PCE Part B- Set C 2000

PCE PART B - SET C (questions 1-20)

Sample Questions with Answers

1 The Risk of War in All Risks Policy is _________________

A an insured risk
B an excluded risk
C an insurance risk for an additional premium
D B and C C10

2 Which of the following statements is correct regarding Private Motor Car Insurance?

A Insurable interest is not required at all.

B Insurable interest is required only at the time of loss.
C Insurable interest is required only at the time of taxing the insurance.
D Insurable interest is required at the inception and throughout the duration of the
insurance.
C10

3 Quick Rich Sdn Bhd insured its building and stock for RM500,000. There was a fire
on 25 June 1990 damaging the back portion of its building and some of the stock. The
damage was assessed as

Building RM100,000
Stocks RM 50,000
Salvage value RM 10,000

What is the amount payable?

A RM500,000
B RM150,000
C RM140,000
D RM160,000 C10

4 Mr Lim insured his house under a fire insurance for the period 1 Jan 1987 to 1 Jan
1988. On 15 May 1987, he sold his house to John for RM100,000. When must be the
assignment of Mr. Lims fire insurance to John be made?

A On 1 Jan 87
B Before 1 Jan 88
C On or before 15 May 87
D After 15 May 87 C10

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 PCE Part B- Set C 2000

5 For good commercial practice, _____________ is usually sent to the insured by the
insurance company before the expiry date.

A A cover note
B An insurance policy
C A renewal notice
D A proposal form C12

6 Comprehensive Cover as provided by motor insurance provides cover for the

following.

A Third Party property damage

B Third Party plus own vehicle damage
C Third Party, fire, and theft plus other own vehicle damage specified in the
policy
D Own Vehicle damage only C10

7 The No Claim Discount ranges for private cars are normally set up between the
following percentages.

A 15% to 50%
B 20% to 45%
C 25% to 55%
D 35% to 55% C14

8 Which of the following benefits are under Personal Accident Insurance?

A Weekly benefits and Medical expenses

B Interest on unclaimed accident
C No claim bonus
D None of the above
C10

9 Which of the following policies protects the aircraft operator from his legal liability to
the owners or cargo carried on the aircraft?

A All risk policy

B Freight Liability Policy
C Loss of License Policy
D Professional Indemnity Policy C10

10 In fire insurance, if the period of insurance is effected for less than one year, the
insurer will _________

A apply a pro rata premium to the insured

B apply a short period scale as per Fire Tariff
C refund half of the premium to the insured
D not refund any premium to the insured C11

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 PCE Part B- Set C 2000

11 Which of the following factors is significant to Workmans Compensation Insurance

rating?

A Type of organization involved

B Duration of the contract
C Occupation of the employees
D Facilities and remuneration provided by the employer C10

12 The peril "explosion" in a standard fire policy is ____________

A covered
B excluded except for explosion of gas used for lighting or domestic purpose
provided the building is not part of any gas works
C not covered at all
D covered except for coal C10&C14

13 The following appear in the schedule of a policy EXCEPT ___________

A name of insured
B period of insurance
C location of property insured
D exclusion C12

14 The following extensions can be made to fire policy EXCEPT ____________

A boiler breakdown
B riot, strike
C landslide
D explosion C10&C14

15 The following are the classification for commercial vehicles EXCEPT ____________

A bus
B special types
C private cars
D motor trade C10

16 Section II of the motor policy covers the following EXCEPT ____________

A death or bodily injury to third parties

B damage to third party property
C reasonable cost of protection of insureds vehicle after an accident
D legal fees C14

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 PCE Part B- Set C 2000

17 Insurers are not liable for motor accident claims caused by the following EXCEPT
_________

A motor vehicle is used otherwise then as stated in the limitations as to use

B it is driven by an L license driver
C outside the geographical area
D motor vehicle is not driven by authorized driver C10&C14

18 Under the Inter-Company Agreement on Motor Tariff, the following are stipulated
EXCEPT _________

A member companies shall comply strictly with No Claim Discount

B an underwriting agent may be paid an additional commission of 5% above an
ordinary agent of gross tariff rate
C no part of commission shall be rebated to the insured
D policy documents must be sent to the insured within 30 days of inception of
risk
C15

19 Exclusion under a standard fire policy include ____________

A loss by theft, during or after fire

B war
C typhoon
D all of the above C10&C14

20 Which of the following is not covered under the consequential loss policy?

A loss of net profit

B standing chargers
C increased cost of working due to interruption of
business
D damage to the building C10

21 Which of the following is not a liability class of insurance?

A Theft Insurance
B Motor Insurance
C Workmens Compensation Insurance
D Public Liability Insurance C10

22 Why is the claim form necessary?

A It is a requirement by law
B It is a formality
C To gather relevant information
D To provide information to the claimant
C13

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 PCE Part B- Set C 2000

23 In many cases, both insurer and insured may refer to an arbitration because
____________.

A it is easier although a little bit expensive

B anybody can be called up as an arbitrator
C arbitration is less expensive and speedier than court
action
D the court would reject awarding any compensation if an arbitration is appointed
C13

24 ___________ arises when sum insured is smaller than the value of property at the time
of loss.

