Louisiana Property & Casualty — Practice Exam
Questions
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93 practice questions covering general P&C concepts and Louisiana-specific rules for the state licensing
exam. Answer key and explanations follow the question set.
For agent use in exam preparation. State rules and dollar thresholds can change — always confirm current requirements with
TDI or LDI before relying on this guide for compliance purposes.
,Practice Questions
1. A wiring problem in an old house that makes an electrical fire more likely is an example of a:
A. Peril
B. Hazard
C. Loss
D. Exposure unit
2. A dishonest attitude that increases the likelihood of a loss (such as intentionally causing damage
to collect on a claim) is best classified as a:
A. Physical hazard
B. Morale hazard
C. Morale peril
D. Legal hazard
3. The law of large numbers allows insurers to:
A. Guarantee that no policyholder will ever have a loss
B. Predict losses more accurately as the number of similar exposure units increases
C. Avoid the need for reinsurance
D. Set identical premiums for every applicant regardless of risk
4. Adverse selection refers to the tendency of:
A. Insurers to reject all high-risk applicants
B. Higher-risk individuals to seek insurance more than lower-risk individuals
C. Agents to prefer selling only high-commission products
D. Regulators to approve only low-risk policy forms
5. Which of the following is NOT generally required for a risk to be considered insurable?
A. The loss must be accidental/fortuitous from the insured's standpoint
B. The loss must be catastrophic to all insureds at once
C. The loss must be measurable and definite
D. There must be a large number of similar exposure units
6. The essential elements of a legally binding contract include offer, acceptance, and:
A. Coinsurance
B. Consideration
C. Indemnity
D. Subrogation
7. An insurance policy is called a contract of adhesion because:
A. Both parties negotiate every term equally
B. It is drafted entirely by the insurer, and ambiguities are generally construed against the insurer
C. It cannot be cancelled by either party
D. It requires witnesses to be valid
, 8. An insurance contract is described as "aleatory" because:
A. Only the insurer makes any promises
B. The dollar values exchanged by each party are not necessarily equal
C. The contract must be renewed annually
D. Only licensed attorneys may draft it
9. An insurance contract is "unilateral" because:
A. Only one party is competent to contract
B. Only the insurer makes a legally enforceable promise; the insured is not obligated to pay premiums
or keep the policy
C. There are two insurers involved
D. It can never be cancelled
10. The principle of utmost good faith requires that:
A. Only the insurer must act honestly
B. Both parties disclose all material facts honestly during the application process
C. Premiums must be paid in full at policy inception
D. Claims must be filed within 24 hours of a loss
11. An applicant who deliberately withholds a material fact from an underwriter has committed:
A. Twisting
B. Rebating
C. Concealment
D. Coinsurance
12. The difference between innocent misrepresentation and fraud is generally:
A. There is no difference; both void a policy automatically
B. Fraud requires intent to deceive; innocent misrepresentation does not
C. Fraud only applies to life insurance
D. Misrepresentation can never affect a policy's validity
13. A statement that must be exactly and literally true, or the insurer may void the policy, is a:
A. Representation
B. Warranty
C. Waiver
D. Binder
14. The voluntary relinquishment of a known legal right is called a:
A. Waiver
B. Estoppel
C. Warranty
D. Subrogation
15. A contract that was never legally valid from the start (for example, due to lack of insurable
interest) is described as:
Questions
Get Licensed Study Guides
93 practice questions covering general P&C concepts and Louisiana-specific rules for the state licensing
exam. Answer key and explanations follow the question set.
For agent use in exam preparation. State rules and dollar thresholds can change — always confirm current requirements with
TDI or LDI before relying on this guide for compliance purposes.
,Practice Questions
1. A wiring problem in an old house that makes an electrical fire more likely is an example of a:
A. Peril
B. Hazard
C. Loss
D. Exposure unit
2. A dishonest attitude that increases the likelihood of a loss (such as intentionally causing damage
to collect on a claim) is best classified as a:
A. Physical hazard
B. Morale hazard
C. Morale peril
D. Legal hazard
3. The law of large numbers allows insurers to:
A. Guarantee that no policyholder will ever have a loss
B. Predict losses more accurately as the number of similar exposure units increases
C. Avoid the need for reinsurance
D. Set identical premiums for every applicant regardless of risk
4. Adverse selection refers to the tendency of:
A. Insurers to reject all high-risk applicants
B. Higher-risk individuals to seek insurance more than lower-risk individuals
C. Agents to prefer selling only high-commission products
D. Regulators to approve only low-risk policy forms
5. Which of the following is NOT generally required for a risk to be considered insurable?
A. The loss must be accidental/fortuitous from the insured's standpoint
B. The loss must be catastrophic to all insureds at once
C. The loss must be measurable and definite
D. There must be a large number of similar exposure units
6. The essential elements of a legally binding contract include offer, acceptance, and:
A. Coinsurance
B. Consideration
C. Indemnity
D. Subrogation
7. An insurance policy is called a contract of adhesion because:
A. Both parties negotiate every term equally
B. It is drafted entirely by the insurer, and ambiguities are generally construed against the insurer
C. It cannot be cancelled by either party
D. It requires witnesses to be valid
, 8. An insurance contract is described as "aleatory" because:
A. Only the insurer makes any promises
B. The dollar values exchanged by each party are not necessarily equal
C. The contract must be renewed annually
D. Only licensed attorneys may draft it
9. An insurance contract is "unilateral" because:
A. Only one party is competent to contract
B. Only the insurer makes a legally enforceable promise; the insured is not obligated to pay premiums
or keep the policy
C. There are two insurers involved
D. It can never be cancelled
10. The principle of utmost good faith requires that:
A. Only the insurer must act honestly
B. Both parties disclose all material facts honestly during the application process
C. Premiums must be paid in full at policy inception
D. Claims must be filed within 24 hours of a loss
11. An applicant who deliberately withholds a material fact from an underwriter has committed:
A. Twisting
B. Rebating
C. Concealment
D. Coinsurance
12. The difference between innocent misrepresentation and fraud is generally:
A. There is no difference; both void a policy automatically
B. Fraud requires intent to deceive; innocent misrepresentation does not
C. Fraud only applies to life insurance
D. Misrepresentation can never affect a policy's validity
13. A statement that must be exactly and literally true, or the insurer may void the policy, is a:
A. Representation
B. Warranty
C. Waiver
D. Binder
14. The voluntary relinquishment of a known legal right is called a:
A. Waiver
B. Estoppel
C. Warranty
D. Subrogation
15. A contract that was never legally valid from the start (for example, due to lack of insurable
interest) is described as:
