IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE

SURVEY AND LOSS ASSESSMENT

QUESTIONS BASED ON ‘SURVEY AND LOSS ASSESSMENT’

Question 1 Which type of claimants are not content with collecting the actual loss but seek to
get as much as they can get by trading tactics ?
(a) Habitual claimant
(b) Reasonable claimant
(c) Misinformed claimant
(d) Trading claimant
(e) Hostile claimant

Correct Answer Trading claimant

Answer Trading claimants – The most common type of claimants the surveyor comes across,
Explanation whose aim is ‘to make fortune out of a misfortune’. They are not content with
collecting the actual loss but seek to get as much as they can get by trading tactics.

Question 2 The surveyor must make sufficient investigation of facts relating to a loss to
determine whether the is liable under the policy.
(a) Insured
(b) Insurer
(c) Assessee
(d) Nominee
(e) Actuary

Correct Answer Insurer

Answer The surveyor must make sufficient investigation of facts relating to a loss to
Explanation determine whether the insurance company ie. the insurer is liable or not under the
policy.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 3 A Surveyor or Loss assessor shall submit his report to the insurer as expeditiously as
possible, but not later than days of his appointment.
(a) 15
(b) 30
(c) 45
(d) 60
(e) 75

Correct Answer 30

Question 4 In case where damage to an insured item can be repaired and if the repairs are
executed at a workshop owned by the insured, the insurance company will pay –
1. Cost of materials incurred for the purpose
2. Cost of wages incurred for the purpose
3. Some reasonable percentage to cover overhead charges

(a) Only 1
(b) Only 3
(c) 1 and 2
(d) 1 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer If the repairs are executed at a workshop owned by the insured, the insurance
Explanation company will pay the cost of materials and wages incurred for the purpose of repairs
plus a reasonable percentage to cover overhead charges.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 5 How are machinery values ordinarily determined?

(a) Actual replacement cost
(b) Replacement cost plus allowance for depreciation
(c) Replacement cost less allowance for depreciation
(d) Replacement cost divided by allowance for depreciation
(e) Market value of such new machine

Correct Answer Replacement cost less allowance for depreciation

Answer Machinery values ordinarily determined according to replacement cost, less
Explanation allowance for depreciation or betterment.

Question 6 The Code of Conduct for practicing surveyors is given in the chapter of the
‘Insurance Surveyors and Loss Assessors (Licensing , Professional requirements and
Code pf Conduct) Regulations, 2000’.
(a) 2
(b) 4
(c) 6
(d) 8
(e) 11

Correct Answer 6
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 7 Which of these is/are instances of disputes between insured and the insurer on the
admittance and settlement of claims?
1. Arithmetic calculation of indemnity and the amount of loss payable
2. Interpretation of ‘exclusion’ clause and the ‘covered perils’
3. Reinstatement or replacement option exercised by the insurer as a measure
of indemnity

(a) Only 1
(b) Only 3
(c) 2 and 3
(d) 1 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer All the above are instances of disputes between insured and the insurer on the
Explanation admittance and settlement of claims.

Question 8 Under the Electronic Equipment policy, which of the following are treated as
exclusions –
1. Loss to property covered under the terms of the maintenanceagreement
2. Loss caused by any faults existing at the time of commencement of policy
3. Loss or bulbs, valves, fuses, seals etc.
(a) Only 1
(b) Only 3
(c) 2 and 3
(d) 1 and 2
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer The entire above are treated as exclusions under the Electronic Equipment policy.
Explanation
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 9 The ‘risk’ covered in the policy may be explained under which of the following heads
in a Survey Report?
1. Nature of occupancy
2. Nature of the insured
3. Details of construction
4. Details of housekeeping

(a) Only 3
(b) 1, 3 and 4
(c) 1, 2 and 3
(d) 2 and 3
(e) All 1, 2, 3 and 4

Correct Answer 1, 3 and 4

Answer The ‘risk’ can also be explained under the following subheads so that the loss is
Explanation understood in the correct perspective by the claim processing official :
- Details of constriction
- Nature of occupancy
- Type of affected property
- Details of housekeeping
- Type of exposure
- Details of previous similar occurrences

Question 10 Which types of claimants consider insurance as a mode of investment and want to
recover more than what he has paid as the premium while making a claim?
(a) Habitual claimant
(b) Reasonable claimant
(c) Misinformed claimant
(d) Trading claimant
(e) Hostile claimant

Correct Answer Habitual claimant

Answer The characteristic of a Habitual Claimant is that he considers the insurance as a mode
Explanation of investment – his express desire is to recover more than what he has paid as the
premium.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 11 The ‘Extent of Damage’ part of the survey report is devoted in furnishing the
details of the observed damages.
1. Practical 2. Qualitative 3. Quantitative
(a) Only 1
(b) Only 2
(c) Only 3
(d) 2 and 3
(e) All 1, 2 and 3

Correct Answer 2 and 3

Answer The ‘Extent of Damage’ part of the survey report is devoted in furnishing the
Explanation qualitative and quantitative details of the observed damages. The description of
damages should be visible in the evidence furnished by surveyor in the form of
photographs appended to the report.

Question 12 If more than one policy is covering the interest in the property insured, the
clause in the policy comes into effect.
(a) 1. Deductible
(b) 2. Indemnity
(c) 3. Proximate
(d) 4. Contribution
(e) 5. Good faith

Correct Answer 4. Contribution

Answer If more than one policy is covering the interest in the property insured, the
Explanation ‘Contribution’ clause in the policy comes into effect.
As the name implies, the sum insured on each of the policies are added together and
each insurer will pay a proportion of the loss equivalent to the proportion of the sum
insured to the total sum insured.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 13 Which of the following is /are objectives of Segregation / Inventory verification after
a fire or flood etc.?
1. To eliminate from consideration articles that are damaged
2. To present the affected balance items for inspection in the condition that will
make its remaining value most apparent
3. To produce an inventory which shall be the basis on which the loss isdetermined
(a) Only 1
(b) Only 2
(c) 2 and 3
(d) 1 and 2
(e) All 1, 2 and 3

Correct Answer 2 and 3

Answer Option 1 should correctly read as - To eliminate from consideration articles that are
Explanation undamaged.

Question 14 Valued policies can be issued in fire insurance for works of art, obsolete machinery
etc., subject to .
(a) Terms of the policy
(b) Indemnity clause
(c) Minimal clause
(d) A maximum amount payable
(e) Valuation certificate

Correct Answer Valuation certificate

Answer Valued policies can be issued in fire insurance for works of art, obsolete machinery
Explanation etc, and subject to Valuation Certificate.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 15 Which of this is NOT a method of valuation to depreciate an asset?

