PERSONAL LINES
PRACTICE EXAM QUESTIONS WITH
CORRECT DETAILED ANSWERS |
ALREADY GRADED A+<RECENT
VERSION>
1. Risk _________ is when one takes action to prevent or reduce potential loss. -
ANSWER Reduction
2. When the number of similar units increases, the predictability of the loss improves
according to the rule of _____ ________. - ANSWER Large Numbers
3. The insuring of risks that are more prone to losses than average risks is known as? -
ANSWER Adverse Selection
4. A ___________ contract is an arrangement where one insurer transfers or shares risks
with another insurer. - ANSWER Reinsurance
5. _____________ Reinsurance is accepted or rejected by a case by case basis. -
ANSWER Facultative
6. The fact that an insured would profit from a loss, would be a violation of the principle
of ___________. - ANSWER Indemnity
7. The determination of acceptable risks is the primary function of the ___________ . -
ANSWER Underwriter
,8. Underwriters like to select insureds who's actual losses will be similar to expected
losses. True or False? - ANSWER True
9. When rates cannot be used until they are improved by the department or division of
insurance, they are called ____ ________ rates. - ANSWER Prior Approval
10. The termination of a policy by either the insured or insurer before its expiration date
is known as ___________. - ANSWER Cancellation
11. When the insurer cancels a property policy, the unearned premium is returned ___
____. - ANSWER Pro Rata
12. When an insured requests cancellation of a policy, the unearned premium is refunded
to the insured on a _____ _____. - ANSWER Short Rate
13. A fire is considered to be a _____ of a potential loss. - ANSWER Cause
14. A document that provides temporary insurance coverage until a policy is issued is
known as a ______. - ANSWER Binder
15. The process by which a disputed claim is decided by a neutral third party is known as
___________. - ANSWER Arbitration
16. _________ _________ is a situation where there are two causes resulting in a loss,
with one of the causes excluded and the other cause of loss not excluded. -
ANSWER Concurrent Causation
17. If two or more policies provide identical coverage for the same risk, the policies are
deemed to be __________. - ANSWER Concurrent
18. Policy A is written for $100,000, and an excess Policy B is written for $200,000 on
the same property. In the event of a $20,000 loss, how much will each policy pay? -
ANSWER A= $20,000 ; B= $0
,19. A building that has neither occupants nor personal property is ______. - ANSWER
Vacant
20. When property is damaged by fire, the loss is said to be a(n) ______ loss. -
ANSWER Direct
21. If a fire on a premises caused a power outage, which caused meat in the freezer to
spoil, would the meat spoilage be considered a direct loss or indirect loss? -
ANSWER Indirect Loss
22. Open peril policies include losses caused by theft. True or False? - ANSWER True
23. If a property owner does not desire any deduction for depreciation following a
covered loss, he/she should purchase a ___________ ____ policy. - ANSWER
Replacement Cost
24. For replacement cost coverage to apply in dwelling policies, the insured must carry
insurance at least equal to ____% of the cost of replacement of the building. -
ANSWER 80
25. Would a stated amount method of valuation likely be used when insuring gold
bullion? - ANSWER No
26. An ____ policy is one that the value of the subject matter is not agreed upon, but is
left to be ascertained in case of loss. - ANSWER Open
27. A valued policy is one that expresses on it's face an agreement that the thing insured is
valued at a specific sum. True or False? - ANSWER True
28. Insuring more than one property on one policy for a single amount of insurance that
applies to all properties covered under the policy is known as _______ coverage. -
ANSWER Blanket
, 29. The name of the insured is found on the declarations page of the policy. True or
False? - ANSWER True
30. What part or portion of a property policy contains the effective or expiration dates of
the policy? - ANSWER Declarations
31. Are the insurer's limits of insurance amount stated in the conditions part or portion
part of the policy? - ANSWER No
32. The __________ part or portion of a property policy sets forth the rights, rules, duties,
and obligations of the insurer and insured to be followed throughout the policy period.
