Quiz Time: General Insurance Exam Practice Test!
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This practice exam covers general insurance concepts. It is designed to help you evaluate your comprehension of the general insurance concepts for which you will be tested in your insurance license qualification exam. The questions are intended to resemble the types of queries and the range of content on your insurance license qualification exam; however, because insurance license exam questions are kept strictly confidential, you should not expect these questions to be the same as those you will see on your actual exam. Instead, this practice exam is designed to help you evaluate how well you understand the general insurance concepts presented in this book.
- 1.Which type of insurer consists of an unincorporated group of members who share losses and provide insurance to each other?
- A.
Lloyd's Association
- B.
Reciprocal exchange
- C.
Mutual company
- D.
Multi-line insurer
- 2.Medical payments under a homeowners policy are available for expenses resulting from an injury to which of the following?
- A.
The named insured
- B.
A residence employee
- C.
A person who is on the insured location without permission
- D.
Any regular resident of the insured's household who pays rent
- 3.Some property insurance policies provide for payment of the full policy limit in the event of a total loss by a covered peril, regardless of the actual value of the property. These policies are known as which of the following?
- A.
Indemnity policies
- B.
ACV policies
- C.
Valued or agreed amount policies
- D.
Market value policies
- 4.
- A.
An assumption of risk
- B.
An intervening cause
- C.
The proximate cause of loss
- D.
A matter of strict liability
- 5.Policies issued under the National Flood Insurance Program provide removal coverage for property removed to protect it from the flood. This coverage applies at another location for up to how many days?
- A.
60 days
- B.
45 days
- C.
30 days
- D.
15 days
- 6.
- A.
Unilateral contract
- B.
Representation
- C.
Warranty
- D.
Waiver
- 7.When the special causes of loss form are attached to a commercial property coverage part, coverage for theft of furs and fur garments is limited to how much?
- A.
$2,500
- B.
$2,000
- C.
$1,500
- D.
$1,000
- 8.An insurer's loss ratio is determined by dividing what?
- A.
Premiums by combined losses and expenses
- B.
Premiums by underwriting losses
- C.
Operating expenses by total premiums
- D.
Underwriting losses by total premiums
- 9.Under most property insurance policies, the policy territory includes which of the following?
- A.
Only the United States
- B.
The United States, its territories and possessions, and Canada
- C.
The United States, Canada, and Mexico
- D.
All of North America and Europe
- 10.Apparent authority of an insurance agent is the authority:
- A.
Given by the agent's contract with the insurer.
- B.
Granted to an agent by state law.
- C.
The agent tells an insurance applicant that he or she has.
- D.
That members of the public can reasonably assume that the agent has.
- 11.Claims-made general liability coverage does not apply to bodily injury or property damage that occurs when?
- A.
On the policy's retroactive date
- B.
Before the policy's retroactive date
- C.
After the policy's retroactive date
- D.
Before the effective date, if there is no retroactive date
- 12.Under liability insurance policies, what does an "aggregate limit" mean?
- A.
It is the most the insurer will pay for any one accident.
- B.
It is the most the insurer will pay for all losses during any one policy period.
- C.
It is the maximum limit for each claim when multiple claimants are arising out of the same occurrence.
- D.
It is the single largest limit that applies when a loss is covered by two or more policies issued by the same insurer.
- 13.The purpose of FAIR Plans (Fair Access to Insurance Requirements) is to do what?
- A.
Give the federal government a major role in providing insurance
- B.
Make property insurance available to risks that were otherwise considered uninsurable because of environmental hazards
- C.
Require complete disclosure of the reasons for policy cancellations
- D.
Force all insurance companies to participate in an insurance pool
- 14.In the event of a physical damage loss that makes a covered auto unavailable for a period of time, a personal auto policy will provide coverage for transportation expenses at the rate of $20 per day up to how much?
- A.
A maximum payment of $300
- B.
A maximum payment of $460
- C.
A maximum payment of $600
- D.
A maximum payment of $740
- 15.Under the business auto coverage part, each of the following is true about the classifications of covered autos, which are designated by numerical symbols shown in the declarations, except for which of the following?
- A.
All classes of newly acquired autos are automatically covered.
- B.
An insured can select different classifications for various coverages.
- C.
"Any auto" is the broadest coverage classification.
- D.
"Hired autos" include autos the insured leases, hires, rents, or borrows.
- 16.Something that might increase the likelihood that a loss will occur, is called what?
- A.
Peril
- B.
Hazard
- C.
Risk
- D.
Catastrophe
- 17.Tom Baxter has an automobile insured by a personal auto policy. He trades in his car and purchases a new private passenger auto as a replacement vehicle. If he does not notify the insurance company, the liability coverage for his replacement vehicle will apply automatically for how long?
- A.
10 days
- B.
30 days
- C.
60 days
- D.
Until the end of the policy period
- 18.A device that is used to minimize small nuisance claims and that helps to keep insurance premiums down is called what?
- A.
Arbitration
- B.
Deductible
- C.
Valued policy
- D.
Coinsurance
- 19.Homeowners coverage for loss of personal property because of "mysterious disappearance" is provided by what?
- A.
The special form (HO-3) only
- B.
The broad and special forms (HO-2 and HO-3) only
- C.
The comprehensive form (HO-5) only
- D.
All homeowners forms
- 20.Which type of insurance professional does not actually sell insurance coverages, but sells advice about insurance coverages?
- A.
Excess and surplus lines agent
- B.
Solicitor
- C.
Consultant
- D.
Producer
- 21.Which of the following is not excluded under commercial general liability coverage for bodily injury and property damage liability?
- A.
Injury or damage caused by the operation of mobile equipment
- B.
Damage to property rented to the named insured
- C.
An injury that is also covered by a workers compensation law
- D.
Liability resulting from the accidental escape of pollutants
- 22.Most liability claims are based on negligence that results in injury or damage. An act of negligence is considered to be a tort. What does the term "tort" mean?
- A.
A tort is a criminal act committed with the intent to cause injury.
- B.
A tort is a civil wrong that violates the rights of another.
- C.
A tort is any act that has the potential to cause financial loss to another person.
- D.
A tort is an act that can be prosecuted by the state or federal government even if no injury or damage occurred.
- 23.Various types of domestic shipments may be covered under a number of inland marine forms. Which of the following is not one of the nonfiled marine forms used to ensure domestic shipments?
- A.
Mail coverage form
- B.
Annual transit policy
- C.
Trip transit policy
- D.
Motor truck cargo shipper's form
- 24.Claims that are paid by general liability coverage are charged against the aggregate policy limits and reduce the amount of insurance remaining to pay future claims. However, CGL aggregate limits will be reinstated in full
- A.
If there are more than five claims during a policy period.
- B.
On the next policy anniversary date.
- C.
If the insured pays an extra premium for reinstatement.
- D.
As soon as the aggregate is actually exhausted.
- 25.Under the dwelling property forms, personal property moved to a new principal residence will be automatically covered at the new location (subject to policy expiration) for a period of how long?
- A.
60 days
- B.
30 days
- C.
20 days
- D.
10 days
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