(a) Straight line method
(b) Declining balance method
(c) Inverted curve method
(d) Present worth method
(e) Sum of years digits method

Correct Answer Inverted curve method

Answer There are Non-Interest based and Interest based methods of valuation to depreciate
Explanation on original cost.
Non-interest procedures are – i) Straight line method, ii) Declining balance method,
iii) Sum of years digits method
Interest based procedures are – i) Sinking fund method and ii) Present worth method
Inverted curve is not a method of depreciation.

Question 16 Most Engineering policies, Marine ICC ‘A’ etc. come under which policy head?

(a) ‘Named Risk’ policy

(b) ‘All Risk’ policy
(c) ‘No Risk’ policy
(d) ‘High Risk’ policy
(e) ‘Catastrophe’ policy

Correct Answer ‘All Risk’ policy

Answer Under Proximate Cause, the policies can be broadly grouped under ‘All Risk’ policies
Explanation and ‘Named Risk’ policies. Most Engineering policies (C.A.R., E.A.R etc) , Marine ICC
‘A’ and All Risk on Jewellery etc. under Miscellaneous class of insurances come under
‘All Risk’ group and Standard Fire and Special perils policy, Motor, Marine etc. fall
under ‘Named Risk’ group.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 17 A Student Member seeking a license to act as a Surveyor and Loss Assessor shall
undergo practical training for a period of not less than months with a licensed
Associate or Fellow Surveyor and Loss Assessor.
(a) 3
(b) 6
(c) 9
(d) 12
(e) 15

Correct Answer 12

Question 18 The contract of insurance is a contract between the insurer and insured, and
is the product of the system.
(a) Pecuniary , Intangible
(b) Pecuniary , tangible
(c) Legal, intangible
(d) Legal, tangible
(e) None of above

Correct Answer Legal, tangible

Answer The insurance contract is a legal contract between the insurer and insured, and is the
Explanation tangible product of the system, devised to handle risk through a transfer of the
burden of uncertain and unpredictable events to the insurer, which may otherwise
cause pecuniary losses to the insured.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 19 The surveyor should organize immediate disposal of damage affected items, if they
are of , to the market with the concurrence of the insured and insurer.
(a) Critical to production
(b) Perishable nature
(c) High value
(d) Low value
(e) Not Critical to production

Correct Answer Perishable nature

Answer The surveyor should organize immediate disposal of damage affected items, if they
Explanation are of perishable nature, to the market so that some price / salvage value can be
received before they become useless.

Question 20 inspection by the surveyor means visiting the site of the

reported occurrence.
(a) On the spot
(b) Off the spot
(c) Examining the claim
(d) Recording survey
(e) Document

Correct Answer On the spot

Answer Visiting the site of the reported occurrence and making On-the-spot inspection is a
Explanation part of the procedural sequential approach generally followed by surveyors.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 21 warranties may be stated in terms of, for example, nature of occupancy,
end use of premises, condition of packing etc.
(a) Impress
(b) Implied
(c) Stated
(d) Express
(e) Admissible

Correct Answer Express

Answer A warranty is a condition and unless it is complied with, there is no liability for the
Explanation loss. Express warranties may be stated in terms of nature of occupancy (like -No
inflammable material having flash point of below 32 degree centigrade should be
stored in the warehouse, end use of premises (like – the premise to be used as shop
only and no manufacturing activities to be carried out), condition of packing etc.

Question 22 Which type of obsolescence relates to the difference between the design and
materials of construction used presently to the item assessed?
(a) Functional obsolescence
(b) Technological obsolescence
(c) Economic obsolescence
(d) Financial obsolescence
(e) Constructional obsolescence

Correct Answer Technological obsolescence

Answer Technological obsolescence relates to the difference between the design and
Explanation materials of construction used presently to the item assessed (use of
superior materials which would enhance life expectancy, miniaturization in
electronics
components reducing the size etc.)
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 23 in marine losses assumes special significance when the consignment size is
large and sizeable bags are damaged, possibly by contact with water.
(a) Protection
(b) Verification
(c) Segregation
(d) Salvaging
(e) Inspection

Correct Answer Segregation

Answer Segregation in marine losses assumes special significance when the consignment size
Explanation is large (for example when dealing with food grains, fertilizes, cement etc. in bags)
and sizeable bags are damaged, possibly by contact with water.
On separation of sound bags, the surveyor has to decide the mode of segregation to
suit assessment of percentage depreciation of the balance bags.

Question 24 Which of these is / are Non-Interest based method of valuation to depreciate on

original cost?
1. Sum of years digits method
2. Sinking fund method
3. Present worth method

(a) Only 1
(b) Only 2
(c) 1 and 3
(d) 2 and 3
(e) All 1,2 and 3

Correct Answer Only 1

Answer Non-interest procedures are – i) Straight line method, ii) Declining balance method,
Explanation iii) Sum of years digits method

Interest based procedures are – i) Sinking fund method and ii) Present worth method
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 25 In case of the policies, the focus is to find out whether any of the exceptions
stated in the policy has come into operation, and has a bearing on the cause of loss.

(a) Named Risk

(b) All Risk
(c) Marine Inland transit
(d) Term
(e) All of the above

Correct Answer All Risk

Answer In case of the ‘All Risk’ policies, the focus is to find out whether any of the exceptions
Explanation stated in the policy has come into operation, and has a bearing on the cause of loss.

The surveyor effort’s should be directed to analyze the reported occurrence, against
his observed facts on the occurrence, taking each of the stated exception in the
policy for analysis one by one and if none of the exceptions is found applicable, it can
be reasonably confirmed that the reported loss is admissible under the ‘all risk’
policy.

Question 26 Which of these are treated as exclusions in Marine Cargo policies?

1. Damages caused by ordinary leakages
2. Loss caused by inherent vice or nature of the subject matter
3. Loss caused by insufficiency of packing
(a) Only 1
(b) Only 2
(c) 2 and 3
(d) 1 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Exclusions under Marine Cargo policies include –
Explanation 1. Damages / shortages caused by ordinary leakage, ordinary loss in weight or
volume
2. Loss caused by inherent vice or nature of the subject matter
3. Loss / damage caused by insufficiency or unsuitability of packing or preparation of
the subject matter insured
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 27 In India, professional recognition of an insurance surveyor was an implied one,

through the insertion of in the Insurance Act 1938.
(a) Sec. 24 UM
(b) Sec. 42 UM
(c) Sec. 51 UM
(d) Sec. 64 UM
(e) Sec. 77 UM

Correct Answer Sec. 64 UM

Answer In India, professional recognition of an insurance surveyor was an implied one,
Explanation through the insertion of Sec. 64 UM in the Insurance Act 1938, on amendment in
1968. Till then the surveyor’s profession was nowhere formally referred to.

