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Free General Insurance Concepts Practice Questions
Pennsylvania Personal Lines exam (series 16-16) — 26 practice questions.
Subtopics: 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
Sample questions & answers
1. Only which type of risk is insurable?
Pure risk (chance of loss or no loss, but no chance of gain)
Insurance covers pure risk - the chance of loss or no loss - not speculative risk, which includes a chance of gain.
2. A condition that increases the likelihood or severity of a loss is called a:
Hazard
A hazard is a condition that increases the chance or severity of a loss; perils are the actual causes of loss.
3. In insurance terms, a peril is:
The cause of a loss, such as fire or theft
A peril is the cause of a loss (e.g., fire, windstorm, theft) against which insurance provides protection.
4. A moral hazard refers to:
Dishonest tendencies that increase the chance of loss, such as exaggerating a claim
Moral hazard arises from a person's dishonesty or character that increases the likelihood of loss or fraud.
All Personal Lines topics
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 Pennsylvania Insurance Department and the exam administrator before relying on it.