2018 CA Insurance Adjuster Exam Questions and Answers (Solved Papers) Is a a contract in which an insurance company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for a payment of a premium from an "insured person or group". - Correct Answers ✅insurance policy A method of handling pure risk, by spreading it over a large number of similar individuals. - Correct Answers ✅Insurance - the more tradition definition and will probably
be on the state exam:
Insurance is based on the Law of Large Numbers. This law shows that you can predict, fairly accurately, what happen to a large group of similar individuals in a given time period. - Correct Answers ✅Law of Large Numbers When large groups of similar individuals are combined. - Correct Answers ✅Risk Pools People who make mathematical predictions about things like, how many people in any given "risk pool" will have their home destroyed by a tornado, be diagnosed with cancer or die in a given year. - Correct Answers ✅Actuaries Insurers are able to calculate their probable losses and to establish the rates for premiums that will cover losses and 1 / 4
2018 CA Insurance Adjuster Exam Questions and Answers (Solved Papers) operating expenses. - Correct Answers ✅Using the Law of Large Numbers Insurance Contracts are governed by the principal of indemnity. - Correct Answers ✅Principal of Indemnity Assumes that an insured, who suffered a loss, should only be restored to the approximate financial condition that existed prior to the loss, no better, no worse. If insured makes a profit, the principal of indemnity is violated. - Correct Answers ✅The Principal of Indemnity The person must show lawful, substantial, and economic interest in the life, health, property, or object being covered under the insurance contract. - Correct Answers ✅Insurable Interest An individual, company, insurer, association, organization, partnership, or any other legal entity, - Correct Answers ✅Person when referring to the purchaser of an insurance policy, includes Must be present at the time of the loss. - Correct Answers ✅With Property and Casually insurance policies insurable interest 2 / 4
2018 CA Insurance Adjuster Exam Questions and Answers (Solved Papers) Use exist at the time the policy is purchased. - Correct Answers ✅Insurable Interest - life insurance polices Is the possibility (uncertainty) that a loss might occur is the reason that people buy insurance. - Correct Answers ✅Risk Are insurable - Correct Answers ✅Not al Risks The loss must be definite and definable; The loss must be accidental; The insurance company should be able to calculate the chance of loss; The Law of Large Numbers should apply; The loss must be great enough to create economic hardship; The insurance must be offered at a reasonable cost; and The loss must not be catastrophic in nature.All elements are not required to be present for every insured risk but most of them should exist whenever possible. - Correct Answers ✅Characteristics of an Insurable Risk Pure Risks and Speculative Risks - Correct Answers ✅Categories of Risk 3 / 4
2018 CA Insurance Adjuster Exam Questions and Answers (Solved Papers) A situation where there is only the possibility of a loss, there is never a possibility of a profit or gain. Pure Risks are insurable. - Correct Answers ✅Pure Risks A situation where either a profit or loss is possible, such as betting on a horse. Speculative Risks are NOT insurable. - Correct Answers ✅Speculative Risks Static Risks, Dynamic Risks, Fundamental Risk and Particular Risk - Correct Answers ✅Types of Pure and Speculative Risks These risk factors are historical factors that do not frequently fluctuate. They result from a static or unchanged environment. Associated with long term risk such as a flood every 20 years.static risk may or may not occur and therefore, are insurable. - Correct Answers ✅Static Risk Type of risk associated with change and are Not insurable.Examples, A new and fatal virus spontaneously erupts into society, unforeseen technology advances that might cause a business to lose market shares. - Correct Answers ✅Dynamic Risk Risks that effect entire groups of people or within society and can be both insurable and non insurable. Example, floods and earthquakes are insurable through food and earthquake
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