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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Arizona Life exam — 47 practice questions.

Subtopics: Risk, Peril, Hazard, Adverse selection, Law of large numbers, Representations, Utmost good faith, Definition of risk, Handling risk, Retention, Insurable risk, Stock insurer, Mutual insurer, Admitted insurer, Domestic foreign alien, Consideration, Legal purpose, Competent parties, Offer and acceptance, Express authority, Apparent authority, Indemnity, Concealment, Pure vs speculative risk, Moral hazard, Morale hazard, Physical hazard, Implied authority, Fiduciary duty, Aleatory contract, Contract of adhesion, Unilateral contract, Conditional contract, Warranty, Waiver, Estoppel, Reciprocal insurer, Fraternal benefit society, Reinsurance, Surplus lines insurer, Self-insurance

Read the General Insurance Concepts study guide

Sample questions & answers

1. In insurance, pure risk refers to a situation involving:

Only the chance of loss or no loss, with no chance of gain

Pure risk involves only the possibility of loss or no loss and is insurable; speculative risk includes a chance of gain and is not.

2. A peril is best defined as:

The cause of a loss

A peril is the cause of a loss, such as fire or accident; a hazard is a condition that increases the chance or severity of loss.

3. A hazard is best described as:

A condition that increases the likelihood or severity of a loss

A hazard is a condition that increases the chance or severity of loss; hazards may be physical, moral, or morale in nature.

4. Adverse selection refers to the tendency of:

Higher-risk individuals to seek or keep coverage more than average-risk individuals

Adverse selection is the tendency of higher-risk persons to pursue insurance, which underwriting is designed to counterbalance.

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Practice: General Insurance Concepts

Take a randomized, timed-style practice test. Answer choices are shuffled and your results are scored instantly with an explanation for every question.

Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Pennsylvania Insurance Department and the exam administrator before relying on it.