WASHINGTON STATE INSURANCE EXAM QUESTIONS
WITH CORRECT ANSWERS 2026
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 policyowner 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
Real Property - CORRECT ANSWER -Property that is non-moveable
Components - CORRECT ANSWER -Factors that determine rates, including loss reserves, loss
adjusting expenses, operating expenses and profits.
Comparative Negligence - CORRECT ANSWER -Many states, by statute, require that damage be
apportioned based upon the degree of negligence of each party in an accident.
Assignment - CORRECT ANSWER -The transfer of a legal right or interest in an insurance policy.
In property and casualty insurance, assignments of policies are usually valid only with the prior
written consent of the insurer. Example: transferring a policy to a friend who will be taking over
renters insurance when you move out.
WITH CORRECT ANSWERS 2026
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 policyowner 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
Real Property - CORRECT ANSWER -Property that is non-moveable
Components - CORRECT ANSWER -Factors that determine rates, including loss reserves, loss
adjusting expenses, operating expenses and profits.
Comparative Negligence - CORRECT ANSWER -Many states, by statute, require that damage be
apportioned based upon the degree of negligence of each party in an accident.
Assignment - CORRECT ANSWER -The transfer of a legal right or interest in an insurance policy.
In property and casualty insurance, assignments of policies are usually valid only with the prior
written consent of the insurer. Example: transferring a policy to a friend who will be taking over
renters insurance when you move out.
