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Washington State Insurance Exam
Questions with Detailed Verified
Answers
Question: Apparent
Ans: is the appearance or assumption of authority based on the actions,
words, or deeds of the principal or because of circumstances the principal
created.
Question: Mutual Company
Ans: Owned by the policyowner and issue participating policies. Policy
owners are entitled to dividends, which are a return of excess premiums and
are therefore non-taxable. Dividends are not guaranteed.
Question: Sharing
Ans: A method of dealing with risk for a group of individual persons or
businesses with the same or similar exposure to loss to share the losses that
occur within that group. A RECIPROCAL insurance exchange is a form of risk-
sharing arrangement.
Question: Retention
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Ans: Is the planned assumption of risk by the insured through the use of
deductibles, co-payments, or self-insurance. It is also known as self-insurance
when the insured accepts the responsibility for the loss before the insurance
company pays.
Question: Express Authority
Ans: Is the AUTHORITY a principal intends to grant to an agent by means of
the agent's contract. It is the authority that is written in the contract.
Question: Insurable Risk
Ans: In order to be characterized as a pure risk, the loss must be due to
chance, definite, measurable, and predictable, but not catastrophic.
Question: Insurance Policy Conditions
Ans: Section of an insurance policy that indicates the general rules or
procedures that the insurer and insured agree to follow under the terms of the
policy. Examples: Inspection may be made as needed/ Changes to the policy
must be made by insurer and be in writing/ Liberalization clause/ Return of
premiums, which dictates methods used.
Question: Loss Costs Rating
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Ans: Type of rating: Method developed by the insurance services office Inc.
(ISO) that provides an insurer with that portion of a rate that does not include
provisions of expenses or profit and are based on historical aggregate loss and
loss adjustment expenses projected through development to their ultimate
value and through trending to a future point in time.
Question: Strict Liability
Ans: Is commonly applied in product liability cases. The business is then liable
for defective products, regardless of fault or negligence.
Question: Insuring Agreement
Ans: The part of the policy structure that describes the insured perils and the
method of indemnification.
Question: Conditions
Ans: States the legal obligations and duties of the parties to the contract.
Question: Valued Policy
Ans: Provides for payment of the full policy amount in the event of a total
loss WITHOUT regard to actual value or depreciation.
Question: Contributory Negligence
Washington State Insurance Exam
Questions with Detailed Verified
Answers
Question: Apparent
Ans: is the appearance or assumption of authority based on the actions,
words, or deeds of the principal or because of circumstances the principal
created.
Question: Mutual Company
Ans: Owned by the policyowner and issue participating policies. Policy
owners are entitled to dividends, which are a return of excess premiums and
are therefore non-taxable. Dividends are not guaranteed.
Question: Sharing
Ans: A method of dealing with risk for a group of individual persons or
businesses with the same or similar exposure to loss to share the losses that
occur within that group. A RECIPROCAL insurance exchange is a form of risk-
sharing arrangement.
Question: Retention
, Page | 2
Ans: Is the planned assumption of risk by the insured through the use of
deductibles, co-payments, or self-insurance. It is also known as self-insurance
when the insured accepts the responsibility for the loss before the insurance
company pays.
Question: Express Authority
Ans: Is the AUTHORITY a principal intends to grant to an agent by means of
the agent's contract. It is the authority that is written in the contract.
Question: Insurable Risk
Ans: In order to be characterized as a pure risk, the loss must be due to
chance, definite, measurable, and predictable, but not catastrophic.
Question: Insurance Policy Conditions
Ans: Section of an insurance policy that indicates the general rules or
procedures that the insurer and insured agree to follow under the terms of the
policy. Examples: Inspection may be made as needed/ Changes to the policy
must be made by insurer and be in writing/ Liberalization clause/ Return of
premiums, which dictates methods used.
Question: Loss Costs Rating
, Page | 3
Ans: Type of rating: Method developed by the insurance services office Inc.
(ISO) that provides an insurer with that portion of a rate that does not include
provisions of expenses or profit and are based on historical aggregate loss and
loss adjustment expenses projected through development to their ultimate
value and through trending to a future point in time.
Question: Strict Liability
Ans: Is commonly applied in product liability cases. The business is then liable
for defective products, regardless of fault or negligence.
Question: Insuring Agreement
Ans: The part of the policy structure that describes the insured perils and the
method of indemnification.
Question: Conditions
Ans: States the legal obligations and duties of the parties to the contract.
Question: Valued Policy
Ans: Provides for payment of the full policy amount in the event of a total
loss WITHOUT regard to actual value or depreciation.
Question: Contributory Negligence
