WASHINGTON STATE INSURANCE EXAM
QUESTIONS AND ANSWERS 2025
Apparent - CORRECT ANSWER-is the appearance or assumption of authority based
on the actions, words, or deeds of the principal or because of circumstances the
principal created.
Mutual Company - CORRECT ANSWER-Owned by the policy owner and issue
participating policies. Policy owners are entitled to dividends, which are a return of
excess premiums and are therefore non-taxable. Dividends are not guaranteed.
Sharing - CORRECT ANSWER-A method of dealing with risk for a group of individual
persons or businesses with the same or similar exposure to loss to share the losses that
occur within that group. A RECIPROCAL insurance exchange is a form of risk-sharing
arrangement.
Retention - CORRECT ANSWER-Is the planned assumption of risk by the insured
through the use of deductibles, co-payments, or self-insurance. It is also known as self-
insurance when the insured accepts the responsibility for the loss before the insurance
company pays.
Express Authority - CORRECT ANSWER-Is the AUTHORITY a principal intends to
grant to an agent by means of the agent's contract. It is the authority that is written in
the contract.
Insurable Risk - CORRECT ANSWER-In order to be characterized as a pure risk, the
loss must be due to chance, definite, measurable, and predictable, but not catastrophic.
Insurance Policy Conditions - CORRECT ANSWER-Section of an insurance policy that
indicates the general rules or procedures that the insurer and insured agree to follow
under the terms of the policy. Examples: Inspection may be made as needed/ Changes
to the policy must be made by insurer and be in writing/ Liberalization clause/ Return of
premiums, which dictates methods used.
Loss Costs Rating - CORRECT ANSWER-Type of rating: Method developed by the
insurance services office Inc. (ISO) that provides an insurer with that portion of a rate
that does not include provisions of expenses or profit and are based on historical
aggregate loss and loss adjustment expenses projected through development to their
ultimate value and through trending to a future point in time.
, Strict Liability - CORRECT ANSWER-Is commonly applied in product liability cases. The
business is then liable for defective products, regardless of fault or negligence.
Insuring Agreement - CORRECT ANSWER-The part of the policy structure that
describes the insured perils and the method of indemnification.
Conditions - CORRECT ANSWER-States the legal obligations and duties of the parties
to the contract.
Valued Policy - CORRECT ANSWER-Provides for payment of the full policy amount in
the event of a total loss WITHOUT regard to actual value or depreciation.
Contributory Negligence - CORRECT ANSWER-In states that have this, the defendant
must have been 100% at fault for an accident and the claimant free of fault if the
claimant is to be successful in collecting damages.
Agreed Value - CORRECT ANSWER-A property policy with provisions agreed upon by
the insurer and insured as to the amounts of insurance that represents a fair valuation
for the property at the time the insurance is written. The amount is paid in a loss,
regardless of the insured property's appreciation or depreciation.
Occurance - CORRECT ANSWER-Includes those losses caused by continuous or
repeated exposure to conditions resulting in injury or damage to property that is neither
intended nor expected.
Consequential loss - CORRECT ANSWER-Also known as an indirect loss, is a second
financial loss caused by a covered direct loss.
Nonconcurrency - CORRECT ANSWER-Refers to other insurance written on the same
risk, but not on the same coverage basis.
Negligence - CORRECT ANSWER-Four essential elements: Duty, breach, injury, and
unbroken chain.
Stated Amount - CORRECT ANSWER-The value of the insured property is determined
at the time the policy is written. In the event of a loss, that amount is paid without regard
to any COINSURANCE provision. However, if the loss is less than total, the insurer has
salvage rights with the insured having first right of refusal of the salvage.
Personal Property - CORRECT ANSWER-Property that is moveable
QUESTIONS AND ANSWERS 2025
Apparent - CORRECT ANSWER-is the appearance or assumption of authority based
on the actions, words, or deeds of the principal or because of circumstances the
principal created.
Mutual Company - CORRECT ANSWER-Owned by the policy owner and issue
participating policies. Policy owners are entitled to dividends, which are a return of
excess premiums and are therefore non-taxable. Dividends are not guaranteed.
Sharing - CORRECT ANSWER-A method of dealing with risk for a group of individual
persons or businesses with the same or similar exposure to loss to share the losses that
occur within that group. A RECIPROCAL insurance exchange is a form of risk-sharing
arrangement.
Retention - CORRECT ANSWER-Is the planned assumption of risk by the insured
through the use of deductibles, co-payments, or self-insurance. It is also known as self-
insurance when the insured accepts the responsibility for the loss before the insurance
company pays.
Express Authority - CORRECT ANSWER-Is the AUTHORITY a principal intends to
grant to an agent by means of the agent's contract. It is the authority that is written in
the contract.
Insurable Risk - CORRECT ANSWER-In order to be characterized as a pure risk, the
loss must be due to chance, definite, measurable, and predictable, but not catastrophic.
Insurance Policy Conditions - CORRECT ANSWER-Section of an insurance policy that
indicates the general rules or procedures that the insurer and insured agree to follow
under the terms of the policy. Examples: Inspection may be made as needed/ Changes
to the policy must be made by insurer and be in writing/ Liberalization clause/ Return of
premiums, which dictates methods used.
Loss Costs Rating - CORRECT ANSWER-Type of rating: Method developed by the
insurance services office Inc. (ISO) that provides an insurer with that portion of a rate
that does not include provisions of expenses or profit and are based on historical
aggregate loss and loss adjustment expenses projected through development to their
ultimate value and through trending to a future point in time.
, Strict Liability - CORRECT ANSWER-Is commonly applied in product liability cases. The
business is then liable for defective products, regardless of fault or negligence.
Insuring Agreement - CORRECT ANSWER-The part of the policy structure that
describes the insured perils and the method of indemnification.
Conditions - CORRECT ANSWER-States the legal obligations and duties of the parties
to the contract.
Valued Policy - CORRECT ANSWER-Provides for payment of the full policy amount in
the event of a total loss WITHOUT regard to actual value or depreciation.
Contributory Negligence - CORRECT ANSWER-In states that have this, the defendant
must have been 100% at fault for an accident and the claimant free of fault if the
claimant is to be successful in collecting damages.
Agreed Value - CORRECT ANSWER-A property policy with provisions agreed upon by
the insurer and insured as to the amounts of insurance that represents a fair valuation
for the property at the time the insurance is written. The amount is paid in a loss,
regardless of the insured property's appreciation or depreciation.
Occurance - CORRECT ANSWER-Includes those losses caused by continuous or
repeated exposure to conditions resulting in injury or damage to property that is neither
intended nor expected.
Consequential loss - CORRECT ANSWER-Also known as an indirect loss, is a second
financial loss caused by a covered direct loss.
Nonconcurrency - CORRECT ANSWER-Refers to other insurance written on the same
risk, but not on the same coverage basis.
Negligence - CORRECT ANSWER-Four essential elements: Duty, breach, injury, and
unbroken chain.
Stated Amount - CORRECT ANSWER-The value of the insured property is determined
at the time the policy is written. In the event of a loss, that amount is paid without regard
to any COINSURANCE provision. However, if the loss is less than total, the insurer has
salvage rights with the insured having first right of refusal of the salvage.
Personal Property - CORRECT ANSWER-Property that is moveable
