EXAM FX 2 ACTUAL TEST PAPER QUESTIONS CORRECT ANSWERS GRADED A PLUS
Question:
Absolute Liability
Answer:
A type of liability that occurs due to extremely dangerous operations, such as the use of explosives
or working at extreme heights.
Question:
Accident
Answer:
An unplanned, unforeseen event which occurs suddenly and at a specific place.
Question:
Actual Cash Value (ACV)
Answer:
The required amount to pay damages or for property loss, which is calculated based on the
property's current replacement value minus depreciation.
Question:
Additional Coverage
Answer:
A provision in an insurance policy that allows for more coverage for specific loss expense without
increase in premium.
Question:
,Additional Insureds
Answer:
Individuals or business that are not named as insured on the declaration page, but are protected by
the policy, usually in regard to a specific interest.
Question:
Adhesion
Answer:
A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is
to accept or reject the contract. Any ambiguities in the contract will be settled in favor of the
insured.
Question:
Admitted Insurer
Answer:
An insurance company authorized and licensed to transact business in a particular state.
Question:
Adverse Selection
Answer:
The tendency of risks with higher probability of loss to purchase and maintain insurance more often
than the risks who present lower probability.
Question:
Agent
Answer:
An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.
,Question:
Aggregate Limit
Answer:
The maximum limit of coverage available under a liability policy during a policy year regardless of
the number of claims that may be made or the number of accidents that may occur.
Question:
Agreed Value
Answer:
A property policy with a provision agreed upon by the insurer and insured as to the amount of
insurance that represents a fair valuation for property at the time the insurance is written.
Question:
Aleatory
Answer:
A contract in which the participating parties agree to exchange unequal amounts. Insurance
contracts are ________ in that the amount the insured will pay in premiums is unequal to the amount
the insurer will pay in the event of a loss.
Question:
Alien Insurer
Answer:
An insurance company that is incorporated outside of the United States.
Question:
Apparent Authority
Answer:
, The appearance or the assumption of authority based on the actions, words, or deeds of the principal
or because of circumstances the principal created.
Question:
Appraisal
Answer:
An assessment of property to determine either the correct amount of insurance to be written or the
amount of loss to paid.
Question:
Arbitration
Answer:
Method of claim settlement used when the insured and insurer cannot agree upon the amount of the
loss.
Question:
Assignment
Answer:
The transfer of a legal right or interest in an insurance policy. In property and Casualty insurance,
________ of policies are usually valid only with the prior written consent of the insurer.
Question:
Authorized Insurer
Answer:
An insurance company that has qualified and received a Certificate of Authority from the
Department of Insurance to transact insurance in the state.
Question:
Question:
Absolute Liability
Answer:
A type of liability that occurs due to extremely dangerous operations, such as the use of explosives
or working at extreme heights.
Question:
Accident
Answer:
An unplanned, unforeseen event which occurs suddenly and at a specific place.
Question:
Actual Cash Value (ACV)
Answer:
The required amount to pay damages or for property loss, which is calculated based on the
property's current replacement value minus depreciation.
Question:
Additional Coverage
Answer:
A provision in an insurance policy that allows for more coverage for specific loss expense without
increase in premium.
Question:
,Additional Insureds
Answer:
Individuals or business that are not named as insured on the declaration page, but are protected by
the policy, usually in regard to a specific interest.
Question:
Adhesion
Answer:
A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is
to accept or reject the contract. Any ambiguities in the contract will be settled in favor of the
insured.
Question:
Admitted Insurer
Answer:
An insurance company authorized and licensed to transact business in a particular state.
Question:
Adverse Selection
Answer:
The tendency of risks with higher probability of loss to purchase and maintain insurance more often
than the risks who present lower probability.
Question:
Agent
Answer:
An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of an insurer.
,Question:
Aggregate Limit
Answer:
The maximum limit of coverage available under a liability policy during a policy year regardless of
the number of claims that may be made or the number of accidents that may occur.
Question:
Agreed Value
Answer:
A property policy with a provision agreed upon by the insurer and insured as to the amount of
insurance that represents a fair valuation for property at the time the insurance is written.
Question:
Aleatory
Answer:
A contract in which the participating parties agree to exchange unequal amounts. Insurance
contracts are ________ in that the amount the insured will pay in premiums is unequal to the amount
the insurer will pay in the event of a loss.
Question:
Alien Insurer
Answer:
An insurance company that is incorporated outside of the United States.
Question:
Apparent Authority
Answer:
, The appearance or the assumption of authority based on the actions, words, or deeds of the principal
or because of circumstances the principal created.
Question:
Appraisal
Answer:
An assessment of property to determine either the correct amount of insurance to be written or the
amount of loss to paid.
Question:
Arbitration
Answer:
Method of claim settlement used when the insured and insurer cannot agree upon the amount of the
loss.
Question:
Assignment
Answer:
The transfer of a legal right or interest in an insurance policy. In property and Casualty insurance,
________ of policies are usually valid only with the prior written consent of the insurer.
Question:
Authorized Insurer
Answer:
An insurance company that has qualified and received a Certificate of Authority from the
Department of Insurance to transact insurance in the state.
Question:
