Free General Insurance Concepts Practice Questions
Maryland Life exam — 78 practice questions.
Subtopics: Contract of adhesion, Aleatory contract, Utmost good faith, Representations, Concealment, Warranty, Estoppel, 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, Unilateral contract, Conditional contract, Waiver, 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 policy is a contract of adhesion, meaning:
The insurer drafts it and the buyer accepts it as written
Because the insurer drafts the contract and the applicant adheres to its terms, ambiguities are generally construed against the insurer.
2. An insurance contract is aleatory because:
The values exchanged may be unequal and depend on chance
An aleatory contract involves an exchange of unequal values dependent on an uncertain event, such as a loss.
3. The principle that both parties to an insurance contract rely on each other's honesty is:
Utmost good faith
Insurance contracts are based on utmost good faith, requiring honesty and full disclosure from both insurer and insured.
4. Under Maryland's required life policy provision, statements in an application attached to the policy are treated, absent fraud, as:
Representations
If the application is made part of the policy, the policy must state that statements in it are, in the absence of fraud, representations and not warranties.
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.
