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I.A.(MR) practice questions

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Question 1Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which principle of insurance requires the insured to disclose all material facts relevant to the risk being underwritten?

  1. Utmost good faith Correct answer.
  2. Contribution
  3. Subrogation
  4. Indemnity

Explanation

Utmost good faith obliges both parties to disclose material facts honestly and without concealment. Material facts are those that would influence a prudent underwriter's decision on acceptance or terms.

Question 2Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A fire policy covers a building for Rs. 8,00,000 while its actual value at risk is Rs. 10,00,000. A loss of Rs. 4,00,000 occurs. Under the average clause, the payable amount is:

  1. Rs. 8,00,000
  2. Rs. 3,20,000 Correct answer.
  3. Rs. 4,00,000
  4. Rs. 2,00,000

Explanation

The average clause reduces the claim in the proportion of sum insured to value at risk: (8,00,000 / 10,00,000) × 4,00,000 = Rs. 3,20,000. This penalises underinsurance.

Question 3Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following best describes the purpose of subrogation in insurance?

  1. To allow the insurer to cancel the policy after a claim
  2. To transfer the insured's risk to a reinsurer
  3. To prevent the insured from profiting by recovering from both insurer and third party Correct answer.
  4. To increase the premium after a loss

Explanation

Subrogation lets the insurer pursue the negligent third party after settling the claim, ensuring the insured does not recover twice. It supports the principle of indemnity.

Question 4Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

In survey and loss assessment, the term 'salvage' refers to:

  1. The cost of hiring a surveyor
  2. The premium refunded on cancellation
  3. The scrap value of damaged property retained or sold after a loss Correct answer.
  4. The reinstatement value of a building

Explanation

Salvage is the residual value of damaged goods or property that survives a loss. It is deducted from the gross loss to arrive at the net claim payable.

Question 5Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

An insured deliberately sets fire to his own insured warehouse to claim the money. This is best described as:

  1. A fortuitous loss
  2. A speculative risk
  3. A physical hazard
  4. A moral hazard Correct answer.

Explanation

Moral hazard arises from the insured's dishonest intent or character, such as deliberately causing a loss. It is distinct from physical hazards, which are tangible conditions increasing risk.

Question 6Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is a characteristic of an insurable risk?

  1. The loss must be intentional
  2. The loss must be measurable in money Correct answer.
  3. The risk must affect only one individual
  4. The risk must be catastrophic to society

Explanation

Insurable risks require losses that can be quantified in monetary terms so claims can be assessed. The loss should also be accidental, definite, and part of a large pool of similar exposures.

Question 7Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

The principle of contribution applies when:

  1. Two or more insurers cover the same interest against the same peril Correct answer.
  2. The policy is assigned to a new owner
  3. A single insurer covers a risk and reinsures part of it
  4. The insured recovers from a negligent third party

Explanation

Contribution allows insurers covering the same interest against the same peril to share the loss equitably. It prevents the insured from recovering more than the actual loss from multiple policies.

Question 8Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Under the principle of indemnity, the maximum amount recoverable by the insured is:

  1. The actual financial loss suffered, subject to the sum insured Correct answer.
  2. The sum insured regardless of loss
  3. The market value of the policy
  4. Twice the premium paid

Explanation

Indemnity restores the insured to the same financial position as before the loss, capped by the sum insured. The insured should neither profit nor lose from a claim.

Question 9Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A surveyor assessing a machinery breakdown claim should FIRST verify:

  1. The resale value of the damaged machine
  2. The number of employees in the factory
  3. Whether the policy was in force and the peril is covered Correct answer.
  4. The insured's credit rating

Explanation

The first step in loss assessment is confirming that a valid policy existed at the time of loss and that the cause falls within the insured perils. Only then are quantum and liability examined.

Question 10Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is an example of a physical hazard?

  1. Financial difficulties of the insured
  2. Dishonesty of the insured
  3. Indifference to loss prevention
  4. Poor housekeeping and flammable storage Correct answer.

Explanation

Physical hazards are tangible conditions that increase the chance or severity of loss, such as poor housekeeping or flammable materials. The other options are moral or morale hazards.

Question 11Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

In a fire loss assessment, 'reinstatement value' means:

  1. The cost of rebuilding or replacing with new property of like kind Correct answer.
  2. The value stated in the policy schedule
  3. The depreciated value of the property
  4. The forced-sale value of the property

Explanation

Reinstatement value is the cost to rebuild or replace the damaged property with new equivalent property. It differs from market value and depreciated value, and is used in reinstatement-value policies.

