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Free General Insurance Concepts Practice Questions

Indiana Property & Casualty exam — 39 practice questions.

Subtopics: Reinsurance, Insurable risk characteristics, Risk pooling, Speculative risk, Abandonment clause, Liability of common carrier, Handling risk, Insurer classifications, Adverse selection, Elements of a contract, Insurable risk, Hazards, Definitions, Authority of producers, Legal interpretations, Law of large numbers, Principle of indemnity, Utmost good faith, Concealment, Warranty, Waiver and estoppel, Subrogation, Admitted vs nonadmitted, Domestic foreign alien, Aleatory contract, Contract of adhesion, Unilateral contract, Apparent authority, Rebating, Pro-rata cancellation

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Sample questions & answers

1. Reinsurance is best described as what?

Insurance that one insurer purchases from another to transfer risk

Reinsurance is the transfer of risk from one insurer (the ceding company) to another to spread large or concentrated exposures.

2. Which characteristic is generally required for a risk to be insurable?

The loss must be definite, measurable, and due to chance

Insurable risks generally must involve losses that are definite, measurable, fortuitous, and not catastrophic to the insurer.

3. The pooling of many similar exposures allows insurers to do what?

Spread risk so that the losses of a few are shared among many

Pooling spreads the cost of losses among many insureds, which is the fundamental mechanism that makes insurance work.

4. Why is speculative risk generally not insurable?

It involves the chance of gain as well as loss

Speculative risk includes the possibility of gain, such as gambling or investing, and is therefore not insurable.

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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.