General Insurance Concepts

Question 1

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of what

Answer 1

Concealment

Question 2

Which of the following is NOT the consideration of a policy?

Answer 2

Application given to a prospective insured

Question 3

All of the following are examples of risk retention EXCEPT

Answer 3

Premiums

Question 4

In case of a loss, the indemnity provision in insurance policies

Answer 4

Restores an insured person to the same financial state as before the loss

Question 5

A producer who fails to separate premium monies from their own personal funds is guilty of

Answer 5

Commingling

Question 6

Hazard is best defined as

Answer 6

Something that increases the risk of loss

Question 7

Which authority is NOT stated in an agents’ contract, but is required for the agent to conduct business?

Answer 7

Implied authority

Question 8

Which of the following is NOT a goal of risk retention?

Answer 8

To minimize the insured’s level of liability in the event of a loss

Question 9

In insurance transactions, fiduciary responsibility means

Answer 9

Handling insurers funds in a trust capacity

Question 10

The insurer must be able to rely on the statements in the application, and the insured must rely on their insurer to pay valid claims. In the forming of an insurance contract, this is referred to as

Answer 10

Utmost good faith

Question 11

Installing deadbolt locks on the doors of a home is an example of which method of handling risk?

Answer 11

Reduction

Question 12

Which of the following is considered to be a morale hazard?

Answer 12

Driving recklessly

Question 13

Which of the following would qualify as a competent party in an insurance contract?

Answer 13

The applicant has a prior felony conviction

Question 14

Which of the following types of authority is also called “perceived authority”?

Answer 14

Apparent Authority

Question 15

Peril is most easily defined as

Answer 15

The cause of loss insured against

Question 16

In insurance, an offer is usually made when

Answer 16

An applicant submits an application to the insurer

Question 17

Which of the following is NOT a characteristic of an insurable risk?

Answer 17

The loss must be catastrophic

Question 18

A situation in which a person can only lose or have no change represents

Answer 18

Pure risk

Question 19

What document grants express authority to an agent?

Answer 19

Agent’s contract with the principal

Question 20

What is a material misrepresentation?

Answer 20

A statement by the applicant that, upon discovery, would alter the underwriting decision

Question 21

Events in which a person has both the chance of winning or losing are classified as

Answer 21

Speculative risk

Question 22

A loss has occurred before the first report has been filed on a value reporting coverage form. Which is NOT true?

Answer 22

Never more than 75% of a loss is paid

Question 23

In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of depreciation?

Answer 23

Agreed Value

Question 24

First aid costs for others injured on the insured’s premises

Answer 24

Are paid in addition to the liability limit