Question 28 is a term commonly used to refer to the system of maintaining records

of financial transactions of any commercial enterprise.
(a) Journal entry
(b) Accounting principles
(c) Book keeping
(d) Ledgers
(e) Trail balance

Correct Answer Book keeping

Answer Book Keeping is a term commonly used to refer to the system of maintaining records
Explanation of financial transactions of any commercial enterprise.
This covers accounting records in the initial stage of every transaction and the
preparation of final accounts i.e. the Balance Sheet etc.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 29 Which of these is/are instances of disputes between insured and the insurer on the
admittance and settlement of claims?
1. Valuation and disposal of salvage
2. Position of security cabin of the watchman
3. Depreciation to be applied in assessing property losses
4. Reasonableness of repair charges indemnified
(a) 1 and 2
(b) 3 and 4
(c) 1,2 and 3
(d) 1, 3 and 4
(e) All 1, 2, 3 and 4

Correct Answer 1, 3 and 4

Answer All the above except the ‘situation of security cabin’ can be instances of disputes
Explanation between insured and the insurer on the admittance and settlement of claims.

Question 30 Only persons or corporate’s who have in property / assets can cover such
properties / assets by insurance.
(a) Proximity
(b) Insurable interest
(c) Liability
(d) Decision making
(e) Indemnity

Correct Answer Insurable interest

Answer Only persons or corporate who have an insurable interest in property / assets can
Explanation cover such properties / assets by insurance. The competency of a person /corporate
to effect a contract of insurance is determined by (i) his legal capacity to contract and
(ii) insurable interest in the subject matter of insurance.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 31 An applicant seeking a license to act as a surveyor and loss assessor shall undergo a
period of practical training of not less than months with a surveyor and loss
assessor.
(a) 3
(b) 6
(c) 9
(d) 12
(e) 15

Correct Answer 12

Question 32 A is a condition and unless it is complied with there is no liability for the loss.

(a) Indemnity
(b) Premium paid
(c) Proposal
(d) Warranty
(e) Surveyors confirmation

Correct Answer Warranty

Answer A warranty is a condition and unless it is complied with there is no liability for the
Explanation loss. It is immaterial for what purpose a warranty is introduced, but being
introduced, liability does not exist unless it is literally compiled with.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 33 The verification of multiple policies is carried out by the surveyor to decide the
under respective policies.
(a) Loss amount
(b) Damage amount
(c) Appropriate coverage
(d) Commission amount
(e) Claim amount

Correct Answer Appropriate coverage

Answer The verification of multiple policies is carried out by the surveyor to decide the
Explanation appropriate coverage under respective policies, and thereby ascertain the individual
insurer’s liability under each of the policies in force that time of loss.

Question 34 In the case of stocks that after reconditioning, must be sold for less than the price of
sound grade, the measure of loss will be the cost of reconditioning the
amount lost through price reduction.
(a) Less
(b) Plus
(c) Multiply
(d) Divide
(e) Double

Correct Answer Plus

Answer Generally, single commodity stocks in bulk or in packages (like bags of food grains,
Explanation fertilizers, tea etc.) can be reconditioned to some extent after damage. When such
stocks, that after reconditioning, must be sold for less than the price of sound grade,
the measure of loss will be the cost of reconditioning plus the amount lost
through price reduction.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 35 As per regulation , of IRDA Code of Conduct, every surveyor and loss assessor
shall submit an annual statement in the prescribed format.
(a) 19 (a)
(b) 19 (b)
(c) 19 (c)
(d) 19 (d)
(e) 19 (e)

Correct Answer 19 (b)

Answer As per regulation 19 (b) of IRDA Code of Conduct, every surveyor and loss assessor
Explanation shall submit an annual statement in the prescribed format.

Question 36 represents the amounts owed by the business and all claims against the
business, whereas represent anything of value owned by the business.
(a) Loss , Profit
(b) Profit , Loss
(c) Assets, Liabilities
(d) Liabilities, Assets
(e) Expenditure, Income

Correct Answer Liabilities, Assets

Answer Assets – Anything of value owned by the business. Articles owned (or claims on
Explanation others) such as furniture, cash, stock of goods, money owned by debtors etc.
Liabilities - Amounts owed by the business and all claims against the business
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 37 For , the reconstruction cost can be arrived at by plinth area method.
(a) Marine containers
(b) Plant and machinery
(c) Merchandise
(d) Buildings
(e) Ambulances

Correct Answer Buildings

Answer For Buildings, the reconstruction cost is arrived at by either plinth area method or by
Explanation extrapolation of original cost of construction using the cost of construction index.

Question 38 In case there is damage to a large quantity of any powdered or granulated

commodity, this would require too much time and labour to re-bag it for weighment.
In such cases the system of is used.
(a) Appropriate weights
(b) Volumetric measurements
(c) Past weight records
(d) Weight age measurements
(e) True Book Records

Correct Answer Volumetric measurements

Answer In Volumetric measurements, piling of the powder/granules in regular shape like
Explanation rectangular or conical are done. There is usually a constant relation between the
weight and quantity of such commodities, a relation which enables the surveyor to
calculate the weight from volumetric measurement of the quantity.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 39 Insurance policies are mostly market value policies and the market value of a
property is nothing but the .
(a) Depreciated value of property
(b) Value in exchange
(c) Actual market value
(d) Value in return
(e) Written down value

Correct Answer Value in exchange

Answer Market value of a property is nothing but the value in exchange, i.e. what a buyer
Explanation will pay for the property or what it would cost to buy similar property at the place
and at the price ruling at the time of loss.

