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Commercial Lines 101 CE Questions and
Correct Answers/ Latest Update /
Already Graded
Insurer
Ans: The insurance company
Named Insured/Insured
Ans: The policyholder
Financial Definition of Insurance
Ans: A financial agreement involving the redistribution of financial losses
Legal Definition of Insurance
Ans: A contractual agreement in which one party (the insurer) agrees to
compensate or indemnify another party (the insured) for fortuitous losses
Loss Pooling
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Ans: the sharing of total losses sustained by a few members of the insured
group
Payment of Accidental or Fortuitous Losses
Ans: Allows the insurer to more accurately predict future losses
Transfer of Risk
Ans: Involves the transfer of risk from the insured to the insurer which is
normally a larger entity more financially able to absorb the loss
Indemnification
Ans: The act of an insurer compensating the insured for a covered loss
with the goal to put the insured back in the same financial position he or
she was in prior to the loss
Loss
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Ans: The basis of a claim for damages under the terms of the policy
Planned Losses
Ans: Include expenses such as depreciation on a piece of factory
equipment or on a commercial vehicle
Is insurance designed to cover planned losses or accidental losses?
Ans: Accidental losses
Direct Loss
Ans: An insurable loss that is the immediate result of a covered cause of
loss (fire to an office building)
Indirect Loss
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Ans: An insurable loss that is a consequential result of a direct loss
(expenses entailed in renting other commercial property because of a fire
to your office building)
Peril
Ans: The cause of the loss
Named Perils Policy
Ans: The policy specifically lists the covered perils
All Risks Policy
Ans: Provides broader protection and covers any accidental loss, subject
to a host of policy exclusions
Exclusion
Ans: A policy provision that identifies losses that are not covered
Commercial Lines 101 CE Questions and
Correct Answers/ Latest Update /
Already Graded
Insurer
Ans: The insurance company
Named Insured/Insured
Ans: The policyholder
Financial Definition of Insurance
Ans: A financial agreement involving the redistribution of financial losses
Legal Definition of Insurance
Ans: A contractual agreement in which one party (the insurer) agrees to
compensate or indemnify another party (the insured) for fortuitous losses
Loss Pooling
,2 | Page
Ans: the sharing of total losses sustained by a few members of the insured
group
Payment of Accidental or Fortuitous Losses
Ans: Allows the insurer to more accurately predict future losses
Transfer of Risk
Ans: Involves the transfer of risk from the insured to the insurer which is
normally a larger entity more financially able to absorb the loss
Indemnification
Ans: The act of an insurer compensating the insured for a covered loss
with the goal to put the insured back in the same financial position he or
she was in prior to the loss
Loss
,3 | Page
Ans: The basis of a claim for damages under the terms of the policy
Planned Losses
Ans: Include expenses such as depreciation on a piece of factory
equipment or on a commercial vehicle
Is insurance designed to cover planned losses or accidental losses?
Ans: Accidental losses
Direct Loss
Ans: An insurable loss that is the immediate result of a covered cause of
loss (fire to an office building)
Indirect Loss
, 4 | Page
Ans: An insurable loss that is a consequential result of a direct loss
(expenses entailed in renting other commercial property because of a fire
to your office building)
Peril
Ans: The cause of the loss
Named Perils Policy
Ans: The policy specifically lists the covered perils
All Risks Policy
Ans: Provides broader protection and covers any accidental loss, subject
to a host of policy exclusions
Exclusion
Ans: A policy provision that identifies losses that are not covered
