MCQs on Insurance Policy
 |
| MCQs on Insurance Policy |
We are going to provide you a mcq on Insurance Policy based on MCQ on Loss of stock policy and MCQ on Loss of profit policy.
MCQ on Loss of Stock Policy
1. Loss of stock policy provides compensation for:
a) Loss of fixed assets
b) Loss of profits due to business interruption
c) Loss of stock due to fire or other insured perils
d) Loss of goodwill
Answer:c) Loss of stock due to fire or other insured perils
2. The claim under the Loss of Stock Policy is generally settled on the basis of:
a) Selling price of stock
b) Market value of stock
c) Cost price of stock
d) Insured value of stock
Answer:c) Cost price of stock
3. Underinsurance in a stock policy leads to the application of:
a) Average Clause
b) Salvage Clause
c) Contribution Clause
d) Subrogation Clause
Answer: a) Average Clause
4. The formula to calculate the claim under the Loss of Stock Policy (considering the Average Clause) is:
a) (Stock destroyed × Policy amount) ÷ Insured amount
b) (Stock destroyed × Insured amount) ÷ Policy amount
c) (Insured amount × Policy amount) ÷ Stock destroyed
d) (Policy amount × Stock value) ÷ Loss amount
Answer:a) (Stock destroyed × Policy amount) ÷ Insured amount
5. The closing stock for claim calculation is determined based on:
a) Previous year’s closing stock
b) Adjusted Gross Profit
c) Memorandum Trading Account
d) Actual stock physically verified
Answer:c) Memorandum Trading Account
MCQ on Loss of Profit Policy (Consequential Loss Policy)
6. Loss of profit insurance covers:
a) Loss of stock due to fire
b) Business interruption leading to loss of revenue
c) Loss of cash due to theft
d) Loss due to bad debts
Answer:b) Business interruption leading to loss of revenue
7. Which of the following is not covered under the Loss of Profit Policy?
a) Fixed expenses like rent and salaries
b) Net profit loss due to business interruption
c) Increase in cost of working
d) Loss due to theft of assets
Answer:d) Loss due to theft of assets
8. The Loss of Profit Policy is also known as:
a) Fire Insurance Policy
b) Business Interruption Insurance
c) Stock Insurance Policy
d) Employee Benefit Insurance
Answer:b) Business Interruption Insurance
9. The amount of claim under a Loss of Profit Policy is calculated using the formula:
a) (Shortfall in turnover × Gross profit ratio) – Savings in expenses
b) (Net profit × Gross profit ratio) + Additional expenses
c) (Gross profit × Loss of stock) – Insured amount
d) (Turnover × Net profit) ÷ Insured amount
Answer:a) (Shortfall in turnover × Gross profit ratio) – Savings in expenses
10. Which of the following factors are considered while computing the claim under a Loss of Profit Policy?
a) Reduction in turnover
b) Gross profit ratio
c) Period of indemnity
d) All of the above
Answer:d) All of the above
MCQ on Loss of Stock Policy
11. Which of the following is required to calculate the stock lost in fire?
a) Opening stock and purchases
b) Sales and gross profit ratio
c) Closing stock as per records
d) All of the above
Answer:d) All of the above
12. If salvage is recovered from the damaged stock, how is it treated in the claim calculation?
a) It is ignored
b) It is deducted from the total claim amount
c) It is added to the insurance claim amount
d) It is treated as an additional expense
Answer:b) It is deducted from the total claim amount
13. If the sum insured under the Loss of Stock Policy is equal to or more than the actual stock value, the claim will be:
a) Subject to the Average Clause
b) Paid in full
c) Rejected
d) Reduced
Answer:b) Paid in full
14. In the case of underinsurance, the claim is reduced in proportion to:
a) The extent of damage
b) The ratio of insured amount to actual stock value
c) The ratio of turnover to gross profit
d) The salvage value
Answer:b) The ratio of insured amount to actual stock value
15. If the insured stock is deliberately destroyed to claim insurance, it is considered as:
a) Constructive total loss
b) Moral hazard
c) Financial fraud
d) Both b) and c)
Answer:d) Both b) and c)
MCQ on Loss of Profit Policy (Consequential Loss Policy)
16. The period for which a Loss of Profit Policy compensates the insured is known as:
a) Policy tenure
b) Indemnity period
c) Waiting period
d) Grace period
Answer:b) Indemnity period
17. Which of the following expenses is generally **not** covered under the Loss of Profit Policy?
a) Fixed expenses like rent and salaries
b) Net profit loss
c) Increase in cost of working
d) Loss due to stock destruction
Answer:d) Loss due to stock destruction
18. The Gross Profit Ratio for a Loss of Profit Policy claim is calculated as:
a) (Gross Profit / Sales) × 100
b) (Net Profit / Sales) × 100
c) (Total Expenses / Sales) × 100
d) (Stock Lost / Sales) × 100
Answer:a) (Gross Profit / Sales) × 100
19. If an insured company temporarily shifts operations to another location to continue business, the extra cost incurred is called:
a) Business loss
b) Increase in cost of working
c) Salvage recovery
d) Fixed cost recovery
Answer:b) Increase in cost of working
20. Loss of Profit Policy is most useful for businesses that have:
a) High fixed costs and recurring expenses
b) High inventory turnover
c) Minimal operating costs
d) No physical assets
Answer: a) High fixed costs and recurring expenses
0 Comments