Virginia Personal Lines Agent Licensing Course
Exam Questions (Answered) 210 Questions and
Correct Answers| 2025/2026.
What is insurance?
Insurance is a social device for spreading the chance of financial loss among a large number of
people. By purchasing insurance, a "person" shares risk with a group of others, thereby reducing the
individual potential for disastrous financial consequences.
What is insurance based on?
the law of large numbers; by combining a large number of homogeneous units, the insurer is able to
make predictions of possible loss. Using the law of large numbers, insurers are able to calculate
probable losses and to establish the rates for premiums that will cover their losses and their
operating expenses.
What is underwriting?
the process of selecting certain types of risks that have historically produced a profit and rejecting
those risks that do not fit the underwriting criteria of the insurer; normally produces a favorable loss
ratio
Adverse selection
assess risk and charge too little; the tendency of insureds with a greater-than-average chance of loss
to purchase insurance
Reinsurace
a contract of indemnity against liability by which an insurance company procures another insurance
company to insure it against loss or liability by reason of the original insurance; insurance companies
have a company that insures them
What are the 6 parts of an insurance contract?
Declarations, Insuring Agreement, Conditions, Exclusions and Limitations, Definitions, Endorsements
Declarations
includes the identity and address of the named insured, the policy term or period, the amount of
insurance or limits of liability, the policy premium, and any applicable deductibles; include property
description and any applicable deductibles as well as list any endorsements; who is insured, what is
insured, deductibles... etc.
Insuring Agreement
describes the covered perils, or risks assumed, or nature of coverage, or makes some reference to
the contractual agreement between insurer and insured; what insurer will cover for you.
Conditions
,set provisions, rules of conduct, duties, and obligations for the parties; describes things such as the
policy period and territory, the insured's obligation to provide proof of loss, how settlements are
handled when other insurance is involved, and the right of each party to cancel the policy
Exclusions and Limitations
Exclusions: may describe property , perils, hazards, or losses arising from specific causes that are not
covered by the policy; Limitations; may eliminate or reduce coverage, but only under certain
circumstances or when specified conditions apply; Exclusions and Limitations: when the insurance
company wont cover you.
Definitions
Define important terms used in the policy language; explanation
Endorsements
used to add, delete, or change any of the policy parts; written modification of the policy; additional
coverages to contract --> extra money premium.
Peril
potential cause of loss
Hazard
increases the seriousness of a loss or increases the likelihood that a loss will occur; increased
potential of peril
Direct Loss
direct consequence of a particular peril (example: fire damage to an apartment building
Indirect Loss
loss that is a result of a covered peril but is not caused directly and immediately by that peril
(example: loss of rental income)
Salvage
If the insurer pays a loss on behalf of the insured, the insurer is entitled to the salvage to reduce the
claim (example: totaled care --> belongs to insurance company)
Abandonment
insured cannot simply abandon the property to the insurance company in exchange for the full-
insured value.
Pair or Set Clause
if part of a pair or set is lost or damaged, the loss will be valued as a fair proportion of the total value
of the set, giving consideration to the importance of the damaged article to the set; initial -
appraised = payout
Deductible
Self-insured part of an insured loss, the insured must bear this loss; amount you pay before
insurance comes in --> you are responsible.
, Vacancy and Unoccupancy
Vacancy: building is void of contents and people; 60 or more days; Unoccupancy: premises are void
of people, will not affect the coverage provided by the policy.
Assignment
Insurance policy cannot be assigned to another party without consent of the insurance company
Liberalization
if the policy or endorsement forms are broadened and no additional premium is required, then all
existing similar policies or endorsements will be construed to include the broadened coverage
Binder
temporary evidence that coverage is in effect until the policy is issued --> oral or written
Primary Insurance
in cases where more than one policy is in force, the primary policy pays first; example: you borrow
your friends car and get into an accident --> that car's insurance covers you, then you can use your
own insurance.
Excess Insurance
insurance policy that pays benefits only when coverage under other applicable insurance policies
have become exhausted
Accident
sudden and unforeseen event resulting in a financial loss
Occurance
continuous or repeated exposure to an event that results in financial loss; also sudden and
unforeseen
Appraisal and Arbitration
Appraisal: both parties select an appraiser to determine the value of the loss, appraiser chooses an
umpire, each party will pay its chosen appraiser and bear the other expenses of the appraisal and
umpire equally; Arbitration: resolve liability disputes for bodily injury and/or property damage, also
used to settle disputes between insurance companies involving third party liability claims.
Subrogation Clause
when insurer has paid a covered claim on behalf of the insured that is caused by another party, the
insurance company is entitled to the insured's right of recovery from the negligent party, AKA
"transfer of right of recovery against others to us"; person who hit you doesn't have insurance, they
(insurance company) go after the other person for what they owe.
Other Insurance Clause
if insured has other sources of recovery for a covered claim, this clause is activated.
