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waec2025insurance
Q1. Which of the following best defines insurance?
AA contract where one party agrees to pay another for losses in exchange for a premium
BA savings plan for retirement
CA loan agreement with interest
DA government tax on property
Correct Answer: A
Insurance is fundamentally a contract of indemnity where the insurer agrees to compensate the insured for specified losses in return for premiums paid.
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waec2025insurance
Q2. The principle of utmost good faith in insurance requires that
ABoth parties disclose all material facts honestly
BThe insurer pays claims immediately
CThe policyholder pays premiums on time
DThe broker earns a commission
Correct Answer: A
Utmost good faith (uberrimae fidei) is a fundamental principle requiring full and honest disclosure of all relevant information by both the insured and insurer to avoid misrepresentation.
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waec2025insurance
Q3. Insurable interest must exist
AAt the time of taking out the policy and at the time of loss
BOnly at the time of loss
COnly at the time of taking out the policy
DNeither at policy inception nor at loss
Correct Answer: A
For property insurance, insurable interest must be present both when the policy is effected and when the loss occurs to ensure the contract is valid and not a wager.
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waec2025insurance
Q4. The principle of indemnity ensures that the insured
AReceives compensation exactly for the loss suffered
BProfits from the insurance claim
CPays more premiums than the claim value
DShares the loss with the insurer
Correct Answer: A
Indemnity aims to restore the insured to the financial position they were in before the loss, preventing profit from insurance.
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waec2025insurance
Q5. Subrogation allows the insurer, after paying a claim, to
ATake over the insured's rights against third parties
BIncrease the premium rate
CCancel the policy
DDemand repayment from the insured
Correct Answer: A
Subrogation enables the insurer to step into the shoes of the insured and pursue recovery from any third party responsible for the loss, reducing the insurer's outlay.
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waec2025insurance
Q6. Contribution applies when
AMore than one policy covers the same risk
BThe insured makes a false claim
CThe policy lapses due to non-payment
DThe insurer reinsures the risk
Correct Answer: A
Contribution ensures that when multiple policies cover the same risk, each insurer pays a proportionate share, preventing the insured from double recovery.
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waec2025insurance
Q7. Proximate cause in insurance refers to
AThe dominant and effective cause of the loss
BThe nearest cause in time to the loss
CThe cheapest way to settle the claim
DThe policyholder's negligence
Correct Answer: A
The proximate cause is the active, efficient cause that sets in motion the chain of events leading to the loss, determining whether the insurer is liable.
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waec2025insurance
Q8. Which is not a type of life insurance?
ATerm assurance
BEndowment policy
CWhole life policy
DMotor vehicle insurance
Correct Answer: D
Motor vehicle insurance is a general (non-life) insurance class, while the others are forms of life assurance providing benefits on death or maturity.
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waec2025insurance
Q9. Fire insurance typically covers
ADamage by fire to property
BLoss of income due to illness
CTheft of personal belongings
DLiability for accidents
Correct Answer: A
Fire insurance indemnifies against loss or damage to property caused by fire, including related perils like explosion or lightning as per standard policies.
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waec2025insurance
Q10. Marine insurance covers risks associated with
ASea voyages and cargo transport
BLand vehicles only
CAviation exclusively
DBuilding construction
Correct Answer: A
Marine insurance protects against perils of the sea, including hull, cargo, and freight during maritime transport.
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waec2025insurance
Q11. A broker in insurance acts as an intermediary
ARepresenting the insured
BRepresenting the insurer
COwning the insurance company
DRegulating the market
Correct Answer: A
An insurance broker is an independent intermediary who represents the insured's interests, advising on suitable covers and negotiating with insurers.
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waec2025insurance
Q12. Premium in insurance is
AThe amount paid by the insured to the insurer
BThe claim amount received
CThe agent's commission
DThe policy document fee
Correct Answer: A
The premium is the consideration paid by the insured to the insurer for the promise of coverage against specified risks.
