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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

South Dakota Personal Lines exam — 58 practice questions.

Subtopics: Insurable interest, Principle of indemnity, Actual cash value, Subrogation, Moral hazard, Binder, Pure vs speculative risk, Hazard, Peril, Morale hazard, Physical hazard, Law of large numbers, Risk avoidance, Risk retention, Risk transfer, 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

Read the General Insurance Concepts study guide

Sample questions & answers

1. For property insurance to be valid, the insured generally must have an insurable interest in the property:

At the time of the loss

Property insurance requires an insurable interest at the time of loss so the insured suffers a genuine financial loss.

2. The principle of indemnity in property insurance means the insured should be:

Restored to about the same financial position as before the loss, and no better

Indemnity restores the insured to roughly the pre-loss financial position without allowing a profit from the loss.

3. Actual cash value (ACV) is most often calculated as:

Replacement cost minus depreciation

ACV is generally replacement cost at the time of loss minus depreciation for age and wear.

4. After paying a covered claim, an insurer's right to pursue the responsible third party for reimbursement is called:

Subrogation

Subrogation lets the insurer recover from the at-fault third party after it has paid the insured's claim.

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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.