Certificates of Insurance
Exam Questions (Answered) 210 Questions and
Correct Answers| 2025/2026.
What is insurance?
Insurance is a social device for spreading the chance of financial loss among a large number of
people. By purchasing insurance, a "person" shares risk with a group of others, thereby reducing the
individual potential for disastrous financial consequences.
What is insurance based on?
the law of large numbers; by combining a large number of homogeneous units, the insurer is able to
make predictions of possible loss. Using the law of large numbers, insurers are able to calculate
probable losses and to establish the rates for premiums that will cover their losses and their
operating expenses.
What is underwriting?
the process of selecting certain types of risks that have historically produced a profit and rejecting
those risks that do not fit the underwriting criteria of the insurer; normally produces a favorable loss
ratio
Adverse selection
assess risk and charge too little; the tendency of insureds with a greater-than-average chance of loss
to purchase insurance
Reinsurace
a contract of indemnity against liability by which an insurance company procures another insurance
company to insure it against loss or liability by reason of the original insurance; insurance companies
have a company that insures them
What are the 6 parts of an insurance contract?
Declarations, Insuring Agreement, Conditions, Exclusions and Limitations, Definitions, Endorsements
Declarations
includes the identity and address of the named insured, the policy term or period, the amount of
insurance or limits of liability, the policy premium, and any applicable deductibles; include property
description and any applicable deductibles as well as list any endorsements; who is insured, what is
insured, deductibles... etc.
Insuring Agreement
describes the covered perils, or risks assumed, or nature of coverage, or makes some reference to
the contractual agreement between insurer and insured; what insurer will cover for you.
Conditions
,set provisions, rules of conduct, duties, and obligations for the parties; describes things such as the
policy period and territory, the insured's obligation to provide proof of loss, how settlements are
handled when other insurance is involved, and the right of each party to cancel the policy
Exclusions and Limitations
Exclusions: may describe property , perils, hazards, or losses arising from specific causes that are not
covered by the policy; Limitations; may eliminate or reduce coverage, but only under certain
circumstances or when specified conditions apply; Exclusions and Limitations: when the insurance
company wont cover you.
Definitions
Define important terms used in the policy language; explanation
Endorsements
used to add, delete, or change any of the policy parts; written modification of the policy; additional
coverages to contract --> extra money premium.
Peril
potential cause of loss
Hazard
increases the seriousness of a loss or increases the likelihood that a loss will occur; increased
potential of peril
Direct Loss
direct consequence of a particular peril (example: fire damage to an apartment building
Indirect Loss
loss that is a result of a covered peril but is not caused directly and immediately by that peril
(example: loss of rental income)
Salvage
If the insurer pays a loss on behalf of the insured, the insurer is entitled to the salvage to reduce the
claim (example: totaled care --> belongs to insurance company)
Abandonment
insured cannot simply abandon the property to the insurance company in exchange for the full-
insured value.
Pair or Set Clause
if part of a pair or set is lost or damaged, the loss will be valued as a fair proportion of the total value
of the set, giving consideration to the importance of the damaged article to the set; initial -
appraised = payout
Deductible
Self-insured part of an insured loss, the insured must bear this loss; amount you pay before
insurance comes in --> you are responsible.
, Vacancy and Unoccupancy
Vacancy: building is void of contents and people; 60 or more days; Unoccupancy: premises are void
of people, will not affect the coverage provided by the policy.
Assignment
Insurance policy cannot be assigned to another party without consent of the insurance company
Liberalization
if the policy or endorsement forms are broadened and no additional premium is required, then all
existing similar policies or endorsements will be construed to include the broadened coverage
Binder
temporary evidence that coverage is in effect until the policy is issued --> oral or written
Primary Insurance
in cases where more than one policy is in force, the primary policy pays first; example: you borrow
your friends car and get into an accident --> that car's insurance covers you, then you can use your
own insurance.
Excess Insurance
insurance policy that pays benefits only when coverage under other applicable insurance policies
have become exhausted
Accident
sudden and unforeseen event resulting in a financial loss
Occurance
continuous or repeated exposure to an event that results in financial loss; also sudden and
unforeseen
Appraisal and Arbitration
Appraisal: both parties select an appraiser to determine the value of the loss, appraiser chooses an
umpire, each party will pay its chosen appraiser and bear the other expenses of the appraisal and
umpire equally; Arbitration: resolve liability disputes for bodily injury and/or property damage, also
used to settle disputes between insurance companies involving third party liability claims.
Subrogation Clause
when insurer has paid a covered claim on behalf of the insured that is caused by another party, the
insurance company is entitled to the insured's right of recovery from the negligent party, AKA
"transfer of right of recovery against others to us"; person who hit you doesn't have insurance, they
(insurance company) go after the other person for what they owe.
Other Insurance Clause
if insured has other sources of recovery for a covered claim, this clause is activated.
Certificates of Insurance
