General Insurance Agent Practice Questions With Answers

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General Insurance Agent Practice Questions With Answers - Quiz

Are you a general insurance agent, or do you want to become one? If so, check out these practice questions with answers and make your understanding better regarding this concept. All questions are from the latest syllabus and cover general insurance all topics. These agents sell insurance products to other insurance brokers or agents and then sell these products to individuals or companies. Shall we begin the quiz now? Play it out and try to learn everything if possible.


Questions and Answers
  • 1. 

    Risk is

    • A.

      An increased chance of loss

    • B.

      Being uncertain about a future outcome

    • C.

      The cause of the loss

    • D.

      A financial stake in the property 

    Correct Answer
    B. Being uncertain about a future outcome
    Explanation
    Chapter 2

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  • 2. 

    An accident is a specific, sudden and unforeseen event that results in damage.

    • A.

      True

    • B.

      False

    Correct Answer
    A. True
    Explanation
    Chapter 2 

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  • 3. 

    Which one of the following is NOT true about insurable interest?

    • A.

      Must have financial interest in the property at the time you purchased the policy

    • B.

      Must have insurance on the property that was in the loss

    • C.

      Must not gain financially from the loss to the property that is insured

    • D.

      Must have financial interest in the property at the time of the loss

    Correct Answer
    A. Must have financial interest in the property at the time you purchased the policy
    Explanation
    Chapter 2

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  • 4. 

    When an insured is returned to the same financial condition after the loss or made whole again, this is referred to as

    • A.

      Indemnity

    • B.

      Subrogation

    • C.

      Reimbursement

    • D.

      Waiver

    Correct Answer
    A. Indemnity
    Explanation
    Chapter 2

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  • 5. 

    An insurance company falls under which status when doing business in a state where they were incorporated?

    • A.

      Domestic

    • B.

      Foreign

    • C.

      Alien

    • D.

      Non-admitted

    Correct Answer
    A. Domestic
    Explanation
    Chapter 2

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  • 6. 

    A deductible is an example of which risk management technique?

    • A.

      Retain

    • B.

      Reduce

    • C.

      Avoid

    • D.

      Transfer

    Correct Answer
    A. Retain
    Explanation
    Chapter 2

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  • 7. 

    Which one of the following best describes the homeowner's clogged dryer vents?

    • A.

      Accident

    • B.

      Peril

    • C.

      Risk

    • D.

      Hazard

    Correct Answer
    D. Hazard
    Explanation
    The homeowner's clogged dryer vents can be described as a hazard. A hazard refers to a potential source of danger or harm. In this case, the clogged dryer vents pose a risk of fire hazard due to the accumulation of lint and restricted airflow. This can lead to overheating and potentially cause a fire. Therefore, the clogged dryer vents can be considered a hazard that needs to be addressed to ensure safety.

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  • 8. 

    Insurance is

    • A.

      Avoiding the risk

    • B.

      Transferring the risk

    • C.

      Speculating the risk

    • D.

      Retaining the risk

    Correct Answer
    B. Transferring the risk
    Explanation
    Chapter 2

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  • 9. 

    Dawn owns a shoe store and a fire occurs because of an overheated extension cord. The fireman come to put the fire out and they break the front windows to get the hose into the store. Dawn arrives to see her shoes displayed in the front window ripped by the glass and soaking wet. The shoes ripped by the glass is an example of a/an

    • A.

      Excluded Loss

    • B.

      Indirect Loss

    • C.

      Direct Loss

    • D.

      Physical Loss

    Correct Answer
    C. Direct Loss
    Explanation
    Chapter 2

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  • 10. 

    The term that identifies an agent who is authorized to represent more than one insurance company is known as

    • A.

      Captive

    • B.

      Independent

    • C.

      Appointed

    • D.

      Admitted

    Correct Answer
    B. Independent
    Explanation
    Chapter 2

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  • 11. 

    Installing an ADT alarm system in your home is an example of which risk management technique?

    • A.

      Transfer

    • B.

      Share

    • C.

      Retain

    • D.

      Reduce

    Correct Answer
    D. Reduce
    Explanation
    Chapter 2

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  • 12. 

    Lightning hits a power line causing it to catch fire and fall on the house. The house catches fire and burns down to the ground. The insured must stay in a hotel while the house is being rebuilt. Which one of the following is the indirect loss?

    • A.

      The lightning

    • B.

      The burning power line

    • C.

      The burning house

    • D.

