TRIP Insurance Principles and Coverages 1

Question 1

What is the principle of indemnity in insurance?

Accepted Answer

To restore the insured to their pre-loss position

Answer

The principle of indemnity ensures that the insured is restored to their original financial position without profit from a loss.

Question 2

Which type of insurance covers bodily injury and property damage caused by a vehicle?

Accepted Answer

Auto liability insurance

Answer

Auto liability insurance protects against claims for bodily injury or property damage resulting from vehicle operation.

Question 3

What is subrogation in the context of insurance?

Accepted Answer

Insurer takes legal action against a third party

Answer

Subrogation allows insurers to recover costs from a third party that caused the insured's loss after a claim has been paid.

Question 4

Which insurance principle requires full disclosure of all material facts?

Accepted Answer

Utmost good faith

Answer

Utmost good faith is the principle that both parties must act honestly and disclose relevant information when entering an insurance contract.

Question 5

What is typically covered under motor truck cargo insurance?

Accepted Answer

Loss or damage to transported goods

Answer

Motor truck cargo insurance provides protection for goods being transported in case of theft, damage, or loss.

(TRIP) Transportation Risk and Insurance Professional Practice Test