Insurance exam Idaho (questions well
answered) 2025 updated
insurance policy - correct answer ✔✔a written contract between the insured and an insurance
company that promises to pay for all or part of a loss
insurance - correct answer ✔✔transfer of risk from a person/business to an insurer
types of risk - correct answer ✔✔speculative: chance of loss or gain.
pure: chance of loss only, insurance companies will insure.
exposure - correct answer ✔✔Risk in which the insurance company would be liable.
peril - correct answer ✔✔cause of loss (house burns down- fire is the peril)
Loss - correct answer ✔✔direct loss: physical loss to property (lightening hits house, car hits a
tree)
Indirect loss: consequential loss (loss of rental income due to fire burning house down)
hazard - correct answer ✔✔physical: hazard can be seen
Moral: dishonest customer (lying to get insurance money)
Morale: carelessness (leaving car running)
risk handling methods (STARR) - correct answer ✔✔Sharing: two or more group members split
the loss
Transfer: insurer (insurance company) agrees to pay for the los
,Avoidance: eliminating certain risks by not engaging
Retention: individual or business will pay for losses.
Reduction: lessening the chance that a loss will occur.
contract - correct answer ✔✔an agreement between insured (1st party, the customer) and the
insurer (2nd party, insurance company)
law of large numbers - correct answer ✔✔The larger the group, the more accurate losses can be
predicted
calculable - correct answer ✔✔Premiums must be calculable based upon prior loss statistics for
that particular risk in order to predict future losses.
affordable - correct answer ✔✔premium must be affordable for average customer
homogeneous - correct answer ✔✔risk must be similar so that same factors affect chance of
loss.
accidental - correct answer ✔✔loss caused by accident.
measureable - correct answer ✔✔proof of loss must be established with #'s and dollar
amounts.
adverse selection - correct answer ✔✔A high-risk person benefits more from insurance, so is
more likely to purchase it.
reinsurance - correct answer ✔✔An insurance company's insurance company.
, types of insurers - correct answer ✔✔stock insurer- business owned by stockholders
mutual insurer- owned by policyholders ( customers)
fraternal benefit society- offers insurance as a benefit for their customers
reciprocal insurers- unincorporated members insure each others losses under contract.
lloyds association- insurance provided by individuals underwriters not companies
risk retention- provides only liability insurance
risk purchasing- buy liability insurance for their members.
self insurers- business pays its own claims.
domestic - correct answer ✔✔native to headquarters of company
foreign - correct answer ✔✔another state or territory
alien - correct answer ✔✔anything created out of the united states
admitted/authorized - correct answer ✔✔state requires the insurance company to have a
certificate of authority
Nonadmitted Insurer - correct answer ✔✔an insurer not licensed to do business in the state
surplus lines - correct answer ✔✔- Insurance sold by unauthorized/nonadmitted insurers
independant insurance agents - correct answer ✔✔sell insurance for several companies
captive agents - correct answer ✔✔Work for only one insurer
answered) 2025 updated
insurance policy - correct answer ✔✔a written contract between the insured and an insurance
company that promises to pay for all or part of a loss
insurance - correct answer ✔✔transfer of risk from a person/business to an insurer
types of risk - correct answer ✔✔speculative: chance of loss or gain.
pure: chance of loss only, insurance companies will insure.
exposure - correct answer ✔✔Risk in which the insurance company would be liable.
peril - correct answer ✔✔cause of loss (house burns down- fire is the peril)
Loss - correct answer ✔✔direct loss: physical loss to property (lightening hits house, car hits a
tree)
Indirect loss: consequential loss (loss of rental income due to fire burning house down)
hazard - correct answer ✔✔physical: hazard can be seen
Moral: dishonest customer (lying to get insurance money)
Morale: carelessness (leaving car running)
risk handling methods (STARR) - correct answer ✔✔Sharing: two or more group members split
the loss
Transfer: insurer (insurance company) agrees to pay for the los
,Avoidance: eliminating certain risks by not engaging
Retention: individual or business will pay for losses.
Reduction: lessening the chance that a loss will occur.
contract - correct answer ✔✔an agreement between insured (1st party, the customer) and the
insurer (2nd party, insurance company)
law of large numbers - correct answer ✔✔The larger the group, the more accurate losses can be
predicted
calculable - correct answer ✔✔Premiums must be calculable based upon prior loss statistics for
that particular risk in order to predict future losses.
affordable - correct answer ✔✔premium must be affordable for average customer
homogeneous - correct answer ✔✔risk must be similar so that same factors affect chance of
loss.
accidental - correct answer ✔✔loss caused by accident.
measureable - correct answer ✔✔proof of loss must be established with #'s and dollar
amounts.
adverse selection - correct answer ✔✔A high-risk person benefits more from insurance, so is
more likely to purchase it.
reinsurance - correct answer ✔✔An insurance company's insurance company.
, types of insurers - correct answer ✔✔stock insurer- business owned by stockholders
mutual insurer- owned by policyholders ( customers)
fraternal benefit society- offers insurance as a benefit for their customers
reciprocal insurers- unincorporated members insure each others losses under contract.
lloyds association- insurance provided by individuals underwriters not companies
risk retention- provides only liability insurance
risk purchasing- buy liability insurance for their members.
self insurers- business pays its own claims.
domestic - correct answer ✔✔native to headquarters of company
foreign - correct answer ✔✔another state or territory
alien - correct answer ✔✔anything created out of the united states
admitted/authorized - correct answer ✔✔state requires the insurance company to have a
certificate of authority
Nonadmitted Insurer - correct answer ✔✔an insurer not licensed to do business in the state
surplus lines - correct answer ✔✔- Insurance sold by unauthorized/nonadmitted insurers
independant insurance agents - correct answer ✔✔sell insurance for several companies
captive agents - correct answer ✔✔Work for only one insurer