A Over insurance
B Co-insurance
C Self insurance
D Under insurance C13

25 Which of the following are insurance documents?

A Agents monthly statements

B Proposal form
C Cover note
D B and C only C12

26 Information found in a cover note includes ____________

A name and address of the insured

B period of insurance
C past loss experience
D A and B only C12

27 The function of a cover note is to ____________.

A provide evidence of insurance for a temporary period of time

B replace the insurance policy
C form the basis of insurance contract
D all of the above C12

28 General Takaful Scheme is basically ____________ contract that provides cover to

participants against loss or damage due to a catastrophe or disaster, usually inflicted
upon properties or assets.

A long-term donation
B short-term donation
C short-term indemnity
D long-term indemnity
C10

29 Which of the following sources of risks would not be classified with the other three?

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 PCE Part B- Set C 2000

A fire
B flood
C obsolescence of stocks
D arson C10

30 Risk can be simply defined as:

A Uncertainty
B Uncertainty about losses
C Hazard
D Losses C9

31 In an insurance policy, losses are payable only when it is brought about by

____________

A an insured peril
B an excepted peril
C an uninsured peril
D a valid peril C9

32 The Inter-Company Agreement on General Insurance Business came into effect on

____________

A 1st January 1988

B 1st March 1992
C 1st July 1987
D 24th April 1992 C15

33 Which of the following policies only requires insurable interest to be present at the
time of a loss?

A Fire policy
B Burglary policy
C Personal Accident policy
D Marine Cargo policy C9

34 Which of the following policies is not a policy of indemnity?

A Fire policy
B Burglary policy
C Public Liability policy
D Personal Accident policy C10

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 PCE Part B- Set C 2000

35 Which of the following requires a reinstatement of sum insured to its original cover
once an insurer has paid a partial loss?

A Motor policy
B Fire policy
C Marine policy
D Public Liability policy C13

36 This policy covers loss or damage from fire, theft and any accidents not specifically
excluded by the terms of the policy.

A Burglary policy
B All Risk policy
C Fire policy
D Equipment policy C10

37 The principle of contribution does not apply in which of the following policies:

A Personal Accident policy

B Fire policy
C Money policy
D All Risk policy C10

38 The principle of subrogation allows an insurer:

A to pay only the rateable proportion of a loss in the event of more than one
policy covering the loss of a subject matter insured.
B to be paid the rateable proportion of a loss by another insurer who has also
provided the same coverage, after the insurer has settled a claim in full.
C to avail itself of the rights of an insured after having indemnified the insured
D to avail itself of the rights of an insured to recovery from a third party, after
having indemnified the insured.
C9

39 What are the conditions that must be present for a risk to be insurable?

I. Loss must be fortuitous.

II. There must be interest in the subject matter.
III. It must not be against public policy.
IV. The loss must be measurable.

Select one of the combinations below:

A I and IV only
B I, II and IV only
C I, III and IV only
D All of the above C9

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 PCE Part B- Set C 2000

40 Who is responsible or the supervision of insurance companies to ensure compliance

with the Insurance Act?

A Director General of Insurance

B Chairman of PIAM
C Technical committee of MNRB
D Accountant General C15

41 An insurer can cancel a motor insurance policy by sending __________ days notice by
registered letter to the insured at his last known address

A 7
B 14
C 21
D 3 C14

42 A standard fire policy does not cover

A fire damage caused by negligence of insured

B fire damage caused by negligence of insureds
employees
C fire damage caused by bush fires
D fire damage caused by explosion of domestic boilers
C10&C14

43 Which of the items below will not be in an agents marketing plan?

A Goals
B Strategies
C Reviews
D Survey of insureds premises
C15

44 Policy endorsements are prepared to record in the policy the following situations
EXCEPT:

A the occurrence of a partial damage

B the change of values at risk
C the change of occupation
D the change of address C12

45 Losses suffered by an employer or as a result of acts of dishonesty by employees may

be covered by:

A a money policy
B a fidelity guarantee policy
C a financial bond
D a burglary policy C10

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 PCE Part B- Set C 2000

46 Which of the following documents needs to be stamped?

A proposal form
B cover note
C certificate of insurance
D policy document C12

47 Which of the following statements are true.

Type of insurance Minimum premium

I. Motorcycle 15.00
II. Workmen Compensation Insurance 35.00
III. Fire Insurance 50.00
IV. Motor Insurance 50.00

A I and II only
B II and III only
C I, II and III only
D II, III and IV only C11

48 Which of the following statements are correct regarding rating?

I. The rates charged can be broadly categorized as individual rates, class rates,
standard rates and merit rates.
II. Individual rate is the rate to be charged on each risk separately without
referring to an established formula or manual
III. When there is a small number of risks to be insured under a class of insurance,
it is possible to classify the risks by certain characteristics into various classes.
IV. A merit rating plan is a combination of class rating and individual rating.

