Personal Lines Insurance Exam Questions And 100%
Correct Answers 2024-2025
Risk _________ is when one takes action to prevent or reduce potential loss. - Answer
Reduction
As one increases the number of similar units, according to the rule of _____ ________ the
predictability of the loss improves. - Answer Large Numbers
The insuring of risks that are more prone to losses than average risks is known as? -
Answer Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares risks
with another insurer. - Answer Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. - Answer
Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of
___________. - Answer Indemnity
The determination of acceptable risks is the primary function of the ___________. -
Answer Underwriter
Underwriters prefer to select insureds whose actual losses will be similar to expected
losses. True or False? - Answer True
When rates cannot be used until they are improved by the department or division of
insurance, they are called ____ ________ rates. - Answer Prior Approval
,The termination of a policy by either the insured or insurer before its expiration date is
known as ___________. - Answer Cancellation
When the insurer cancels a property policy, the unearned premium is returned ___ ____.
- Answer Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded to
the insured on a _____ _____. - Answer Short Rate
A fire is considered to be a _____ of a potential loss. - Answer Cause
A document that provides temporary insurance coverage until a policy is issued is
called a ______. - Answer Binder
A process in which a disputed claim is decided by a neutral third party is called
___________. - Answer Arbitration
Concurrent Causation refers to 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. - Answer
Concurrent Causation
If two or more policies provide identical coverage for the same risk, the policies are
considered to be __________. - Answer Concurrent
Policy A is written for $100,000 and an excess Policy B is written for $200,000 on the
same property. If there is a $20,000 loss, how much will each pay? - Answer A= $20,000
; B= $0
A building which contains neither occupants nor personal property is ______. - Answer
Vacant
, If property is destroyed by fire, the loss is called a(n) ______ loss. - 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? - Answer Indirect
Loss
Open peril policies include losses caused by theft. True or False? - Answer True
If an owner does not want any deduction for depreciation after a covered loss, he/she
should buy a ___________ ____ policy. - Answer Replacement Cost
For replacement cost coverage to apply under dwelling policies, the insured must carry
insurance at least equal to ____% of the cost of replacement of the building. - Answer 80
Would an agreed amount method of valuation likely be used when insuring gold bullion?
- 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. - 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? - 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. -
Answer Blanket
The name of the insured appears on the declarations page of the policy. True or False?
-Answer True
Correct Answers 2024-2025
Risk _________ is when one takes action to prevent or reduce potential loss. - Answer
Reduction
As one increases the number of similar units, according to the rule of _____ ________ the
predictability of the loss improves. - Answer Large Numbers
The insuring of risks that are more prone to losses than average risks is known as? -
Answer Adverse Selection
A ___________ contract is an arrangement where one insurer transfers or shares risks
with another insurer. - Answer Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. - Answer
Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of
___________. - Answer Indemnity
The determination of acceptable risks is the primary function of the ___________. -
Answer Underwriter
Underwriters prefer to select insureds whose actual losses will be similar to expected
losses. True or False? - Answer True
When rates cannot be used until they are improved by the department or division of
insurance, they are called ____ ________ rates. - Answer Prior Approval
,The termination of a policy by either the insured or insurer before its expiration date is
known as ___________. - Answer Cancellation
When the insurer cancels a property policy, the unearned premium is returned ___ ____.
- Answer Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded to
the insured on a _____ _____. - Answer Short Rate
A fire is considered to be a _____ of a potential loss. - Answer Cause
A document that provides temporary insurance coverage until a policy is issued is
called a ______. - Answer Binder
A process in which a disputed claim is decided by a neutral third party is called
___________. - Answer Arbitration
Concurrent Causation refers to 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. - Answer
Concurrent Causation
If two or more policies provide identical coverage for the same risk, the policies are
considered to be __________. - Answer Concurrent
Policy A is written for $100,000 and an excess Policy B is written for $200,000 on the
same property. If there is a $20,000 loss, how much will each pay? - Answer A= $20,000
; B= $0
A building which contains neither occupants nor personal property is ______. - Answer
Vacant
, If property is destroyed by fire, the loss is called a(n) ______ loss. - 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? - Answer Indirect
Loss
Open peril policies include losses caused by theft. True or False? - Answer True
If an owner does not want any deduction for depreciation after a covered loss, he/she
should buy a ___________ ____ policy. - Answer Replacement Cost
For replacement cost coverage to apply under dwelling policies, the insured must carry
insurance at least equal to ____% of the cost of replacement of the building. - Answer 80
Would an agreed amount method of valuation likely be used when insuring gold bullion?
- 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. - 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? - 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. -
Answer Blanket
The name of the insured appears on the declarations page of the policy. True or False?
-Answer True
