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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Maryland Property & Casualty exam — 39 practice questions.

Subtopics: Loss control, Insurable risk characteristics, Fundamental vs particular, Legal hazard, Frequency vs severity, Insurable interest defined, 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, Reinsurance, Admitted vs nonadmitted, Domestic foreign alien, Aleatory contract, Contract of adhesion, Unilateral contract, Apparent authority, Rebating, Risk pooling, Pro-rata cancellation

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Sample questions & answers

1. Installing sprinklers and alarms to lessen the chance or severity of loss is an example of:

Loss control (risk reduction)

Loss control (risk reduction) uses measures such as safety devices to reduce the frequency or severity of losses.

2. Which is a characteristic of an ideally insurable risk?

The loss is definite, measurable, and not catastrophic to the insurer

Ideally insurable risks involve losses that are definite and measurable, due to chance, part of a large homogeneous group, and not catastrophic.

3. A particular risk differs from a fundamental risk in that a particular risk:

Affects individuals rather than society as a whole

Particular risks affect individuals or small groups and are typically insurable, while fundamental risks affect large segments of society (e.g., war).

4. A legal hazard refers to:

Conditions of the legal environment that increase the frequency or severity of losses

Legal hazard arises when laws or the legal climate (such as generous jury awards) increase the likelihood or size of losses.

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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.