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  4. General Insurance Concepts

Free General Insurance Concepts Practice Questions

Virginia Personal Lines exam — 58 practice questions.

Subtopics: Pure risk, Adhesion, Utmost good faith, Hazard, Law of large numbers, Risk transfer, Pure vs speculative risk, Peril, Moral hazard, Morale hazard, Physical hazard, Risk avoidance, Risk retention, Insurable interest, Indemnity, Elements of a contract, Contract of adhesion, Aleatory contract, 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. Only which type of risk is generally insurable?

Pure risk

Insurance addresses pure risk (loss or no loss), not speculative risk.

2. Because policies are contracts of adhesion, ambiguous terms are interpreted:

Against the insurer that wrote them

Ambiguities in adhesion contracts are construed against the drafting insurer.

3. Utmost good faith requires that:

Both parties be honest and disclose material facts

Both parties must act honestly and disclose material facts.

4. A moral hazard refers to:

Dishonest tendencies that increase the chance or size of a loss

Moral hazard involves dishonesty (e.g., faking a claim) that increases the likelihood or severity of loss.

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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.