Personal Lines Insurance UPDATED
Actual Exam Questions and CORRECT
Answers
Risk _________ is when one takes action to prevent or reduce potential loss. - CORRECT
ANSWER✔✔- Reduction
When the number of similar units increases, the predictability of the loss improves according
to the rule of _____ ________. - CORRECT ANSWER✔✔- Large Numbers
The insuring of risks that are more prone to losses than average risks is known as? -
CORRECT ANSWER✔✔- Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares risks with
another insurer. - CORRECT ANSWER✔✔- Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. - CORRECT
ANSWER✔✔- Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of
___________. - CORRECT ANSWER✔✔- Indemnity
The determination of acceptable risks is the primary function of the ___________ . -
CORRECT ANSWER✔✔- Underwriter
Underwriters like to select insureds who's actual losses will be similar to expected losses.
True or False? - CORRECT ANSWER✔✔- True
When rates cannot be used until they are improved by the department or division of
insurance, they are called ____ ________ rates. - CORRECT ANSWER✔✔- Prior Approval
The termination of a policy by either the insured or insurer before its expiration date is known
as ___________. - CORRECT ANSWER✔✔- Cancellation
,When the insurer cancels a property policy, the unearned premium is returned ___ ____. -
CORRECT ANSWER✔✔- Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded to the
insured on a _____ _____. - CORRECT ANSWER✔✔- Short Rate
A fire is considered to be a _____ of a potential loss. - CORRECT ANSWER✔✔- Cause
A document that provides temporary insurance coverage until a policy is issued is known as a
______. - CORRECT ANSWER✔✔- Binder
The process by which a disputed claim is decided by a neutral third party is known as
___________. - CORRECT ANSWER✔✔- Arbitration
_________ _________ is a situation where there are two causes resulting in a loss, with one
of the causes excluded and the other cause of loss not excluded. - CORRECT ANSWER✔✔-
Concurrent Causation
If two or more policies provide identical coverage for the same risk, the policies are deemed
to be __________. - CORRECT ANSWER✔✔- Concurrent
Policy A is written for $100,000, and an excess Policy B is written for $200,000 on the same
property. In the event of a $20,000 loss, how much will each policy pay? - CORRECT
ANSWER✔✔- A= $20,000 ; B= $0
A building that has neither occupants nor personal property is ______. - CORRECT
ANSWER✔✔- Vacant
When property is damaged by fire, the loss is said to be a(n) ______ loss. - CORRECT
ANSWER✔✔- Direct
, If a fire on a premises caused a power outage, which caused meat in the freezer to spoil,
would the meat spoilage be considered a direct loss or indirect loss? - CORRECT
ANSWER✔✔- Indirect Loss
Open peril policies include losses caused by theft. True or False? - CORRECT
ANSWER✔✔- True
If a property owner does not desire any deduction for depreciation following a covered loss,
he/she should purchase a ___________ ____ policy. - CORRECT ANSWER✔✔-
Replacement Cost
For replacement cost coverage to apply in dwelling policies, the insured must carry insurance
at least equal to ____% of the cost of replacement of the building. - CORRECT
ANSWER✔✔- 80
Would a stated amount method of valuation likely be used when insuring gold bullion? -
CORRECT ANSWER✔✔- No
An ____ policy is one that the value of the subject matter is not agreed upon, but is left to be
ascertained in case of loss. - CORRECT ANSWER✔✔- Open
A valued policy is one that expresses on it's face an agreement that the thing insured is valued
at a specific sum. True or False? - CORRECT ANSWER✔✔- True
Insuring more than one property on one policy for a single amount of insurance that applies
to all properties covered under the policy is known as _______ coverage. - CORRECT
ANSWER✔✔- Blanket
The name of the insured is found on the declarations page of the policy. True or False? -
CORRECT ANSWER✔✔- True
What part or portion of a property policy contains the effective or expiration dates of the
policy? - CORRECT ANSWER✔✔- Declarations
Actual Exam Questions and CORRECT
Answers
Risk _________ is when one takes action to prevent or reduce potential loss. - CORRECT
ANSWER✔✔- Reduction
When the number of similar units increases, the predictability of the loss improves according
to the rule of _____ ________. - CORRECT ANSWER✔✔- Large Numbers
The insuring of risks that are more prone to losses than average risks is known as? -
CORRECT ANSWER✔✔- Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares risks with
another insurer. - CORRECT ANSWER✔✔- Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. - CORRECT
ANSWER✔✔- Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of
___________. - CORRECT ANSWER✔✔- Indemnity
The determination of acceptable risks is the primary function of the ___________ . -
CORRECT ANSWER✔✔- Underwriter
Underwriters like to select insureds who's actual losses will be similar to expected losses.
