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Exam Review

Key Facts: IRDAI Surveyor LOP Exam

100

Exam Questions

IRDAI Syllabus

2.5 hours

Exam Time

IRDAI Syllabus

₹50 lakh

Insurance Ombudsman Limit

Ombudsman Rules

50%

Passing Mark

IRDAI Rules

30 days

Surveyor Report Timeline

IRDAI Regulations

25%

Claims Assessment Weight

Syllabus

The IRDAI Surveyor LOP exam contains 100 questions to be completed in 2.5 hours, with a passing score of 50%. It assesses capabilities in business interruption covers (FLOP, MLOP, IAR), quantitative claims calculations, IRDAI Surveyor Regulations, policy terms, and consumer redressal rules (notably the ₹50 lakh Insurance Ombudsman limit).

Sample IRDAI Surveyor LOP Practice Questions

Try these sample questions to review concepts for the IRDAI Surveyor LOP exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Which of the following is a key operational difference between a Fire Loss of Profit (FLOP) policy and a Machinery Breakdown Loss of Profit (MLOP) policy?
A.FLOP is always based on output, while MLOP is always based on turnover.
B.MLOP typically incorporates a time excess (deductible in days), whereas FLOP generally does not.
C.FLOP covers only variable charges, while MLOP covers Net Profit only.
D.MLOP covers a maximum of 3 months, while FLOP has no maximum limit.
Explanation: MLOP policies typically incorporate a time excess (e.g., 7 or 14 days) during which no indemnity is payable. FLOP policies usually apply a monetary deductible or no excess, and are triggered by fire and allied perils without a time-based deductible.
2Under the additive basis, how is the 'Gross Profit' defined in a standard Fire Loss of Profit (FLOP) policy?
A.Turnover minus specified variable charges.
B.Net Profit plus all standing charges (insured and uninsured).
C.Net Profit plus Insured Standing Charges.
D.Turnover plus savings in standing charges.
Explanation: Under the additive basis, Gross Profit is defined as Net Profit plus Insured Standing Charges. If there is a net loss, it is the Insured Standing Charges less the proportion of the net trading loss.
3Under the difference basis, Gross Profit is calculated by subtracting which of the following from the Turnover?
A.Specified variable charges (working expenses).
B.Net Profit and standing charges.
C.All standing charges.
D.Insured standing charges only.
Explanation: Under the difference basis, Gross Profit is defined as Turnover minus Specified Variable Charges. Specified variable charges are those costs that vary directly with turnover (like raw materials, packing, freight) and are explicitly defined in the policy.
4Which of the following expenses is MOST likely to be classified as a 'Specified Variable Charge' in a manufacturing firm's LOP policy?
A.Rent of factory premises
B.Purchase of raw materials
C.Depreciation of plant and machinery
D.Interest on bank loans
Explanation: Raw materials vary directly with production and turnover. In contrast, rent, depreciation, and interest are fixed charges that continue regardless of the interruption level, classifying them as standing charges.
5What does the term 'Indemnity Period' represent in a Loss of Profit policy?
A.The period during which the insurance policy remains in force.
B.The time elapsed between the occurrence of the damage and the payment of the claim.
C.The period beginning with the occurrence of the damage and ending not later than the maximum indemnity period, during which the business results are affected.
D.The calendar year immediately preceding the date of the damage.
Explanation: The Indemnity Period is the period during which the business results are affected by the damage, starting from the date of the damage and ending no later than the maximum indemnity period specified in the schedule.
6Why does the insured select the length of the 'Maximum Indemnity Period' (e.g., 12, 18, 24 months) at the inception of the policy?
A.To determine the exact period for which the premium is paid.
B.To represent the estimated maximum time required to repair, rebuild, and restore the business to its pre-damage trading level.
C.To comply with the minimum statutory requirement of 12 months.
D.To match the financial year of the company.
Explanation: The maximum indemnity period represents the limit of time for which the insurer will pay for loss of profits. The insured selects it based on how long it would take to replace specialized machinery, rebuild premises, and restore operations and customer bases to normal.
7In an LOP policy, what is the consequence of failing to list a fixed cost (such as factory rent) as an 'Insured Standing Charge'?
A.The policy is rendered void from inception.
B.The charge is automatically covered under the Net Profit section.
C.The charge is treated as uninsured, which will lead to underinsurance during claim assessment.
D.The insurer will reimburse the rent under the Additional Cost of Working section.
Explanation: Failing to list a standing charge means it is uninsured. During a claim, underinsurance (the average clause) will apply because the actual Gross Profit (Net Profit + All Standing Charges) will be higher than the Sum Insured (Net Profit + Insured Standing Charges).
8In Machinery Loss of Profit (MLOP) insurance, what is the 'Time Excess'?
A.The time limit within which the surveyor must complete the inspection.
B.The minimum time required to repair the machinery before a claim can be lodged.
C.A deductible expressed as a specified number of days or hours, during which no loss of profit is payable.
D.The period during which the policy sum insured is doubled.
Explanation: Time Excess in MLOP is a deductible expressed in time (e.g., 7 days). The insurer is not liable for any loss of profit incurred during this initial period starting from the breakdown.
9How does the 'Material Damage Trigger' (Damage Requirement) protect LOP insurers?
A.It limits claims to the cost of physical repairs only.
B.It ensures the interruption is caused by an accidental peril covered under the corresponding property policy, preventing claims for market-driven business downturns.
C.It requires the insured to buy property insurance from the same insurer.
D.It allows the insurer to pay the claim in the form of building materials.
Explanation: The Material Damage Trigger is a condition stating that the insurer is not liable for LOP unless there is a valid property damage claim. This ensures that LOP claims arise from physical damage, not general market conditions or uninsured events.
10Under LOP policy definitions, what is 'Standard Turnover'?
A.The turnover achieved in the financial year immediately preceding the damage.
B.The turnover during the period in the 12 months immediately preceding the damage which corresponds with the Indemnity Period.
C.The maximum turnover the factory is capable of producing under optimal conditions.
D.The average monthly turnover during the policy period.
Explanation: Standard Turnover is the turnover during the period in the 12 months immediately before the date of the damage that corresponds with the indemnity period. It serves as the baseline for calculating the drop in turnover.

