California Personal Lines Broker

California Personal Lines Broker Test Complete Solutions A-1. Insurance is a contract whereby one undertakes to indemnify another against: ️Damage A-2. A peril is: ️The actual cause of a loss. A-3. The uncertainty or chance of a loss occurring is known as: ️Risk A-4. Which are the main types of risks? ️Pure and Speculative A-5. A hazard is best defined as: ️Anything that increases the chance of loss or severity of loss due to a peril. A-6. A hazard that deals with a person`s mental attitude, behavior and habits is an example of: ️A Moral hazard. A-7. The law of large numbers is a principal that basically says: ️The larger the amount of information gathered, the more reliable that information will be. A-8. The term loss exposure refers to: ️The possibility of a loss. A-9. The degree of loss a person/organization faces from suits brought by a third party refers to: ️Liability loss exposure. A-10. Which of the following is NOT required for a risk to be ideally insurable? The loss must be an accident. The loss must be definite and measurable. The loss must occur on the insured`s property. The loss must create economic hardship. ️The loss must occur on the insured's property. A-11. Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest or create a liability against him/her, may be insured against. The more unpredictable a loss becomes: ️The more insurable it becomes. A-12. Restoring the insured back to the condition he or she was in before the loss occurred is known as: ️Indemnification A-13. The process of reviewing applications for insurance and the information on the application is: ️Underwriting A-14. Which of the following is NOT a known private insurer? Reciprocal Insurance Exchanges Mutual Insurance Companies Bond Insurance Companies Stock Insurance Companies ️Bond Insurance companies are not considered insurers. A-15. Bob is thinking about obtaining insurance because he just found out he needs extensive surgery that will require several days in the hospital. This situation of waiting until the last minute to obtain insurance is known as: ️Adverse selection A-16. Loss control refers to: ️Taking the necessary precautions that will reduce the risk of a loss. A-17. Which of the following is the amount of money the insured pays before the insurer pays for the rest of the claim? ️Deductible A-18. What is reinsurance? ️Reinsurance is the process whereby the insurer transfers all or part of the risk to another company. A-19. Which of the following is defined as `an agreement between two or more parties enforceable by law?` ️A contract. A-20. What are the two types of torts? ️Intentional and Unintentional. A-21. What is the binding force of a contract? ️Consideration A-22. What is fraud? ️When one party intentionally gives the other party false information in order to benefit from the unlawful gain. A-23. When a right or privilege has been given up, a party cannot reassert that right or privilege. The process of preventing the party from reasserting that right or privilege is known as: ️Estoppel A-24. Either party may rescind a contract for what reasons? ️Once signed a contract can never be rescinded. A-25. Examples of tort law include all of the following EXCEPT: Libel and slander Bodily injury Personal injury Breach of contract ️Breach of contract. A-26. Substitution of a small certain loss for a large uncertain loss is: ️Insurance A-27. The state of being subject to a loss is considered: ️Exposure A-28. Performance depends upon an uncertain future event is the feature: ️Aleatory A-29. Type of loss exposure pertaining to land and structures attached to it is: ️Property loss