2-20 Insurance License Exam
Questions and Verified Correct
Answers
actual authority - correct answer ✔✔anything a principal authorizes the agent to do
aleatory contract - correct answer ✔✔contract in which the amounts exchanged are not equal
conformity to statute - correct answer ✔✔a policy provision that says the policy follows a
state's law if the law and policy language are in conflict
contract of adhesion - correct answer ✔✔contract drawn by one party and offered to another
on a "take it or leave it" basis
direct writer agent - correct answer ✔✔an agent that is an employee of an insurer, rather than
as an independent holding contracts with an insurer
duty of accounting - correct answer ✔✔the agent must account for any money entrusted to him
by the principal
duty of loyalty - correct answer ✔✔owed by an agent to the principal- the agent must not do
anything to harm the principal
duty of obedience - correct answer ✔✔the agent must obey all lawful instructions from the
principal
,duty of reasonable care - correct answer ✔✔the agent must exercise the same degree of care
as a reasonable and prudent person
duty to give information - correct answer ✔✔the agent must keep the principal informed about
any factors that affect the principal-agent relationship
exclusive agent - correct answer ✔✔an agent that has a contract with only one insurer. may or
may not be an employee of the insurance company he represents.
FAIR plan - correct answer ✔✔a government program that offers property and crime insurance
in the inner cities
fraternal insurers - correct answer ✔✔offer coverage only to members of a particular group
hazard - correct answer ✔✔increases the chance of loss from a peril
indemnify - correct answer ✔✔to make whole again financially
independent adjuster - correct answer ✔✔an adjuster who works for several companies on a
contract basis
independent agent - correct answer ✔✔an agent that has contracts with several insurers.
"Owns the expirations"
Inland Marine - correct answer ✔✔traditionally provides protection for property in transit over
land, and today, to collections, personal property, and other coverage for movable property
insurable interest - correct answer ✔✔the potential for financial loss associated with damage or
destruction of property
, insurance policy - correct answer ✔✔the indemnity contract between an insured and insurer
marine insurance - correct answer ✔✔insurance that covers property that is in some way
related to transportation
moral hazard - correct answer ✔✔arises out of the dishonesty of an insured. Burning down
your own house
morale hazard - correct answer ✔✔arises out of the indifference to loss because of insurance
coverage
ocean marine - correct answer ✔✔provides protection for waterborne property
peril - correct answer ✔✔potential cause for loss
premium - correct answer ✔✔consideration paid by the insured in exchange for the insurer's
promise to indemnify
reciprocal insurers - correct answer ✔✔a group of individuals or firms who combine to pay each
other's losses
social insurance - correct answer ✔✔a minimal level of protection provided by the government.
participation is mandatory
workers comp 3a - correct answer ✔✔known locations
workers comp 3c - correct answer ✔✔other locations
Questions and Verified Correct
Answers
actual authority - correct answer ✔✔anything a principal authorizes the agent to do
aleatory contract - correct answer ✔✔contract in which the amounts exchanged are not equal
conformity to statute - correct answer ✔✔a policy provision that says the policy follows a
state's law if the law and policy language are in conflict
contract of adhesion - correct answer ✔✔contract drawn by one party and offered to another
on a "take it or leave it" basis
direct writer agent - correct answer ✔✔an agent that is an employee of an insurer, rather than
as an independent holding contracts with an insurer
duty of accounting - correct answer ✔✔the agent must account for any money entrusted to him
by the principal
duty of loyalty - correct answer ✔✔owed by an agent to the principal- the agent must not do
anything to harm the principal
duty of obedience - correct answer ✔✔the agent must obey all lawful instructions from the
principal
,duty of reasonable care - correct answer ✔✔the agent must exercise the same degree of care
as a reasonable and prudent person
duty to give information - correct answer ✔✔the agent must keep the principal informed about
any factors that affect the principal-agent relationship
exclusive agent - correct answer ✔✔an agent that has a contract with only one insurer. may or
may not be an employee of the insurance company he represents.
FAIR plan - correct answer ✔✔a government program that offers property and crime insurance
in the inner cities
fraternal insurers - correct answer ✔✔offer coverage only to members of a particular group
hazard - correct answer ✔✔increases the chance of loss from a peril
indemnify - correct answer ✔✔to make whole again financially
independent adjuster - correct answer ✔✔an adjuster who works for several companies on a
contract basis
independent agent - correct answer ✔✔an agent that has contracts with several insurers.
"Owns the expirations"
Inland Marine - correct answer ✔✔traditionally provides protection for property in transit over
land, and today, to collections, personal property, and other coverage for movable property
insurable interest - correct answer ✔✔the potential for financial loss associated with damage or
destruction of property
, insurance policy - correct answer ✔✔the indemnity contract between an insured and insurer
marine insurance - correct answer ✔✔insurance that covers property that is in some way
related to transportation
moral hazard - correct answer ✔✔arises out of the dishonesty of an insured. Burning down
your own house
morale hazard - correct answer ✔✔arises out of the indifference to loss because of insurance
coverage
ocean marine - correct answer ✔✔provides protection for waterborne property
peril - correct answer ✔✔potential cause for loss
premium - correct answer ✔✔consideration paid by the insured in exchange for the insurer's
promise to indemnify
reciprocal insurers - correct answer ✔✔a group of individuals or firms who combine to pay each
other's losses
social insurance - correct answer ✔✔a minimal level of protection provided by the government.
participation is mandatory
workers comp 3a - correct answer ✔✔known locations
workers comp 3c - correct answer ✔✔other locations
