Fundamentals of Insurance - Licensing Practice Exam 2
Latest 2023 with complete solution
1. To "Bind a Risk" means:
a. Having authority from the Insurer to put insurance in force
b. Finding a company willing to give a quote on a risk
c. Getting underwriting information from a client
d. Automatically renewing an existing policy
a. Having authority from the Insurer to put insurance in force
"Subrogation"d means:
a. The right of the insurance company to recover payments made under the policy from
another person who is legally responsible for the loss
b. The amount of the insurance company receives from a person who is legally
responsible for a loss
c. That the insurance company takes over the salvage after it has paid the claim in full
d. That the Insured has the option of receiving payment for the loss from either the
insurer or the person responsible
a. The right of the insurance company to recover payments made under the policy from
another person who is legally responsible for the loss
Insurance coverage under the terms of the policy of "fire" insurance expires at:
a. 12:01 a.m. Standard Time at the location of the property insurance
b. 12:01 p.m. Standard Time at the location of the property insured
c. Twelve months after the broker binds coverage
d. 12:01 a.m. Standard Time at the address of the named insured
d. 12:01 a.m. Standard Time at the address of the named insured
In the contract of Insurance, "consideration" means:
a. Something of value
b. The amount of the Insured can collect in event of a claim
c. The object of insurance
d. The reviewing of the details of the risk to be insured by an underwriter
a. Something of value
An Insurance Contract indemnifies the Insured against loss arising out of the happening
of the specific event. Which of the following is correct?
a. The event must be a future event and it must be accidental
b. The event may happen with the co-operation of the insured
c. The event may happen with the intent of the insured
d. All of the above
a. The event must be a future event and it must be accidental
"Indemnify" means:
,a. Returning the premium of the Insured
b. Restoring the Insured to the same financial position as he was in immediately prior to
the loss
c. Paying the Insured the face amount of the policy
d. Restoring the insured to the same financial position as he was in at the inception date
of the policy
b. Restoring the Insured to the same financial position as he was in immediately prior to
the loss
Under the Indemnity Agreement of the Fire Policy it states it will pay the lesser of three
amounts in the event of a claim. One factor which does NOT enter into this calculation
is:
a. The actual cash value of the property
b. The original cost of the property
c. The insured's interest in the property
d. The policy limit
b. The original cost of the property
A physical hazard is:
a. A type of peril
b. The same as a moral hazard
c. A physical feature of a risk, which may give rise to a loss
d. The possibility of a loss due to the character of the insured
c. A physical feature of a risk, which may give rise to a loss
The following is the most practical way in which to deal with risk:
a. Transfer of risk
b. Retention of risk
c. Controlling of Risk
d. Avoidance of Risk
a. Transfer of risk
If a policy has been cancelled by the insurance Company before the term has expired:
a. The commission is fully earned
b. The total premium is returned
c. Part of the commission, corresponding to the unearned portion of the premium must
be returned to the Insured
d. The policyholder will be charged an additional fee for the cancellation
...
Every policy of "fire" insurance:
a. Usually covers fire, smoke and specified types of explosion
b. Is required by law to cover fire, windstorm and lightening
c. Covers fire, explosion and windstorm
d. Is required by law to cover at least fire, lightening and specified types of explosions
d. Is required by law to cover at least fire, lightening and specified types of explosions
, Insurable Interest means:
a. Interest gains on money in the bank
b. Interest payable on loan
c. The personal interest a person has in something he expects to inherit
d. The financial interest a person has in something of value
d. The financial interest a person has in something of value
The major function of insurance is:
a. To reduce the cost of losses
b. To spread the losses of the few among the many
c. To safeguard mortgage investments
d. To serve as the basis of existing credit system
b. To spread the losses of the few among the many
With respect to federally licensed insurance companies, the Federal Department of
Insurance:
a. Controls the type of policies issued
b. Regulates the financial stability of Insurers
c. Stipulates the types of agents who may represent the company
d. Only supervises life insurance companies
b. Regulates the financial stability of Insurers
A "peril" is best defined as:
a. The chance of a loss
b. The occurrence of a loss
c. The cause of a loss
d. The result of a loss
c. The cause of a loss
Our Insured suffers the loss of a steak as a result of a fire, which, fortunately, was
confined in her barbeque. Such loss to the steak is a result of a:
a. Direct fire
b. Indirect fire
c. Hostile fire
d. Friendly fire
d. Friendly fire
Under a policy of "fire" insurance, which one of the following losses is covered:
a. Fire damage caused by a fire, which followed a short circuit
b. Loss caused by enemy attack by Armed Forces
c. Radioactive Contamination
d. Loss of property caused by a process involving the application of heat
a. Fire damage caused by a fire, which followed a short circuit
Statutory Conditions found in all policies of "fire" insurance:
