PCE Part B- Set A 2000

PCE PART B - SET A

Sample Questions with Answers

1 General Insurance contracts are usually made for a period of __________.

A 5 years
B 1 year
C 10 years
D 15 years C9

2 In general insurance, the aim is to place the insured in the same financial position as
that occupied before the occurrence of the insured risk. This principle is referred to as
____________.

A Subrogation
B Insurable Interest
C Indemnity
D Utmost Good Faith C9

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

____________.

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

4 Fire policy does not cover ___________.

A lightning damage
B fire caused by negligence of employees
C war
D fire as a result of the explosion of a domestic boiler C10

5 A client suffering losses which are due to the negligent actions of his lawyer. What
class of insurance is this?

A Public Liability Insurance

B Consequential Loss Insurance
C Professional Indemnity Insurance
D All Risk Insurance C10

6 A customer walking through a glass wall with inadequate warning signs. Which policy
would the following claim be recoverable?

A Houseowners Insurance
B Public Liability Insurance
C Consequential Loss Insurance
D Contractors All Risk Insurance C10

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 PCE Part B- Set A 2000

7 The process of risk assessment and determination of price, terms and conditions are
known as ___________.

A claims
B premium
C underwriting
D rating C11

8 Which clause provides for the signature on the policy by an authorised official of the
insurer?

A Conditions
B Operative
C Attestation
D Recital C12

9 The knock-for-knock agreement is an agreement which ___________.

A provides an independent service for dealing with disputes between insurers and
personal policy holders
B enables insurers to reduce legal and administrative
expenses
C states the new terms and conditions to be imposed by the insurer
D indicates that a valid claim exists C13

10 When the sum insured under a policy is inadequate as compared to the value of the
property at the time of loss, insurers will involve the ___________ condition.

A reinstatement
B average
C subrogation
D litigation C13

11 This section of the policy sets out the perils insured and the circumstances in which the
insurer will make payment to the insured. Which of the following best indicates the
above?

A Recital clause
B Schedule
C Operative clause
D Conditions C12

12 Agents must make clear to the policyholder that all answers and statements especially
on the proposal form are the responsibility of _________.

A insurer
B agent
C insured
D claimant C15

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 PCE Part B- Set A 2000

13 On the happening of any loss or damage the insured should __________.

A enter the building, take and keep possession of it

B notify the company immediately
C reinstate or replace the property damage
D remove or deal with it in any other manner C13

14 If the insurer cancels the cover, in which case the insurer has to ________.

A refund the total premium

B refund the premium for the unexpired period according to short period scale
C refund to the insured a pro rata premium for the unexpired period
D non of the above C13

15 All benefits under the policy will be forfeited if __________.

A the claims is fraudulent in any respect

B false declarations are made to support a claim
C any fraudulent means or devices are used to obtain benefit under the policy
D all of the above C13

16 Under the Inter-Company Agreement, agents are allowed to ___________.

A issue or complete insurance policies

B settle or approve claim
C collect premiums
D conduct a loss survey C15

17 When approaching a prospective policyholder, the agent must not ___________.

A identify the insurer

B surprise the prospective policyholder by calling when
he is unprepared
C explain fully the essential provisions of the cover
D draw attention to any restrictions and exclusions C15

18 When informed of a claim by the policyholder, the agent must not __________.

A inform the insurer immediately

B pass on to the insurer all information received from the policyholder
C advise the policyholder of the requirements of the insurer in order to file a
proper claims
D assess the loss and advise the policyholder of the amount of settlements
C13

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 PCE Part B- Set A 2000

19 The householders insurance policy is designed for those who wish to insure
___________.

A private dwellings
B home contents against loss or damage
C private dwellings and home contents
D loss of or damage to property cause by fire C10

20 Which is the regulatory body for Motor Insurance?

A Employees Social Security Act, 1969

B Workmens Compensation Ordinance, 1952
C Road Transport Act, 1987
D Insurance Act, 1996 C9

21 What is "Act Only" cover?

A Death or bodily injury to third party

B Act only cover and third party property
C Loss or damage to insured vehicle by fire and theft
D Accidental damage and medical expenses C10

22 What is All Risk Insurance?

I. Covers against loss of or damage to the contents in a business

II. Covers against all risk (fire, theft and all accidental causes) other than those
excluded from the policy
III. Covers for injury sustained or illness contracted out of and in the course of his
employment
IV. All of the above

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

23 Underwriting is the process of __________.

A determination of the premium

B assessment and selection of risks
C determining the terms and conditions of the policy
D All of the above C11

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 PCE Part B- Set A 2000

24 If the risk is abnormal, poor or sub-standard, underwriters will not ___________.

A charge standard rates

B charge increased rates
C impose special conditions
D reject the risk C11

25 Which of the following is not a factor in the underwriting of a fire insurance risk?

A Type of construction
B Type of burglar alarm system
C Nature of goods stored
D Situation of risk C11

26 An arrangement whereby the insurer reinsures the part of the risk assumed which is in
excess of his retention to the reinsurer(s) is known as ____________.

