Tennessee Property and Casualty Insurance Exams 2025
(Revised 100% Success Rate)
An individual applied for auto insurance and obtained coverage from ABC
Insurance Company. Who is the first party in the contract?
A. The insured
B. The insurer
C. The agent
D. The insured and agent - The insured (customer)
If a fire causes damage to a building the fire is
A. a hazard
B. a peril
C. a risk
D. an exposure - A peril
Wearing a seatbelt in a car is an example if which method of managing risk?
A. Retain
B. Avoid
C. Reduce
D. Transfer - Reduce
Tiff leaves her car unlocked when she goes shopping. She figures her car and
its contents are insured, so there is no reason to worry. Which type of hazard
is this an example of?
A. Physical
B. Morale
C. Carless
D. Moral - Morale
A flood is an example of
A. a peril
B. a moral hazard
C. a speculative risk
D. a physical hazard - Peril
,An insurance company incorporated in Wisconsin and conducting business in
Wisconsin is known as a domestic company. What kind of company are they
considered if they do business in Minnesota
A. Alien
B. Domestic
C. Foreign
D. Nonadmitted - Foreign
All of the following statements about a stock company are true except:
A. stock company pays dividends to stockholders
B. stock company is a participating company
C. stock company is a nonparticipating company
D. stock company has shareholders - stock company is a participating
company
What do insurance companies use to help predict how many losses will occur
in a group or class of individuals?
A. The law of large numbers
B. Standard and Poor's Insurance Rating Service
C. Risk retention group
D. Adverse selection - The law of large numbers
State requires companies to have a license to sell insurance in the state. The
license is called:
A. a certificate of authority
B. a reinsurance license
C. a producer's license
D. an admittance license - a certificate of authority
All of the following are requirements of an insurable pure risk EXCEPT:
A. premium must be calculable
B. premium must be affordable
C. teh risk must be catastrophic for the insurance company
, D. the loss must have been accidental - the risk must be catastrophic for the
insurance company
Insurers may be classified according to their financial strength. This includes
all of the following factors except:
A. number of clients
B. loss experience
C. investment performance
D. operating expenses - number of clients
Agency is a relationship in which one person is authorized to represent and
act for another person or a corporation. In insurance, the insurance agent
acts on behalf of:
A. the principal
B. the insured
C. the claimant
D. the adjuster - the principal (insurance company)
Which of the following types of advertising does not involve an agent and is
conducted through the mail, advertisement in newspapers and magazines,
on television and radio and through the internet:
A. Direct writing
B. Captive agency writing
C. Direct response
D. Cold calling - Direct Response
Which of the following individuals represent only one insurance company:
A. an independent agent
B. a general agent
C. a captive agent
D. a managing general agent - a captive agent
What is a contract or device for transferring risk from a person, business or
organization to an insurance company:
A. insurance
(Revised 100% Success Rate)
An individual applied for auto insurance and obtained coverage from ABC
Insurance Company. Who is the first party in the contract?
A. The insured
B. The insurer
C. The agent
D. The insured and agent - The insured (customer)
If a fire causes damage to a building the fire is
A. a hazard
B. a peril
C. a risk
D. an exposure - A peril
Wearing a seatbelt in a car is an example if which method of managing risk?
A. Retain
B. Avoid
C. Reduce
D. Transfer - Reduce
Tiff leaves her car unlocked when she goes shopping. She figures her car and
its contents are insured, so there is no reason to worry. Which type of hazard
is this an example of?
A. Physical
B. Morale
C. Carless
D. Moral - Morale
A flood is an example of
A. a peril
B. a moral hazard
C. a speculative risk
D. a physical hazard - Peril
,An insurance company incorporated in Wisconsin and conducting business in
Wisconsin is known as a domestic company. What kind of company are they
considered if they do business in Minnesota
A. Alien
B. Domestic
C. Foreign
D. Nonadmitted - Foreign
All of the following statements about a stock company are true except:
A. stock company pays dividends to stockholders
B. stock company is a participating company
C. stock company is a nonparticipating company
D. stock company has shareholders - stock company is a participating
company
What do insurance companies use to help predict how many losses will occur
in a group or class of individuals?
A. The law of large numbers
B. Standard and Poor's Insurance Rating Service
C. Risk retention group
D. Adverse selection - The law of large numbers
State requires companies to have a license to sell insurance in the state. The
license is called:
A. a certificate of authority
B. a reinsurance license
C. a producer's license
D. an admittance license - a certificate of authority
All of the following are requirements of an insurable pure risk EXCEPT:
A. premium must be calculable
B. premium must be affordable
C. teh risk must be catastrophic for the insurance company
, D. the loss must have been accidental - the risk must be catastrophic for the
insurance company
Insurers may be classified according to their financial strength. This includes
all of the following factors except:
A. number of clients
B. loss experience
C. investment performance
D. operating expenses - number of clients
Agency is a relationship in which one person is authorized to represent and
act for another person or a corporation. In insurance, the insurance agent
acts on behalf of:
A. the principal
B. the insured
C. the claimant
D. the adjuster - the principal (insurance company)
Which of the following types of advertising does not involve an agent and is
conducted through the mail, advertisement in newspapers and magazines,
on television and radio and through the internet:
A. Direct writing
B. Captive agency writing
C. Direct response
D. Cold calling - Direct Response
Which of the following individuals represent only one insurance company:
A. an independent agent
B. a general agent
C. a captive agent
D. a managing general agent - a captive agent
What is a contract or device for transferring risk from a person, business or
organization to an insurance company:
A. insurance
