Sample Questions
Question 1
Easy
Which of the following is a commercial risk exposure that would NOT typically be covered under a standard homeowners policy?
Solution
C is correct.
Standard homeowners policies typically exclude or severely limit coverage for business property and business liability. A home-based business owner who stores $25,000 of business equipment at home would generally find that coverage is excluded or capped at a low sublimit (often $2,500). The homeowner would need a home business endorsement or separate commercial policy.
Standard homeowners policies typically exclude or severely limit coverage for business property and business liability. A home-based business owner who stores $25,000 of business equipment at home would generally find that coverage is excluded or capped at a low sublimit (often $2,500). The homeowner would need a home business endorsement or separate commercial policy.
Question 2
Medium
Which of the following best describes the law of large numbers as it applies to insurance?
Solution
B is correct.
The law of large numbers is a fundamental statistical principle stating that as the number of independent exposure units (policyholders) increases, the actual results will more closely approximate the expected (predicted) results. This allows insurers to predict aggregate losses with greater precision and set appropriate premiums.
The law of large numbers is a fundamental statistical principle stating that as the number of independent exposure units (policyholders) increases, the actual results will more closely approximate the expected (predicted) results. This allows insurers to predict aggregate losses with greater precision and set appropriate premiums.
Question 3
Hard
Under the ACA (Affordable Care Act), which of the following is true regarding guaranteed issue for individual health insurance purchased through the marketplace?
Solution
D is correct.
Under the ACA, individual health insurance sold through the marketplace is guaranteed issue, meaning insurers must accept all applicants regardless of pre-existing conditions, health status, or claims history. Additionally, insurers cannot vary premiums based on health status; premiums can only vary based on age, tobacco use, geographic area, and family size.
Under the ACA, individual health insurance sold through the marketplace is guaranteed issue, meaning insurers must accept all applicants regardless of pre-existing conditions, health status, or claims history. Additionally, insurers cannot vary premiums based on health status; premiums can only vary based on age, tobacco use, geographic area, and family size.