Latest 2023 with complete solution
1. To "Bind a Risk" means:
a. Having authority from the Insurer to put insurance in force
b. Finding a company willing to give a quote on a risk
c. Getting underwriting information from a client
d. Automatically renewing an existing policy
a. Having authority from the Insurer to put insurance in force
"Subrogation"d means:
a. The right of the insurance company to recover payments made under the policy from
another person who is legally responsible for the loss
b. The amount of the insurance company receives from a person who is legally
responsible for a loss
c. That the insurance company takes over the salvage after it has paid the claim in full
d. That the Insured has the option of receiving payment for the loss from either the
insurer or the person responsible
a. The right of the insurance company to recover payments made under the policy from
another person who is legally responsible for the loss
Insurance coverage under the terms of the policy of "fire" insurance expires at:
a. 12:01 a.m. Standard Time at the location of the property insurance
b. 12:01 p.m. Standard Time at the location of the property insured
c. Twelve months after the broker binds coverage
d. 12:01 a.m. Standard Time at the address of the named insured
d. 12:01 a.m. Standard Time at the address of the named insured
In the contract of Insurance, "consideration" means:
a. Something of value
b. The amount of the Insured can collect in event of a claim
c. The object of insurance
d. The reviewing of the details of the risk to be insured by an underwriter
a. Something of value
An Insurance Contract indemnifies the Insured against loss arising out of the happening
of the specific event. Which of the following is correct?
a. The event must be a future event and it must be accidental
b. The event may happen with the co-operation of the insured
c. The event may happen with the intent of the insured
d. All of the above
a. The event must be a future event and it must be accidental
"Indemnify" means:
,a. Returning the premium of the Insured
b. Restoring the Insured to the same financial position as he was in immediately prior to
the loss
c. Paying the Insured the face amount of the policy
d. Restoring the insured to the same financial position as he was in at the inception date
of the policy
b. Restoring the Insured to the same financial position as he was in immediately prior to
the loss
Under the Indemnity Agreement of the Fire Policy it states it will pay the lesser of three
amounts in the event of a claim. One factor which does NOT enter into this calculation
is:
a. The actual cash value of the property
b. The original cost of the property
c. The insured's interest in the property
d. The policy limit
b. The original cost of the property
A physical hazard is:
a. A type of peril
b. The same as a moral hazard
c. A physical feature of a risk, which may give rise to a loss
d. The possibility of a loss due to the character of the insured
c. A physical feature of a risk, which may give rise to a loss
The following is the most practical way in which to deal with risk:
a. Transfer of risk
b. Retention of risk
c. Controlling of Risk
d. Avoidance of Risk
a. Transfer of risk
If a policy has been cancelled by the insurance Company before the term has expired:
a. The commission is fully earned
b. The total premium is returned
c. Part of the commission, corresponding to the unearned portion of the premium must
be returned to the Insured
d. The policyholder will be charged an additional fee for the cancellation
...
Every policy of "fire" insurance:
a. Usually covers fire, smoke and specified types of explosion
b. Is required by law to cover fire, windstorm and lightening
c. Covers fire, explosion and windstorm
d. Is required by law to cover at least fire, lightening and specified types of explosions
d. Is required by law to cover at least fire, lightening and specified types of explosions
, Insurable Interest means:
a. Interest gains on money in the bank
b. Interest payable on loan
c. The personal interest a person has in something he expects to inherit
d. The financial interest a person has in something of value
d. The financial interest a person has in something of value
The major function of insurance is:
a. To reduce the cost of losses
b. To spread the losses of the few among the many
c. To safeguard mortgage investments
d. To serve as the basis of existing credit system
b. To spread the losses of the few among the many
With respect to federally licensed insurance companies, the Federal Department of
Insurance:
a. Controls the type of policies issued
b. Regulates the financial stability of Insurers
c. Stipulates the types of agents who may represent the company
d. Only supervises life insurance companies
b. Regulates the financial stability of Insurers
A "peril" is best defined as:
a. The chance of a loss
b. The occurrence of a loss
c. The cause of a loss
d. The result of a loss
c. The cause of a loss
Our Insured suffers the loss of a steak as a result of a fire, which, fortunately, was
confined in her barbeque. Such loss to the steak is a result of a:
a. Direct fire
b. Indirect fire
c. Hostile fire
d. Friendly fire
d. Friendly fire
Under a policy of "fire" insurance, which one of the following losses is covered:
a. Fire damage caused by a fire, which followed a short circuit
b. Loss caused by enemy attack by Armed Forces
c. Radioactive Contamination
d. Loss of property caused by a process involving the application of heat
a. Fire damage caused by a fire, which followed a short circuit
Statutory Conditions found in all policies of "fire" insurance:
