AD banker exam | Questions and Answers | 2025
Update | 100% Correct.
/. Where can an insured find insurance coverage after being rejected by Insurer A due
to claims history?
A
Residual market
B
Risk retention insurer
C
Reinsurance market
D
Lloyd's of London - Answer-A Residual Market
The residual market is a coverage source of last resort for businesses and individuals
who have been rejected by voluntary market insurers.
/.Which Federal entity administers the Terrorism Risk Insurance Program
Reauthorization Act?
A
Secretary of State
B
Executive office
C
Department of Defense
D
Department of the Treasury - Answer-D Department of the Treasury
The Terrorism Risk Insurance Act, which protects consumers by ensuring the continued
widespread availability and affordability of property and casualty insurance for a
terrorism risk, is administered by the Dept. of Treasury.
/.An applicant makes a statement on the insurance application which becomes part of
the contract that she has an alarm system which qualifies her for a premium discount.
This statement is considered a:
A
Representation
B
Endorsement
C
Warranty
D
Provision - Answer-C Warranty
,A warranty is a statement that is guaranteed to be true, as opposed to a representation
of something that is true to the best of one's knowledge.
/.Insurance is designed to provide protection against which of the following?
A
Involuntary risk
B
Pure Risk
C
Certain Risk
D
Speculative risk - Answer-B Pure Risk
With pure risk, the only consideration is the possibility of loss or no loss. By contrast,
speculative entails a chance of gain as well as a chance of loss.
/.Which of the following best describes the principle of Indemnity?
A
The insured is restored to the same financial condition as prior to the loss, with no loss
or gain
B
The insured compensates the insurer for any expenses it incurs in adjusting the loss
C
The insureds position is not improved after sustaining a loss
D
The insured is restored to a financial condition as good as, or better than, the insured
was before the loss - Answer-A The insured is restored to the same financial condition
as prior to the loss, with no loss or gain
Indemnity is the principle that restores an insured party to the economic position he/she
enjoyed before sustaining a loss.
/.Determining acceptable risks is the primary responsibility of the:
A
Underwriter
B
Adjuster
C
Producer
D
Auditor - Answer-A Underwriter
The selection of risk is the primary responsibility of the underwriter, who protects the
insurer by selecting risks that fall into the normal range of expected losses.
,/.When an applicant intentionally fails to make a material fact known, it is known as:
A
Misrepresentation
B
Concealment
C
Bad faith
D
Deception - Answer-B Concealment
Concealment is defined as the withholding of known facts, the knowledge of which
would change the decision of an insurer with respect to underwriting, settling a loss, or
determining the premium.
/.If an insurer is incorporated in Rhode Island, but primarily does business in New York,
what type of insurer would it be considered in New York?
A
Domestic
B
Nonadmitted
C
Alien
D
Foreign - Answer-D Foreign
An insurer that is incorporated under the laws of another state is considered a foreign
insurer.
/.In an insurance contract, the value that each party gives the other is called the:
A
Acceptance
B
Consideration
C
Offer
D
Subject matter - Answer-B Consideration
Consideration can take the form of money, goods, a promise to do something, or
anything else that changes the legal position of the party. A contract cannot exist
without consideration being given by both sides.
/.An insurer that is authorized to do business in a particular state is said to be:
A
Admitted
B
, Non-Admitted
C
Foreign
D
Domestic - Answer-A Admitted
An admitted insurer is an insurer that is authorized to transact insurance in a state by
that state's insurance department, as evidenced by a Certificate of Authority to transact
business.
/.A potential cause of loss, such as fire, explosion, flood, or theft is considered to be
a(n):
A
Peril
B
Accident
C
Occurrence
D
Hazard - Answer-A Peril
A peril is a cause of potential loss to property such as fire, windstorm, hail, or flood.
/.Which of the following might be considered a physical hazard?
A
Dishonesty on the part of an insured
B
The insured's attitude that good housekeeping is not important
C
The storage of flammables near a furnace
D
The storage of flammables in a fireproof container - Answer-C The storage of
flammables near a furnace
A physical hazard is a condition on the property, or exposed to the property, that
increases the probability of loss to the property.
/.Rates that cannot be used until the Department or Division of Insurance approves
them are referred to as:
A
Use and file rates
B
File and use rates
C
Open competition rates
D
Update | 100% Correct.
