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Bcom 240/Bbam 240: Risk And Insurance Question Paper

Bcom 240/Bbam 240: Risk And Insurance

Course:Bachelor Of Commerce

Institution: Chuka University question papers

Exam Year:2013

CHUKA

UNIVERSITY

UNIVERSITY EXAMINATIONS
SECOND YEAR EXAMINATIONS FOR THE AWARD OF BACHELOR OF COMMERCE
BCOM 240/BBAM 240: RISK AND INSURANCE
STREAMS: BCOM Y2S1 TIME: 2 HOURS
DAY/DATE: MONDAY 22/4/2013 2.30 PM – 4.30 PM
INSTRUCTIONS:

• Answer Question ONE and any other TWO
• Do not write on the Question Paper

QUESTION ONE

(a) Explain clearly the concept of risk. [10 Marks]

(b) Explain the principle methods of handling risk giving examples. [8 Marks]

(c) Joel Hatari borrowed Ksh. 5000000 from KCB Ltd to purchase a fishing boat. He keeps the boat at the dock owned by the Pwani Company Ltd. He uses the boat to earn income by fishing. Joel has also a contract with Double Fine Fishing Company to transport Shrimp from one part to another along Africa Coastline. Explain the existence and extent of insurable interest for:

(i) KCB Ltd [4 Marks]

(ii) Pwani Company Ltd [4 Marks]

(iii) Double Fine Fishing Company [4 Marks]

QUESTION TWO

(a) “Although no risk completely meet all ideal requirement of insurance risk, some come closer to meeting them than others.” Explain the ideal requirement of an insurable risk. [10 Marks]

(b) A wall of building was damaged in Meru town and remained standing for several weeks. The municipal authority for the sake and public safety, ordered it demolished. While demolishing the wall damaged the adjoining building owned by Kariuki.

Required:

(i) Indicate the proximate cause of the damage to Kariuki’s building. [2 Marks]

(ii) Explain the position of Kariuki regarding insurer’s compensation. [3 Marks]

(c) Okaka owns certain premises in Chuka which is contracting to sell. He has a policy against fire in regard of the premises. The purchaser has agreed to pay 10 million the market price of the premises. In the course of negotiation, there was fire and part of the premises was destroyed. Okaka was paid 3 million by the insurance for the loss. He equally went ahead to receive full purchase money without deductions from the purchaser. The insurance has known this and has moved to court. Decide.
[5 Marks]

QUESTION THREE

(a) Explain the cost of risk to the economy. [7 Marks]

(b) Discuss the circumstances under which the tenet of Uberrimae Fedei does apply in Insurance contract. [7 Marks]

(c) Explain the following legal doctrines

(i) Misrepresentation [2 Marks]

(ii) Concealment [2 Marks]

(iii) Warranty [2 Marks]

QUESTION FOUR

(a) Omosh’s car is involved in a road accident with that of Stella. Omosh’s car is extensively damaged and the police abstract blames Stella for the accident. Omosh’s insurer setles the claim to him at Ksh 600 000, subsequently Omosh sues Stella and the court awards hik Ksh 700 000 for the damage to his car. Omosh’s insurer on hearing of this seeks to receive from him.
(i) Stating your reason, advice Omosh on whether he should comply with the
insurers demand. [2 Marks]

(ii) Explain the provision that Omosh and the insurer must comply with.
[3 Mark]

(b) Explain the importance and components of an insurance policy document. [8Marks]

(c) Explain the functions of the insurance regulatory authority. [7 Marks]

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Bcom 240/Bbam 240: Risk And Insurance Question Paper

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