©EVERLY 2024/2025 ALL RIGHTS RESERVED.
Insurance License Exam Questions And
Answers (Guaranteed A+)
Absolute Liability - Answer✔Liability that arises from an extremely dangerous situation.
Absolute Liability is often found in cases involving explosives. Also known as "strict"liability.
For example, you are absolutely liable if you keep a wild animal as a pet.
Accident - Answer✔A sudden and unexpected event, occurring at a specific time and place.
Actual Cash Value (ACV) - Answer✔The cost to replace an item of property at the time of loss,
less an allowance for depreciation. Often used to determine amount of reimbursement for a loss
(Replacement Cost minus Depreciation).
Additional Insured - Answer✔A person, firm, or corporation other than the Named Insured on a
policy, or a lender named in a mortgage clause, who is protected against loss by the terms of the
policy.
Additional Living Expenses - Answer✔A coverage designed to reimburse the insured for an
increase in living expenses necessitated by loss to the dwelling. This Indirect Loss must be the
result of Direct Loss by a covered Peril.
Adjuster - Answer✔Represents the insurance company and acts for the company in working on
agreements as to the amount of a loss and the liability of the company.
Admitted Company - Answer✔A company that meets the state insurance department's standards
and is authorized by the Director to do business in the state.
Agent/Producer - Answer✔An individual appointed by an insurance company to solicit,
negotiate, effect, or countersign insurance contracts on its behalf.
Aggregate Limit - Answer✔A type of policy limit found in Liability policies that limits coverage
to a specified total amount for all losses occurring within the policy period.
Alien Company - Answer✔An insurance company incorporated in a country other than the
United States.
Allied Lines - Answer✔Property coverages that are closely associated with and frequently sold
with fire insurance: Dwelling Building and Contents form, Earthquake insurance, Sprinkler
Leakage, etc.
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, ©EVERLY 2024/2025 ALL RIGHTS RESERVED.
All-Risk Insurance - Answer✔Insurance protecting the insured from loss arising from any peril
other than those specifically excluded by name. This contrasts with named peril insurance, which
names the peril or perils insured against.
Application - Answer✔A questionnaire that is filled out by an agent and the prospect seeking
insurance. The form contains rating and underwriting information. The applicant is expected to
make representations by answering questions to the best of his or her knowledge (truthfully).
Appraisal - Answer✔If the insured and insurer cannot agree on the amount of loss, either may
demand an appraisal. Each party will pay its own appraiser and share equally the expenses of the
appraisal, as well as an umpire selected by the appraisers, if needed. Agreement by any two of
the three will be binding.
Appurtenant Structure - Answer✔A structure belonging to the insured structure, such as a tool
shed. Appurtenant structures are provided for in the Homeowners policy and other Dwelling
policies. This coverage is often called Other Structures or Out Buildings
Assigned Risk - Answer✔There are some applicants that underwriters do not care to insure, but
because of state law or otherwise, must be provided protection. To become authorized, a
Casualty company must agree to participate in the Assigned Risk Pool and take its turn providing
Auto insurance to high-risk drivers. Also known as the auto insurance "plan."
Audit - Answer✔A survey of the financial records of the insured conducted to determine
exposures, limits, etc., which are needed to calculate the premium. The initial premiums only a
deposit.
Bailee - Answer✔A person who has temporary custody of property belonging to another person.
An example of a bailee: the dry cleaners.
Bailee's Customers Policy - Answer✔Insurance obtained by a bailee, to cover loss or damage to
customers' property in the bailee's custody, without regard to liability.
Binders - Answer✔Binders and other temporary insurance contracts may be made orally or in
writing. Each binder is deemed to include all usual terms of the policy for which it was
given,plus endorsements. Life or Disability insurance utilizes conditional receipts instead of
binders.
Blanket Position Bond - Answer✔Fidelity bond that specifies a single limit of Liability
applicable to each employee involved in a loss.
Bodily Injury - Answer✔Usually defined to include bodily harm, sickness, disease, including
required care, loss of services and resulting death.
Boiler and Machinery Policy - Answer✔Insurance that covers the insured against loss (Liability
and Physical Damage) arising out of the use of steam boilers or other machinery. May be written
as a separate policy or as part of a Commercial Package Policy.
Bond - Answer✔An obligation of the insurance company to protect one against financial loss
caused by the acts of others.