/. Where can an insured find insurance coverage after being rejected by Insurer A due
to claims history?
A
Residual market
B
Risk retention insurer
C
Reinsurance market
D
Lloyd's of London - Answer-A Residual Market
The residual market is a coverage source of last resort for businesses and individuals
who have been rejected by voluntary market insurers.
/.Which Federal entity administers the Terrorism Risk Insurance Program
Reauthorization Act?
A
Secretary of State
B
Executive office
C
Department of Defense
D
Department of the Treasury - Answer-D Department of the Treasury
The Terrorism Risk Insurance Act, which protects consumers by ensuring the continued
widespread availability and affordability of property and casualty insurance for a
terrorism risk, is administered by the Dept. of Treasury.
/.An applicant makes a statement on the insurance application which becomes part of
the contract that she has an alarm system which qualifies her for a premium discount.
This statement is considered a:
A
Representation
B
Endorsement
C
Warranty
D
Provision - Answer-C Warranty
,A warranty is a statement that is guaranteed to be true, as opposed to a representation
of something that is true to the best of one's knowledge.
/.Insurance is designed to provide protection against which of the following?
A
Involuntary risk
B
Pure Risk
C
Certain Risk
D
Speculative risk - Answer-B Pure Risk
With pure risk, the only consideration is the possibility of loss or no loss. By contrast,
speculative entails a chance of gain as well as a chance of loss.
/.Which of the following best describes the principle of Indemnity?
A
The insured is restored to the same financial condition as prior to the loss, with no loss
or gain
B
The insured compensates the insurer for any expenses it incurs in adjusting the loss
C
The insureds position is not improved after sustaining a loss
D
The insured is restored to a financial condition as good as, or better than, the insured
was before the loss - Answer-A The insured is restored to the same financial condition
as prior to the loss, with no loss or gain
Indemnity is the principle that restores an insured party to the economic position he/she
enjoyed before sustaining a loss.
/.Determining acceptable risks is the primary responsibility of the:
A
Underwriter
B
Adjuster
C
Producer
D
Auditor - Answer-A Underwriter
The selection of risk is the primary responsibility of the underwriter, who protects the
insurer by selecting risks that fall into the normal range of expected losses.
,/.When an applicant intentionally fails to make a material fact known, it is known as:
A
Misrepresentation
B
Concealment
C
Bad faith
D
Deception - Answer-B Concealment
Concealment is defined as the withholding of known facts, the knowledge of which
would change the decision of an insurer with respect to underwriting, settling a loss, or
determining the premium.
/.If an insurer is incorporated in Rhode Island, but primarily does business in New York,
what type of insurer would it be considered in New York?
A
Domestic
B
Nonadmitted
C
Alien
D
Foreign - Answer-D Foreign
An insurer that is incorporated under the laws of another state is considered a foreign
insurer.
/.In an insurance contract, the value that each party gives the other is called the:
A
Acceptance
B
Consideration
C
Offer
D
Subject matter - Answer-B Consideration
Consideration can take the form of money, goods, a promise to do something, or
anything else that changes the legal position of the party. A contract cannot exist
without consideration being given by both sides.
/.An insurer that is authorized to do business in a particular state is said to be:
A
Admitted
B
, Non-Admitted
C
Foreign
D
Domestic - Answer-A Admitted
An admitted insurer is an insurer that is authorized to transact insurance in a state by
that state's insurance department, as evidenced by a Certificate of Authority to transact
business.
/.A potential cause of loss, such as fire, explosion, flood, or theft is considered to be
a(n):
A
Peril
B
Accident
C
Occurrence
D
Hazard - Answer-A Peril
A peril is a cause of potential loss to property such as fire, windstorm, hail, or flood.
/.Which of the following might be considered a physical hazard?
A
Dishonesty on the part of an insured
B
The insured's attitude that good housekeeping is not important
C
The storage of flammables near a furnace
D
The storage of flammables in a fireproof container - Answer-C The storage of
flammables near a furnace
A physical hazard is a condition on the property, or exposed to the property, that
increases the probability of loss to the property.
/.Rates that cannot be used until the Department or Division of Insurance approves
them are referred to as:
A
Use and file rates
B
File and use rates
C
Open competition rates
D
