Illinois Property Insurance Exam - Basic Principles Exam Questions and Answers (Solved Papers) A social device (legal contact or policy) for the transfer of risk. Cover only pure risks - Correct Answers ✅An Insurance Policy A risk when a person can only stand to lose should an event occur - Correct Answers ✅Pure Risk a risk where the person stands to profit. Insurance policies do not cover speculative risks - Correct Answers ✅Speculative Risk When a large group of people contributes money to a fund out of which their losses can be paid. - Correct Answers ✅Pooling of risks The person or organization who is protected by the insurance policy and for whom the insurance company accepts financial risk - Correct Answers ✅The Insured The money paid by the insured to the insurance company in exchange for the insurance policy. Must be enough to pay commissions, marketing cost, administrative costs, and provide a loss reserve - Correct Answers ✅The Premium 1 / 3
Illinois Property Insurance Exam - Basic Principles Exam Questions and Answers (Solved Papers) When a policy is terminated due to nonpayment of premiums
- Correct Answers ✅A Lapse
A form added to an insurance policy. It is usually added for an additional premium charge to add additional coverage. - Correct Answers ✅An Endorsement An actual cause of loss than can be insured against. Most Common = fire - Correct Answers ✅A Peril A condition or operation in property which either creates or increases the change of loss by a covered peril. Example = frayed wiring - Correct Answers ✅A Hazard The likelihood, probability or degree of uncertainty that a covered peril will cause a loss - Correct Answers ✅Risk Statistical tables used in calculating premium rate tables.They tell the insurance companies how many people are likely to have claims and how much the losses are likely to be. - Correct Answers ✅Actuarial Tables Money set aside to pay claims in accordance with the actuarial tables - Correct Answers ✅Loss reserves 2 / 3
Illinois Property Insurance Exam - Basic Principles Exam Questions and Answers (Solved Papers) An insurance company representative who keeps track of loss statistics and calculates premium rate tables and loss reserves - Correct Answers ✅Actuary The more people the insurance company insures, the more accurate the actuarial tables will be - Correct Answers ✅Law of large numbers -A financial interest (risk) which the insured must posses at the time of the loss.-Is the person in the position to lose money?-Ex. property owner, mortgagee, lien holder - Correct Answers ✅Insurable Interest The legal concept of one party (insurance company) standing in the place of or making good for another (the insured) - Correct Answers ✅Indemnity Means the same as reimburse - Correct Answers ✅Indemnify
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