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Free General Insurance Concepts Practice Questions

Idaho Personal Lines exam — 58 practice questions.

Subtopics: Risk avoidance, Law of large numbers, Reinsurance, Exposure unit, Concealment, Contract of adhesion, Pure vs speculative risk, Hazard, Peril, Moral hazard, Morale hazard, Physical hazard, Risk retention, Risk transfer, Insurable interest, Indemnity, Elements of a contract, Aleatory contract, Utmost good faith, Representation, Warranty, Express authority, Apparent authority, Implied authority, Stock vs mutual insurer, Domestic foreign alien, Admitted insurer, Estoppel, Adverse selection, 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

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Sample questions & answers

1. Choosing not to engage in an activity at all to eliminate its risk is an example of risk:

Avoidance

Risk avoidance eliminates a risk by not undertaking the activity that creates it.

2. The law of large numbers helps a property insurer to:

Predict aggregate losses more accurately as the number of similar exposures grows

The law of large numbers improves the accuracy of loss predictions as the number of similar insured exposures increases.

3. When a property insurer transfers part of its risk to another insurer, this is called:

Reinsurance

reinsurance is the transfer of part of an insurer's risk to another insurer to spread exposure.

4. In insurance, an exposure unit is best described as:

A unit of measure of the loss potential being insured

An exposure unit is a measure of the loss potential, such as one insured home, used in rating.

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Practice: General Insurance Concepts

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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.