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PERSONAL LINES-CALIFORNIA INSURANCE EXAM
QUESTIONS
Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing 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 actual 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 actual loss only. An insured cannot collect more than 100% of actual 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, incorporated. Can be admitted or non admitted Question 26: Material, structural, age, location, operations arise from what type of Hazard
Answer:
Physical
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