General Insurance Essentials - C81 + C82 Exam
Newest 2026 Questions and Correct Detailed
Answers Already Graded A+
What does a broker do? - CORRECT ANSWER-Acts on behalf of an insured in
placing business with insurance companies
What does it mean to indemnify? - CORRECT ANSWER-To provide
compensation for loss or expenses incurred
What is the premium? - CORRECT ANSWER-The price of insurance protection
for a specified risk for a specified period of time
What is the specific risk covered by life insurance? - CORRECT ANSWER-The
death of the insured
What type of insurance covers goods in transit on land? - CORRECT ANSWER-
Inland transportation
What concept upholds the principle of indemnity? - CORRECT ANSWER-
Insurable Interest
,What 3 departments are unique to insurance companies? - CORRECT
ANSWER-Actuarial, claims, and underwriting
What is facultative reinsurance? - CORRECT ANSWER-Reinsurance of risks on
an individual case-by-case basis subject to acceptance or rejection by the insurer
(the opposite of Treaty reinsurance)
What is subscribed capital? - CORRECT ANSWER-The amount of stock sold by a
corporation
What is the basic task of an underwriting department? - CORRECT ANSWER-
Select risks to insure
What is the term used when an insurance company re-insures its liability with
another insurance company? - CORRECT ANSWER-Cession
What is treaty insurance? - CORRECT ANSWER-Reinsurance in which an
agreement between the insurer and the reinsurer provides for automatic
reinsurance without the insurer having to submit every risk to the reinsurer.
,(opposite of faculative reinsurance)
What is underwriting profit? - CORRECT ANSWER-The amount of money an
insurance company gains as a result of its insurance operations
what math term relates to the degree of certainty in predicting future losses? -
CORRECT ANSWER-the law of large numbers
Describe mutual insurance companies - CORRECT ANSWER-They are based on
the principle of mutual aid, where each policyholder is a member.
Describe stock companies - CORRECT ANSWER-They are companies whose
main purpose is making a profit for shareholders.
Agents and brokers obtain their authority from the agreement entered into with
their insurers. True or False? - CORRECT ANSWER-True
What is a hazard? - CORRECT ANSWER-A condition that may cause a loss to be
more severe
What is a peril? - CORRECT ANSWER-An event that may give rise to a loss
, What is the immediate and effective action in a chain of circumstances that leads
naturally and directly to the loss? - CORRECT ANSWER-Proximate cause
What is the proximate cause of a loss? - CORRECT ANSWER-The immediate
and effective cause of the loss or damage
What cause of loss would be insured? - CORRECT ANSWER-Proximate cause
Which type of risk can be insured? - CORRECT ANSWER-Pure risk
A firm's decision to change insurers or brokers or accept policy renewal costs
usually requires approval by which of the following? - CORRECT ANSWER-The
firm's senior management
All costs associated with managing pure risk are known as which of the following?
- CORRECT ANSWER-Cost of risk
Members of an organization are subject to the possibility of illness, disability, or
premature death. What category is this subject of loss? - CORRECT ANSWER-
Human assets
Newest 2026 Questions and Correct Detailed
Answers Already Graded A+
What does a broker do? - CORRECT ANSWER-Acts on behalf of an insured in
placing business with insurance companies
What does it mean to indemnify? - CORRECT ANSWER-To provide
compensation for loss or expenses incurred
What is the premium? - CORRECT ANSWER-The price of insurance protection
for a specified risk for a specified period of time
What is the specific risk covered by life insurance? - CORRECT ANSWER-The
death of the insured
What type of insurance covers goods in transit on land? - CORRECT ANSWER-
Inland transportation
What concept upholds the principle of indemnity? - CORRECT ANSWER-
Insurable Interest
,What 3 departments are unique to insurance companies? - CORRECT
ANSWER-Actuarial, claims, and underwriting
What is facultative reinsurance? - CORRECT ANSWER-Reinsurance of risks on
an individual case-by-case basis subject to acceptance or rejection by the insurer
(the opposite of Treaty reinsurance)
What is subscribed capital? - CORRECT ANSWER-The amount of stock sold by a
corporation
What is the basic task of an underwriting department? - CORRECT ANSWER-
Select risks to insure
What is the term used when an insurance company re-insures its liability with
another insurance company? - CORRECT ANSWER-Cession
What is treaty insurance? - CORRECT ANSWER-Reinsurance in which an
agreement between the insurer and the reinsurer provides for automatic
reinsurance without the insurer having to submit every risk to the reinsurer.
,(opposite of faculative reinsurance)
What is underwriting profit? - CORRECT ANSWER-The amount of money an
insurance company gains as a result of its insurance operations
what math term relates to the degree of certainty in predicting future losses? -
CORRECT ANSWER-the law of large numbers
Describe mutual insurance companies - CORRECT ANSWER-They are based on
the principle of mutual aid, where each policyholder is a member.
Describe stock companies - CORRECT ANSWER-They are companies whose
main purpose is making a profit for shareholders.
Agents and brokers obtain their authority from the agreement entered into with
their insurers. True or False? - CORRECT ANSWER-True
What is a hazard? - CORRECT ANSWER-A condition that may cause a loss to be
more severe
What is a peril? - CORRECT ANSWER-An event that may give rise to a loss
, What is the immediate and effective action in a chain of circumstances that leads
naturally and directly to the loss? - CORRECT ANSWER-Proximate cause
What is the proximate cause of a loss? - CORRECT ANSWER-The immediate
and effective cause of the loss or damage
What cause of loss would be insured? - CORRECT ANSWER-Proximate cause
Which type of risk can be insured? - CORRECT ANSWER-Pure risk
A firm's decision to change insurers or brokers or accept policy renewal costs
usually requires approval by which of the following? - CORRECT ANSWER-The
firm's senior management
All costs associated with managing pure risk are known as which of the following?
- CORRECT ANSWER-Cost of risk
Members of an organization are subject to the possibility of illness, disability, or
premature death. What category is this subject of loss? - CORRECT ANSWER-
Human assets