Question 12Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

An insured holds two fire policies covering the same building for Rs. 5,00,000 each. A loss of Rs. 3,00,000 occurs. Under contribution, each insurer pays:

  1. Rs. 5,00,000
  2. Rs. 75,000
  3. Rs. 3,00,000
  4. Rs. 1,50,000 Correct answer.

Explanation

Where policies are equal and cover the same interest, contribution shares the loss equally: 3,00,000 / 2 = Rs. 1,50,000 each. The insured recovers only the actual loss.

Question 13Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following best distinguishes reinsurance from coinsurance?

  1. Reinsurance is arranged by the insured; coinsurance is arranged by the surveyor
  2. Reinsurance covers only life risks; coinsurance covers only fire
  3. Reinsurance is compulsory; coinsurance is optional
  4. Reinsurance is between insurers; coinsurance is sharing between insurers of the same risk Correct answer.

Explanation

Reinsurance is a contract where one insurer transfers part of its risk to another insurer. Coinsurance is the sharing of a single risk among two or more insurers under the same cover.

Question 14Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

The main objective of a loss assessment report is to:

  1. Recommend premium increases to the insured
  2. Appoint a new agent for the area
  3. Establish the cause, nature, and quantum of loss for the insurer Correct answer.
  4. Sell additional policies to the insured

Explanation

A loss assessment report documents the cause and extent of loss and quantifies the claim to help the insurer determine liability and payable amount. It is a factual and analytical document.

Question 15Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

An insured fails to disclose a previous fire loss when proposing fire insurance. The insurer may:

  1. Avoid the policy on grounds of non-disclosure of a material fact Correct answer.
  2. Transfer the policy to another insurer
  3. Increase the sum insured automatically
  4. Be obliged to pay the claim in full

Explanation

Non-disclosure of a material fact such as a prior loss breaches utmost good faith, entitling the insurer to avoid the contract. Materiality is judged by what would influence a prudent underwriter.

Question 16Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which type of average applies a proportionate reduction to a claim when the sum insured is less than the value at risk?

  1. No-claim discount
  2. Average clause Correct answer.
  3. Excess
  4. Franchise

Explanation

The average clause reduces claims proportionally when property is underinsured. Franchise and excess are deductibles, and no-claim discount affects premium, not claims.

Question 17Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

In assessing a business interruption claim, the surveyor primarily measures:

  1. The insured's tax liability
  2. The book value of the plant
  3. The replacement cost of stock
  4. The reduction in gross profit or turnover during the interruption Correct answer.

Explanation

Business interruption cover indemnifies lost gross profit or increased cost of working following an insured peril. The measure is the reduction in turnover and consequent loss of gross profit during the indemnity period.

Question 18Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is a duty of the insured after a loss occurs?

  1. To conceal the extent of damage
  2. To notify the insurer promptly and cooperate in the investigation Correct answer.
  3. To repair all damage before any survey
  4. To sell salvage without informing the insurer

Explanation

The insured must give prompt notice of loss and cooperate with the insurer's investigation. Concealment or unauthorised disposal of salvage can prejudice the claim.

Question 19Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A policy has a sum insured of Rs. 20,00,000 with a 5% franchise. A loss of Rs. 80,000 occurs. How much is payable?

  1. Rs. 80,000 Correct answer.
  2. Rs. 76,000
  3. Rs. 20,00,000
  4. Nil

Explanation

A franchise waives losses below the stated percentage but pays the full loss once the threshold is exceeded. Five percent of 20,00,000 is Rs. 1,00,000, so a loss of Rs. 80,000 is below the franchise and not payable.

Question 20Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

The principle of proximate cause is used to:

  1. Fix the date of policy inception
  2. Determine the premium rate for a risk
  3. Identify the dominant, effective cause of a loss among a chain of events Correct answer.
  4. Calculate the salvage value of damaged goods

Explanation

Proximate cause identifies the dominant and effective cause of a loss when several events combine. The insurer pays only if that proximate cause is an insured peril.

Question 21Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following statements about the insurable interest is correct?

  1. It is never required in life insurance
  2. It must exist at the time of the loss in property insurance Correct answer.
  3. It applies only to marine insurance
  4. It may be created after the loss occurs

Explanation

In property insurance, insurable interest must exist at the time of loss, though it need not exist when the policy is taken. In life insurance, it must exist at inception.

