P & C
P & C practice exam
- 1.
The transfer of pure risk from one party to another for a price through a legal contract that spells out the terms, the perils covered, the perils and property not covered, and other specific provisions is:
- A.
Reinsurance
- B.
Insurance
- C.
Risk
- D.
Exposure
Correct Answer
B. Insurance -
- 2.
As a company continues to expand, it must grow more and more just to maintain a constant percentage of grow. This is and example of:
- A.
Law of Large Number
- B.
Perils
- C.
Loss Reserve
- D.
Dwelling Program
Correct Answer
A. Law of Large Number -
- 3.
Protection or security against damage or loss is known as:
- A.
Loss Reserve
- B.
Perils
- C.
Indemnity
- D.
Exposure
Correct Answer
C. Indemnity -
- 4.
What is a Commercial Line?
- A.
Insurance for business
- B.
Individual insurance
- C.
The amount of money an insurer sets aside to pay future claims.
- D.
That which could cause loss.
Correct Answer
A. Insurance for business -
- 5.
The tendancy for people with a greater-than-average exposure to loss to purchase insurance is:
- A.
Adverse Selection
- B.
Law of Large Numbers
- C.
Dwelling Program
- D.
Reinsurance
Correct Answer
A. Adverse Selection -
- 6.
Which of the following is most closely related to the concept of insurable interest?
- A.
Loss Valuation
- B.
Indemnity
- C.
Actual cash value
- D.
Replacement cost
Correct Answer
B. IndemnityExplanation
An insured is indemnified to the degree of his insurable interest in the covered property.Rate this question:
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- 7.
Replacement cost minus description best defines:
- A.
Actual cash value
- B.
Direct loss value
- C.
Insurable interest
- D.
Financial risk
Correct Answer
A. Actual cash valueExplanation
ACV is equal to replacement cost minus depreciation.Rate this question:
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- 8.
Placing an insured in the same financial condition in which he existed before a loss occurred best describes:
- A.
Insurable interest
- B.
Indemnity
- C.
Replacement Cost
- D.
Market Value
Correct Answer
B. IndemnityExplanation
because speculative risks are not insurable, the principle of indemnification allows compensation only up to the economic standing of the insured before the loss.Rate this question:
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- 9.
All of the following are required elements of a legal contract EXCEPT
- A.
Consideration
- B.
Competent parties
- C.
Countersignature
- D.
Agreement
Correct Answer
C. Countersignature -
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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
-
Jul 30, 2011Quiz Edited by
ProProfs Editorial Team -
Oct 25, 2010Quiz Created by
Mika_breann
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