Free General Insurance Concepts Practice Questions
Colorado Life exam — 78 practice questions.
Subtopics: Adhesion, Aleatory, Utmost good faith, Representations, Concealment, Warranty, Risk management, Definition of risk, Hazard, Peril, Handling risk, Retention, Insurable risk, Stock insurer, Mutual insurer, Admitted insurer, Domestic foreign alien, Consideration, Legal purpose, Competent parties, Offer and acceptance, Express authority, Apparent authority, Indemnity, Pure vs speculative risk, Law of large numbers, Adverse selection, Moral hazard, Morale hazard, Physical hazard, Implied authority, Fiduciary duty, Aleatory contract, Contract of adhesion, Unilateral contract, Conditional contract, Waiver, Estoppel, Reciprocal insurer, Fraternal benefit society, Reinsurance, Surplus lines insurer, Self-insurance, Exposure, Loss, Risk avoidance, Risk reduction, Risk sharing, Speculative risk, Homogeneous exposure units, Catastrophic loss, Domestic insurer, Alien insurer, Mutual dividends, Assessment mutual, Lloyd's, Government insurers, Insurer ratings, Captive agency system, Independent agency, Direct response, Managing general agent, Insurer as principal, Presumption of agency, Errors and omissions, Insurer consideration, Reasonable expectations, Fraud, Personal contract, Valued contract
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Sample questions & answers
1. An insurance contract is called a contract of adhesion because:
The insurer writes the contract and the applicant accepts it as written
A contract of adhesion is drafted by one party (the insurer) and offered to the other on a take-it-or-leave-it basis.
2. Insurance contracts are described as aleatory because:
The dollars exchanged may be unequal depending on chance events
An aleatory contract involves an exchange of unequal amounts; a small premium may yield a large benefit depending on chance.
3. The principle of utmost good faith in insurance means:
Both parties rely on the honesty and full disclosure of the other
Insurance is a contract of utmost good faith, requiring honesty and full disclosure of material facts by both parties.
4. A statement made by an applicant that is believed to be true to the best of their knowledge is a:
Representation
A representation is a statement believed true to the best of the applicant's knowledge, as opposed to a guaranteed warranty.
Practice: General Insurance Concepts
Answer choices are shuffled every time, and every question comes with an explanation.
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