Question 40 If the damaged items are , the stock related books should be perused and
initialed during the first visit itself, to avoid any further tampering of records.
(a) Tools
(b) Baggage
(c) Stationery items
(d) Stocks in trade
(e) Flame able liquids

Correct Answer Stocks in trade

Answer If the damaged items are predominantly stocks in trade or manufacturing stocks, the
Explanation stock related books should be perused and initialed during the first visit itself, to
avoid any further tampering of records.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 41 What is the suggested protective measure for ferrous spare parts, small tools etc?
(a) Pump out the oil from bottom of tanks
(b) Cleaned, dried and heated up if insulation value is low
(c) Dewatering of basements
(d) Put into wire buckets and dip in oil
(e) Rebagging using dry bags

Correct Answer Put into wire buckets and dip in oil

Answer Protective measure for ferrous spare parts, small tools – can be put into wire buckets
Explanation and dipped into barrels of oil.

Question 42 The indemnity clause in baggage insurance policy states that ‘To indemnify the
insured to the extent of the value of the accompanied personal baggage of the
insured lost or destroyed’.
(a) Notional
(b) Market
(c) Intrinsic
(d) Minimal
(e) Depreciated

Correct Answer Intrinsic

Answer The indemnity clause in baggage insurance policy states that ‘To indemnify the
Explanation insured to the extent of the intrinsic value of the accompanied personal baggage of
the insured lost or destroyed’.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 43 Which type of inspection provides a firsthand detail of the degree of damages, based
on which the surveyor can explore alternative use of damaged material.
(a) Market inspection
(b) Arial inspection
(c) Competitor inspection
(d) Deliberate inspection
(e) Physical inspection

Correct Answer Physical inspection

Answer Physical inspection provides a firsthand detail of the degree of damages, based on
Explanation which the surveyor can explore alternative use of damaged material, optimise the
salvage recovery and determine the applicable depreciation.

Question 44 In case of sale of salvage by tender, the deposits are to those parties whose
offers are not accepted
(a) Adjusted
(b) Forfeited
(c) Refunded
(d) Reissued
(e) Deposited

Correct Answer Refunded

Answer In sale of salvage by tender, the sale is advertised; tender forms and conditions are
Explanation given to prospective buyers who come to see the salvage. With the sealed tenders,
normally parties are asked to furnish specified amount of deposit to justify their
genuine interest.
The deposits are refunded to those parties whose offers are not accepted.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 45 In practice. The most popular basis of valuation for marinelosses is .

(a) Cost, insurance & Freight + 20%
(b) Cost, insurance & Freight + 10%
(c) Cost & Freight + 10%
(d) Cost & Freight + 20%
(e) Cost, insurance & Freight + 25%

Correct Answer Cost, insurance & Freight + 10%

Answer Marine insurance policies are valued policies i.e. the value of the items covered are
Explanation agreed in advance between the insured and insurer. In practice. The most popular
basis of valuation for marine losses is Cost, insurance & Freight + 10%.

Question 46 Which of these is/are the usual income items that are taken to the credit side of the
Profit and Loss Account -
1. Dividend received
2. Interest earned
3. Discount received

(a) Only 3
(b) 1 and 2
(c) 2 and 3
(d) 1 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer The usual income and profits that are taken to the credit side of the Profit and Loss
Explanation account are :
- Dividend received
- Interest earned
- Discount and Commission received
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 47 Which accounting statement shows readily the financial position of the business at a
given date?
(a) Profit and Loss account
(b) Balance Sheet
(c) Trial Balance
(d) Sales register
(e) Trading account

Correct Answer Balance Sheet

Answer Balance Sheet is prepared as at a particular date and not for a particular period as is
Explanation a summary of the balances remaining open in the General Ledger. It readily shows
the financial position of the business at a given date by disclosing the amount of
capital contributed and how the same has been invested and the values od assets
and liabilities and their nature.

Question 48 What are the qualities for a surveyor to be successful and acceptable to the insurer,
insured and other related agencies?
1. Clear understanding of the policy conditions
2. Knowledge of ‘Cause effect analysis’
3. Knowledge of ‘failure analysis’

(a) Only 1
(b) Only 3
(c) 1 and 2
(d) 1 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer To be a successful and acceptable to the insurer, insured and other related agencies,
Explanation the surveyor should have a clear understanding of the respective policy conditions, a
good knowledge of commercial and accounting practices, a broad based knowledge
of technical aspects of ‘failure analysis’ , ‘cause effect analysis’ and other commonly
encountered hazards in property damages.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 49 Record of survey reports, photographs and other important documents shall be
maintained by the surveyor for a period of years
(a) 2
(b) 3
(c) 5
(d) 7.5
(e) 10

Correct Answer 3
Answer Record of survey reports, photographs and other important documents shall be
Explanation maintained by the surveyor for a period of three years which shall be furnished with
other specified returns as and when called for by the investigating authority or
insurer.

Question 50 The principal objective of a survey is to establish the cause of and to assess
fairly and accurately the extent in monetary terms in conformity with the specific
policy conditions.
(a) Loss
(b) Damage
(c) Indemnity
(d) Both 1 and 2
(e) Both 1 and 3

Correct Answer Both 1 and 2

Answer The principal objective of a survey is to establish the cause of LOSS and DAMAGE and
Explanation to assess fairly and accurately the extent in monetary terms in conformity with the
specific policy conditions.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 51 The Sales Day book is an important book of accounting entries. Which is the ’source
document’ for verification of entries in this book?
(a) Stock register
(b) Purchase invoices
(c) Vouchers
(d) Trial balance
(e) Sales invoices

Correct Answer Sales invoices

Answer The Sales Day Book is used to record the sales on credit as they take place. The
Explanation ‘source document’ for verification of entries in this book is the ‘Sales Invoices’.

Question 52 Before going into the technicalities of the ‘expected perils / exclusions and their
implications’, the surveyor should appreciate that the cardinal principle of viewing a
loss is to confirm whether the reported loss is attributed to cause.
1. Accidental 2. Intentional 3. Fortuitous
(a) Only 1
(b) Only 2
(c) 1 and 3
(d) 1 and 2
(e) All 1,2 and 3

Correct Answer 1 and 3

Answer Accidental cause is that which produces results that are not foreseen and Fortuitous
Explanation cause means happening by chance rather than intention. The purpose of a policy is to
secure indemnity against accidents which may happen and not against events which
must happen or which have been deliberately brought about.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 53 Which of these is NOT included in the Survey Report while mentioning the Policy
details?
(a) Net worth of the insured
(b) Validity period of the policy
(c) Policy number
(d) Name and address of insurer and insured
(e) Particulars of clauses affecting the reported loss

Correct Answer Net worth of the insured

Answer The details of policy which are normally included in the Survey Report include all of
Explanation the above except the net worth of the insured.

Question 54 In which type of surveys is the printed formats commonly used?

