INSURANCE EXAM 2026 Questions and
Answers
SPECULATIVE RISK - Correct answer-Chance of Financial loss or gain
Speculative risk - Correct answer-gambling
Pure risk - Correct answer-Chance of Financial loss, no gain
loss - Correct answer-Unintended unforeseen/ financial
loss - Correct answer-Not sentimental
peril - Correct answer-reason loss occured
hazard - Correct answer-Increases likelihood or severity of loss
Physical hazard - Correct answer-Material or structural ( oily rag, icy road )
Moral hazard - Correct answer-Morality or ethics (intentional, fraud, arson)
Morale hazard - Correct answer-Human carelessness or irresponsibility (cell
phones, garage doors)
4 risk management techniques
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,1. reduce - Correct answer-Lowering hazard
4 risk management techniques
2. Retain - Correct answer-Self-insure or deductible
4 risk management techniques
3. Avoid - Correct answer-Do not engage in the activity
4 risk management techniques
4. transfer - Correct answer-Purchase insurance so the company is at risk not you
First dollar coverage - Correct answer-No deductible
insurance - Correct answer-Transfer of financial risk
Law of large numbers - Correct answer-Predicts total future losses, no individual
losses
Legally binding contract - Correct answer-Insurance policy
binder - Correct answer-temp insurance contract 90 days, written or verbal
War or nuclear damage - Correct answer-Never covered
Insurable interest - Correct answer-Financial loss a person suffers when property is
destroyed
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, contract - Correct answer-Must be legal
Contract - Correct answer-Both offer and acceptance
Contract - Correct answer-competent parties - not intoxicated, minor or legally
insane
contract - Correct answer-consideration - trade of value
(act, promise, money)
representations - Correct answer-Material facts on an app, insured believes to be
true
concealment - Correct answer-Leaving out info on purpose
warranties - Correct answer-Written statements guaranteeing something to be true,
breach of warranty voids insurance contract
fraud - Correct answer-Knowing misrepresentation, concealment of material fats
Fraud is a felony - Correct answer-10,000
Up to 10 years prison
Combination of both
indemnity - Correct answer-Makes insured financially whole, not allowing gain
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Answers
SPECULATIVE RISK - Correct answer-Chance of Financial loss or gain
Speculative risk - Correct answer-gambling
Pure risk - Correct answer-Chance of Financial loss, no gain
loss - Correct answer-Unintended unforeseen/ financial
loss - Correct answer-Not sentimental
peril - Correct answer-reason loss occured
hazard - Correct answer-Increases likelihood or severity of loss
Physical hazard - Correct answer-Material or structural ( oily rag, icy road )
Moral hazard - Correct answer-Morality or ethics (intentional, fraud, arson)
Morale hazard - Correct answer-Human carelessness or irresponsibility (cell
phones, garage doors)
4 risk management techniques
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,1. reduce - Correct answer-Lowering hazard
4 risk management techniques
2. Retain - Correct answer-Self-insure or deductible
4 risk management techniques
3. Avoid - Correct answer-Do not engage in the activity
4 risk management techniques
4. transfer - Correct answer-Purchase insurance so the company is at risk not you
First dollar coverage - Correct answer-No deductible
insurance - Correct answer-Transfer of financial risk
Law of large numbers - Correct answer-Predicts total future losses, no individual
losses
Legally binding contract - Correct answer-Insurance policy
binder - Correct answer-temp insurance contract 90 days, written or verbal
War or nuclear damage - Correct answer-Never covered
Insurable interest - Correct answer-Financial loss a person suffers when property is
destroyed
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, contract - Correct answer-Must be legal
Contract - Correct answer-Both offer and acceptance
Contract - Correct answer-competent parties - not intoxicated, minor or legally
insane
contract - Correct answer-consideration - trade of value
(act, promise, money)
representations - Correct answer-Material facts on an app, insured believes to be
true
concealment - Correct answer-Leaving out info on purpose
warranties - Correct answer-Written statements guaranteeing something to be true,
breach of warranty voids insurance contract
fraud - Correct answer-Knowing misrepresentation, concealment of material fats
Fraud is a felony - Correct answer-10,000
Up to 10 years prison
Combination of both
indemnity - Correct answer-Makes insured financially whole, not allowing gain
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