A co-insurance
B confirmation
C reinsurance
D rating C11

27 What is a tariff?

A To ensure that price competition among insurers will go below the economic
level
B To determine the class rate and then adjust the rate upwards or downwards
depending on the merits of the risk
C To ensure that price competition among insurers will not go below the
economic level
D To set a minimum premium to be charged C11

28 A proposal form is

A the insurance contract

B a record of the subject matter insured
C a document drafted by the insurer in the form of questionnaires
D an evidence that a policy document has been issued C12

29 Which of the following is not commonly found in a fire proposal form?

A Name of the proposer

B Situation of the risk to be insured
C Number of family members of the insured
D Amount to be insured C10

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 PCE Part B- Set A 2000

30 The issuance of a Motor Certificate of Insurance is required by __________.

A The Malaysian Penal Code

B The Insurance Act
C The Road Transport Act 1987
D The Office of the Director General of Insurance C12

31 Which of the following is not commonly found in a motor proposal form?

A Cubic Capacity of the Vehicle

B Proposers name
C Driving offences
D Weight of the driver C12

32 The policy form is ___________.

A the insurance contract

B the written evidence of the insurance contract
C a note of the amount of premium due
D a temporary policy C12

33 The function of a cover note is to ___________.

A replace the insurance policy

B form the basis of insurance contract
C provide evidence of insurance for a temporary period of time
D None of the above C12

34 Changes to an insurance policy are effected by the issue of __________.

A a new policy
B a schedule
C an endorsement
D a certificate of insurance C12

35 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

36 Arbitration is concerned with dispute between the claimant and the insurer over
__________.

A the amount of the loss

B the facts of law
C the circumstances of the loss
D the property which was the subject matter of the C13
insurance

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 PCE Part B- Set A 2000

37 The assessment of the amount of loss is carried out by ___________.

A a solicitor
B the underwriter
C the adjuster
D the agent C11

38 __________ is one of the method of settling a claim.

A Good faith
B Subrogation
C Litigation
D Reinstatement
C13

39 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 faster than court action
D the court would reject awarding any compensation if an C13
arbitrator is appointed.

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

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

41 Which of the following is not tariff regulated?

A Fire
B Marine
C Motor
D Workmens compensation C11

42 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

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 PCE Part B- Set A 2000

43 The peril "explosion" in a standard fire policy is __________.

A covered
B excluded except for explosion of gas used for lighting or domestic
C not covered at all
D covered except for coal C10&C14

44 The following appear in the schedule of a policy EXCEPT __________.

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

45 Under the Road Transport Act, a motor policy should indemnify expenses reasonably
incurred for hospital treatment up to a maximum of ___________.

A RM50 for outpatient treatment and RM500 for inpatient treatment

B RM40 for outpatient treatment and RM200 for inpatient treatment
C RM40 for outpatient treatment and RM400 for inpatient treatment
D RM50 for outpatient treatment and RM400 for inpatient treatment
C10

46 Which of the following is NOT the method for settlement of claims?

A Repair
B Replacement
C Cash-payment of claim by cheque
D Discharge voucher C13

47 When a dispute arises, it may be resolved through the following channels.

A Negotiation
B Litigation
C Arbitration
D All of the above C13

48 Exclusions are inserted into policies for the following reasons except ____________.

A cover can be provided under more appropriate policies

B the risks are uninsurable
C the cover is not demanded by insured
D insurer requires additional premium for such cover C14

49 Insurance tariffs in Malaysia are formulated by ___________.

A the DGIs office

B the Persatuan Insurance Am Malaysia (PIAM)
C the National Insurance Association of Malaysia (NIAM)
D the Insurance Brokers Association of Malaysia (IBAM) C11

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 PCE Part B- Set A 2000

50 Which of the following factors is significant to Workmens Compensation Insurance

rating?

A Type of organisation involved

B Duration of the contract
C Occupation of the employees
D Facilities C10&C11

51 All benefits under the fire policy will be forfeited if the following EXCEPT
____________.

A claim is fraudulent
B false declarations are made to support claim
C the loss is due to the willful act of the insured
D insured does not submit claim form within 14 days of the date of loss
C13

52 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

53 The _________ serves as an official record of policies issued by the insurer.

A discharge form
B endorsement
C policy register
D schedule C13

54 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

55 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 Licence Policy
D Professional Indemnity Policy C10

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 PCE Part B- Set A 2000

56 The following are the classification for commercial vehicles except __________.

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

57 Exclusion under a standard fire policy include ___________.

A loss by theft, during or after fire

B war
C typoon
D all of the above C10

58 "Risk" can be simply defined as:

A Uncertainty
B Uncertainty about losses
C Hazard
D Losses
C9

59 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 boiler C10&C14

60 Given the following Short Period Premium Rates:

Term Not Exceeding Proportion of Annual Rate

1 week 1/8

1 month 1/4

2 months 3/8

3 months 1/2

If an insured cancels his motor policy after the policy has been inforce for 1 months,
and his annual premium is RM1600, how much premium refund he is entitled to?

A RM 200
B RM400
C RM600
D RM1000 C11

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 PCE Part B- Set A 2000

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