Question 22Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A surveyor finds that a fire was caused by spontaneous combustion of stored oily rags. For a standard fire policy, this is significant because:

  1. Some fire policies exclude loss caused by spontaneous combustion or its own fermentation Correct answer.
  2. Spontaneous combustion is always covered without conditions
  3. It automatically increases the sum insured
  4. It transfers liability to the landlord

Explanation

Standard fire policies often exclude damage from spontaneous combustion or heating/fermentation unless fire results. The surveyor must determine whether an ensuing fire is covered.

Question 23Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following best describes 'betterment' in loss assessment?

  1. Improvement in the insured's position from replacing old property with new Correct answer.
  2. An increase in premium after a claim
  3. A discount given for good risk
  4. A penalty imposed on the surveyor

Explanation

Betterment occurs when a claim payment leaves the insured with property newer or better than before the loss. Assessors make deductions so the insured does not profit contrary to indemnity.

Question 24Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Under a policy with an excess of Rs. 10,000, an assessed loss is Rs. 60,000. The payable amount is:

  1. Rs. 50,000 Correct answer.
  2. Rs. 10,000
  3. Rs. 70,000
  4. Rs. 60,000

Explanation

An excess is a fixed first amount deducted from every claim: 60,000 − 10,000 = Rs. 50,000. Unlike a franchise, the excess is deducted even when the loss exceeds it.

Question 25Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following would most likely be treated as a 'material fact' requiring disclosure in a property proposal?

  1. The number of visitors per month
  2. The name of the insured's accountant
  3. A history of repeated burglaries at the premises Correct answer.
  4. The colour of the insured's office furniture

Explanation

A history of repeated burglaries directly affects the risk and would influence a prudent underwriter, making it material. Trivial or irrelevant details need not be disclosed.

Question 26Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following best describes the role of a loss assessor in the insurance process?

  1. To sell insurance policies to prospective clients
  2. To underwrite new insurance applications
  3. To determine the cause and extent of loss and recommend the amount payable Correct answer.
  4. To invest the insurer's premium income

Explanation

A loss assessor investigates the circumstances of a loss, quantifies the damage, and advises the insurer on the admissible claim amount. Selling policies, underwriting, and investment are functions of agents, underwriters, and investment managers respectively.

Question 27Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is a fundamental characteristic of insurance?

  1. It eliminates all risks faced by an individual
  2. It transfers risk from the insured to the insurer in exchange for a premium Correct answer.
  3. It is a form of gambling
  4. It guarantees a profit for the insured

Explanation

Insurance works by transferring the financial consequences of specified risks from the insured to the insurer, who pools many similar risks. It does not eliminate risk, guarantee profit, or constitute gambling.

Question 28Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

What is the primary purpose of a survey in the context of insurance?

  1. To assess the risk and provide recommendations to improve it Correct answer.
  2. To market insurance products
  3. To settle claims after a loss
  4. To calculate the premium rate for a policy

Explanation

A survey is an inspection of the risk to evaluate its acceptability and to suggest risk improvement measures. Premium calculation, claim settlement, and marketing are separate functions.

Question 29Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is a type of survey that is conducted when a policy is due for renewal?

  1. Initial survey
  2. Special survey
  3. Renewal survey Correct answer.
  4. Claim survey

Explanation

A renewal survey is carried out before renewal of a policy to update the risk information. Initial surveys are for new risks, claim surveys investigate losses, and special surveys are for specific purposes.

Question 30Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Under the principle of subrogation, after indemnifying the insured, the insurer:

  1. Must return the premium to the insured
  2. Is liable to pay the claim twice
  3. Can increase the sum insured without consent
  4. Acquires the insured's rights to recover damages from a third party responsible for the loss Correct answer.

Explanation

Subrogation gives the insurer the right to step into the insured's shoes and pursue recovery from a negligent third party after paying the claim. It prevents the insured from being indemnified twice.

Question 31Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is an example of a moral hazard in insurance?

  1. A factory storing flammable chemicals
  2. An insured who deliberately sets fire to their own property to claim insurance Correct answer.
  3. A car with faulty brakes
  4. A building located in a flood-prone area

Explanation

Moral hazard refers to the risk arising from the insured's behavior or attitude, such as deliberately causing a loss to claim insurance. The other options are physical hazards.

Question 32Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

What is the main purpose of the principle of indemnity in insurance?

