220 Exam – Prep Florida Statutes Comprehensive Exam,
Florida Insurance, 2026, Complete QUESTIONS WITH WELL
VERIFIED ANSWERS
1. Insurance Principle
What is the primary purpose of insurance?
A. To eliminate all financial risk
B. To transfer certain risks from an individual or business to an insurer
C. To guarantee investment profits
D. To prevent accidents from occurring
**Answer: B**
**Rationale:** Insurance is a mechanism for **risk transfer**. The insured transfers specified
financial risks to an insurer in exchange for a premium. Insurance does not eliminate the
possibility of loss; it provides financial protection against covered losses.
---
### 2. Risk
Which situation represents a **pure risk**?
,A. Buying stock
B. Gambling at a casino
C. The possibility of a house being destroyed by fire
D. Starting a new business for profit
**Answer: C**
**Rationale:** A pure risk involves only the possibility of **loss or no loss**. There is no
opportunity for gain. Fire damage to a home is a classic example. Speculative risks, such as
gambling or investing, involve the possibility of gain or loss.
---
### 3. Insurable Risk
Which characteristic is generally necessary for a risk to be insurable?
A. The loss must be intentional.
B. The loss must be impossible to estimate.
C. The loss should be accidental and measurable.
D. The loss must guarantee a profit.
**Answer: C**
**Rationale:** Insurable risks are generally characterized by losses that are **fortuitous,
measurable, sufficiently definite, and statistically predictable**.
,---
### 4. Indemnity
The principle of indemnity is intended to:
A. Allow the insured to profit from a loss
B. Restore the insured approximately to the financial position held before a covered loss
C. Guarantee replacement with a brand-new item in every situation
D. Eliminate deductibles
**Answer: B**
**Rationale:** Indemnity is designed to compensate for a covered loss without allowing the
insured to profit from the loss.
---
### 5. Insurable Interest
When must an insurable interest generally exist in property insurance?
A. Only after the loss
B. At the time of loss
C. Only when the policy expires
D. Never
, **Answer: B**
**Rationale:** In property insurance, the insured generally must have an **insurable interest
at the time of loss**. An insurable interest exists when the person would suffer a financial or
other recognized loss if the insured property were damaged or destroyed.
---
### 6. Contract of Adhesion
An insurance contract is considered a contract of adhesion because:
A. Both parties negotiate every provision equally.
B. The insurer prepares the contract and the insured generally accepts or rejects it.
C. The contract has no legal effect.
D. Only the insured can modify the contract.
**Answer: B**
**Rationale:** Insurance policies are generally **contracts of adhesion** because they are
prepared by the insurer and presented to the insured on a take-it-or-leave-it basis.
---
### 7. Unilateral Contract
Florida Insurance, 2026, Complete QUESTIONS WITH WELL
VERIFIED ANSWERS
1. Insurance Principle
What is the primary purpose of insurance?
A. To eliminate all financial risk
B. To transfer certain risks from an individual or business to an insurer
C. To guarantee investment profits
D. To prevent accidents from occurring
**Answer: B**
**Rationale:** Insurance is a mechanism for **risk transfer**. The insured transfers specified
financial risks to an insurer in exchange for a premium. Insurance does not eliminate the
possibility of loss; it provides financial protection against covered losses.
---
### 2. Risk
Which situation represents a **pure risk**?
,A. Buying stock
B. Gambling at a casino
C. The possibility of a house being destroyed by fire
D. Starting a new business for profit
**Answer: C**
**Rationale:** A pure risk involves only the possibility of **loss or no loss**. There is no
opportunity for gain. Fire damage to a home is a classic example. Speculative risks, such as
gambling or investing, involve the possibility of gain or loss.
---
### 3. Insurable Risk
Which characteristic is generally necessary for a risk to be insurable?
A. The loss must be intentional.
B. The loss must be impossible to estimate.
C. The loss should be accidental and measurable.
D. The loss must guarantee a profit.
**Answer: C**
**Rationale:** Insurable risks are generally characterized by losses that are **fortuitous,
measurable, sufficiently definite, and statistically predictable**.
,---
### 4. Indemnity
The principle of indemnity is intended to:
A. Allow the insured to profit from a loss
B. Restore the insured approximately to the financial position held before a covered loss
C. Guarantee replacement with a brand-new item in every situation
D. Eliminate deductibles
**Answer: B**
**Rationale:** Indemnity is designed to compensate for a covered loss without allowing the
insured to profit from the loss.
---
### 5. Insurable Interest
When must an insurable interest generally exist in property insurance?
A. Only after the loss
B. At the time of loss
C. Only when the policy expires
D. Never
, **Answer: B**
**Rationale:** In property insurance, the insured generally must have an **insurable interest
at the time of loss**. An insurable interest exists when the person would suffer a financial or
other recognized loss if the insured property were damaged or destroyed.
---
### 6. Contract of Adhesion
An insurance contract is considered a contract of adhesion because:
A. Both parties negotiate every provision equally.
B. The insurer prepares the contract and the insured generally accepts or rejects it.
C. The contract has no legal effect.
D. Only the insured can modify the contract.
**Answer: B**
**Rationale:** Insurance policies are generally **contracts of adhesion** because they are
prepared by the insurer and presented to the insured on a take-it-or-leave-it basis.
---
### 7. Unilateral Contract
