Personal Lines Study Guide 2025/2026 QUESTIONS AND
ANSWERS GUARANTEE A+
Unauthorized or non-admitted insurers that are permitted to write policies on risks that admitted
insurers cannot underwrite are called - surplus lines insurers.
Insurers use _ to select risks that fall into the normal range of the insurer's expected losses -
underwriters.
The underwriter uses the _ and other information sources to check for the applicant's insurability
- insurance application.
The file and use method allows insurers to - use rates as soon as they are filed with the state
regulatory authority.
The use and file method allows insurers to - use rates as long as they are filed within a certain
number of days after use.
The prior approval method - requires the rates to be accepted by the state regulatory authority
before they can be used.
An agent - transacts insurance on behalf of an insurer.
A broker - transacts insurance on behalf of an insured.
An agent is granted authority to represent the insurer under the __ which assigns responsibility to
the insurer for the agent's contractual acts - law of agency
An agent has a __ to handle the funds of others - fiduciary duty
,Authority that is written in the agency contract is called - express authority
Authority that is presumed or interpreted based on the agent's actions is called - implied
authority.
Authority that arises when the insurer does not act to stop an agent from exceeding contractual
authority is called - apparent authority. (All three are equally binding)
The business of insurance is regulated on the - state level.
The __ protects the privacy of consumer credit information by regulating the ways insurers
collect/use and store credit reports - Fair Credit Reporting Act.
The___ provides consumers with the legal right to opt out of information sharing and requires
insurers to provide privacy notices at the time the customer relationship is established and
annually thereafter - Gramm-Leach-Bliley Act (GLBA)
The __ is a temporary program to provide reinsurance for losses arising from the peril of
terrorism which is generally too catastrophic to be covered in the private market - Terrorism Risk
Insurance Act (TRIA)
The Terrorism Insurance Program is administered by the ___ who determines what is considered
an act of terrorism - Secretary of Treasury
A contract - is an agreement between two or more parties that is enforceable by law.
In order to be valid the contract must be made by ___ who have legal capacity to enter into the
contract - competent parties.
, The contract must include an ___ composed of an offer and acceptance. The contract must also
include the exchange of value known as ___. - agreement; consideration.
Insurance contracts are ____ because the insurer writes the contract on a takeit- or-leave-it basis
but any ambiguities in the contract will be interpreted in favor of the insured - contracts of
adhesion.
Insurance contracts are also ____ as the uncertainty of loss means there will be an unequal
exchange of value - aleatory contracts
statements made by the applicant on the application that are believed to betrue at the time of
application. - Representations
are guaranteed to be true - warranties
false statements contained in the application - Misrepresentations
The policy that responds first is known as - primary insurance.
A policy that responds only after that policy's limits are exhausted is known as - excess insurance
If a loss does take place the insurance policy is responsible for returning the insured to the same
financial or physical condition that existed prior to loss which is known as the - principle of
indemnity.
a temporary contract to provide insurance coverage for a limited amount of time before the
issuance of the full policy. - binder
Evidence that insurance coverage at certain amounts is in place is provided by a - certificate of
insurance.
ANSWERS GUARANTEE A+
Unauthorized or non-admitted insurers that are permitted to write policies on risks that admitted
insurers cannot underwrite are called - surplus lines insurers.
Insurers use _ to select risks that fall into the normal range of the insurer's expected losses -
underwriters.
The underwriter uses the _ and other information sources to check for the applicant's insurability
- insurance application.
The file and use method allows insurers to - use rates as soon as they are filed with the state
regulatory authority.
The use and file method allows insurers to - use rates as long as they are filed within a certain
number of days after use.
The prior approval method - requires the rates to be accepted by the state regulatory authority
before they can be used.
An agent - transacts insurance on behalf of an insurer.
A broker - transacts insurance on behalf of an insured.
An agent is granted authority to represent the insurer under the __ which assigns responsibility to
the insurer for the agent's contractual acts - law of agency
An agent has a __ to handle the funds of others - fiduciary duty
,Authority that is written in the agency contract is called - express authority
Authority that is presumed or interpreted based on the agent's actions is called - implied
authority.
Authority that arises when the insurer does not act to stop an agent from exceeding contractual
authority is called - apparent authority. (All three are equally binding)
The business of insurance is regulated on the - state level.
The __ protects the privacy of consumer credit information by regulating the ways insurers
collect/use and store credit reports - Fair Credit Reporting Act.
The___ provides consumers with the legal right to opt out of information sharing and requires
insurers to provide privacy notices at the time the customer relationship is established and
annually thereafter - Gramm-Leach-Bliley Act (GLBA)
The __ is a temporary program to provide reinsurance for losses arising from the peril of
terrorism which is generally too catastrophic to be covered in the private market - Terrorism Risk
Insurance Act (TRIA)
The Terrorism Insurance Program is administered by the ___ who determines what is considered
an act of terrorism - Secretary of Treasury
A contract - is an agreement between two or more parties that is enforceable by law.
In order to be valid the contract must be made by ___ who have legal capacity to enter into the
contract - competent parties.
, The contract must include an ___ composed of an offer and acceptance. The contract must also
include the exchange of value known as ___. - agreement; consideration.
Insurance contracts are ____ because the insurer writes the contract on a takeit- or-leave-it basis
but any ambiguities in the contract will be interpreted in favor of the insured - contracts of
adhesion.
Insurance contracts are also ____ as the uncertainty of loss means there will be an unequal
exchange of value - aleatory contracts
statements made by the applicant on the application that are believed to betrue at the time of
application. - Representations
are guaranteed to be true - warranties
false statements contained in the application - Misrepresentations
The policy that responds first is known as - primary insurance.
A policy that responds only after that policy's limits are exhausted is known as - excess insurance
If a loss does take place the insurance policy is responsible for returning the insured to the same
financial or physical condition that existed prior to loss which is known as the - principle of
indemnity.
a temporary contract to provide insurance coverage for a limited amount of time before the
issuance of the full policy. - binder
Evidence that insurance coverage at certain amounts is in place is provided by a - certificate of
insurance.