      The hotel

    Correct Answer
    D. The hotel
    Explanation
    Chapter 2

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  • 13. 

    The insured sustained a large amount of damage to their living room from a candle that was accidentally knocked over by the cat. Fire, also known as the cause of loss, would be considered a/an

    • A.

      Exposure

    • B.

      Hazard

    • C.

      Peril

    • D.

      Risk

    Correct Answer
    C. Peril
    Explanation
    Chapter 2

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  • 14. 

    Which one of the following would be considered a morale hazard?

    • A.

      A couple that lives in a beach house

    • B.

      A person in poor financial condition

    • C.

      A person using their vehicle to transport clients

    • D.

      A person that leaves oily rags next to a kerosene heater

    Correct Answer
    D. A person that leaves oily rags next to a kerosene heater
    Explanation
    Chapter 2

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  • 15. 

    Which one of the following would be considered persons insured under an insurance policy?

    • A.

      A friend living with the insured for two months

    • B.

      The neighbor living across the street from the insured

    • C.

      A 17 year old child of the insured that is unlicensed

    • D.

      Someone that comes in to clean the insured's house twice a month

    Correct Answer
    C. A 17 year old child of the insured that is unlicensed
    Explanation
    The 17 year old child of the insured that is unlicensed would be considered a person insured under an insurance policy because they are a family member of the insured.

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  • 16. 

    Which of the following would be considered real property?

    • A.

      Vehicle

    • B.

      Dining room table

    • C.

      Animals

    • D.

      Barn

    Correct Answer
    D. Barn
    Explanation
    Chapter 2

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  • 17. 

    Which of the following will only cover perils listed on the policy?

    • A.

      Open Perils

    • B.

      Named Perils

    • C.

      All Risk Perils

    • D.

      Special Perils

    Correct Answer
    B. Named Perils
    Explanation
    Chapter 2

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  • 18. 

    Which of the following is NOT a nonresident agent requirement in Massachusetts?

    • A.

      Be in good standing with their home state

    • B.

      Submit an application

    • C.

      Take the Virginia licensing examination

    • D.

      Home state must award nonresident license on same basis

    Correct Answer
    C. Take the Virginia licensing examination
    Explanation
    Chapter 1

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  • 19. 

    Which of the following is NOT correct regarding agent appointments?

    • A.

      Agents are appointed to solicit for an insurer

    • B.

      Agent license remains active without an appointment

    • C.

      Insurer must appoint an agent within 15 days of a sale

    • D.

      The Commissioner notifies an agent of appointment termination

    Correct Answer
    D. The Commissioner notifies an agent of appointment termination
    Explanation
    Chapter 1

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  • 20. 

    Mutual insurers are:

    • A.

      Owned by policyholders and formed to earn a profit

    • B.

      Owned by stockholders and formed to provide them insurance

    • C.

      Owned by stockholders for the purpose of earning a profit

    • D.

      Owned by policyholder to provide them insurance 

    Correct Answer
    D. Owned by policyholder to provide them insurance 
    Explanation
    Chapter 2

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  • 21. 

    The type of insurance that allows a primary insurer to transfer their losses to another is called:

    • A.

      Admitted insurance

    • B.

      Reinsurance

    • C.

      Non-admitted insrance

    • D.

      Surplus lines insurance

    Correct Answer
    B. Reinsurance
    Explanation
    Chapter 1

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  • 22. 

    How many days does an agent have to report a change in residency to the Commissioner?

    • A.

      5 days

    • B.

      10 days

    • C.

      30 days

    • D.

      60 days

    Correct Answer
    C. 30 days
    Explanation
    Chapter 1

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  • 23. 

    The term that describes an agent exclusively representing only one insurer is called:

    • A.

      Captive

    • B.

      Independent

    • C.

      Appointed

    • D.

      Admitted

    Correct Answer
    A. Captive
    Explanation
    Chapter 2

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  • 24. 

    An insurer operating in a state where they were not incorporated is called:

    • A.

      Domestic Insurer

    • B.

      Foreign Insurer

    • C.

      Alien Insurer

    • D.

      Admitted Insurer

    Correct Answer
    B. Foreign Insurer
    Explanation
    Chapter 2

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  • 25. 

    The directive that states the violation an agent committed requiring them to stop the illegal activity is called 

    • A.

      Show Cause Order

    • B.

      Subpoena

    • C.

      Tort

    • D.

