WA SURPLUS LINES BROKER EXAM UPDATED
ACTUAL EXAM QUESTIONS AND CORRECT
ANSWERS
◉ Mutual Company.
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.
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.
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.
,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.
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.
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.
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.
Answer: Is commonly applied in product liability cases. The business
is then liable for defective products, regardless of fault or negligence.
◉ Insuring Agreement.
Answer: The part of the policy structure that describes the insured
perils and the method of indemnification.
◉ Conditions.
Answer: States the legal obligations and duties of the parties to the
contract.
◉ Valued Policy.
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.
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.
Answer: A property policy with provisions agreed upon by the
insurer and insured as to the amounts of insurance that represents a
ACTUAL EXAM QUESTIONS AND CORRECT
ANSWERS
◉ Mutual Company.
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.
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.
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.
,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.
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.
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.
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.
Answer: Is commonly applied in product liability cases. The business
is then liable for defective products, regardless of fault or negligence.
◉ Insuring Agreement.
Answer: The part of the policy structure that describes the insured
perils and the method of indemnification.
◉ Conditions.
Answer: States the legal obligations and duties of the parties to the
contract.
◉ Valued Policy.
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.
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.
Answer: A property policy with provisions agreed upon by the
insurer and insured as to the amounts of insurance that represents a
