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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Maine Personal Lines exam — 58 practice questions.

Subtopics: Speculative risk, Physical hazard, Risk avoidance, Risk reduction, Utmost good faith, Estoppel, Pure vs speculative risk, Hazard, Peril, Moral hazard, Morale hazard, Law of large numbers, Risk retention, Risk transfer, Insurable interest, Indemnity, Elements of a contract, Contract of adhesion, Aleatory contract, Representation, Concealment, Warranty, Express authority, Apparent authority, Implied authority, Stock vs mutual insurer, Domestic foreign alien, Admitted insurer, 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 speculative risk, such as a business venture or gambling, differs from a pure risk because it involves:

The chance of either loss or gain, and is generally not insurable

Speculative risk carries the possibility of gain as well as loss and is generally not insurable.

2. An icy sidewalk that increases the chance of a fall is an example of a:

Physical hazard

A physical hazard is a tangible condition that increases the likelihood or severity of a loss.

3. Deciding never to operate a trampoline business in order to eliminate that liability entirely is an example of risk:

Avoidance

Risk avoidance eliminates a risk completely by choosing not to engage in the activity that creates it.

4. Installing smoke detectors and a sprinkler system to lessen fire damage is an example of risk:

Reduction

Risk reduction lowers the frequency or severity of potential losses through loss-control measures.

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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.