NC PERSONAL LINES LICENSE
CERTIFICATION EVALUATION 2026
COMPLETE REVIEW GRADED A+
⩥ Types of risk.
Answer: 1. Speculative risk
2. Pure risk
3. Insurable risk
⩥ Speculative risk.
Answer: chance of grain as well as a chance of loss; insurance is not
intended to protect against this type of risk
⩥ Pure risk.
Answer: chance of loss only; we attempt to buy insurance based on pure
risk
⩥ insurable risk.
Answer: one that an insurance company is willing to accept
⩥ Characteristics of insurable risk.
Answer: 1. low probability of loss occurring
,2. less than catastrophic results (earthquake, flood, wind)
3. the loss must be measurable ($)
4. the loss must be significant
5. the loss must be accidental and unintended
⩥ Probability.
Answer: measures the chance of an event occurring; measure of risk;
predicting the future based on the past
⩥ Law of Large Numbers (Law of Averages).
Answer: Mathematical principle that makes it possible to predict future
losses based upon prior experience; insurance uses both probability and
law of numbers in determining rates
⩥ geographic dispersion (spread of risk).
Answer: spreading the company's policies over a broad geographical
area in order to avoid large losses in the event of a catastrophic event
⩥ adverse selection.
Answer: occurs when insureds with a high risk of loss attempt to
purchase insurance and are successful in obtaining insurance; insurers
attempt to prevent adverse selection by carefully underwriting each and
every applicant for insurance.
, ⩥ with higher risk customers you can.
Answer: 1. refulse to write the policy
2. charge more
3. check underwriting guidelines with companies; some use credit
history; shop around
⩥ do not.
Answer: deductibles ____ prevent bad business from getting on the
books
⩥ methods of handling risk.
Answer: 1. retention
2. transfer
3. control or reduction
⩥ retention.
Answer: when liability for a loss is maintained by an individual by not
purchasing insurance
⩥ transfer.
Answer: shift the responsibility for a loss to an insurance company
through the purchase of insurance
CERTIFICATION EVALUATION 2026
COMPLETE REVIEW GRADED A+
⩥ Types of risk.
Answer: 1. Speculative risk
2. Pure risk
3. Insurable risk
⩥ Speculative risk.
Answer: chance of grain as well as a chance of loss; insurance is not
intended to protect against this type of risk
⩥ Pure risk.
Answer: chance of loss only; we attempt to buy insurance based on pure
risk
⩥ insurable risk.
Answer: one that an insurance company is willing to accept
⩥ Characteristics of insurable risk.
Answer: 1. low probability of loss occurring
,2. less than catastrophic results (earthquake, flood, wind)
3. the loss must be measurable ($)
4. the loss must be significant
5. the loss must be accidental and unintended
⩥ Probability.
Answer: measures the chance of an event occurring; measure of risk;
predicting the future based on the past
⩥ Law of Large Numbers (Law of Averages).
Answer: Mathematical principle that makes it possible to predict future
losses based upon prior experience; insurance uses both probability and
law of numbers in determining rates
⩥ geographic dispersion (spread of risk).
Answer: spreading the company's policies over a broad geographical
area in order to avoid large losses in the event of a catastrophic event
⩥ adverse selection.
Answer: occurs when insureds with a high risk of loss attempt to
purchase insurance and are successful in obtaining insurance; insurers
attempt to prevent adverse selection by carefully underwriting each and
every applicant for insurance.
, ⩥ with higher risk customers you can.
Answer: 1. refulse to write the policy
2. charge more
3. check underwriting guidelines with companies; some use credit
history; shop around
⩥ do not.
Answer: deductibles ____ prevent bad business from getting on the
books
⩥ methods of handling risk.
Answer: 1. retention
2. transfer
3. control or reduction
⩥ retention.
Answer: when liability for a loss is maintained by an individual by not
purchasing insurance
⩥ transfer.
Answer: shift the responsibility for a loss to an insurance company
through the purchase of insurance
