Free General Insurance Concepts Practice Questions
Michigan Property & Casualty exam (series 16-81) — 45 practice questions.
Subtopics: Law of large numbers, Pure risk, Utmost good faith, Proximate cause, Handling risk, Insurer classifications, Adverse selection, Elements of a contract, Insurable risk, Hazards, Definitions, Authority of producers, Legal interpretations, Principle of indemnity, Concealment, Warranty, Waiver and estoppel, Subrogation, Reinsurance, Admitted vs nonadmitted, Domestic foreign alien, Aleatory contract, Contract of adhesion, Unilateral contract, Apparent authority, Rebating, Risk pooling, Pro-rata cancellation, Risk, Marketing systems, Concealment and fraud, Indemnity
Read the General Insurance Concepts study guide
Sample questions & answers
1. Insurers can predict losses more accurately by applying the:
Law of large numbers
The law of large numbers lets insurers predict losses more accurately as the number of similar risks grows.
2. Insurance generally covers which type of risk?
Pure risk
Insurance covers pure risk, which involves only the chance of loss or no loss, not gain.
3. The duty of honesty and full disclosure by both parties reflects:
Utmost good faith
Insurance contracts rest on utmost good faith, requiring honesty and disclosure by both parties.
4. The unbroken chain of events that leads to a covered loss reflects the principle of:
Proximate cause
Proximate cause is the primary cause setting in motion the chain of events resulting in a loss.
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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.
