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Free General Insurance Concepts Practice Questions

Nevada Personal Lines exam — 58 practice questions.

Subtopics: Speculative risk, Loss control, Reinsurance, Stock insurer, Unilateral contract, Estoppel, 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, Adverse selection, 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, 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 risk that involves the chance of either loss or gain, such as gambling or investing, is a:

Speculative risk

Speculative risk involves the possibility of gain as well as loss and is generally not insurable, unlike pure risk.

2. Installing smoke detectors and deadbolts to lessen the chance or severity of a loss is an example of risk:

Reduction through loss control

Risk reduction (loss control) takes steps to lessen the frequency or severity of losses, such as installing safety devices.

3. An arrangement in which one insurer transfers part of its risk to another insurer is:

Reinsurance

Reinsurance is the transfer of all or part of a risk from one insurer to another to spread exposure.

4. An insurance company owned by shareholders and operated to earn a profit for them is a:

Stock insurer

A stock insurer is owned by shareholders who seek a profit, in contrast to a mutual insurer owned by policyholders.

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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.