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General Insurance Essentials - C81 + C82
EXAM (updated 2025) Questions &
Answers | Latest Already Graded A+
UPDATE 2025|2026
What is a hazard? - (ANSWER)A condition that may cause a loss to be more
severe
What is a peril? - (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? - (ANSWER)Proximate cause
What is the proximate cause of a loss? - (ANSWER)The immediate and effective
cause of the loss or damage
What cause of loss would be insured? - (ANSWER)Proximate cause
Which type of risk can be insured? - (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? - (ANSWER)The firm's senior
management
, 2
All costs associated with managing pure risk are known as which of the following?
- (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? - (ANSWER)Human assets
What is a consequence of not using a risk management approach to setting up
insurance for a client? - (ANSWER)A major loss may not be covered
What is a simple definition of earnings? - (ANSWER)The difference between
revenues and expenses—the profits (net income) of a business
What method allows a broker to identify and analyze the risks an organization
faces? - (ANSWER)Risk Management
What is a risk management technique whereby the risk of loss is prevented by not
engaging in activities that present the risk? - (ANSWER)Avoidance
What is both a pre-loss and a post-loss objective of risk management? -
(ANSWER)Social Responsibility
What is the duty of a risk manager? - (ANSWER)Identifying loss exposures
, 3
Which type of professional would be responsible for educating other corporate
managers about risk and acting as a resource to other managers, in much the
same way as a broker would for a small business client? - (ANSWER)Risk Manager
A small, popular coffee shop is severely damaged by fire.Which party has
insurable interest in the coffee shop? - (ANSWER)bank that holds a mortgage on
the building in which the coffee shop is located
How can insurance be an aid to credit? - (ANSWER)Because it is virtually
impossible to obtain credit without having insurance on the item concerned
How can insurance be an aid to security? - (ANSWER)By substituting a certain
premium payment in place of an uncertain loss payment
How can risk be spread? - (ANSWER)By volume, diversity of risks, and diversity of
location
What does a broker do? - (ANSWER)Acts on behalf of an insured in placing
business with insurance companies
What does it mean to indemnify? - (ANSWER)To provide compensation for loss or
expenses incurred
What is the premium? - (ANSWER)The price of insurance protection for a
specified risk for a specified period of time
, 4
What is the specific risk covered by life insurance? - (ANSWER)The death of the
insured
What type of insurance covers goods in transit on land? - (ANSWER)Inland
transportation
What concept upholds the principle of indemnity? - (ANSWER)Insurable Interest
What 3 departments are unique to insurance companies? - (ANSWER)Actuarial,
claims, and underwriting
What is facultative reinsurance? - (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? - (ANSWER)The amount of stock sold by a
corporation
What is the basic task of an underwriting department? - (ANSWER)Select risks to
insure
What is the term used when an insurance company re-insures its liability with
another insurance company? - (ANSWER)Cession
General Insurance Essentials - C81 + C82
EXAM (updated 2025) Questions &
Answers | Latest Already Graded A+
UPDATE 2025|2026
What is a hazard? - (ANSWER)A condition that may cause a loss to be more
severe
What is a peril? - (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? - (ANSWER)Proximate cause
What is the proximate cause of a loss? - (ANSWER)The immediate and effective
cause of the loss or damage
What cause of loss would be insured? - (ANSWER)Proximate cause
Which type of risk can be insured? - (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? - (ANSWER)The firm's senior
management
, 2
All costs associated with managing pure risk are known as which of the following?
- (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? - (ANSWER)Human assets
What is a consequence of not using a risk management approach to setting up
insurance for a client? - (ANSWER)A major loss may not be covered
What is a simple definition of earnings? - (ANSWER)The difference between
revenues and expenses—the profits (net income) of a business
What method allows a broker to identify and analyze the risks an organization
faces? - (ANSWER)Risk Management
What is a risk management technique whereby the risk of loss is prevented by not
engaging in activities that present the risk? - (ANSWER)Avoidance
What is both a pre-loss and a post-loss objective of risk management? -
(ANSWER)Social Responsibility
What is the duty of a risk manager? - (ANSWER)Identifying loss exposures
, 3
Which type of professional would be responsible for educating other corporate
managers about risk and acting as a resource to other managers, in much the
same way as a broker would for a small business client? - (ANSWER)Risk Manager
A small, popular coffee shop is severely damaged by fire.Which party has
insurable interest in the coffee shop? - (ANSWER)bank that holds a mortgage on
the building in which the coffee shop is located
How can insurance be an aid to credit? - (ANSWER)Because it is virtually
impossible to obtain credit without having insurance on the item concerned
How can insurance be an aid to security? - (ANSWER)By substituting a certain
premium payment in place of an uncertain loss payment
How can risk be spread? - (ANSWER)By volume, diversity of risks, and diversity of
location
What does a broker do? - (ANSWER)Acts on behalf of an insured in placing
business with insurance companies
What does it mean to indemnify? - (ANSWER)To provide compensation for loss or
expenses incurred
What is the premium? - (ANSWER)The price of insurance protection for a
specified risk for a specified period of time
, 4
What is the specific risk covered by life insurance? - (ANSWER)The death of the
insured
What type of insurance covers goods in transit on land? - (ANSWER)Inland
transportation
What concept upholds the principle of indemnity? - (ANSWER)Insurable Interest
What 3 departments are unique to insurance companies? - (ANSWER)Actuarial,
claims, and underwriting
What is facultative reinsurance? - (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? - (ANSWER)The amount of stock sold by a
corporation
What is the basic task of an underwriting department? - (ANSWER)Select risks to
insure
What is the term used when an insurance company re-insures its liability with
another insurance company? - (ANSWER)Cession
