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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Kentucky Property & Casualty exam — 39 practice questions.

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

Read the General Insurance Concepts study guide

Sample questions & answers

1. When an insurer transfers part of its risk to another insurer, the arrangement is called:

Reinsurance

Reinsurance is the transfer of part of an insurer's risk to another insurer.

2. Buying insurance to handle a pure risk is an example of risk:

Transfer

Purchasing insurance transfers the financial consequences of a pure risk to the insurer.

3. The tendency of higher-than-average risks to seek insurance more than others is:

Adverse selection

Adverse selection is the tendency of higher-risk individuals to seek or retain coverage more than average risks.

4. Insurers can predict losses more accurately as the number of similar insured units increases, due to the:

Law of large numbers

The law of large numbers allows more accurate loss prediction as the number of similar exposure units grows.

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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.