Unlock hundreds more features
Save your Quiz to the Dashboard
View and Export Results
Use AI to Create Quizzes and Analyse Results

OR
Sign inSign in with Facebook
Sign inSign in with Google
Quizzes > Quizzes for Business > Finance

Take the General Insurance Knowledge Test

Boost Your Insurance Wisdom with a Quick Quiz

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting elements related to a General Insurance Knowledge Test quiz.

Use this general insurance quiz to practice policies, risk, underwriting, and claims in 15 multiple-choice questions. You'll spot gaps fast and build confidence for class, licensing study, or work. Want more practice? Try the fundamentals quiz or the practice quiz .

What is the primary purpose of a deductible in an insurance policy?
To increase the insurer's profits by charging extra fees
To share costs with the insured and reduce moral hazard
To ensure all losses are fully covered by the insurer
To penalize the insured for filing claims
A deductible requires the insured to pay part of a loss, which reduces small claims and lowers premiums by sharing costs. It discourages unnecessary claims and aligns incentives between insurer and insured.
Which type of insurance primarily covers damage to the insured's home and personal property?
Liability insurance
Life insurance
Auto insurance
Homeowners insurance
Homeowners insurance provides coverage for damage to a residence and the owner's personal property due to perils like fire, theft, or vandalism. Other policies cover different exposures such as vehicles or personal liability.
What does liability coverage protect the insured against?
Legal responsibility for bodily injury or property damage to others
Loss of life or permanent disability
Medical expenses of the insured
Damage to the insured's own property
Liability coverage defends the insured against legal claims and pays damages for which they are found liable. It does not cover their own property damage or personal medical costs.
In insurance terms, what is a premium?
The periodic payment made to maintain insurance coverage
A financial penalty for late payment
The amount paid by the insurer to settle a claim
The commission paid to an insurance broker
A premium is the amount the insured pays, often periodically, to the insurer in exchange for coverage. It funds the insurer's risk pool and administrative expenses.
The principle of risk pooling involves which of the following?
Investing premiums exclusively in equities
Charging no premiums for certain policyholders
Assigning all risk to a single insured
Sharing losses among a large group of insureds
Risk pooling spreads individual losses over many policyholders so that each pays a small share of the total loss. This diversification reduces the financial impact on any one insured.
Which factor is least relevant when underwriting a personal auto insurance policy?
Driver's medical history
Driving record
Vehicle model
Annual mileage
Underwriting auto insurance focuses on driving-related factors such as driving record, mileage, and vehicle type. The insured's medical history generally does not affect auto risk assessment.
Which part of an insurance policy provides details of coverage limits and deductibles?
Declarations page
Policy jacket
Endorsement
Binder
The declarations page summarizes key policy details such as coverage limits, deductibles, and insured properties. Endorsements modify specific provisions, while the jacket contains general terms.
What does the principle of utmost good faith require from parties to an insurance contract?
Full disclosure of all material facts by both parties
Immediate payment of all claims without investigation
Guaranteed stable premium rates
Selection of any claims adjuster by the insured
Utmost good faith, or uberrima fides, obligates both insurer and insured to disclose material information fully. Failure to do so can void the policy or lead to contested claims.
In a standard commercial property policy, which peril is typically excluded and requires a separate policy?
Theft
Flood
Fire
Vandalism
Commercial property policies generally exclude flooding due to high volatility and catastrophic potential. Flood coverage is often obtained through a separate flood insurance program.
The expected value calculation in risk assessment is used to estimate what?
Legal exposure in lawsuits
Regulatory compliance status
Average loss amount over time
Investment return on reserves
Expected value of loss combines possible loss amounts with their probabilities to determine an average expected loss. It guides premium setting and risk financing decisions.
When an insurance policy includes an 80% coinsurance clause, the insured must:
Maintain insurance equal to at least 80% of property value
Pay 80% of every covered claim
Insure only 80% of each loss
Share 20% of the annual premium
An 80% coinsurance clause requires the insured to carry coverage representing at least 80% of the property's value. Failure to do so results in a reduced claim payment proportional to the underinsurance.
Which step in the claims process involves investigating and determining the amount payable?
Loss adjustment
Underwriting
Policy issuance
Premium collection
Loss adjustment is the stage where the adjuster examines the cause, liability, and amount of loss to determine the insurer's payment. Underwriting occurs before policy issuance.
A best practice for selecting an insurance solution is to:
Match coverage features to the specific risk exposures
Choose the lowest premium regardless of coverage
Ignore policy exclusions to save time
Always select the highest available limits
Effective insurance placement aligns policy terms and limits with the insured's unique risk profile. Selecting solely on price or limits can leave gaps or unnecessary coverage.
Which entity typically oversees insurance regulation at the U.S. state level?
National Association of Insurance Commissioners
Securities and Exchange Commission
State insurance department
Department of Labor
Each U.S. state has its own insurance department or commissioner responsible for licensing, rate approval, and consumer protection. The NAIC is a coordinating association, not a regulator.
What is subrogation in insurance?
Insurer's right to recover from a third party after claim payment
Waiver of future premium payments
Additional excess coverage provided to the insured
Policyholder's right to transfer the policy
Subrogation allows the insurer to step into the insured's position after paying a claim and pursue recovery from the liable third party. It helps control claim costs and prevents double recovery.
A property valued at $500,000 is insured for $300,000 under an 80% coinsurance clause with a $2,000 deductible. A $100,000 loss occurs. How much will the insurer pay?
$98,000
$97,000
$73,000
$75,000
Required insurance is 80% of $500,000, or $400,000. The insured carries $300,000, so coverage ratio is 300,000/400,000 = 0.75. The recoverable loss is $100,000 Ã- 0.75 = $75,000, minus $2,000 deductible equals $73,000.
Which statement best distinguishes occurrence-form liability policies from claims-made policies?
Occurrence forms only cover claims reported during the policy period
Claims-made forms only cover losses above the policy deductible
Occurrence forms cover incidents during the policy period regardless of when the claim is reported
Claims-made forms cover all claims regardless of the date of occurrence
Occurrence policies pay for events that occur during the policy term, even if the claim is filed later. Claims-made policies require both the event and claim reporting to happen within the policy term.
An insurer expects a loss of $200,000 with 10% probability and $0 with 90% probability. Administrative costs are $10,000. What is the pure premium?
$30,000
$10,000
$210,000
$20,000
Expected loss is $200,000 Ã- 0.10 = $20,000. Adding administrative costs of $10,000 yields a pure premium of $30,000. This covers expected payouts and expenses.
In a dispute over policy coverage, which principle requires ambiguous contract terms be interpreted in favor of the insured?
Utmost good faith
Contra proferentem
Indemnity
Subrogation
Contra proferentem dictates that any unclear or ambiguous term in a contract is construed against the party that drafted it, typically the insurer. This protects the insured from hidden exclusions.
Which type of reinsurance involves case-by-case negotiation and covers individual risks?
Excess-of-loss treaty reinsurance
Facultative reinsurance
Stop-loss reinsurance
Treaty pro rata reinsurance
Facultative reinsurance is negotiated for each individual risk and allows either party to accept or reject coverage. Treaty reinsurance automatically covers classes of risks under agreed terms.
0
{"name":"What is the primary purpose of a deductible in an insurance policy?", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"What is the primary purpose of a deductible in an insurance policy?, Which type of insurance primarily covers damage to the insured's home and personal property?, What does liability coverage protect the insured against?","img":"https://www.quiz-maker.com/3012/images/ogquiz.png"}

