Free General Insurance Concepts Practice Questions
Michigan Personal Lines exam (series 16-69) — 70 practice questions.
Subtopics: Law of large numbers, Pure risk, Contract of adhesion, Proximate cause, Pure vs speculative risk, Hazard, Peril, Moral hazard, Morale hazard, Physical hazard, Risk avoidance, Risk retention, Risk transfer, Insurable interest, Indemnity, Elements of a contract, Aleatory contract, Utmost good faith, Representation, 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
Read the General Insurance Concepts study guide
Sample questions & answers
1. Insurers predict losses more accurately using the:
Law of large numbers
The law of large numbers improves loss prediction as the number of similar exposures grows.
2. Insurance is designed to cover:
Pure risk
Insurance covers pure risk, which involves only the chance of loss, not gain.
3. A personal lines policy is a contract of adhesion because it is:
Drafted by the insurer and accepted as written
A contract of adhesion is drafted by the insurer and accepted by the insured on a take-it-or-leave-it basis.
4. The continuous chain of events leading to a covered loss reflects:
Proximate cause
Proximate cause is the primary cause that sets in motion the chain of events causing the loss.
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.
