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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Minnesota Personal Lines exam — 58 practice questions.

Subtopics: Hazard, Pure risk, Law of large numbers, Risk transfer, Binder, Endorsement, Pure vs speculative risk, Peril, Moral hazard, Morale hazard, Physical hazard, Risk avoidance, Risk retention, 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

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Sample questions & answers

1. A condition that increases the chance or severity of a loss is called what?

A hazard

A hazard is a condition that increases the likelihood or severity of a loss, while a peril is the actual cause of loss.

2. An insurable risk that presents only the possibility of loss with no possibility of gain is known as what?

Pure risk

Pure risk presents only the possibility of loss or no loss, with no chance of gain, and is the type of risk insurance is designed to address.

3. Insurers can predict losses more accurately as what increases?

The number of similar exposures

The law of large numbers states that as the number of similar independent exposures increases, loss predictions become more accurate.

4. Buying an insurance policy is an example of which risk management technique?

Risk transfer

Purchasing insurance transfers the financial consequences of a possible loss from the insured to the insurer.

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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.