Learning Outcomes

  1. Analyse different insurance policy types and coverage features
  2. Evaluate risk assessment principles for personal and commercial policies
  3. Identify key underwriting factors influencing premium calculations
  4. Demonstrate knowledge of regulatory compliance and claims processes
  5. Apply best practices for selecting appropriate insurance solutions

Cheat Sheet

  1. Understanding Insurance Policy Types - Insurance comes in many flavors, from life and health to auto and property, each offering unique coverages like liability, collision, or dwelling protection. Getting to know these differences is like building your own safety net - you'll feel confident choosing the perfect plan for your lifestyle. Explore insurance types
    2. Discover all policy types
  2. Mastering Risk Assessment - Risk assessment is the art of predicting "what ifs" and measuring how likely and costly they could be. Insurers use this insight to set fair premiums, and you can use it to anticipate your own exposure. Embrace your inner analyst to see why higher risks often carry higher price tags! Dive into risk evaluation
    3. Learn more about risk assessment
  3. Key Underwriting Factors - Underwriting is like a detective game where age, health, driving record, and occupation all play clues in calculating your premium. Younger drivers or those in high-risk jobs may pay more, so understanding these factors gives you the power to manage costs. Armed with this knowledge, you'll know exactly why your rate is what it is. Uncover underwriting secrets
    4. See underwriting factors explained
  4. Navigating Regulatory Compliance - Rules and regulations keep the insurance world honest, protecting consumers and ensuring ethical practices. From licensing requirements to consumer rights, staying on top of compliance builds trust and avoids nasty surprises. Think of it as the rulebook that keeps the game fair for everyone involved. Check compliance standards
    5. Read more about compliance
  5. Streamlining the Claims Process - Filing a claim can feel like a quest, but knowing each step helps you breeze through from loss reporting to final settlement. Timely updates and accurate details are your best allies to speed things up. With a clear roadmap, you'll emerge victorious and well-compensated. Follow the claims guide
    6. Get the claims roadmap
  6. Selecting the Best Insurance Solutions - Choosing the right policy is like customizing a playlist: assess your needs, compare options, and consider an insurer's financial strength. A good mix provides solid protection without unnecessary extras or hidden fees. Remember, the cheapest track isn't always the chart-topper! Find top insurance tips
    7. Compare your options
  7. Understanding Deductibles - A deductible is the amount you pay out of pocket before insurance kicks in, and tweaking it can balance your premiums versus claim costs. Opting for a higher deductible slashes your monthly payment but raises what you owe if you claim. With this power, you can tailor a plan that fits both your wallet and your risk comfort. Explore deductible options
    8. Learn more about deductibles
  8. Spotting Policy Exclusions - Exclusions are those pesky fine-print clauses that tell you what's off-limits in your coverage. Overlooking them can lead to nasty surprises when you file a claim, so read carefully to know exactly what's included - and what's not. It's like setting ground rules before you start the game! Review exclusion details
    9. See policy exclusions
  9. Exploring Reinsurance - Reinsurance is insurance for insurance companies, helping them share risk and stay financially stable after big losses. Think of it as teaming up so no single company carries all the weight if a major disaster strikes. This safety net keeps the entire industry strong and reliable. Understand reinsurance
    10. Read about reinsurance
  10. Keeping Up with Emerging Trends - The insurance world is evolving with tech like AI-driven underwriting, telematics, and big data analytics transforming how policies are priced and claims are handled. Embracing innovation keeps you ahead of the curve and opens doors to personalized, cost-effective solutions. Stay curious and let these trends inspire your next insurance move! Explore industry trends
    11. Discover new trends
Make a Quiz (FREE) Copy & Edit This Quiz Create a Quiz with AI

Finance Quizzes

Powered by: Quiz Maker