PERSONAL LINES INSURANCE EXAM |COMPLETE QUESTIONS
WITH 100% RATED EXPERT SOLUTIONS |2026 LATEST UPDATED
Risk _________ is when one takes action to prevent or reduce potential loss. -
(answer)Reduction
When the number of similar units increases, the predictability of the loss improves according to
the rule of _____ ________. - (answer)Large Numbers
The insuring of risks that are more prone to losses than average risks is known as? -
(answer)Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares risks with
another insurer. - (answer)Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. -
(answer)Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of
___________. - (answer)Indemnity
,The determination of acceptable risks is the primary function of the ___________ . -
(answer)Underwriter
Underwriters like to select insureds who's actual losses will be similar to expected losses. True or
False? - (answer)True
When rates cannot be used until they are improved by the department or division of insurance,
they are called ____ ________ rates. - (answer)Prior Approval
The termination of a policy by either the insured or insurer before its expiration date is known as
___________. - (answer)Cancellation
When the insurer cancels a property policy, the unearned premium is returned ___ ____. -
(answer)Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded to the
insured on a _____ _____. - (answer)Short Rate
A fire is considered to be a _____ of a potential loss. - (answer)Cause
,A document that provides temporary insurance coverage until a policy is issued is known as a
______. - (answer)Binder
The process by which a disputed claim is decided by a neutral third party is known as
___________. - (answer)Arbitration
_________ _________ is a situation where there are two causes resulting in a loss, with one of
the causes excluded and the other cause of loss not excluded. - (answer)Concurrent Causation
If two or more policies provide identical coverage for the same risk, the policies are deemed to
be __________. - (answer)Concurrent
Policy A is written for $100,000, and an excess Policy B is written for $200,000 on the same
property. In the event of a $20,000 loss, how much will each policy pay? - (answer)A= $20,000 ;
B= $0
A building that has neither occupants nor personal property is ______. - (answer)Vacant
When property is damaged by fire, the loss is said to be a(n) ______ loss. - (answer)Direct
, If a fire on a premises caused a power outage, which caused meat in the freezer to spoil, would
the meat spoilage be considered a direct loss or indirect loss? - (answer)Indirect Loss
Open peril policies include losses caused by theft. True or False? - (answer)True
If a property owner does not desire any deduction for depreciation following a covered loss,
he/she should purchase a ___________ ____ policy. - (answer)Replacement Cost
For replacement cost coverage to apply in dwelling policies, the insured must carry insurance at
least equal to ____% of the cost of replacement of the building. - (answer)80
Would a stated amount method of valuation likely be used when insuring gold bullion? -
(answer)No
An ____ policy is one that the value of the subject matter is not agreed upon, but is left to be
ascertained in case of loss. - (answer)Open
A valued policy is one that expresses on it's face an agreement that the thing insured is valued at
a specific sum. True or False? - (answer)True
WITH 100% RATED EXPERT SOLUTIONS |2026 LATEST UPDATED
Risk _________ is when one takes action to prevent or reduce potential loss. -
(answer)Reduction
When the number of similar units increases, the predictability of the loss improves according to
the rule of _____ ________. - (answer)Large Numbers
The insuring of risks that are more prone to losses than average risks is known as? -
(answer)Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares risks with
another insurer. - (answer)Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. -
(answer)Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of
___________. - (answer)Indemnity
,The determination of acceptable risks is the primary function of the ___________ . -
(answer)Underwriter
Underwriters like to select insureds who's actual losses will be similar to expected losses. True or
False? - (answer)True
When rates cannot be used until they are improved by the department or division of insurance,
they are called ____ ________ rates. - (answer)Prior Approval
The termination of a policy by either the insured or insurer before its expiration date is known as
___________. - (answer)Cancellation
When the insurer cancels a property policy, the unearned premium is returned ___ ____. -
(answer)Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded to the
insured on a _____ _____. - (answer)Short Rate
A fire is considered to be a _____ of a potential loss. - (answer)Cause
,A document that provides temporary insurance coverage until a policy is issued is known as a
______. - (answer)Binder
The process by which a disputed claim is decided by a neutral third party is known as
___________. - (answer)Arbitration
_________ _________ is a situation where there are two causes resulting in a loss, with one of
the causes excluded and the other cause of loss not excluded. - (answer)Concurrent Causation
If two or more policies provide identical coverage for the same risk, the policies are deemed to
be __________. - (answer)Concurrent
Policy A is written for $100,000, and an excess Policy B is written for $200,000 on the same
property. In the event of a $20,000 loss, how much will each policy pay? - (answer)A= $20,000 ;
B= $0
A building that has neither occupants nor personal property is ______. - (answer)Vacant
When property is damaged by fire, the loss is said to be a(n) ______ loss. - (answer)Direct
, If a fire on a premises caused a power outage, which caused meat in the freezer to spoil, would
the meat spoilage be considered a direct loss or indirect loss? - (answer)Indirect Loss
Open peril policies include losses caused by theft. True or False? - (answer)True
If a property owner does not desire any deduction for depreciation following a covered loss,
he/she should purchase a ___________ ____ policy. - (answer)Replacement Cost
For replacement cost coverage to apply in dwelling policies, the insured must carry insurance at
least equal to ____% of the cost of replacement of the building. - (answer)80
Would a stated amount method of valuation likely be used when insuring gold bullion? -
(answer)No
An ____ policy is one that the value of the subject matter is not agreed upon, but is left to be
ascertained in case of loss. - (answer)Open
A valued policy is one that expresses on it's face an agreement that the thing insured is valued at
a specific sum. True or False? - (answer)True
