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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Illinois Personal Lines exam — 56 practice questions.

Subtopics: Risk transfer, Law of large numbers, Utmost good faith, Adhesion, Pure vs speculative risk, Hazard, Peril, Moral hazard, Morale hazard, Physical hazard, Risk avoidance, Risk retention, Insurable interest, Indemnity, Elements of a contract, Contract of adhesion, Aleatory contract, Representation, Concealment, Warranty, Express authority, Apparent authority, Implied authority, Stock vs mutual insurer, Domestic foreign alien, Admitted insurer, Estoppel, Adverse selection, 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. Buying a homeowners policy transfers the financial risk of loss to the:

Insurer

Insurance transfers the financial risk of loss from the insured to the insurer.

2. Insurers can predict losses more accurately when they insure:

A large number of similar exposures

The law of large numbers improves loss prediction as the number of similar exposures grows.

3. Both the applicant and the insurer in a personal lines contract owe each other:

Utmost good faith and honesty

Utmost good faith requires honesty and full disclosure by both parties.

4. Because the insurer writes the personal lines policy and the insured accepts it as written it is a contract of:

Adhesion

An insurance policy is a contract of adhesion drafted by the insurer and accepted as written.

All Personal Lines topics

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.