Free General Insurance Concepts Practice Questions
Kentucky Personal Lines exam — 77 practice questions.
Subtopics: Risk avoidance, Law of large numbers, Risk reduction, Representation, Adhesion, Aleatory, Insurance defined, Insurable interest, Representations, Misrepresentation, Premium, Pure vs speculative risk, Hazard, Peril, Moral hazard, Morale hazard, Physical hazard, Risk retention, Risk transfer, Indemnity, Elements of a contract, Contract of adhesion, Aleatory contract, Utmost good faith, Concealment, Warranty, Express authority, Apparent authority, Implied authority, Stock vs mutual insurer, Domestic foreign alien, Admitted insurer, Estoppel, Adverse selection, Reinsurance, Underwriting, Loss ratio, Rate regulation goals, Reciprocal insurer, Lloyds of London, Risk retention group, Self-insurance, Surplus lines, Catastrophic risk, Loss exposure, Frequency vs severity, Unilateral contract, Conditional contract, Personal contract, Waiver, Material misrepresentation, Fiduciary duty, Commingling, Agent vs broker, Rebating, Twisting, Coercion, Defamation, Unfair claims settlement, Indemnity and subrogation, Distribution systems, Insurer types, Insurer ratios, Loss reserves, Rate regulation, Earned and unearned premium, Lapse
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Sample questions & answers
1. Deciding not to own a swimming pool to avoid the associated liability exposure is an example of risk:
Avoidance
Risk avoidance eliminates the exposure entirely by not engaging in the activity that creates the risk.
2. Insurers use the law of large numbers to:
Predict losses more accurately
The law of large numbers lets insurers predict losses more accurately as the number of similar exposures increases.
3. Installing smoke detectors and deadbolt locks to lessen the severity or likelihood of a loss is risk:
Reduction
Risk reduction (control) uses measures such as smoke detectors and locks to lower the frequency or severity of losses.
4. A statement an applicant believes 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, unlike a warranty that is guaranteed true.
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.