A I and III only

B II and IV only
C I, II and III only
D All of the above
C11

49 If there is a surplus to the fund after deducting all operational costs, the surplus

A shall be retained by takaful company

B shall be shared between the shareholders and the takaful
company
C shall be shared between the participants and the takaful company in accordance
with the principle of mudharabah
D shall be distributed to shareholders only C10

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 PCE Part B- Set C 2000

50 When under-insurance exists and the policy is subject to average. Based on the
information below:-

Sum Insured - RM50,000

Value of property - RM80,000
Amount of loss - RM5,000
NCB - RM25%

What is the amount payable by insurer?

A 5000.00
B 3125.00
C 781.25
D 2343.75 C13

51 Insurer will repudiate liability based on several ground. There are :-

I. There was no loss or damage as reported

II. The claim form is not fully completed
III. The loss or damage for which a claim has been made was not caused by a peril
or was excluded by the policy
IV. The policy has been rendered void as a result of a breach in condition (implied
or express) or warranty

A I and III only

B II, III and IV only
C I, III and IV only
D All of the above C13

52 Which of the following statements are correct regarding Marine Insurance?

I. Type of policy Marine Hull, Marine Cargo, Marine Freight and Marine
Building Risk
II. Claim forms are used in marine insurance except in respect of inland transit
claims
III. Proposal form are not used in Marine Cargo Insurance and for large risks
IV. Pirate, thieves, deliberate damage or destruction perils are not covered under
institute cargo clause B and C only

A I and III only

B I, II and III only
C I, III and IV only
D All of the above C10

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 PCE Part B- Set C 2000

53 What is Fidelity guarantee insurance?

A It is used predominantly in relation to building or engineering projects where

the contractor is often required by the employer to furnish a performance bond
to guarantee his performance of the contract.
B This policy incorporates an inspection service and provides cover against loss
of money resulting from dishonest acts of his customers.
C This policy covers the employer against loss of money or stocks resulting from
dishonest or fraudulent acts of any of his employees.
D This policy covers public liability arising out of professional negligence.
C10

54 Act only cover is a form of cover that provides the minimum form of indemnity
required by the Road Transport Act 1987. The cover required is in respect of :-

I. Loss or damage to the insured vehicle

II. Legal liability for death or bodily injury to any third party person
III. Expenses incurred for hospital treatment for injured persons subject to a
maximum of RM40 for outpatient and RM400 for impatient treatment
IV. Personal accident insurance to insured

A I and II only
B II and III only
C I, II and III only
D II, III and IV only C10

55 Which of the following statements are correct regarding Motor Insurance.

Motor Insurance Cover Legal Liability

I. Act only For death/bodily injury to third party
II. Third party Act only + third party property
III. Third party, Fire and Theft Third party cover + loss/damage to third
party vehicle by fire and theft
IV. Comprehensive Third party, fire and theft cover + accidental
damages + medical expenses

A I and II only
B II and IV only
C I, II and IV only
D II, III and IV only C10&C14

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 PCE Part B- Set C 2000

56 Which of the following formula is correct when average clause applies? Amount
payable =

A Value of property X Amount of Loss

Sum Insured
B Value of property X NCB X Amount of Loss
Sum Insured
C Sum Insured X Amount of Loss
Value of property
D Sum Insured X NCB X Amount of Loss C13
Value of property

57 When a property is underinsured, the premium paid by the insured is based on the sum
insured instead of its full value. This means

A the insurer will make a profit.

B the insured will be making a contribution to the general fund which is less than
the risk transferred to the insurer.
C the average clause will not be applied.
D insurer will pay sum insured upon total loss on insured vehicle.
C13

58 Generally arbitration is preferred to litigation because the former is ____________

A speedier
B less costly
C negotiable
D A and B
C13

59 When making a preliminary check on a claim, the claim official may, among others,
check the following:-

I. Is the policy inforce?

II. Has premium been paid?
III. Is the loss caused by an insured peril?
IV. Has claim form been submitted.

A I and II only
B I, II and III only
C II, III and IV only
D All of the above C13

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 PCE Part B- Set C 2000

60 Which of the following statements are implied conditions in policy form?

I. Duty of utmost good faith

II. Subrogation
III. Existence of insurable interest
IV. Existence of subject matter of insurance

A I and III only

B II and IV only
C I, III and IV only
D II, III and IV only C12

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