Property and Casualty Insurance
Virginia Test Questions and Correct
Answers.
What is based on the principle of Risk Transfer - Answer Spreading the results of a financial
loss among many persons, so the cost to any one person is small
What kind of risk has an outcome that is uncertain? - Answer Speculative Risk
What is the reason for a claim? - Answer A loss is the reason a claim against an insurance
company.
What is the measure of a loss? - Answer Exposure Units
Name three types of hazards. - Answer 1. Physical Hazard
2. Moral Hazard
3. Morale Hazard
What is a cause of a loss? - Answer Perils are the causes of possible loss
What is the common way to transfer risk? - Answer The most common method of risk
transfer is when a homeowner purchases insurance on their home..
Define adverse selection. - Answer Insuring risks more prone to losses than an average risk.
What is the theory of probability that is the basis for insurance? - Answer The Law of Large
Numbers
Who manages a Mutual Company - Answer A Boar of Trustees
What is high risk coverage purchased from an unauthorized company? - Answer Surplus
Lines Insurers
How are insurance companies defined? - Answer Where they are located, chartered, or
incorporated.
, What protects policy holders from an insurer's insolvency? - Answer Property and Casualty
Insurance Guaranty Association
What must all insurers obtain to conduct insurance business? - Answer Certificate of
Authority
Who does an agent represent? - Answer Always deemed to represent an insurer (company)
What is the authority that is written in a contract? - Answer Express Authority
What are the four elements of a contract? - Answer 1. Offer and Acceptance
2. Consideration
3. Competent Parties
4. Legal Purpose
Define a fiduciary. - Answer An agent/broker who handles insurer's funds in a trust capacity
What is a value in a contract? - Answer The consideration
What is the fine for violating the Fair Credit Reporting Act? - Answer A maximum fine of
$2,500.00
What must an insured have in regards to their covered property with their insurer? - Answer
Insurable Interest
When must insurable interest exist if an insured' property is damaged? - Answer It must exist
at the time of loss
What is the initial screening of an applicant for insurance coverage? - Answer Underwriting
Why is a loss ratio formula used? - Answer To determine the comparison between premium
income losses, paid claim and claims related cost (this is how insurance company determine
profitability)
What does an insurer use to determine their profitability? - Answer Loss Ratio Formula
What are the ways rates are determined? - Answer 1. Payroll
Virginia Test Questions and Correct
Answers.
What is based on the principle of Risk Transfer - Answer Spreading the results of a financial
loss among many persons, so the cost to any one person is small
What kind of risk has an outcome that is uncertain? - Answer Speculative Risk
What is the reason for a claim? - Answer A loss is the reason a claim against an insurance
company.
What is the measure of a loss? - Answer Exposure Units
Name three types of hazards. - Answer 1. Physical Hazard
2. Moral Hazard
3. Morale Hazard
What is a cause of a loss? - Answer Perils are the causes of possible loss
What is the common way to transfer risk? - Answer The most common method of risk
transfer is when a homeowner purchases insurance on their home..
Define adverse selection. - Answer Insuring risks more prone to losses than an average risk.
What is the theory of probability that is the basis for insurance? - Answer The Law of Large
Numbers
Who manages a Mutual Company - Answer A Boar of Trustees
What is high risk coverage purchased from an unauthorized company? - Answer Surplus
Lines Insurers
How are insurance companies defined? - Answer Where they are located, chartered, or
incorporated.
, What protects policy holders from an insurer's insolvency? - Answer Property and Casualty
Insurance Guaranty Association
What must all insurers obtain to conduct insurance business? - Answer Certificate of
Authority
Who does an agent represent? - Answer Always deemed to represent an insurer (company)
What is the authority that is written in a contract? - Answer Express Authority
What are the four elements of a contract? - Answer 1. Offer and Acceptance
2. Consideration
3. Competent Parties
4. Legal Purpose
Define a fiduciary. - Answer An agent/broker who handles insurer's funds in a trust capacity
What is a value in a contract? - Answer The consideration
What is the fine for violating the Fair Credit Reporting Act? - Answer A maximum fine of
$2,500.00
What must an insured have in regards to their covered property with their insurer? - Answer
Insurable Interest
When must insurable interest exist if an insured' property is damaged? - Answer It must exist
at the time of loss
What is the initial screening of an applicant for insurance coverage? - Answer Underwriting
Why is a loss ratio formula used? - Answer To determine the comparison between premium
income losses, paid claim and claims related cost (this is how insurance company determine
profitability)
What does an insurer use to determine their profitability? - Answer Loss Ratio Formula
What are the ways rates are determined? - Answer 1. Payroll
