PERSONAL LINES-CALIFORNIA INSURANCE EXAM

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PERSONAL LINES-CALIFORNIA INSURANCE EXAM

QUESTIONS

Qs and Ans - Expert- Explanation - ing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: 6 steps of Risk Management

Answer:

Identify, analyze, examine, select, implement, monitor and revise

Question 2: Indemnification

Answer:

Cannot collect more than your loss under this definition.

Question 3: Risk

Answer:

Chance, uncertainty, possibility of loss occurring (uncertainty not certain) There are 2 types of risks: Pure and Speculative.

Question 4: Three dimensions that make up Loss Exposure

Answer:

Type of value exposed to loss, peril causing the loss, and financial consequence of loss

Question 5: Domestic

Answer:

Organized under the laws of California

Question 6: Insurance Contract

Answer:

Policy, written instrument, indemnity agreement and legal document

Question 7: Expectant interests are

Answer:

Not Insurable

Question 8: Risk sharing

Answer:

Reinsurance, more than one primary. Too large (share risk)

Question 9: Claimant

Answer:

Person seeking recovery. In property=insured. In liability=3rd party

Question 10: Private insurer and Government Insurers

Answer:

Insurance is provided to the public by two major sources, private and US Government. Two major insurers are Stock and Mutual

Question 11: Risk Retention

Answer:

Self insure. Self insure portion of risk = deductible. Choosing not to insure something

Question 12: Four Major Categories of Insurers

Answer:

Property insurance, Casualty Insurance, Life Insurance and Accident/health insurance

Question 13: Personnel Loss Exposure

Answer:

Death, resignation, termination, disability

Question 14: Loss exposure

Answer:

Possibility of loss. There are 3 dimensions of loss exposure. Type of value exposed to loss, the peril causing loss, the extent of the potential financial consequences. Normally written as Property, Liability or Human/Personnel

Question 15: Principle of indemnity

Answer:

The basic principle behind Insurance. To restore someone to the same financial condition the occupied prior to the loss with no intent of loss or gain (to make while). The intent is to cover the amount of the loss only. An insured cannot collect more than of loss. An insured can only be indemnified to the extent of their insurable interest (ownership) in property.

Question 16: Court Hazard

Answer:

Legal decisions, lawsuit, mold

Question 17: Property insurance

Answer:

Covers direct and indirect losses- referred to as first party insurance/coverage

Question 18: Authorized vs unauthorized

Answer:

Whether insurer can transact or not in the state

Question 19: Physical Hazard

Answer:

Location, materials, value, operations, height, weight, occupation, next to a dynamite factory, kerosene, blindness, avocation (hobbies)

Question 20: Risk/Hazard/Peril

Answer:

Risk equals chance, Hazard equals increases chances/severity and Peril equals Cause

Question 21: Speculative Risk

Answer:

Loss or gain. Not insurable (gambling, lottery, new business, market value of home)

Question 22: Excess and surplus lines insurers

Answer:

Speciality insurer where there is no market through the original producer or which is not available through admitted. Placed through a surplus lines broker

Question 23: STARR

Answer:

S: Risk sharing

T: Risk transfer

A: risk avoidance

R: Risk Retention

R: Risk reductions

Question 24: Elements of insurability

Answer:

Insurance is not an appropriate mechanism for protection against all risks. There are certain rules that establish a practical basis regarding who can be insured and for what exposure. These rules determine a risks insurability (the ability of an individual to obtain an insurance policy to cover the risk)

Question 25: Domicile of Insurer

Answer:

Where insurer was organized, located, formed, incorpo . Can be admitted or non admitted Question 26: Material, structural, age, location, operations arise from what type of Hazard

Answer:

Physical