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Bcom 240: Risk And Insurance Question Paper

Bcom 240: Risk And Insurance

Course:Bachelor Of Commerce

Institution: Chuka University question papers

Exam Year:2013

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]

Bcom 240: Risk And Insurance Question Paper

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