(a) Spot survey
(b) Final survey
(c) Joint survey
(d) Preliminary survey
(e) All of the above

Correct Answer Spot survey

Answer Spot surveys ( for eg. in Motor policies) is generally carried out at the spot of accident
Explanation of a vehicle before it is shifted for repairs and the purpose is to record the visible
damages, particulars of the vehicle and related documents, cause of accident
as elicited from the driver etc. Use of printed formats is very common for spot survey
reports.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 55 is the impairment of desirability arising from economic forces such as

changes in legislative enactments.
(a) Functional obsolescence
(b) Financial obsolescence
(c) Economic obsolescence
(d) Constructional obsolescence
(e) Technological obsolescence

Correct Answer Economic obsolescence

Answer Economic obsolescence is the impairment of desirability arising from economic
Explanation forces such as changes in legislative enactments, eg. Impossibility of selling an old
commercial vehicle if pollution rules are strictly implemented thus making its value
equivalent to scrap value though it is in healthy condition.

Question 56 Recommending non-admissibility of the reported claim is one of the most difficult
tasks of a / an .
(a) Insurer
(b) Insured
(c) TPA
(d) Agent
(e) Surveyor

Correct Answer Surveyor

Answer Recommending non-admissibility of the reported claim is one of the most difficult
Explanation tasks of a Surveyor. So he should be fully equipped with all facts and evidences
before any comment on the admissibility of claim is made.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 57 In accounting, why is a Journal Book maintained?

(a) For recording details of goods purchased and sold
(b) For recording bills receivable and payable
(c) For recording cash transactions
(d) For recording details of goods sold but later returned
(e) For recording residuary transactions for which separate books cannot be
conveniently maintained

Correct Answer For recording residuary transactions for which separate books cannot be
conveniently maintained
Answer A Journal Book is maintained for recording residuary transactions for which separate
Explanation books cannot be conveniently maintained. Journal entries are used to record the
following type of entries – Opening entries, Closing entries, Adjustment entries,
Rectification entries and Transfer entries.

Question 58 The main purpose of keeping financial accounts is /are –

1. To ascertain the results of operations
2. To know the financial position at the end of a period
3. To determine exactly the relation with outsiders

(a) Only 1
(b) 1 and 2
(c) 2 and 3
(d) 1 and 3
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer Whatever may be the form of business organization, the main purpose of keeping
Explanation financial accounts are –
1. To ascertain the results of operations during a particular period by preparing the
Profit and Loss account
2. To know the financial position at the end of a period by studying the Balance Sheet
3. To determine exactly the relation with outsiders – examination of creditors and
debtors
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 59 As per the Code of Conduct specified in the chapter IV of ‘Insurance Surveyors and
Loss Assessors Regulations 2000’, every Surveyor and Loss Assessor shall –
1. Maintain capital adequacy as mentioned in Chapter IV
2. Behave ethically and with integrity
3. Not accept survey work in areas for which he does not hold a license
4. Keep himself updated with all developments relevant to his professional practice

(a) 1, 2 and 3
(b) 2, 3 and 4
(c) 1, 2 and 4
(d) 1, 3 and 4
(e) All 1, 2, 3 and 4

Correct Answer 2, 3 and 4

Answer In the Code of Conduct specified in the chapter IV of ‘Insurance Surveyors and Loss
Explanation Assessors Regulations 2000’, there is no mention of any capital adequacy
requirement for a Surveyor.

Question 60 Which of these is NOT a form of survey?

(a) Professional survey
(b) Spot survey
(c) Preliminary survey
(d) Final survey
(e) Joint survey

Correct Answer Professional survey

Answer Depending on the type, nature and extent of the reported loss, location and
Explanation circumstances under which the loss has taken place, the insurer may instruct the
surveyor to carry out :
- Spot survey
- Preliminary survey
- Final survey
- Joint survey
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 61 Assessment of losses under Fidelity Guarantees requires detailed examination of

of the insured employer.
(a) Fire protection equipment
(b) Books of accounts
(c) Boiler room and equipment
(d) Cost of motor repairs
(e) Transport cost to and fro from the factory

Correct Answer Books of accounts

Answer Fidelity Guarantees policy protects the employer against any fraudulent or dishonest
Explanation acts committed by its. Employees. Assessment of losses under Fidelity Guarantees
requires detailed examination of books of accounts of the insured employer.

Question 62 The term refers to the superior qualities of the replaced machinery such as
increased output, reduced consumption of power, lower costs of maintenance etc.
due to technological progress and new research.
(a) Betterment
(b) Replacement
(c) Contract Value
(d) Market Value
(e) Depreciation

Correct Answer Betterment

Answer Betterment refers to the superior qualities of the replaced machinery such as
Explanation increased output, reduced consumption of power and lower costs of maintenance.
Betterment and Depreciation are two sides of the same coin.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 63 In a Survey Report, the ‘risk’ may NOT be explained under which of the following sub
heads?
(a) Details of the construction of the property
(b) Details of affected property
(c) Details of housekeeping, number of employees
(d) Details of family members of the insured
(e) Type of exposure

Correct Answer Details of family members of the insured

Answer Details of family members of the insured need not be mentioned in the Survey
Explanation Report.

Question 64 Every surveyor and loss assessor shall maintain a register of survey work containing
the relevant information in Form and shall keep the important records of the
survey for a period of years.
(a) IRDA 10, 5
(b) IRDA 10, 3
(c) IRDA 11, 4
(d) IRDA 09, 5
(e) IRDA 11, 3

Correct Answer IRDA 11, 3

 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 65 In claim payment, while doing the adjustment for ‘Deductible/Excess’ , a deductible
(or excess) clause provides that in case of loss, a specified amount expressed as
, shall be deducted and the insurer will be liable only for thebalance.
1. A fixed sum of money
2. A percentage of loss
3. A fixed sum not greater then Rs 10,000

(a) Only 1
(b) Only 2
(c) Only 3
(d) 1 and 2
(e) 2 and 3

Correct Answer 1 and 2

Answer A deductible (or excess) clause provides that in case of loss, a specified amount
Explanation sometimes expressed as a fixed sum of money, sometimes as a percentage of loss,
shall be deducted and the insurer will be liable only for the balance.
The purpose of this clause is to reduce claims by eliminating smaller ones, where the
cost of processing the claim may be higher than claim amount.

