California Personal Lines Broker Test Questions with 100% Correct Answers | Verified | Latest Update

1. A-1. Insurance is a contract whereby one undertakes to indemnify another against ANS Damage 2. A-2. A peril is ANS The actual cause of a loss. 3. A-3. The uncertainty or chance of a loss occurring is known as ANS Risk 4. A-4. Which are the main types of risks? ANS Pure and Speculative 5. A-5. A hazard is best defined as ANS Anything that increases the chance of loss or severity of loss due to a peril. 6. A-6. A hazard that deals with a person`s mental attitude, behavior and habits is an example of ANS A Moral hazard. 7. A-7. The law of large numbers is a principal that basically says ANS The larger the amount of information gathered, the more reliable that information will be. 8. A-8. The term loss exposure refers to ANS The possibility of a loss. 9. A-9. The degree of loss a person/organization faces from suits brought by a third party refers to ANS Liability loss exposure. 10. A-10. Which of the following is NOT required for a risk to be ideally insur- able? 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. ANS The loss must occur on the insured's property.