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Free General Insurance Concepts Practice Questions

Kentucky Personal Lines exam — 58 practice questions.

Subtopics: Risk avoidance, Law of large numbers, Risk reduction, Representation, Adhesion, Aleatory, Pure vs speculative risk, Hazard, Peril, Moral hazard, Morale hazard, Physical hazard, Risk retention, Risk transfer, Insurable interest, Indemnity, Elements of a contract, Contract of adhesion, Aleatory contract, Utmost good faith, 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. Deciding not to own a swimming pool to avoid the associated liability exposure is an example of risk:

Avoidance

Risk avoidance eliminates the exposure entirely by not engaging in the activity that creates the risk.

2. Insurers use the law of large numbers to:

Predict losses more accurately across many similar exposures

The law of large numbers lets insurers predict losses more accurately as the number of similar exposures increases.

3. Installing smoke detectors and deadbolt locks to lessen the severity or likelihood of a loss is risk:

Reduction

Risk reduction (control) uses measures such as smoke detectors and locks to lower the frequency or severity of losses.

4. A statement an applicant believes to be true to the best of their knowledge is a:

Representation

A representation is a statement believed true to the best of the applicant's knowledge, unlike a warranty that is guaranteed true.

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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 Pennsylvania Insurance Department and the exam administrator before relying on it.