Public Adjuster Illinois Exam Questions
and Answers Graded A+
What is insurance? - Correct answer-method of handling pure risk
Law of large numbers - Correct answer-group of people to predict issues/
prices/etc. This is what insurance is based on
Principle of Indemidity - Correct answer-you only get what it cost, no more
what 6 characteristics does insurable risk need to have? - Correct answer-- Loss
must be definite
-Loss must be accidental
-Calculate chance of risk
-law of number should apply
-must not be catastrophic
-should create economic hardship
Pure Risk - Correct answer-only the possibility of loss
Speculative Risk - Correct answer-not insurable. Possibility of gain
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,static risk - Correct answer-historical factors
dynamic risk - Correct answer-risk associated w change
Fundamental Risk - Correct answer-risk affecting entire groups of people
Particular Risk - Correct answer-a risk that affects only individuals as individuals
peril - Correct answer-cause of loss
hazard - Correct answer-what creates the loss
physical hazard - Correct answer-a physical condition that increases the chance of
loss
moral hazard - Correct answer-increases probability a person will cause or create
loss
morale hazard - Correct answer-intention of loss
what does a contract need to have in order to be valid? - Correct answer-C -
CAPACITY TO CONTACT
L - LEGAL PURPOSE
O -OFFER AND ACCEPTED
C- CONSIDERATION
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, Risk avoidance - Correct answer-aims to completely eliminate a risk or its potential
impact on an organization
transfer of risk - Correct answer-the process of shifting the financial consequences
of a risk from one party to another.
risk sharing - Correct answer-means that the premiums and losses of each member
of a group of policyholders are allocated within the group based on a
predetermined formula.
Risk Retention - Correct answer-can be used to manage and reduce the financial
impact of certain risks
risk reduction control - Correct answer-a set of processes and measures that
organizations use to reduce the likelihood of adverse events and their impact
What are the parts of contract? - Correct answer-D- Dec page
I- insuring agreement
C- Conditions
E- Endorsements
Aleatory Contract - Correct answer-a contract where the values exchanged may not
be equal but depend on an uncertain event
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
and Answers Graded A+
What is insurance? - Correct answer-method of handling pure risk
Law of large numbers - Correct answer-group of people to predict issues/
prices/etc. This is what insurance is based on
Principle of Indemidity - Correct answer-you only get what it cost, no more
what 6 characteristics does insurable risk need to have? - Correct answer-- Loss
must be definite
-Loss must be accidental
-Calculate chance of risk
-law of number should apply
-must not be catastrophic
-should create economic hardship
Pure Risk - Correct answer-only the possibility of loss
Speculative Risk - Correct answer-not insurable. Possibility of gain
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,static risk - Correct answer-historical factors
dynamic risk - Correct answer-risk associated w change
Fundamental Risk - Correct answer-risk affecting entire groups of people
Particular Risk - Correct answer-a risk that affects only individuals as individuals
peril - Correct answer-cause of loss
hazard - Correct answer-what creates the loss
physical hazard - Correct answer-a physical condition that increases the chance of
loss
moral hazard - Correct answer-increases probability a person will cause or create
loss
morale hazard - Correct answer-intention of loss
what does a contract need to have in order to be valid? - Correct answer-C -
CAPACITY TO CONTACT
L - LEGAL PURPOSE
O -OFFER AND ACCEPTED
C- CONSIDERATION
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Risk avoidance - Correct answer-aims to completely eliminate a risk or its potential
impact on an organization
transfer of risk - Correct answer-the process of shifting the financial consequences
of a risk from one party to another.
risk sharing - Correct answer-means that the premiums and losses of each member
of a group of policyholders are allocated within the group based on a
predetermined formula.
Risk Retention - Correct answer-can be used to manage and reduce the financial
impact of certain risks
risk reduction control - Correct answer-a set of processes and measures that
organizations use to reduce the likelihood of adverse events and their impact
What are the parts of contract? - Correct answer-D- Dec page
I- insuring agreement
C- Conditions
E- Endorsements
Aleatory Contract - Correct answer-a contract where the values exchanged may not
be equal but depend on an uncertain event
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
