 as voluntary deductible for other than AOG perils.
His property got damaged due to Fire. While settling this fire claim the excess applicable is

a. Rs. 10,000/- as compulsory Excess

b. 5% of claim amount or subject to minimum of Rs 10,000/-
c. Rs.5,00,000/- only
d. Both compulsory excess of Rs.10,000/- and Voluntary excess of Rs 10,00,000/-.

28.Mark the most unlikely answer below.

a. In Contractor All Risk Policy fragile items are covered automatically

b. Contractor All Risk Policies are issued where the scope of project is only Civil
construction
c. Storage Cum erection policies are issued for erection and commissioning of new and / or
second-hand Electro Mechanical machineries.
d. Storage Cum erection policies are issued where the scope of project involves civil
construction, testing and commissioning of Electro Mechanical machineries.

29. Which of the statement given below is most relevant in case of engineering
operational policies and Business Interruption policies.
a. In case mid term increase in sum insured, the premium chargeable is on pro-rata
basis for the unexpired policy period.
b. In case mid term increase in sum insured, the premium chargeable is on short period
basis for the un expired policy period
c. In case mid term increase in sum insured and renewed with the same or enhanced
sum insured with same insurer then refund on premium arising out of difference
between short period and pro-rata premium is made.
d. In case mid term increase in sum insured and renewed with the same insurer then
refund on premium arising out of difference between short period and pro-rata
premium is made

30. An insured has taken fire policy covering plant and machinery under Standard Fire
and special peril policy. Due to direct impact of Lightning strike on out door Transformer
No.1 and got exploded and got fire. Due to this the out door transformer No 2 and other
surrounding properties are also got damaged. The liability under the fire policy is
a. Entire claim is payable
b. Entire claim is not payable
c. Only Transformer No. 1 is payable
d. Other than transformer No.1 is payable
 UNITED INDIA INSURANCE COMPANY LIMITED
Regional Office – Chennai. 600 006
ENGINEERING INSURANCE QUIZ
1. Following discounts are applicable for SCE policies
a) Voluntary (Higher) excess discount b) Volume discount
c) Discount for opting excess under Marine d) All of the above

2. Under Electronic Equipment policy following equipments are covered

a) Medical Equipments b) Computers
c) Industrial Electronic Equipments d) All of the above

3. Monetary Excess is not applicable under

a) Boiler & Pressure plant policy b) Machinery Breakdown policy
c) CPM policy d) Electronic Equipment policy

4. Under SCE/CAR policy for midterm increase in sum insured

a) Premium should be charged from the date on which the increase is informed
b) Short period scale of rates are charged from the date of increase
c) Mid-term increase in sum insured is not allowed
d) Premium should be charged from the inception of the policy

5. Terrorism rate for Engineering Policies is

a) 0.05%o b) 0.003%o c) NIL d) 0.05%

6. Rate for Machinery Breakdown cover under Industrial All Risk policy is
a) 0.25%o. b) 0.50%o c) 0.25% d) 0.50%

7. Refund of premium can be allowed for early completion of the project under MCE/SCE/CAR if
a] Period of Insurance is 18 months and above b] Period of Insurance is 12 months and above
c] No refund is allowed for early completion d] Period of Insurance is 24 months

8. Under Machinery Breakdown policy, depreciation is deducted for

a) Partial Loss b) Total Loss c) Partial & total Loss d) No depreciation is deducted
9. Sum insured under Machinery loss of profit is
a) Net Profitb) Gross Profit c) Standing Charges d) All of the above

10. Volume discount can be granted under SCE/ CAR policies, if the sum insures is above
a) 25 croresb) 50 croresc) 75 crores d) 100 crores
..2

11. Coverage under MLOP policy is loss of Gross Profit due to

a) Reduction in turn over b) Increase in cost of working
c) both a & b above d) None of the above
12. Following is correct for Deterioration of Stock policy
a) The cover is for the deterioration of stocks due to breakdown of the Cold storage machinery
b) The indemnity is due to putrefaction, deterioration or contamination
c) There should be in force an insurance in respect of breakdown of machinery
a) All of the above
13. For SCE Policies, separate excesses are provided for
a] Storage and erection period [Normal period] b] Testing period
c] Act of God perils d] All of the above

14. Under CAR/SCE policies, projects valued in excess of Rs.1500 crores can be rated
a) As per the rates given in Engineering manual/tariff
b) As per the guide rates given by TAC
c) As per the quotes given by the Reinsurers
d) Cannot be insured in India

15. Following is false about Boiler & Pressure Plant policy

a) It covers damage to Boiler and Pressure plant and also to insureds own surrounding property
b) Explosion or collapse of boiler & pressure plant should cause the damage
c) Cover can be granted for boilers covering under Indian Boiler Regulation (IBR) Act but are not
certified by boiler inspectorate
d) The basic rate for boiler increases for each year in excess of the stipulated age

16. For TPL and surrounding property to be covered as an extension of boiler & pressure plant policy, the rate applicable will be
a) 10% of the net rate applicable to boiler
b) 15% of the net rate applicable to boiler
c) 20% of the net rate applicable to boiler
d) 25% of the net rate applicable to boiler

17. Following machineries can be covered under Electronic Equipment policy

a) Computer b) Medical Equipments c) both a & b d) Electric Panels

18. The machineries that are covered under CPM Insurance policy are divided into
a) Group I, II & III b) Group I, II, III & IV
c) Group I & II d) Group I, II, III, IV & V
..3..
19. Following policy is an All Risk policy
a) Boiler & Pressure Plant policy b) Electronic Equipment Insurance
c) CPM policy d) Machinery Breakdown
20. Special rating is done for Machinery Breakdown policies if the Sum Insured under the policy (Mechanical & Electrical items both single or together) is
a) 5 crores & above b) 10 crores & above
c) 20 crores & above d) 25 crores & above

21. Under Electronic Equipment Insurance, the word ‘Maintenance’ shall mean the following
a) Safety Checks
b) Preventive Maintenance
c) Rectification of Loss resulting from normal operation as well as from ageing
d) All of the above

22. Machinery Breakdown policy can be issued to machines when

a) they are working b) they are at rest
c) they are being dismantled d) All of the above

23. Under Engineering policies

a) the excesses are minimum, but can be eliminated by payment of additional premium
b) the excesses are minimum and cannot be eliminated by payment of additional premium
c) the excesses are optional
 d) there are no excesses
24. Additional rates for Earthquake is charged under MCE/SCE/EAR policies if the project is located in the following zones
a] Zone I b) Zone I & II
c) Zone II & III d) Zone I, II & III

25. Out of the following, what is not covered under Electronic Equipment policy
a) Material Damage b) External date Media
c) Application Software d) Increased cost of working
26. Rating of Machinery Loss of Profit policy depends on
a) Indemnity period b) Relative importance
c) Sum Insured (Gross Profit) d) All of the above

27. Sequence of steps involved in loss assessment of Machinery breakdown policy is

a) Salvage, depreciation, under insurance, excess
b) Depreciation, salvage, under insurance, excess
c) Depreciation, under insurance, salvage, excess
d) Salvage, under insurance, depreciation, excess