True or False? - CORRECT ANSWER✔✔- True
When rates cannot be used until they are improved by the department or division of
insurance, they are called ____ ________ rates. - CORRECT ANSWER✔✔- Prior Approval
The termination of a policy by either the insured or insurer before its expiration date is known
as ___________. - CORRECT ANSWER✔✔- Cancellation
,When the insurer cancels a property policy, the unearned premium is returned ___ ____. -
CORRECT ANSWER✔✔- Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded to the
insured on a _____ _____. - CORRECT ANSWER✔✔- Short Rate
A fire is considered to be a _____ of a potential loss. - CORRECT ANSWER✔✔- Cause
A document that provides temporary insurance coverage until a policy is issued is known as a
______. - CORRECT ANSWER✔✔- Binder
The process by which a disputed claim is decided by a neutral third party is known as
___________. - CORRECT ANSWER✔✔- Arbitration
_________ _________ is a situation where there are two causes resulting in a loss, with one
of the causes excluded and the other cause of loss not excluded. - CORRECT ANSWER✔✔-
Concurrent Causation
If two or more policies provide identical coverage for the same risk, the policies are deemed
to be __________. - CORRECT ANSWER✔✔- Concurrent
Policy A is written for $100,000, and an excess Policy B is written for $200,000 on the same
property. In the event of a $20,000 loss, how much will each policy pay? - CORRECT
ANSWER✔✔- A= $20,000 ; B= $0
A building that has neither occupants nor personal property is ______. - CORRECT
ANSWER✔✔- Vacant
When property is damaged by fire, the loss is said to be a(n) ______ loss. - CORRECT
ANSWER✔✔- Direct
, If a fire on a premises caused a power outage, which caused meat in the freezer to spoil,
would the meat spoilage be considered a direct loss or indirect loss? - CORRECT
ANSWER✔✔- Indirect Loss
Open peril policies include losses caused by theft. True or False? - CORRECT
ANSWER✔✔- True
If a property owner does not desire any deduction for depreciation following a covered loss,
he/she should purchase a ___________ ____ policy. - CORRECT ANSWER✔✔-
Replacement Cost
For replacement cost coverage to apply in dwelling policies, the insured must carry insurance
at least equal to ____% of the cost of replacement of the building. - CORRECT
ANSWER✔✔- 80
Would a stated amount method of valuation likely be used when insuring gold bullion? -
CORRECT ANSWER✔✔- No
An ____ policy is one that the value of the subject matter is not agreed upon, but is left to be
ascertained in case of loss. - CORRECT ANSWER✔✔- Open
A valued policy is one that expresses on it's face an agreement that the thing insured is valued
at a specific sum. True or False? - CORRECT ANSWER✔✔- True
Insuring more than one property on one policy for a single amount of insurance that applies
to all properties covered under the policy is known as _______ coverage. - CORRECT
ANSWER✔✔- Blanket
The name of the insured is found on the declarations page of the policy. True or False? -
CORRECT ANSWER✔✔- True
What part or portion of a property policy contains the effective or expiration dates of the
policy? - CORRECT ANSWER✔✔- Declarations
