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