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AD Banker Exam Questions with Detailed
Verified Answers
Where can an insured find insurance coverage after being rejected
by Insurer A due to claims history?
A
Residual market
B
Risk retention insurer
C
Reinsurance market
D
Lloyd's of London
⼀Answer:⼀ A Residual Market
The residual market is a coverage source of last resort for businesses
and individuals who have been rejected by voluntary market insurers.
Which Federal entity administers the Terrorism Risk Insurance
Program Reauthorization Act?
A
Secretary of State
B
Executive office
C
Department of Defense
D
Department of the Treasury
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⼀Answer:⼀ D Department of the Treasury
The Terrorism Risk Insurance Act, which protects consumers by ensuring
the continued widespread availability and affordability of property
and casualty insurance for a terrorism risk, is administered by the
Dept. of Treasury.
An applicant makes a statement on the insurance application
which becomes part of the contract that she has an alarm system
which qualifies her for a premium discount. This statement is
considered a:
A
Representation
B
Endorsement
C
Warranty
D
Provision
⼀Answer:⼀ C Warranty
A warranty is a statement that is guaranteed to be true, as opposed
to a representation of something that is true to the best of one's
knowledge.
Insurance is designed to provide protection against which of the
following?
A
Involuntary risk
B
Pure Risk
C
Certain Risk
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D
Speculative risk
⼀Answer:⼀ B Pure Risk
With pure risk, the only consideration is the possibility of loss or no
loss. By contrast, speculative entails a chance of gain as well as a
chance of loss.
Which of the following best describes the principle of Indemnity?
A
The insured is restored to the same financial condition as prior to
the loss, with no loss or gain
B
The insured compensates the insurer for any expenses it incurs in
adjusting the loss
C
The insureds position is not improved after sustaining a loss
D
The insured is restored to a financial condition as good as, or better
than, the insured was before the loss
⼀Answer:⼀ A The insured is restored to the same financial condition
as prior to the loss, with no loss or gain
Indemnity is the principle that restores an insured party to the
economic position he/she enjoyed before sustaining a loss.
Determining acceptable risks is the primary responsibility of the:
A
Underwriter
B
Adjuster
C
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Producer
D
Auditor
⼀Answer:⼀ A Underwriter
The selection of risk is the primary responsibility of the underwriter,
who protects the insurer by selecting risks that fall into the normal
range of expected losses.
When an applicant intentionally fails to make a material fact
known, it is known as:
A
Misrepresentation
B
Concealment
C
Bad faith
D
Deception
⼀Answer:⼀ B Concealment
Concealment is defined as the withholding of known facts, the
knowledge of which would change the decision of an insurer with
respect to underwriting, settling a loss, or determining the premium.
If an insurer is incorporated in Rhode Island, but primarily does
business in New York, what type of insurer would it be considered
in New York?
A
Domestic
B
Nonadmitted
AD Banker Exam Questions with Detailed
Verified Answers
Where can an insured find insurance coverage after being rejected
by Insurer A due to claims history?
A
Residual market
B
Risk retention insurer
C
Reinsurance market
D
Lloyd's of London
⼀Answer:⼀ A Residual Market
The residual market is a coverage source of last resort for businesses
and individuals who have been rejected by voluntary market insurers.
Which Federal entity administers the Terrorism Risk Insurance
Program Reauthorization Act?
A
Secretary of State
B
Executive office
C
Department of Defense
D
Department of the Treasury
, Page | 2
⼀Answer:⼀ D Department of the Treasury
The Terrorism Risk Insurance Act, which protects consumers by ensuring
the continued widespread availability and affordability of property
and casualty insurance for a terrorism risk, is administered by the
Dept. of Treasury.
An applicant makes a statement on the insurance application
which becomes part of the contract that she has an alarm system
which qualifies her for a premium discount. This statement is
considered a:
A
Representation
B
Endorsement
C
Warranty
D
Provision
⼀Answer:⼀ C Warranty
A warranty is a statement that is guaranteed to be true, as opposed
to a representation of something that is true to the best of one's
knowledge.
Insurance is designed to provide protection against which of the
following?
A
Involuntary risk
B
Pure Risk
C
Certain Risk
, Page | 3
D
Speculative risk
⼀Answer:⼀ B Pure Risk
With pure risk, the only consideration is the possibility of loss or no
loss. By contrast, speculative entails a chance of gain as well as a
chance of loss.
Which of the following best describes the principle of Indemnity?
A
The insured is restored to the same financial condition as prior to
the loss, with no loss or gain
B
The insured compensates the insurer for any expenses it incurs in
adjusting the loss
C
The insureds position is not improved after sustaining a loss
D
The insured is restored to a financial condition as good as, or better
than, the insured was before the loss
⼀Answer:⼀ A The insured is restored to the same financial condition
as prior to the loss, with no loss or gain
Indemnity is the principle that restores an insured party to the
economic position he/she enjoyed before sustaining a loss.
Determining acceptable risks is the primary responsibility of the:
A
Underwriter
B
Adjuster
C
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Producer
D
Auditor
⼀Answer:⼀ A Underwriter
The selection of risk is the primary responsibility of the underwriter,
who protects the insurer by selecting risks that fall into the normal
range of expected losses.
When an applicant intentionally fails to make a material fact
known, it is known as:
A
Misrepresentation
B
Concealment
C
Bad faith
D
Deception
⼀Answer:⼀ B Concealment
Concealment is defined as the withholding of known facts, the
knowledge of which would change the decision of an insurer with
respect to underwriting, settling a loss, or determining the premium.
If an insurer is incorporated in Rhode Island, but primarily does
business in New York, what type of insurer would it be considered
in New York?
A
Domestic
B
Nonadmitted