      Cease and Desist Order

    Correct Answer
    D. Cease and Desist Order
    Explanation
    A Cease and Desist Order is a directive that is issued by a regulatory agency or a court to an individual or organization involved in illegal activities. It requires them to immediately stop the specified illegal activity. This order is used to prevent further harm or damage caused by the violation and is an official warning that legal action may be taken if the activity continues.

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  • 26. 

    Which marketing distribution uses captive agents and is restricted to representing only a single insurer?

    • A.

      Exclusive

    • B.

      Group marketing

    • C.

      Direct writer

    • D.

      Omnichannel

    Correct Answer
    A. Exclusive
    Explanation
    Chapter 2

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  • 27. 

    An individual appointed by an insurer to sell, solicit, or negotiate policies on its behalf is known as

    • A.

      An adjuster

    • B.

      A Producer

    • C.

      A Consultant

    • D.

      A Underwriter

    Correct Answer
    B. A Producer
    Explanation
    Chapter 1

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  • 28. 

    Lieutenant Insurance Company guarantees in their commercials that you "WILL" save 20% by switching to their company. Several customers have complained that they did NOT save 20% by switching to the Lieutenant Insurance Company. The Lieutenant Insurance Company could be found guilty of:

    • A.

      Rebating

    • B.

      False Advertising

    • C.

      Defamation

    • D.

      Unfair Discrimination

    Correct Answer
    B. False Advertising
    Explanation
    Chapter 1

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  • 29. 

    Overall authority of an insurance agent includes:

    • A.

      Examined Authority

    • B.

      Absolute Authority

    • C.

      Required Authority

    • D.

      Implied Authority

    Correct Answer
    D. Implied Authority
    Explanation
    Chapter 2

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  • 30. 

    The Insurance Commissioner is empowered to

    • A.

      Pass state laws relating to insurance

    • B.

      Write policy forms for mandatory insurance coverage

    • C.

      Set rates for mandatory insurance coverage

    • D.

      Enforce state laws relating to insurance

    Correct Answer
    D. Enforce state laws relating to insurance
    Explanation
    Chapter 1

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  • 31. 

    Which of the following is a federal law that regulates the collection, distribution and use of the consumer's credit information for underwriting purposes?

    • A.

      Property and Casualty Insurance Act

    • B.

      Insurance Credit Protection Act

    • C.

      Gramm-Leach-Bliley Act

    • D.

      Fair Credit Reporting Act

    Correct Answer
    D. Fair Credit Reporting Act
    Explanation
    Chapter 1 

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  • 32. 

    If an agent lies to a client about the policy's terms and conditions, they may be found guilty of:

    • A.

      False Advertising

    • B.

      Rebating

    • C.

      Misrepresentation

    • D.

      Defamation

    Correct Answer
    C. Misrepresentation
    Explanation
    Chapter 1 

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  • 33. 

    How much notice needs to be given to the agent by the Commissioner for examining their records?

    • A.

      No notice needs to be given

    • B.

      1 year

    • C.

      30 days

    • D.

      3 years

    Correct Answer
    A. No notice needs to be given
    Explanation
    Chapter 1

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  • 34. 

    When an individual purchases insurance as a result of threats made by the agent, they have violated the:

    • A.

      Personal Injury Regulations

    • B.

      Unfair Claims Practice Laws

    • C.

      Personal Protection Regulations

    • D.

      Unfair Trade Practice Laws

    Correct Answer
    D. Unfair Trade Practice Laws
    Explanation
    Chapter 1

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  • 35. 

    When an agent is acting within the scope of authority granted in an agency contract, the insurer:

    • A.

      Transfers all liability of the agents acts to the state

    • B.

      Is not responsible when the agent makes misrepresentations

    • C.

      Is responsible for the agents acts that are based on expressed authority only

    • D.

      Is responsible for everything the agents does even if it is outside of the agent's contract

    Correct Answer
    C. Is responsible for the agents acts that are based on expressed authority only
    Explanation
    Chapter 2

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  • 36. 

    Reinstatement of a terminated license for nonrenewing or not complying with continuing education may be done:

    • A.

      Immediately

    • B.

      Within 30 days of renewal date

    • C.

      Within 6 months of renewal date

    • D.

      Within 12 months of renewal date

    Correct Answer
    D. Within 12 months of renewal date
    Explanation
    Chapter 1

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  • Current Version
  • May 12, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Apr 19, 2022
    Quiz Created by
    Alfredhook3
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