Virginia Property and Casualty
Insurance Exam Questions and
Answers11
What is based on the principle of Risk Transfer - ANSWERS-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? - ANSWERS-Speculative Risk
What is the reason for a claim? - ANSWERS-A loss is the reason a claim against an insurance
company.
What is the measure of a loss? - ANSWERS-Exposure Units
Name three types of hazards. - ANSWERS-1. Physical Hazard
2. Moral Hazard
3. Morale Hazard
What is a cause of a loss? - ANSWERS-Perils are the causes of possible loss
What is the common way to transfer risk? - ANSWERS-The most common method of risk
transfer is when a homeowner purchases insurance on their home..
Define adverse selection. - ANSWERS-Insuring risks more prone to losses than an average risk.
, What is the theory of probability that is the basis for insurance? - ANSWERS-The Law of Large
Numbers
Who manages a Mutual Company - ANSWERS-A Boar of Trustees
What is high risk coverage purchased from an unauthorized company? - ANSWERS-Surplus Lines
Insurers
How are insurance companies defined? - ANSWERS-Where they are located, chartered, or
incorporated.
What protects policy holders from an insurer's insolvency? - ANSWERS-Property and Casualty
Insurance Guaranty Association
What must all insurers obtain to conduct insurance business? - ANSWERS-Certificate of
Authority
Who does an agent represent? - ANSWERS-Always deemed to represent an insurer (company)
What is the authority that is written in a contract? - ANSWERS-Express Authority
What are the four elements of a contract? - ANSWERS-1. Offer and Acceptance
2. Consideration
3. Competent Parties
4. Legal Purpose
Define a fiduciary. - ANSWERS-An agent/broker who handles insurer's funds in a trust capacity
Insurance Exam Questions and
Answers11
What is based on the principle of Risk Transfer - ANSWERS-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? - ANSWERS-Speculative Risk
What is the reason for a claim? - ANSWERS-A loss is the reason a claim against an insurance
company.
What is the measure of a loss? - ANSWERS-Exposure Units
Name three types of hazards. - ANSWERS-1. Physical Hazard
2. Moral Hazard
3. Morale Hazard
What is a cause of a loss? - ANSWERS-Perils are the causes of possible loss
What is the common way to transfer risk? - ANSWERS-The most common method of risk
transfer is when a homeowner purchases insurance on their home..
Define adverse selection. - ANSWERS-Insuring risks more prone to losses than an average risk.
, What is the theory of probability that is the basis for insurance? - ANSWERS-The Law of Large
Numbers
Who manages a Mutual Company - ANSWERS-A Boar of Trustees
What is high risk coverage purchased from an unauthorized company? - ANSWERS-Surplus Lines
Insurers
How are insurance companies defined? - ANSWERS-Where they are located, chartered, or
incorporated.
What protects policy holders from an insurer's insolvency? - ANSWERS-Property and Casualty
Insurance Guaranty Association
What must all insurers obtain to conduct insurance business? - ANSWERS-Certificate of
Authority
Who does an agent represent? - ANSWERS-Always deemed to represent an insurer (company)
What is the authority that is written in a contract? - ANSWERS-Express Authority
What are the four elements of a contract? - ANSWERS-1. Offer and Acceptance
2. Consideration
3. Competent Parties
4. Legal Purpose
Define a fiduciary. - ANSWERS-An agent/broker who handles insurer's funds in a trust capacity