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waec2025insurance
Q13. A no-claim bonus in motor insurance
AReduces future premiums for claim-free years
BIncreases the sum insured
CCovers additional risks
DAllows free repairs
Correct Answer: A
No-claim bonus rewards policyholders for accident-free periods by discounting renewal premiums, encouraging safe driving.
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waec2025insurance
Q14. The Insurance Act in many countries requires insurers to
AMaintain solvency margins
BOffer policies only to adults
CLimit claims to 50% of loss
DExclude natural disasters
Correct Answer: A
Solvency margins ensure insurers have sufficient reserves to meet claims, protecting policyholders from insurer insolvency.
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waec2025insurance
Q15. Reinsurance is
AInsurance of insurers
BA type of health policy
CDouble coverage on the same risk
DGovernment-backed insurance
Correct Answer: A
Reinsurance allows insurers to transfer portions of risk to other insurers, stabilizing their financial position for large exposures.
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waec2025insurance
Q16. Which principle prevents over-insurance?
AIndemnity
BUtmost good faith
CInsurable interest
DContribution
Correct Answer: A
The indemnity principle limits recovery to the actual loss, ensuring no profit from insurance.
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waec2025insurance
Q17. Average clause in insurance applies when
AThe sum insured is less than the actual value
BThe claim is for total loss
CThe policy is new
DPremiums are overdue
Correct Answer: A
Under average, if under-insured, the claim is proportionately reduced to the extent of under-insurance.
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waec2025insurance
Q18. A grace period in life insurance allows
APayment of overdue premiums without lapsing
BExtension of cover beyond maturity
CClaim filing after policy end
DSurrender without penalty
Correct Answer: A
Grace period (usually 30 days) keeps the policy in force while allowing late premium payment without immediate lapse.
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waec2025insurance
Q19. Burglary insurance covers
ATheft following forcible entry
BLoss of keys
CDamage to locks only
DEmployee theft
Correct Answer: A
Burglary policies require evidence of forcible and violent entry or exit for theft claims.
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waec2025insurance
Q20. Liability insurance protects against
AClaims from third parties for injury or damage
BOwn property loss
CPremium non-payment
DPolicy cancellation
Correct Answer: A
Liability insurance covers legal costs and compensation for third-party bodily injury or property damage caused by the insured.
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waec2025insurance
Q21. The sum insured in a policy is
AThe maximum amount payable on a claim
BThe total premiums paid
CThe agent's fee
DThe renewal discount
Correct Answer: A
Sum insured is the limit of liability under the policy, the maximum the insurer will pay for a covered loss.
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waec2025insurance
Q22. Cooling-off period in insurance allows the insured to
ACancel the policy and get a refund within a set time
BIncrease cover without medical exam
CClaim for pre-existing conditions
DTransfer to another insurer
Correct Answer: A
Cooling-off (e.g., 14-30 days) gives time to review and cancel without penalty for full refund.
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waec2025insurance
Q23. Which is a feature of term insurance?
ACover for a fixed period only
BSavings element included
CAutomatic renewal for life
DHigh surrender value
Correct Answer: A
Term assurance provides pure protection for a specified term without investment or surrender value.
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waec2025insurance
Q24. Fidelity guarantee insurance covers
ALosses due to employee dishonesty
BNatural disasters
CVehicle accidents
DProduct liability
Correct Answer: A
It indemnifies employers against financial losses from employees' fraud or dishonesty.
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waec2025insurance
Q25. The doctrine of causa proxima means
ANearest cause determines liability
BRemote causes are ignored
CAll causes are considered equal
DInsured must prove cause
Correct Answer: A
Causa proxima (proximate cause) holds the insurer liable based on the dominant cause nearest to the loss.
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waec2025insurance
Q26. An endorsement on a policy
AModifies the terms of the contract
BRenews the policy automatically
CIncreases the premium only
DCancels the cover
Correct Answer: A
Endorsements amend or add clauses to the policy, such as changing cover or exclusions.
