Exam (elaborations)
NJ Property license 1 Questions and Answers Graded A+
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NJ Property license 1
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NJ Property license 1What are the methods of managing risk? - answer Avoidance, transfer, sharing,
retention, reduction
What is the fee a person pays an insurance company to receive coverage? - answer
Premium
Self -insuring is typically used for what type of insurance? - answer Workers
compensation
A tornado that destroys a property would be an example of what? - answer Peril
A state-issued document empowering an insurance company to become an admitted
insurer is called what? - answer Certificate of Authority
Why are the three types of hazards? - answer Physical, moral, and morale
The reduction, decrease, or disappearance of value of the person or property insured in
a policy is known as what? - answer Loss
Insurers are classified according to their domicile. What are the three types of insurers?
- answer Domestic, foreign, and alien
A person who does not lock the doors to his or her house shows an indifferent attitude.
What type of hazard does this represent? - answer Morale
A situation in which a person can experience only a loss and no gain presents what type
of risk? - answer Pure risk
What are the four elements of an insurance contract? - answer Agreement (offer and
acceptance), consideration, competent parties, and legal purpose
What type of insurer is formed under the laws of another state? - answer Foreign
What are the five characteristics of an ideally insurable risk? - answer Loss must be 1)
due to chance 2) definite and measurable, 3) statistically predictable, 4) not
catastrophic, and 5) coverage cannot be mandatory.
What law is the foundation of the statistical prediction of loss upon which rates for
insurance are calculated? - answerLaw of large numbers
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