Question 66 are issued with reinstatement clause incorporated, when the sum
insured should be equal to the reinstatement value of the policy.
(a) Fire policies
(b) Marine policies
(c) Stock / merchandise policies
(d) Human life policies
(e) All of the above

Correct Answer Fire policies

Answer Under the reinstatement value clause, the damaged property is replaced by a new
Explanation property of the same type. This clause is also called the 'New for old' clause as the
insurance company is liable to pay for reinstating the damaged asset with a new
asset.

Fire policies are issued with reinstatement clause incorporated, when the sum
insured should be equal to the reinstatement value of the policy i.e. without any
deductions for depreciation of the items covered by the policy.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 67 Which type of obsolescence relates to the difference in production rates and other
capability characteristics between a new item and the identical damaged item being
assessed?
(a) Economic obsolescence
(b) Functional obsolescence
(c) Financial obsolescence
(d) Constructional obsolescence
(e) Technological obsolescence

Correct Answer Functional obsolescence

Answer Functional obsolescence relates to the difference in production rates and other
Explanation capability characteristics between a new item and the identical damaged item being
assessed (say a machine with higher rate of production, lesser wastage would be
considered superior)

Question 68 Which of the following is considered as an exclusion(s) under Burglary policy- 1.Loss
of money abstracted from safe following the use of key belonging to the insured
unless such key has been obtained by assault / violence 2.Loss or damage caused by
gradual deterioration due to atmospheric conditions 3.Losses occurring when the
premises are left uninhabitated for more than 7 consecutive days and nights

(a) Only 1
(b) 1 and 2
(c) 1 and 3
(d) 2 and 3
(e) All 1, 2 and 3

Correct Answer 1 and 3

Answer Loss or damage caused by gradual deterioration due to atmospheric conditions is
Explanation exclusion under Electronic Equipment policy and not under Burglary policy.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 69 A person who owes something is a and a person to whom something is owed
is a .
(a) Buyer, Negotiator
(b) Seller, Surveyor
(c) Creditor, Investigator
(d) Creditor, Debtor
(e) Debtor, Creditor

Correct Answer Debtor, Creditor

Answer Sunil sells goods to Anil on credit. Here, Anil is the debtor as he owes Sunil the
Explanation amount due and Sunil is the creditor.

Question 70 In case where damage to an insured item can be repaired, the insurance company
will pay –
1. Expenses incurred to restore the damaged machine to its former state
2. Cost of dismantling and re-erection
3. Freight to and fro from the repair shop

(a) Only 1
(b) 1 and 3
(c) 2 and 3
(d) 1 and 2
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer In case where damage to an insured item can be repaired, the insurance company
Explanation will pay expenses necessarily incurred to restore the damaged machine to its former
state of serviceability plus cost of dismantling and re-erection incurred for the
purpose of effecting the repairs as well as ordinary freight to and fro from repair
shop, custom duties and dues if any , to the extent such expenses have been
included in the sum insured.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 71 When an insurer plans to award a survey assignment to a surveyor, he will look for
which of the following attributes?
1. The surveyor should be well dressed
2. The surveyor should have technical competence
3. The surveyor should have knowledge of different type of policies
4. The surveyor should carry out the assignment promptly

(a) 1, 2 and 4
(b) 1, 3 and 4
(c) 2, 3 and 4
(d) 2 and 4
(e) All 1, 2, 3 and 4

Correct Answer 2, 3 and 4

Answer Every insurer looks for the following attributes in a surveyor while awarding survey
Explanation assignments –
1. Technical competence, specialization and professionalism
2. Knowledge of different types of policies
3. Promptness in carrying out the survey and submission of survey report
4. Thorough-going approach in work and clarity of expression
5. Ability to look into the intricacies of the reported claim and resolve disputes

Question 72 is a book of final entry in which transactions are posted from the primary
books.
(a) Cash book
(b) Trail balance
(c) Journal
(d) Ledger
(e) Balance sheet

Correct Answer Ledger

Answer Ledger is a book of final entry in which transactions are posted from the primary
Explanation books. Ledgers are sub-divided as :
- Personal : Sundry debtors and Sundry creditors ledger
- Impersonal : Cash book and General ledger
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 73 Application for renewal of a surveyor’s licence has to be supported by a performance

report on survey work done during the year validity period.
(a) 2
(b) 3
(c) 5
(d) 7
(e) 10

Correct Answer 5
Answer Application for renewal of a surveyor’s licence has to be supported by a performance
Explanation report on survey work done during the 5 year validity period indicating the total
number of survey and amount involved in each category of cases, year-wise and
company-wise.

Question 74 A company insures a DG set for Rs 5 lakhs although the present replacement value of
such DG set is Rs 6 lakhs. Due to an accident, the DG sets suffers a loss of Rs 1 lakh.
What will be the amount payable to the company?
(a) Rs. 1 lakh
(b) Rs. 5 lakhs
(c) Rs. 68,777
(d) Rs. 74,555
(e) Rs. 83,333

Correct Answer Rs. 83,333

Answer This is a case of underinsurance. Therefore the loss will be adjusted as per the
Explanation formula –
Amount payable =Sum insured X Agreed loss / Value at Risk
= 500000 x 100000 / 600000 = Rs. 83,333
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 75 Who among the following are entitled to insure a subject?

(a) Banks and financial institution granting loans on property
(b) Receivers in bankruptcy
(c) Trustees holding legal interests
(d) Executors
(e) All of the above

Correct Answer All of the above

Answer Who all can insure is very relevant to claims settlement. Absolute owners, Trustees
Explanation holding legal interests, Executors, Administrators, Receivers in bankruptcy, Banks
and financial institution granting loans on property, etc. are entitled to insure the
subject.

Question 76 Which of these can be considered as a factor responsible for the misconception that
the insurer will try to avoid or reduce the claim and the surveyor generally takes
decisions to the advantage of the insurer?
1. Contractual, legal language of the insurance policy and the lack of interest of
the insured to read the policy
2. Nature and conduct of the insured
3. Surveyors limitations, nature and attitude

(a) Only 2
(b) Only 1
(c) Only 3
(d) 1 and 2
(e) All 1, 2 and 3

Correct Answer All 1, 2 and 3

Answer The causative factors responsible for the misconception that insurer will try to avoid,
Explanation delay or reduce the claim and the surveyor is biased and will take decisions to the
advantage of the insurer are –
1. Contractual, legal language of the insurance policy and the lack of interest of the
insured to read the policy
2. Nature and conduct of the insured
3. Business expediency of the insurer
4. Business expediency of the third parties involved like repair agencies, hospitals
etc.
5. Surveyor’s limitations , nature and attitude
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 77 The inspection of the premises after a fire assumes importance in cases of
damages to multiple articles.
(a) Complete
(b) Periphery
(c) Visual
(d) Uniform
(e) Non uniform

Correct Answer Non uniform

Answer The inspection of the premises after a fire assumes importance in cases of non-
Explanation uniform damages to multiple articles. The surveyor has to minutely check the
different degree of damages to various articles.
Sometimes there is total destruction and only ashes remain. In such cases, chemical
analysis has to be done to identify the materials burnt.