  1. To ensure the insured makes a profit from a loss
  2. To punish the insured for negligence
  3. To restore the insured financially to the position before the loss Correct answer.
  4. To allow the insured to recover more than the actual loss

Explanation

Indemnity aims to place the insured in the same financial position after a loss as before it, no better and no worse. It prevents profit from insurance and discourages moral hazard.

Question 33Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following documents is issued by an insurer to provide temporary evidence of insurance cover before a policy is formally issued?

  1. Claim form
  2. Endorsement
  3. Cover note Correct answer.
  4. Renewal notice

Explanation

A cover note is a temporary document providing evidence of insurance until the policy is issued. An endorsement modifies an existing policy, a renewal notice invites renewal, and a claim form is used to report a loss.

Question 34Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

In a fire insurance policy, what is the purpose of the 'average' clause?

  1. To provide cover for average losses
  2. To increase the claim amount if the sum insured is higher than the value
  3. To penalize the insured for underinsurance by reducing the claim proportionately Correct answer.
  4. To waive the excess in case of total loss

Explanation

The average clause applies when the sum insured is less than the value of the property at risk, reducing the claim in the same proportion as the underinsurance. It ensures the insured bears a share of the loss.

Question 35Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A fire policy has a sum insured of Rs. 10,00,000 and the value of the property at risk is Rs. 12,00,000. A loss of Rs. 3,00,000 occurs. What amount is payable under the average clause?

  1. Rs. 2,50,000 Correct answer.
  2. Rs. 3,00,000
  3. Rs. 2,00,000
  4. Rs. 1,50,000

Explanation

The average clause reduces the claim in the proportion of sum insured to value at risk: (10,00,000 / 12,00,000) × 3,00,000 = Rs. 2,50,000. The insured bears the remaining Rs. 50,000 as underinsurance.

Question 36Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following best describes 'salvage' in loss assessment?

  1. The amount paid by the insurer to the insured for a total loss
  2. The cost of repairing the damaged property
  3. The premium paid for the policy
  4. The residual value of damaged property that can be sold or reused Correct answer.

Explanation

Salvage refers to the remaining value of damaged goods or property that can be sold or reused, which is deducted from the claim to avoid over-indemnity. It is not the claim payment, repair cost, or premium.

Question 37Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

In assessing a claim for damage to a building, the surveyor notices that the insured has upgraded the damaged portion with superior materials. This is an example of:

  1. Depreciation
  2. Salvage
  3. Betterment Correct answer.
  4. Average

Explanation

Betterment occurs when repairs or replacement improve the property beyond its original condition, and the insured should bear the cost of the improvement. Depreciation is a decrease in value, salvage is residual value, and average is proportional reduction for underinsurance.

Question 38Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is a key duty of the insured at the time of taking out an insurance policy?

  1. To minimize the loss after an event
  2. To provide a loss assessment report
  3. To disclose all material facts accurately Correct answer.
  4. To notify all claims promptly

Explanation

At proposal stage, the insured must disclose all material facts truthfully so the insurer can assess the risk. Claim notification, loss minimization, and loss assessment reports are post-loss matters.

Question 39Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A surveyor is assessing a claim for water damage to stock. Which of the following would be the most appropriate first step?

  1. Interview the insured's customers
  2. Calculate the depreciation on the stock
  3. Verify the policy coverage and conditions Correct answer.
  4. Check the insured's tax returns

Explanation

Before assessing the loss, the surveyor must establish that the policy covers the peril and that all conditions have been met. Depreciation, customer interviews, and tax returns are secondary or irrelevant steps.

Question 40Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Under a fire policy, if the insured fails to take reasonable steps to minimize the loss after a fire, what is the likely consequence?

  1. The insurer must pay the full claim
  2. The premium is refunded
  3. The policy is automatically cancelled
  4. The claim may be reduced or rejected Correct answer.

Explanation

Most policies require the insured to take reasonable precautions to mitigate loss. Failure to do so can lead to a reduction or rejection of the claim. Automatic cancellation or premium refund is not a standard consequence.

Question 41Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is an example of a 'consequential loss' that may be covered under a business interruption policy?

  1. Loss of profit due to reduced production after a fire Correct answer.
  2. Cost of repairing a damaged machine
  3. Injury to a worker during the fire
  4. Damage to the factory building by fire

Explanation

Consequential loss refers to financial losses that follow a physical loss, such as loss of profit or increased cost of working. Physical damage and repair costs are direct losses, and worker injury is covered under a liability or personal accident policy.