About the IRDAI Surveyor LOP Exam

The IRDAI Surveyor and Loss Assessor exam for the Loss of Profit (LOP) department tests the technical and regulatory competence of surveyors in assessing business interruption losses. The exam covers Fire Loss of Profit (FLOP) and Machinery Breakdown Loss of Profit (MLOP) policies, claims assessment formulas (reduction in turnover, gross profit rates, increased cost of working, average clause), the IRDAI (Surveyors and Loss Assessors) Regulations, policy conditions and exclusions, and policyholder redressal mechanisms, including the Insurance Ombudsman's ₹50 lakh limit.

Exam sponsor: IRDAI / Insurance Institute of India (III). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

100 multiple-choice questions

Time Limit

As per III online slot booking (confirm current duration when scheduling)

Passing Score

60% (60/100)

Exam / Certification Fees

~₹1,000

Exam sponsor website

Reported exam pass rate: ~50%. estimated pass rate This describes exam candidates, not OpenExamPrep users or results from using our resources. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

25%

Loss of Profit (LOP) Covers

Fire Consequential Loss (FLOP) and MLOP policies, standing charges vs variable charges, gross profit, and indemnity period.

25%

Loss of Profit (LOP) Claims Assessment

Turnover calculations, gross profit rates, increased cost of working limitations, average clause application, and savings in standing charges.

20%

Survey Practice

IRDAI Surveyor Regulations (timelines, duties, code of conduct), book of accounts audit, GST returns, and report writing.

15%

Conditions and Exclusions

Material damage trigger, material alteration, policy exclusions (war, civil commotion), extensions (suppliers, customers, public utilities).

15%

Principles and Redressal

Principles of insurance (indemnity, subrogation, proximate cause), IRDAI policyholder protection regulations, and Insurance Ombudsman jurisdiction (limit up to ₹50 lakh).

Preparing for the IRDAI Surveyor LOP Exam

What You Need to Know

  • Passing score: 60% (60/100)
  • Assessment: 100 multiple-choice questions
  • Time limit: As per III online slot booking (confirm current duration when scheduling)
  • Exam / certification fees: ~₹1,000 Official sources

Using Our Practice Resources

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

IRDAI Surveyor LOP: Suggested Study Strategy

1Master the difference between FLOP (based on turnover/output) and MLOP (based on turnover/output/time excess).
2Understand the calculation of 'Rate of Gross Profit' and how trends affect the 'Standard Turnover' and 'Annual Turnover'.
3Know the statutory timeline for surveyors: report submission within 30 days of appointment, and the process for requesting extensions from the insurer.
4Review the three main limitations on the 'Increased Cost of Working' (ACOW) claim payment.
5Memorize the Insurance Ombudsman rules, jurisdiction, and the ₹50 lakh limit.
6Learn the core principles of insurance: utmost good faith, indemnity, insurable interest, subrogation, contribution, and proximate cause.

Frequently Asked Questions

What is the IRDAI Surveyor Loss of Profit (LOP) exam?

It is a specialized exam conducted to license surveyors in the Loss of Profit (Business Interruption) department in India. It tests technical proficiency in quantifying gross profit losses and knowledge of relevant laws and guidelines.

What are the core topics tested on this exam?

The exam is divided into five key areas: LOP Covers (25%), LOP Claims Assessment (25%), Survey Practice (20%), Conditions & Exclusions (15%), and Principles & Redressal (15%).

What is the new Insurance Ombudsman limit tested on this exam?

Under the current Insurance Ombudsman Rules, the maximum limit for compensation or award that can be passed by the Insurance Ombudsman is ₹50 lakh. This is an increase from the previous ₹30 lakh limit.

What is the material damage trigger in LOP policies?

A fundamental condition of any LOP policy is the 'Material Damage Trigger' (or damage requirement), which states that no liability exists under the LOP policy unless there is a valid claim and payment (or admitted liability) under the corresponding material damage policy (like Fire or Machinery Breakdown) for the physical damage that caused the business interruption.

How is underinsurance calculated under an LOP policy?

Underinsurance is evaluated by comparing the Sum Insured with the Gross Profit that would have been earned during the 12 months immediately following the damage (adjusted for trends/variations). If the Sum Insured is less, the claim is proportionately reduced under the Average Clause.