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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Connecticut Personal Lines exam — 58 practice questions.

Subtopics: Peril, Hazard, Risk transfer, Law of large numbers, Adverse selection, Representations, Pure vs speculative risk, Moral hazard, Morale hazard, Physical hazard, Risk avoidance, Risk retention, Insurable interest, Indemnity, Elements of a contract, Contract of adhesion, Aleatory contract, Utmost good faith, Representation, Concealment, Warranty, Express authority, Apparent authority, Implied authority, Stock vs mutual insurer, Domestic foreign alien, Admitted insurer, Estoppel, Reinsurance, Underwriting, Loss ratio, Rate regulation goals, Reciprocal insurer, Lloyds of London, Risk retention group, Self-insurance, Surplus lines, Fundamental vs particular risk, Loss exposure, Frequency vs severity, Unilateral contract, Conditional contract, Personal contract, Waiver, Material misrepresentation, Fiduciary duty, Commingling, Agent vs broker, Rebating, Twisting, Coercion, Defamation, Unfair claims settlement

Read the General Insurance Concepts study guide

Sample questions & answers

1. In insurance, a peril is:

The cause of a loss, such as fire or windstorm

A peril is the cause of a loss, such as fire, windstorm, or theft.

2. A hazard differs from a peril because a hazard:

Increases the likelihood or severity of a loss

A hazard increases the chance or severity of a loss, while a peril is the actual cause.

3. Buying a homeowners policy is an example of risk:

Transfer

Purchasing insurance transfers the financial consequences of a risk to the insurer.

4. The law of large numbers allows insurers to:

Predict losses more accurately as the group of insureds grows

As the number of similar exposures increases, the law of large numbers improves the accuracy of loss predictions.

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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 Insurance Department and the exam administrator before relying on it.