Question 78 In case the salvage is disposed off using the sale by advertised tender route and the
highest bidder after bidding and its acceptance changes his mind, the sellers can
exercise their right by the bidders deposit.
(a) Forfeiting
(b) Returning
(c) Investing
(d) Reimbursing
(e) Deducting

Correct Answer Forfeiting

Answer As per the ‘Forfeiture of Deposit Clause’ the sellers exercise their right by forfeiting
Explanation the bidders deposit if the bidder does not meet with is commitment.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 79 For what type of losses is an inventory of affected items prepared during inspection
and segregation, recording the groups of damaged, undamaged and partially
damaged items in an orderly manner?
(a) Marine losses
(b) Fire losses
(c) Miscellaneous losses
(d) Motor losses
(e) Engineering losses

Correct Answer Fire losses

Answer In Fire Losses, generally an inventory prepared of all affected items is prepared
Explanation during inspection and segregation, recording the groups of damaged, undamaged
and partially damaged (with their qualitative status) items in an orderlymanner.
Question 80 On cancellation of license, a surveyor or loss assessor shall not be eligible for
having a license to act for a period of next years.
(a) 2
(b) 3
(c) 4
(d) 5
(e) 7

Correct Answer 3
Answer Any surveyor or loss assessor whose license has been cancelled shall not be eligible
Explanation for having a license to act as a Surveyor or Loss Assessor for a period of three years
from the date on which the cancellation is notified in the official gazette.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 81 The principal factor(s) taken into consideration for adjusting the assesses gross loss
is/are –
1. Salvage recovery
2. Depreciation / improvement or betterment
3. Excess / franchise limit

(a) Only 1
(b) Only 3
(c) 1 and 2
(d) 2 and 3
(e) All 1,2 and 3

Correct Answer All 1,2 and 3

Answer The principal factors taken into consideration for adjusting the assesses gross loss
Explanation are –
1. Salvage recovery
2. Depreciation / improvement or betterment
3. Excess / franchise limit
4. Under insurance / application of average clause

Question 82 While making adjustments for calculating a claim, if the damaged property is
replaced by a better or identical new property, it is necessary to deduct from the cost
of replacing an amount which reflects the that the property has suffered.

(a) Appreciation
(b) Depreciation
(c) Value
(d) Betterment
(e) Market value

Correct Answer Depreciation

Answer An insurance policy is an indemnity contract, so the amount of money payable to the
Explanation claimant should reflect its value at the time of loss, nothing more nothing less.

Hence, if the damaged property is replaced by a better or identical new property, it is

necessary to deduct from the cost of replacing an amount which reflects the
depreciation that the property has suffered.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 83 For claims under the policy, the damages attributable to gradual
deterioration due to atmospheric conditions, rusting is non-admissible.
(a) All risks
(b) Marine ICC ‘A’
(c) Erection
(d) Storage cum Erection
(e) Marine (Inland Transit) B

Correct Answer Storage cum Erection

Answer As per a practical example, analysis of the exclusion of the Storage Cum Erection
Explanation policy revealed that ‘damages attributable to gradual deterioration due to
atmospheric conditions, rusting’ is non-admissible

Question 84 In , the value of the items covered by the policies are agreed in advance
between the insured and the insurer, which is reflected as the sum insured in the
policies.
(a) Valued polices
(b) Reinstatement policies
(c) Market value policies
(d) Fire polices
(e) Plant and machinery policies

Correct Answer Valued polices

Answer In _, the value of the items covered by the policies is agreed in advance
Explanation between the insured and the insurer, which is reflected as the sum insured in the
policies.

Marine insurance policies are valued polices. In the event of total loss the agreed
sum insured is paid.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 85 In accounting, what is the golden rule for Nominal accounts?

(a) Debit all losses and credit all gains
(b) Debit what comes in and credit what goes out
(c) Credit what comes in and debit what goes out
(d) Debit the receiver and credit the giver
(e) Credit all losses and debit all gains

Correct Answer Debit all losses and credit all gains

Answer Nominal accounts are accounts related to gains and losses. The golden rule for
Explanation Nominal accounts are Debit all losses and expenses and Credit all gains and incomes.

Question 86 In case of marine claims, as the policy is a valued one, except for adjustment of
, no other factors are applicable.
(a) Depreciation
(b) Betterment
(c) Sum assured
(d) Premium
(e) Salvage recovery

Correct Answer Salvage recovery

Answer In case of marine claims, as the policy is a valued one, except for adjustment of
Explanation salvage recovery, no other factors are applicable. The net claim, therefore is arrived
at, by reducing the assessed gross loss, the amount of agreed salvage recovery.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 87 In Machinery Insurance policy, the loss, damage and/or liability due to faults or
defects existing at the time of commencement of the policy and known to
the insured but not disclosed to the insurer is treated as .
(a) Exclusion
(b) Inclusion
(c) Proportionally related
(d) Addition
(e) Cavet Emptor

Correct Answer Exclusion

Answer In Machinery Insurance policy, the loss, damage and/or liability due to faults or
Explanation defects existing at the time of commencement of the policy and known to the
insured but not disclosed to the insurer is treated as exclusion.