2|Page
Insurance License Exam Questions And
Answers (Guaranteed A+)
Absolute Liability - Answer✔Liability that arises from an extremely dangerous situation.
Absolute Liability is often found in cases involving explosives. Also known as "strict"liability.
For example, you are absolutely liable if you keep a wild animal as a pet.
Accident - Answer✔A sudden and unexpected event, occurring at a specific time and place.
Actual Cash Value (ACV) - Answer✔The cost to replace an item of property at the time of loss,
less an allowance for depreciation. Often used to determine amount of reimbursement for a loss
(Replacement Cost minus Depreciation).
Additional Insured - Answer✔A person, firm, or corporation other than the Named Insured on a
policy, or a lender named in a mortgage clause, who is protected against loss by the terms of the
policy.
Additional Living Expenses - Answer✔A coverage designed to reimburse the insured for an
increase in living expenses necessitated by loss to the dwelling. This Indirect Loss must be the
result of Direct Loss by a covered Peril.
Adjuster - Answer✔Represents the insurance company and acts for the company in working on
agreements as to the amount of a loss and the liability of the company.
Admitted Company - Answer✔A company that meets the state insurance department's standards
and is authorized by the Director to do business in the state.
Agent/Producer - Answer✔An individual appointed by an insurance company to solicit,
negotiate, effect, or countersign insurance contracts on its behalf.
Aggregate Limit - Answer✔A type of policy limit found in Liability policies that limits coverage
to a specified total amount for all losses occurring within the policy period.
Alien Company - Answer✔An insurance company incorporated in a country other than the
United States.
Allied Lines - Answer✔Property coverages that are closely associated with and frequently sold
with fire insurance: Dwelling Building and Contents form, Earthquake insurance, Sprinkler
Leakage, etc.
1|Page
, ©EVERLY 2024/2025 ALL RIGHTS RESERVED.
All-Risk Insurance - Answer✔Insurance protecting the insured from loss arising from any peril
other than those specifically excluded by name. This contrasts with named peril insurance, which
names the peril or perils insured against.
Application - Answer✔A questionnaire that is filled out by an agent and the prospect seeking
insurance. The form contains rating and underwriting information. The applicant is expected to
make representations by answering questions to the best of his or her knowledge (truthfully).
Appraisal - Answer✔If the insured and insurer cannot agree on the amount of loss, either may
demand an appraisal. Each party will pay its own appraiser and share equally the expenses of the
appraisal, as well as an umpire selected by the appraisers, if needed. Agreement by any two of
the three will be binding.
Appurtenant Structure - Answer✔A structure belonging to the insured structure, such as a tool
shed. Appurtenant structures are provided for in the Homeowners policy and other Dwelling
policies. This coverage is often called Other Structures or Out Buildings
Assigned Risk - Answer✔There are some applicants that underwriters do not care to insure, but
because of state law or otherwise, must be provided protection. To become authorized, a
Casualty company must agree to participate in the Assigned Risk Pool and take its turn providing
Auto insurance to high-risk drivers. Also known as the auto insurance "plan."
Audit - Answer✔A survey of the financial records of the insured conducted to determine
exposures, limits, etc., which are needed to calculate the premium. The initial premiums only a
deposit.
Bailee - Answer✔A person who has temporary custody of property belonging to another person.
An example of a bailee: the dry cleaners.
Bailee's Customers Policy - Answer✔Insurance obtained by a bailee, to cover loss or damage to
customers' property in the bailee's custody, without regard to liability.
Binders - Answer✔Binders and other temporary insurance contracts may be made orally or in
writing. Each binder is deemed to include all usual terms of the policy for which it was
given,plus endorsements. Life or Disability insurance utilizes conditional receipts instead of
binders.
Blanket Position Bond - Answer✔Fidelity bond that specifies a single limit of Liability
applicable to each employee involved in a loss.
Bodily Injury - Answer✔Usually defined to include bodily harm, sickness, disease, including
required care, loss of services and resulting death.
Boiler and Machinery Policy - Answer✔Insurance that covers the insured against loss (Liability
and Physical Damage) arising out of the use of steam boilers or other machinery. May be written
as a separate policy or as part of a Commercial Package Policy.
Bond - Answer✔An obligation of the insurance company to protect one against financial loss
caused by the acts of others.
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