Free General Insurance Concepts Practice Questions
South Carolina Personal Lines exam — 81 practice questions.
Subtopics: Contract elements, Competent parties, Legal purpose, Risk pooling, Speculative risk, Proximate cause, Domestic insurer, Foreign insurer, Alien insurer, Admitted insurer, Nonadmitted insurer, Sell, Solicit, Negotiate, Producer license, 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, Estoppel, Adverse selection, Reinsurance, Underwriting, Loss ratio, Rate regulation goals, Reciprocal insurer, Lloyds of London, Risk retention group, Self-insurance, Surplus lines, Catastrophic 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, Indemnity and subrogation, Distribution systems, Insurer types, Insurer ratios, Loss reserves, Rate regulation, Earned and unearned premium, Lapse
Read the General Insurance Concepts study guide
Sample questions & answers
1. Which of the following is a required element of a valid insurance contract?
Offer and acceptance (agreement)
A valid contract requires offer and acceptance, along with consideration, legal purpose, and competent parties.
2. For an insurance contract to be valid, the parties must be:
Legally competent
Competent parties is an element of a valid contract; parties must have the legal capacity to contract.
3. An insurance contract must have a legal purpose, which means it cannot:
Insure an illegal activity
A contract must have a legal purpose; insuring an illegal activity would make the contract unenforceable.
4. Insurance fundamentally works by:
Spreading the cost of losses among many insureds
Insurance pools premiums from many insureds so the relatively few who suffer losses can be indemnified.
Practice: General Insurance Concepts
Answer choices are shuffled every time, and every question comes with an explanation.
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.