Question 42Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

In the context of insurance, what does 'proximate cause' mean?

  1. The event that is closest in time to the loss
  2. The first event that starts a chain of events leading to a loss
  3. The last event before the loss occurs
  4. The dominant, effective cause of a loss Correct answer.

Explanation

Proximate cause is the active, efficient cause that sets in motion a chain of events leading to a loss, without intervention of another force. It is not simply the first or last event, nor necessarily the closest in time.

Question 43Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A policy covers fire but excludes lightning. A loss occurs due to lightning that results in a fire. Under the doctrine of proximate cause, the loss is:

  1. Not covered, because lightning is an excluded peril
  2. Covered, because both perils occurred
  3. Covered, because fire was the proximate cause
  4. Not covered, because lightning was the proximate cause Correct answer.

Explanation

If lightning is the proximate cause and it is excluded, the loss is not covered even if fire followed. The excluded peril is the dominant cause, so the claim fails.

Question 44Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following statements about insurable interest is correct?

  1. Insurable interest must exist at the time of the loss only
  2. Insurable interest is not required for property insurance
  3. Insurable interest must exist at both the time of taking out the policy and at the time of loss Correct answer.
  4. Insurable interest must exist at the time of taking out the policy only

Explanation

For property insurance, insurable interest must exist at both inception and at the time of loss to prevent gambling and moral hazard. For life insurance, it is generally required only at inception.

Question 45Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A surveyor is assessing a machinery breakdown claim. The machine was 10 years old and had a useful life of 15 years. The surveyor applies depreciation. What is the purpose of this adjustment?

  1. To reduce the claim to reflect the depreciated value of the machine Correct answer.
  2. To penalize the insured for not maintaining the machine
  3. To increase the claim to cover replacement cost
  4. To calculate the premium for the next renewal

Explanation

Depreciation is applied to arrive at the indemnity value of the damaged property, reflecting its age and wear. It ensures the insured does not profit from the claim.

Question 46Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following is a common exclusion in a standard fire policy?

  1. Damage caused by explosion of a domestic boiler
  2. Damage caused by fire
  3. Damage caused by lightning
  4. Damage caused by earthquake Correct answer.

Explanation

Earthquake is typically excluded in a standard fire policy and requires separate cover. Fire, lightning, and domestic boiler explosion are usually covered perils.

Question 47Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

In loss assessment, what is the meaning of 'reinstatement value'?

  1. The market value of the property at the time of loss
  2. The cost to replace or repair the damaged property with new materials of like kind and quality without deduction for depreciation Correct answer.
  3. The original purchase price of the property
  4. The value of the property after depreciation

Explanation

Reinstatement value is the cost of replacing or repairing the property with new materials without deducting for depreciation. It differs from indemnity value, which is depreciated.

Question 48Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A surveyor finds that a fire was caused by the insured's willful act. How should the surveyor report this?

  1. Recommend payment of the claim as a gesture of goodwill
  2. Recommend payment after deducting salvage
  3. Recommend payment after applying average
  4. Recommend rejection of the claim due to willful misconduct Correct answer.

Explanation

Willful misconduct by the insured is a breach of the policy conditions and generally voids the claim. The surveyor should report the facts and recommend rejection.

Question 49Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

Which of the following best explains the difference between a 'franchise' and an 'excess' in an insurance policy?

  1. A franchise applies only to fire policies, while an excess applies only to marine policies
  2. A franchise means the insurer pays nothing if the loss is below the franchise amount, but pays the full loss if it exceeds it; an excess is deducted from every loss Correct answer.
  3. A franchise is a percentage, while an excess is always a fixed amount
  4. A franchise is deducted from every loss, while an excess is deducted only when the loss exceeds a certain amount

Explanation

With a franchise, if the loss is below the specified amount, no payment is made; if it exceeds the franchise, the full loss is paid without deduction. With an excess, the specified amount is deducted from every loss.

Question 50Principles and Practice of Insurance and Survey and Loss Assessment (S-01)

A policy has a sum insured of Rs. 50,00,000 with a policy excess of Rs. 20,000. A loss of Rs. 5,00,000 occurs. What is the amount payable?

  1. Rs. 4,80,000 Correct answer.
  2. Rs. 5,00,000
  3. Rs. 5,20,000
  4. Rs. 4,50,000

Explanation

The excess is deducted from the assessed loss: Rs. 5,00,000 - Rs. 20,000 = Rs. 4,80,000. The sum insured is adequate, so no average applies.