Virginia Personal Lines Agent Licensing
Course 2025/2026 Exam Questions and
Verified Answers | Already Graded A+
What is insurance? - 🧠ANSWER ✔✔Insurance is a social device for
spreading the chance of financial loss among a large number of people. By
purchasing insurance, a "person" shares risk with a group of others,
thereby reducing the individual potential for disastrous financial
consequences.
What is insurance based on? - 🧠ANSWER ✔✔the law of large numbers; by
combining a large number of homogeneous units, the insurer is able to
make predictions of possible loss. Using the law of large numbers, insurers
are able to calculate probable losses and to establish the rates for
premiums that will cover their losses and their operating expenses.
,What is underwriting? - 🧠ANSWER ✔✔the process of selecting certain
types of risks that have historically produced a profit and rejecting those
risks that do not fit the underwriting criteria of the insurer; normally
produces a favorable loss ratio
Adverse selection - 🧠ANSWER ✔✔assess risk and charge too little; the
tendency of insureds with a greater-than-average chance of loss to
purchase insurance
Reinsurace - 🧠ANSWER ✔✔a contract of indemnity against liability by
which an insurance company procures another insurance company to
insure it against loss or liability by reason of the original insurance;
insurance companies have a company that insures them
What are the 6 parts of an insurance contract? - 🧠ANSWER
✔✔Declarations, Insuring Agreement, Conditions, Exclusions and
Limitations, Definitions, Endorsements
Declarations - 🧠ANSWER ✔✔includes the identity and address of the
named insured, the policy term or period, the amount of insurance or limits
of liability, the policy premium, and any applicable deductibles; include
,property description and any applicable deductibles as well as list any
endorsements; who is insured, what is insured, deductibles... etc.
Insuring Agreement - 🧠ANSWER ✔✔describes the covered perils, or risks
assumed, or nature of coverage, or makes some reference to the
contractual agreement between insurer and insured; what insurer will cover
for you.
Conditions - 🧠ANSWER ✔✔set provisions, rules of conduct, duties, and
obligations for the parties; describes things such as the policy period and
territory, the insured's obligation to provide proof of loss, how settlements
are handled when other insurance is involved, and the right of each party to
cancel the policy
Exclusions and Limitations - 🧠ANSWER ✔✔Exclusions: may describe
property , perils, hazards, or losses arising from specific causes that are
not covered by the policy; Limitations; may eliminate or reduce coverage,
but only under certain circumstances or when specified conditions apply;
Exclusions and Limitations: when the insurance company wont cover you.
Definitions - 🧠ANSWER ✔✔Define important terms used in the policy
language; explanation
3
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
STATEMENT. ALL RIGHTS RESERVED
, Endorsements - 🧠ANSWER ✔✔used to add, delete, or change any of the
policy parts; written modification of the policy; additional coverages to
contract --> extra money premium.
Peril - 🧠ANSWER ✔✔potential cause of loss
Hazard - 🧠ANSWER ✔✔increases the seriousness of a loss or increases
the likelihood that a loss will occur; increased potential of peril
Direct Loss - 🧠ANSWER ✔✔direct consequence of a particular peril
(example: fire damage to an apartment building
Indirect Loss - 🧠ANSWER ✔✔loss that is a result of a covered peril but is
not caused directly and immediately by that peril (example: loss of rental
income)
Salvage - 🧠ANSWER ✔✔If the insurer pays a loss on behalf of the insured,
the insurer is entitled to the salvage to reduce the claim (example: totaled
care --> belongs to insurance company)
Abandonment - 🧠ANSWER ✔✔insured cannot simply abandon the property
to the insurance company in exchange for the full-insured value.
Course 2025/2026 Exam Questions and
Verified Answers | Already Graded A+
What is insurance? - 🧠ANSWER ✔✔Insurance is a social device for
spreading the chance of financial loss among a large number of people. By
purchasing insurance, a "person" shares risk with a group of others,
thereby reducing the individual potential for disastrous financial
consequences.
What is insurance based on? - 🧠ANSWER ✔✔the law of large numbers; by
combining a large number of homogeneous units, the insurer is able to
make predictions of possible loss. Using the law of large numbers, insurers
are able to calculate probable losses and to establish the rates for
premiums that will cover their losses and their operating expenses.
,What is underwriting? - 🧠ANSWER ✔✔the process of selecting certain
types of risks that have historically produced a profit and rejecting those
risks that do not fit the underwriting criteria of the insurer; normally
produces a favorable loss ratio
Adverse selection - 🧠ANSWER ✔✔assess risk and charge too little; the
tendency of insureds with a greater-than-average chance of loss to
purchase insurance
Reinsurace - 🧠ANSWER ✔✔a contract of indemnity against liability by
which an insurance company procures another insurance company to
insure it against loss or liability by reason of the original insurance;
insurance companies have a company that insures them
What are the 6 parts of an insurance contract? - 🧠ANSWER
✔✔Declarations, Insuring Agreement, Conditions, Exclusions and
Limitations, Definitions, Endorsements
Declarations - 🧠ANSWER ✔✔includes the identity and address of the
named insured, the policy term or period, the amount of insurance or limits
of liability, the policy premium, and any applicable deductibles; include
,property description and any applicable deductibles as well as list any
endorsements; who is insured, what is insured, deductibles... etc.
Insuring Agreement - 🧠ANSWER ✔✔describes the covered perils, or risks
assumed, or nature of coverage, or makes some reference to the
contractual agreement between insurer and insured; what insurer will cover
for you.
Conditions - 🧠ANSWER ✔✔set provisions, rules of conduct, duties, and
obligations for the parties; describes things such as the policy period and
territory, the insured's obligation to provide proof of loss, how settlements
are handled when other insurance is involved, and the right of each party to
cancel the policy
Exclusions and Limitations - 🧠ANSWER ✔✔Exclusions: may describe
property , perils, hazards, or losses arising from specific causes that are
not covered by the policy; Limitations; may eliminate or reduce coverage,
but only under certain circumstances or when specified conditions apply;
Exclusions and Limitations: when the insurance company wont cover you.
Definitions - 🧠ANSWER ✔✔Define important terms used in the policy
language; explanation
3
COPYRIGHT©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
STATEMENT. ALL RIGHTS RESERVED
, Endorsements - 🧠ANSWER ✔✔used to add, delete, or change any of the
policy parts; written modification of the policy; additional coverages to
contract --> extra money premium.
Peril - 🧠ANSWER ✔✔potential cause of loss
Hazard - 🧠ANSWER ✔✔increases the seriousness of a loss or increases
the likelihood that a loss will occur; increased potential of peril
Direct Loss - 🧠ANSWER ✔✔direct consequence of a particular peril
(example: fire damage to an apartment building
Indirect Loss - 🧠ANSWER ✔✔loss that is a result of a covered peril but is
not caused directly and immediately by that peril (example: loss of rental
income)
Salvage - 🧠ANSWER ✔✔If the insurer pays a loss on behalf of the insured,
the insurer is entitled to the salvage to reduce the claim (example: totaled
care --> belongs to insurance company)
Abandonment - 🧠ANSWER ✔✔insured cannot simply abandon the property
to the insurance company in exchange for the full-insured value.
