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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Massachusetts Personal Lines exam — 56 practice questions.

Subtopics: Agreed value, Pro rata cancellation, Vicarious liability, Negligence, Pure vs speculative risk, Hazard, Peril, Moral hazard, Morale hazard, Physical hazard, Law of large numbers, Risk avoidance, Risk retention, 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

Read the General Insurance Concepts study guide

Sample questions & answers

1. A policy that pays a predetermined amount rather than actual cash value at the time of loss uses:

An agreed value approach

An agreed value approach pays an amount the insurer and insured set in advance rather than calculating actual cash value.

2. When an insurer cancels a policy and returns the full unearned premium with no penalty, the cancellation is:

Pro rata

A pro rata cancellation returns the full unearned premium to the insured without a penalty.

3. A parent held legally responsible for damage caused by their minor child illustrates:

Vicarious liability

Vicarious liability holds one party legally responsible for the acts of another, such as a parent for a minor child.

4. Failing to act as a reasonably prudent person would, resulting in harm to another, is:

Negligence

Negligence is the failure to use the degree of care a reasonably prudent person would, causing harm to another.

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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.