Adjuster license
15: Which of the following is not a hazard
A fire started in a wastebasket
6: Which of the following would not have the capacity to enter into an insurance contract
A person who is under the influence of drugs at the time the agreement was made
20: A slippery floor is an example of?
A physical hazard
1: Which of the following best demonstrates a moral Hazard?
A recent purchaser of auto insurance drives less carefully, knowing that the insurer will cover any losses that occur
7: Which of the following is a statement that is guaranteed to be the truth throughout the duration of the policy
A warranty
17: Estoppel is best exemplified by which of the following?
An insurer is prohibited from denying a claim because its appointed producer advised the insured the claim covered
2: Risk is best defined as:
An uncertainty of a loss
11: Adverse selection occurs when
Applicants are accepted by the insurer with little or no attention given to underwriting
An applicant fails to disclose known facts when completing an application for insurance. This is known as?
Concealment
9: An insurance contract must comply with the "Principle of Indemnity" Jarron's friend Nick accidentally destroys Jarron"s laptop computer. Nick pays Jarron for the damages, but Jarron also submits a claim to his insurance company for the laptop. The claim will be:
Denied because Jarron has already been paid for the damage
3: Milton agrees to steal and wreck Albert's car for $4000.00, so that Albert can collect $8000.00 under his auto insurance policy. Which of the elements of a valid contract are missing in this agreement?
Legal purpose
12: In order for a contract to be binding in a court of law, it must be designed for:
Legal purposes
13: An intentional act designed to deceive and induce another party to part with something of value is known as?
Legal purposes
An insured has fabricated a claim so that it would appear to be legitimate. This would be?
Moral hazard
23: Which of the following is not a common risk management technique?
Multiply the risk by engaging in hazardous activities
19: When a person purchases several insurance policies to provide more coverage on a risk than the value of the possible loss, it is known as?
Over insurance
21: The principle of indemnity is illustrated by which of the following?
Restores an insured to the same condition enjoyed before a loss
17: Horatio is a business owner who is part of a business owners group that is buying old commercial buildings in their small city and refurbishing them. Horatio has bought a beautiful historical building made mostly of wood. He knows that he should install a sprinkler system right away to prevent a fire. What risk management strategy is Horatio using?
Risk reduction
15: An element of a valid contract must involve an offer and an acceptance. Sebastian completes an application for auto insurance and submits it to Indemnify Insurance Company. Who made the offer?
Sebastian
23: The Declarations page of an insurance policy contains?
The name and address of the insured and duration of the policy
3: Which of the following is most likely to be uninsurable?
The purchaser of a new home wants to protect herself from a possible drop in housing prices
14: Which of the following statements is not true concerning the Law of Large numbers?
The size of the sample group is not relevant to the accuracy of the results
16: Max lives in a large apartment complex where there is no guard station or gate. Several hundred people live in the complex so it's very easy to determine the work schedules of the neighbors living around him. One morning Max leaves for work at 6:30am as he usually does, but he forgets to lock the front door. Later that morning someone comes into the apartment and steals Max's computer. What was the peril in this situation?
The theft of the computer
14: Which of the following best describes the purpose of the "insuring agreement" contained in an insurance policy?
To the insurer's promise to pay in case of a loss
1: Which of the following terms is used to describe a contract where the insurance company is the only party that is legally bound to perform its part of the agreement?
Unilateral
26: The giving up of a known right is called?
Waiver
4: Which of the following most accurately describes reinsurance
When an insurance company buys insurance for some of the risks for which it has issued coverage
8: Which of the following is true regarding pure and speculative risks
With pure risk there is only the possibility of loss
2: A warranty in insurance is best described as which of the following?
A guarantee that the statements made by the applicant are completely true and untrue statements can void the coverage
10: Any intentional misinformation provide by an applicant for an insurance policy that would have kept the insurance company from issuing the policy had that information been known is?
A material misrepresentational
4: Vanessa states on an application for personal automobile insurance, that she has had no car accidents within the past 3 years. She later remembers an accident and corrects this statement to include an accident that occurred 2 years ago. Vanessa's original statement can be describes as?
A representation
8: Which of the following statements best describes a "Representation" made in an insurance application
A representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false
19: Which of the following people is committing "hard fraud"
Ally wants her insurer to buy her a new truck, so she pushes her current truck off a cliff and files an auto accident claim
16: The conditions section of an insurance policy sets forth the?
Duties of the insured and the insurance company
10: Which of the following would be an example of a moral hazard?
Embezzlement
25: If an insurance company covered an excluded claim it may have to continue paying other such claims because of?
Estoppel
21: The law recognizes 2 types of waivers. They are?
Express/ Implied
24: An agent, insured, or claimant has intentionally deceived an insurer for financial gain. Such an act is known as?
Fraud
12: A church has had the woodwork in the building refinished and new stain and varnish has been applied. The workers placed the rags and brushes that were used to apply the varnish in a small closet and closed the door, creating the possibility of spontaneous combustion. Which of the following terms best describes this condition?
Hazard
5: The attempt to restore an insured to his or her financial condition before a loss occurred is best describes as
Indemnification
13: Meg has been in very good health in the past 3 years. She has been exercising, her blood pressure is at a perfect level and her cholesterol is the envy of all her friends. Because Meg is feeling so healthy, she decides to cancel her health insurance policy. This is an example of which of the following risk management methods
Risk retention
5: Which of the following best demonstrates the meaning of "contract of adhesion"?
Since the insurance company formulates the policy language, the courts usually will resolve any ambiguities in the insured's favor
6: A risk where both profit and loss are possible is known as
Speculative
A 100 year flood is an example of what type of Risk
Static Risk
18: In which part of an insurance contract would you expect to find a description of the duties and obligations of the insured?
The Conditions
7: Which of the following is a true statement regarding the Law of Large Numbers
The L of L #'s states that as the number of insured unit's increases, the ability to predict losses increase
22: The doctrine that states an insured's policy should provide the coverage that a sensible and prudent person would expect is?
The Reasonable expectations doctrine
24: Which of the following is the primary source of information used by insurance companies during the underwriting process
The application for insurance
The contract allows the insured to receive a return in claims payments that is nearly equal to the amount paid in premium
The contract allows the insured to receive a return in claims payments that is nearly equal to the amount paid in premium
11: Which of the following parts of the insurance contract contains the "contractual agreement" between the insurance company and the insured?
The insuring agreement
14: Which of the following best describes the purpose of the "insuring agreement" contained in an insurance policy?
The insuring agreement
18: All of the following are characteristics of an insurable risk, EXCEPT?
The loss must be catastrophic in nature
