Insurance Revision Questions and Answers

1. Kazi moto insured a motor vehicle against fire with MotoMoto company by paying Kshs.300.000. later the car was destroyed at a garage and a compensation of Kshs. 400,000 were paid. Using insurance terms, state what each of the following stand for ;
a) Kazi Moto
b) Fire
c) Kshs 300,000
d) Moto Moto Company
2. Give the significance of the following principles to both the insurer and insured
i) Utmost good faith
ii) Indemnity…..
iii) Contribution
iv) Insurable interest..
3. The following are description of various insurance policies. Identify the name of the policy described by the statement:

Description Policy

Covers an organization against losses which might arise as a result of debtors failure to pay their debts


Covers for the loss of profit due to interruption of business activities as a result of fire


Covers employees who may suffer injuries while on official duties


Covers partial or total physical disability caused to a person due to injury

4. State four reasons why few Kenyan take out life assurance policy

5. Define the following types of marine insurance losses:-
(a) Total constructive loss
(b) General average loss
6. State four conditions necessary for the operation of the principle of indemnity in insurance
7. Highlight four characteristics of an insurable scheme
8. Outline four benefits of the “Pooling of risks” to an insurance company
9. Describe the procedure of acquiring an insurance policy
10. A private warehouse owner insured his warehouse valued at Kshs.400, 000 for Kshs600, 000 against risk of fire. The warehouse was later destroyed completely by fire including goods worth shs 100,000.
i) Determine the amount of compensation paid by the insurance company
ii) Give a reason for your answer in (i) above
1. Under what circumstances can an insurance company fail to compensate the insured in the event of occurrence of the insured risk?
2. Describe the procedure for taking up an insurance policy
3. Your father wants to insure his life with British American Insurance Company. As a Business Studies student, explain to him five benefits of life assurance
4. Explain five principles of insurance

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