Question 88 As per the golden rule of accounting, for Real Accounts, what comes in and
what goes out.
(a) Appreciate , Depreciate
(b) Depreciate , Appreciate
(c) Credit , Debit
(d) Debit , Credit
(e) Credit, Credit

Correct Answer Debit , Credit

Answer Accounting Rule for Real Accounts – Debit what comes in and Credit what goes out.
Explanation
For eg – Transaction - Bought furniture by paying cash. In this, Furniture Account will
be debited and Cash Account will be credited.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 89 Which of these issue(s) should be examined by the surveyor for confirmation of
admissibility of the claim?
1. Verification of policy contents
2. Verification of multiple coverage by different policies
3. Verification of character certificate of the insured
4. Operation of exclusions

(a) Only 1
(b) 2 and 3
(c) 2 and 4
(d) 1, 2 and 4
(e) 1, 3 and 4

Correct Answer 1, 2 and 4

Answer The issues that a surveyor needs to examine for confirmation of admissibility of the
Explanation claim can be broadly grouped as follows –
a. Verification of policy contents / intended coverage
b. Verification of multiple coverage by different policies
c. Insurable interest
d. Proximate cause of loss
e. Operation of exclusions
f. Examinations of warranties

Question 90 In case of marine losses, where local wetting has occurred, a test for may
help to prove presence or otherwise of seawater.
(a) Sulphur
(b) Chlorides
(c) Magnesium
(d) Bacteria
(e) Fungus

Correct Answer Chlorides

Answer Where local wetting has occurred, a test for chlorides may help to prove presence or
Explanation otherwise of seawater. If the test for seawater is negative, this could mean that the
goods were damp/wet before they were loaded on the ship.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 91 In case the insured himself sells the salvage, he will retain the money received and
the amount against the loss, after deducting the necessary cost ofselling.
(a) debit
(b) credit
(c) add
(d) proportionate
(e) Average

Correct Answer credit

Answer In case the salvage is disposed by the insured himself, he will retain the money
Explanation received and credit the amount, less any necessary cost of selling, against his loss.

Question 92 Indemnity bear relation to the sum insured.

(a) Does
(b) Does not necessarily
(c) Has no direct
(d) Averagely
(e) Significantly

Correct Answer Does

Answer Indemnity does not necessarily bear any relation to the sum insured which is merely
Explanation the maximum limit up to which the insurer can be called upto pay and is the amount
on which the premium is calculated.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 93 The responsibility of specifying the rests with the insured and insurers
accordingly fix the premium.
(a) Actual value
(b) Market value
(c) Total cost
(d) Sum insured
(e) Written down or depreciated value

Correct Answer Sum insured

Answer The responsibility of specifying the sum insured rests with the insured and insurers
Explanation accordingly fix the premium by charging a percentage rate on such declared amount .

Question 94 The objective of the clause is to penalize underinsurance by a

corresponding underpayment of claim.
(a) Contribution
(b) Excess
(c) Average
(d) Medium
(e) Good faith

Correct Answer Average

Answer Many insured’s underinsure i.e. the sum insured is less than value at risk, to effect
Explanation savings in premium. The ‘Average’ clause has been devised to prevent such
practices of underinsuring. The objective of the average clause is to penalize
underinsurance
by a corresponding underpayment of claim.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 95 Which are the two important conditions on sale of salvage by tender system?
(a) Sale is on ‘As is, where is’ basis and ‘Forefeiture of Deposit Clause’
(b) Sale is on ‘Here is, there is’ basis and ‘Forefeiture of Sale Clause’
(c) Sale is on ‘Money is, Stock is’ basis and ‘Forefeiture of Signed Clause’
(d) Sale is on ‘Money is, Stock is’ basis and ‘Forefeiture of Sale Clause’
(e) Sale is on ‘As is, where is’ basis and ‘Forefeiture of Signed Clause’

Correct Answer Sale is on ‘As is, where is’ basis and ‘Forefeiture of Deposit Clause’
Answer The two important conditions on sale of salvage by tender system are –
Explanation 1. The sale of salvage is on ‘As is, where is’ basis. The prospective buyers who inspect
the salvage before the actual sale are given as much information as possible. This
gives no scope for any misunderstanding which may have an effect of nullifying the
sale

2. The second feature is the ‘Forfeiture of Deposit clause’. Sometimes the highest
bidder may change his mind. The seller exercises their right by forfeiting the bidders
deposit if the bidder does not meet with his commitment.

Question 96 How is the quantity decided in case of total loss of cotton bales due to fire?
(a) As per the stock book records
(b) As per store managers statements
(c) As per the weight of the ash left
(d) As per volumetric measurements
(e) As per hoop iron weight from debris

Correct Answer As per hoop iron weight from debris

Answer Hoop irons are the flattened iron strips that are used to pack the cotton bales. When
Explanation nothing of the cotton is left due to fire, cotton bale quantification is generally
ascertained by taking the hoop iron weight from the debris and calculations are
accordingly made.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 97 One of the qualities required by a surveyor to carry out the difficult role effectively is
, which enables him to deal naturally with other persons so that the
maximum degree of cooperation is obtained.
(a) Investigation skill
(b) Negotiation skill
(c) Politeness
(d) Sharpness
(e) Tact

Correct Answer Tact

Answer Tact is a quality of mind which enables its possessor to deal naturally with other
Explanation persons so that the maximum degree of cooperation is obtained.

Question 98 In the case of Marine Cargo policy, the insurable interest must exist .
(a) During the currency of the policy
(b) After the currency of the policy
(c) At the time of loss
(d) Both b and c
(e) None of the above

Correct Answer At the time of loss

Answer Generally speaking, insurable interest must exist during the currency of the policy,
Explanation but in case of marine cargo policy, the insurable interest must exist at the time of
loss.
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

Question 99 In case the insured decides to retain the salvage then a value is fixed by the
and the amount is adjusted in the claim.
(a) Insured himself
(b) Industry expert
(c) Actuary
(d) Underwriter
(e) Surveyor

Correct Answer Surveyor

Answer Under various method of disposal of salvage, sometimes the insured may decide to
Explanation retain the salvage in which case a value is fixed on the salvage by the surveyor and
the amount is adjusted in the claim. In other words, the claim is paid ‘net’ of salvage.

Question 100 A businessman has the following policies covering stocks: Policy A for 800000; Policy
B for 1000000; Policy C for 200000. The stocks to the tune of 200000 are damaged
due to rioters. What is the claim payable under policy A?
(a) Rs.200000
(b) Rs.100000
(c) Rs.80000
(d) Rs.65000
(e) NIL

Correct Answer Rs.80000

Answer As per the Contribution Clause, each company would pay claim in the same
Explanation proportion in which insurance has been taken by the customer.
Total Insurance taken is for Rs. 8 lakhs plus Rs. 10 lakhs plus Rs. 2 lakhs = Rs. 20 Lacs.
Share of Company A = 8 Lacs / 20 Lacs = 40%
Hence, company A would pay 40% of the loss amount i.e. 40% of Rs 2 lakhs = Rs.
80000
 IC S01 – PRINCIPLES AND PRACTICE OF INSURANCE
SURVEY AND LOSS ASSESSMENT

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