- ANSWER Conditions
33. The ______________ Clause allows insurers to automatically broaden coverage
without endorsement on existing policies with no increase in premium. -
ANSWER Liberalization
34. When a property policy has been in effect less than 60 days and the insurer cancels for
the nonpayment of premium, the insurer must give the insured ____ days written
notice. - ANSWER 10
35. Could an order to vacate the property possibly cause an insurer to cancel a
commercial property policy? - ANSWER Yes
36. An insurer may non renew a homeowners policy with oral notice to the insured. True
or False? - ANSWER False
37. The insured's transfer of right of ownership or interest in an insurance policy to
another party with the insurer's written consent is known as an __________. -
ANSWER Assignment
38. ___________ transfers an insured's legal right of recovery to the insurer that paid the
claim. - ANSWER Subrogation
PRACTICE EXAM QUESTIONS WITH
CORRECT DETAILED ANSWERS |
ALREADY GRADED A+<RECENT
VERSION>
1. Risk _________ is when one takes action to prevent or reduce potential loss. -
ANSWER Reduction
2. When the number of similar units increases, the predictability of the loss improves
according to the rule of _____ ________. - ANSWER Large Numbers
3. The insuring of risks that are more prone to losses than average risks is known as? -
ANSWER Adverse Selection
4. A ___________ contract is an arrangement where one insurer transfers or shares risks
with another insurer. - ANSWER Reinsurance
5. _____________ Reinsurance is accepted or rejected by a case by case basis. -
ANSWER Facultative
6. The fact that an insured would profit from a loss, would be a violation of the principle
of ___________. - ANSWER Indemnity
7. The determination of acceptable risks is the primary function of the ___________ . -
ANSWER Underwriter
,8. Underwriters like to select insureds who's actual losses will be similar to expected
losses. True or False? - ANSWER True
9. When rates cannot be used until they are improved by the department or division of
insurance, they are called ____ ________ rates. - ANSWER Prior Approval
10. The termination of a policy by either the insured or insurer before its expiration date
is known as ___________. - ANSWER Cancellation
11. When the insurer cancels a property policy, the unearned premium is returned ___
____. - ANSWER Pro Rata
12. When an insured requests cancellation of a policy, the unearned premium is refunded
to the insured on a _____ _____. - ANSWER Short Rate
13. A fire is considered to be a _____ of a potential loss. - ANSWER Cause
14. A document that provides temporary insurance coverage until a policy is issued is
known as a ______. - ANSWER Binder
15. The process by which a disputed claim is decided by a neutral third party is known as
___________. - ANSWER Arbitration
16. _________ _________ is a situation where there are two causes resulting in a loss,
with one of the causes excluded and the other cause of loss not excluded. -
ANSWER Concurrent Causation
17. If two or more policies provide identical coverage for the same risk, the policies are
deemed to be __________. - ANSWER Concurrent
18. Policy A is written for $100,000, and an excess Policy B is written for $200,000 on
the same property. In the event of a $20,000 loss, how much will each policy pay? -
ANSWER A= $20,000 ; B= $0
,19. A building that has neither occupants nor personal property is ______. - ANSWER
Vacant
20. When property is damaged by fire, the loss is said to be a(n) ______ loss. -
ANSWER Direct
21. If a fire on a premises caused a power outage, which caused meat in the freezer to
spoil, would the meat spoilage be considered a direct loss or indirect loss? -
ANSWER Indirect Loss
22. Open peril policies include losses caused by theft. True or False? - ANSWER True
23. If a property owner does not desire any deduction for depreciation following a
covered loss, he/she should purchase a ___________ ____ policy. - ANSWER
Replacement Cost
24. For replacement cost coverage to apply in dwelling policies, the insured must carry
insurance at least equal to ____% of the cost of replacement of the building. -
ANSWER 80
25. Would a stated amount method of valuation likely be used when insuring gold
bullion? - ANSWER No
26. An ____ policy is one that the value of the subject matter is not agreed upon, but is
left to be ascertained in case of loss. - ANSWER Open
27. A valued policy is one that expresses on it's face an agreement that the thing insured is
valued at a specific sum. True or False? - ANSWER True
28. Insuring more than one property on one policy for a single amount of insurance that
applies to all properties covered under the policy is known as _______ coverage. -
ANSWER Blanket
, 29. The name of the insured is found on the declarations page of the policy. True or
False? - ANSWER True
30. What part or portion of a property policy contains the effective or expiration dates of
the policy? - ANSWER Declarations
31. Are the insurer's limits of insurance amount stated in the conditions part or portion
part of the policy? - ANSWER No
32. The __________ part or portion of a property policy sets forth the rights, rules, duties,
and obligations of the insurer and insured to be followed throughout the policy period.
- ANSWER Conditions
33. The ______________ Clause allows insurers to automatically broaden coverage
without endorsement on existing policies with no increase in premium. -
ANSWER Liberalization
34. When a property policy has been in effect less than 60 days and the insurer cancels for
the nonpayment of premium, the insurer must give the insured ____ days written
notice. - ANSWER 10
35. Could an order to vacate the property possibly cause an insurer to cancel a
commercial property policy? - ANSWER Yes
36. An insurer may non renew a homeowners policy with oral notice to the insured. True
or False? - ANSWER False
37. The insured's transfer of right of ownership or interest in an insurance policy to
another party with the insurer's written consent is known as an __________. -
ANSWER Assignment
38. ___________ transfers an insured's legal right of recovery to the insurer that paid the
claim. - ANSWER Subrogation