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waec2025insurance
Q27. Underwriters in insurance
AAssess risks and set premiums
BSell policies to customers
CProcess claims
DRegulate brokers
Correct Answer: A
Underwriters evaluate the risk of applicants and determine terms, including premiums, for acceptance.
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waec2025insurance
Q28. A lapsed policy means
ACoverage has ended due to non-payment
BClaim has been approved
CPremium has been waived
DRisk has been transferred
Correct Answer: A
Lapse occurs when premiums are not paid within the grace period, terminating coverage.
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waec2025insurance
Q29. Personal accident insurance pays
ALump sum on death or injury from accident
BMonthly income
CMedical expenses only
DProperty repair costs
Correct Answer: A
It provides a fixed benefit for accidental death, dismemberment, or total permanent disability.
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waec2025insurance
Q30. The principle of subrogation does not apply to
ALife insurance
BFire insurance
CMarine insurance
DMotor insurance
Correct Answer: A
Life insurance is a valued policy (benefit fixed), not indemnity-based, so subrogation does not apply.
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waec2025insurance
Q31. Co-insurance requires the insured to
ABear a percentage of the loss
BPay full premium upfront
CChoose only one insurer
DExclude certain risks
Correct Answer: A
Co-insurance clauses make the insured share losses proportionally if under-insured.
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waec2025insurance
Q32. A proposal form in insurance is
AThe application for cover
BThe final policy document
CThe claim form
DThe renewal notice
Correct Answer: A
The proposal form contains details from the proposer, forming the basis for underwriting the risk.
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waec2025insurance
Q33. Escalator clause in building insurance
AIncreases sum insured with inflation
BReduces premiums yearly
CCovers only ground floor
DExcludes earthquakes
Correct Answer: A
It automatically adjusts the sum insured annually to account for inflation or cost increases.
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waec2025insurance
Q34. Which is not a class of insurance?
AGeneral insurance
BLong-term insurance
CSpeculative insurance
DLife assurance
Correct Answer: C
Insurance classes are general (non-life) and long-term (life), but speculative insurance is not recognized as it lacks insurable interest.
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waec2025insurance
Q35. Moral hazard in insurance refers to
ADishonesty by the insured increasing risk
BNatural wear and tear
CAct of God perils
DPolicy exclusions
Correct Answer: A
Moral hazard arises when the insured's behavior, due to coverage, increases the likelihood of loss (e.g., carelessness).
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waec2025insurance
Q36. A riders or add-ons in policies provide
AAdditional covers for extra premium
BBasic cover only
CAutomatic exclusions
DFree extensions
Correct Answer: A
Riders extend the main policy with optional benefits like critical illness cover for an additional fee.
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waec2025insurance
Q37. The Omnibus clause in motor insurance covers
AAll persons driving with permission
BOnly the named driver
CFamily members only
DCommercial use only
Correct Answer: A
The omnibus clause extends liability cover to any authorized driver of the vehicle.
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waec2025insurance
Q38. Sinking fund method in insurance is used for
AReplacing assets over time
BImmediate claim payment
CPremium calculation
DRisk assessment
Correct Answer: A
It involves setting aside funds periodically to replace assets at the end of their useful life, often linked to reinstatement cover.
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waec2025insurance
Q39. Which document proves insurable interest?
APolicy wording
BNo specific document; it's implied
CClaim receipt
DPremium receipt
Correct Answer: B
Insurable interest is a legal requirement proven by circumstances (e.g., ownership), not a specific document.
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waec2025insurance
Q40. Tariffs in insurance refer to
AStandard premium rates set by regulators
BCustom rates for high-risk clients
CDiscounts for bulk policies
DClaim settlement fees
Correct Answer: A
Tariffs are prescribed rate structures by regulatory bodies to ensure fair pricing and market stability.