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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

South Dakota Accident & Health exam — 45 practice questions.

Subtopics: Pure versus speculative risk, Physical hazard, Adverse selection, Principle of indemnity, Waiver and estoppel, Risk definition, Morale hazard, Peril, Risk transfer, Stock insurer, Mutual insurer, Admitted insurer, Foreign insurer, Consideration, Legal purpose, Competent parties, Express authority, Apparent authority, Indemnity, Utmost good faith, Representations, Concealment, Aleatory contract, Contract of adhesion, Pure risk, Speculative risk, Law of large numbers, Moral hazard, Implied authority, Fiduciary duty, Warranty, Misrepresentation, Waiver, Estoppel, Reciprocal insurer, Fraternal benefit society, Reinsurance, Non-admitted insurer, Alien insurer, Unilateral contract, Conditional contract, Offer and acceptance, Insurable interest

Read the General Insurance Concepts study guide

Sample questions & answers

1. Only pure risk is generally insurable because pure risk involves:

The chance of loss or no loss, with no chance of gain

Pure risk involves only the possibility of loss or no loss and is insurable, unlike speculative risk that includes a chance of gain.

2. A physical condition such as icy steps that increases the chance of a loss is best classified as a:

Physical hazard

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

3. The tendency of those with a higher-than-average likelihood of loss to seek insurance most eagerly is called:

Adverse selection

Adverse selection is the tendency of poorer-than-average risks to seek or keep coverage, which underwriting tries to manage.

4. Medical expense insurance reflects the principle of indemnity because it generally:

Reimburses covered expenses so the insured is restored, not enriched

Indemnity restores the insured for covered losses without allowing a profit, as reimbursement medical plans do.

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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.