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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Indiana Personal Lines exam — 58 practice questions.

Subtopics: Risk management methods, Risk retention, Physical hazard, Moral hazard, Morale hazard, Binder, Pure vs speculative risk, Hazard, Peril, Law of large numbers, Risk avoidance, Risk transfer, 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, 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

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Sample questions & answers

1. Choosing not to engage in an activity to eliminate its risk entirely is which risk management technique?

Avoidance

Avoidance eliminates a risk by not undertaking the activity that creates the exposure.

2. An insured who chooses a higher deductible is using which risk management technique for small losses?

Retention

Selecting a higher deductible is a form of risk retention, in which the insured keeps responsibility for smaller losses.

3. An icy sidewalk that increases the chance of injury is an example of what kind of hazard?

Physical hazard

A physical hazard is a tangible condition, such as an icy walkway, that increases the likelihood or severity of loss.

4. An insured who intentionally causes a loss to collect insurance illustrates what?

Moral hazard

Moral hazard arises from dishonesty, such as deliberately causing a loss to collect insurance proceeds.

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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.