PERSONAL LINES INSURANCE EXAM QUESTIONS WITH
COMPLETE SOLUTIONS VERIFIED 2024
Risk _________ is when one takes action to prevent or reduce potential loss.
Reduction
When the number of similar units increases, the predictability of the loss
improves according to the rule of _____ ________.
Large Numbers
The insuring of risks that are more prone to losses than average risks is known
as?
Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares
risks with another insurer.
Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis.
Facultative
The fact that an insured would profit from a loss, would be a violation of the
principle of ___________.
Indemnity
The determination of acceptable risks is the primary function of the ___________ .
Underwriter
Underwriters like to select insureds who's actual losses will be similar to
expected losses. True or False?
True
When rates cannot be used until they are improved by the department or division
of insurance, they are called ____ ________ rates.
Prior Approval
The termination of a policy by either the insured or insurer before its expiration
date is known as ___________.
Cancellation
,When the insurer cancels a property policy, the unearned premium is returned
___ ____.
Pro Rata
When an insured requests cancellation of a policy, the unearned premium is
refunded to the insured on a _____ _____.
Short Rate
A fire is considered to be a _____ of a potential loss.
Cause
A document that provides temporary insurance coverage until a policy is issued
is known as a ______.
Binder
The process by which a disputed claim is decided by a neutral third party is
known as ___________.
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.
Concurrent Causation
If two or more policies provide identical coverage for the same risk, the policies
are deemed to be __________.
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?
A= $20,000 ; B= $0
A building that has neither occupants nor personal property is ______.
Vacant
When property is damaged by fire, the loss is said to be a(n) ______ loss.
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?
Indirect Loss
Open peril policies include losses caused by theft. True or False?
, True
If a property owner does not desire any deduction for depreciation following a
covered loss, he/she should purchase a ___________ ____ policy.
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.
80
Would a stated amount method of valuation likely be used when insuring gold
bullion?
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.
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?
True
Insuring more than one property on one policy for a single amount of insurance
that applies to all properties covered under the policy is known as _______
coverage.
Blanket
The name of the insured is found on the declarations page of the policy. True or
False?
True
What part or portion of a property policy contains the effective or expiration dates
of the policy?
Declarations
Are the insurer's limits of insurance amount stated in the conditions part or
portion part of the policy?
No
COMPLETE SOLUTIONS VERIFIED 2024
Risk _________ is when one takes action to prevent or reduce potential loss.
Reduction
When the number of similar units increases, the predictability of the loss
improves according to the rule of _____ ________.
Large Numbers
The insuring of risks that are more prone to losses than average risks is known
as?
Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares
risks with another insurer.
Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis.
Facultative
The fact that an insured would profit from a loss, would be a violation of the
principle of ___________.
Indemnity
The determination of acceptable risks is the primary function of the ___________ .
Underwriter
Underwriters like to select insureds who's actual losses will be similar to
expected losses. True or False?
True
When rates cannot be used until they are improved by the department or division
of insurance, they are called ____ ________ rates.
Prior Approval
The termination of a policy by either the insured or insurer before its expiration
date is known as ___________.
Cancellation
,When the insurer cancels a property policy, the unearned premium is returned
___ ____.
Pro Rata
When an insured requests cancellation of a policy, the unearned premium is
refunded to the insured on a _____ _____.
Short Rate
A fire is considered to be a _____ of a potential loss.
Cause
A document that provides temporary insurance coverage until a policy is issued
is known as a ______.
Binder
The process by which a disputed claim is decided by a neutral third party is
known as ___________.
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.
Concurrent Causation
If two or more policies provide identical coverage for the same risk, the policies
are deemed to be __________.
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?
A= $20,000 ; B= $0
A building that has neither occupants nor personal property is ______.
Vacant
When property is damaged by fire, the loss is said to be a(n) ______ loss.
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?
Indirect Loss
Open peril policies include losses caused by theft. True or False?
, True
If a property owner does not desire any deduction for depreciation following a
covered loss, he/she should purchase a ___________ ____ policy.
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.
80
Would a stated amount method of valuation likely be used when insuring gold
bullion?
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.
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?
True
Insuring more than one property on one policy for a single amount of insurance
that applies to all properties covered under the policy is known as _______
coverage.
Blanket
The name of the insured is found on the declarations page of the policy. True or
False?
True
What part or portion of a property policy contains the effective or expiration dates
of the policy?
Declarations
Are the insurer's limits of insurance amount stated in the conditions part or
portion part of the policy?
No
