Part 3: Claims

Paper II — General Insurance · Part 3: Claims

Q1 Free

What is the role of the Principle of Proximate Cause in insurance claims?

A. To identify the direct, effective and dominant cause of the loss to determine if the insurance is liable
B. To determine the time of loss
C. To calculate the amount of loss
D. To determine which insurer pays

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Correct Answer: A

The Principle of Proximate Cause is one of the fundamental principles of insurance, used to identify the most direct, effective and dominant cause (proximate cause) of the loss.
If the proximate cause is an insured peril, the insurer is liable; if it is an excluded peril, the insurer is not liable.
For example: if an earthquake (excluded) causes a fire (covered), the proximate cause is the earthquake, and if earthquake is excluded, there is no coverage.

Q2 Free

What are the main duties of the insured after an insured event occurs?

A. Repair the damage immediately, then notify the insurer
B. Wait for the insurer to make contact
C. Notify the insurer promptly, take reasonable steps to prevent further loss, and preserve the scene of damage
D. Handle all losses independently; the claim period is one year

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Correct Answer: C

After an insured event, the insured typically has the following duties: (1) notify the insurer promptly; (2) take reasonable steps to prevent further loss ('duty to mitigate'); (3) preserve the scene of damage and not repair before the insurer's inspection; (4) provide all relevant documents and cooperate with investigations.
Failure to notify promptly or deliberately enlarging the loss may affect the right to claim.

Independent study aid. Not affiliated with or endorsed by the Insurance Authority (IA) or the Vocational Training Council (VTC).