Read the questions carefully. It can often help to reword the question to make sure you understand what is being asked.
Don't spend too much time on questions that you absolutely don't know. Eliminate whatever might be obviously wrong then put your best guess. Move on to the next question. Most states require 70% or 75% to pass, that allows quite a few wrong answers, so don't panic or stress when you don't know an answer. Of course, your goal is to do well!
Go with your gut instinct. Often the first answer you put for a question is the correct one if you are taking an educated guess. Statistically, you will more often change a correct answer to an incorrect one if you go back and change your answers. Tips to study for the exam.
About half the questions on the insurance licensing exam are fairly straightforward facts
The concept of restoring someone to the same financial position in which they were before a loss is called:
B. Indemnity *
Some exam questions will require some deductive reasoning
J and R insure their building for $140,000 under a Building and Personal Property coverage form. AB Bank holds a $70,000 mortgage on the building. When the building is destroyed by a propane gas explosion the insurance company discovers that the building was used to store hot air balloons and tanks, when J and R had told them at the time of the application that the building would be used to store office furniture and files. How much will the insurer pay?
A. $70,000 to J and R and $70,000 to the bank.
B. $70,000 to J and R, nothing to the bank.
C. Nothing to J and R, $70,000 to the bank. *
D. Nothing. Premiums will be refunded to J and R.
Other licensing exam questions are asked in the negative. Watch for this type of trick question
Which of the following statements about the subrogation clause is NOT correct?
A. It exists in many insurance contracts.
B. It prevents double collection for a loss by an insured.
C. It allows larger claim payments than are possible without it. *
D. It places the ultimate burden of loss on an at-fault third party.
(The temptation is there to mark the first answer perceived as correct, which is A. What the question is asking, though, is for the answer which is NOT correct about the subrogation clause. Be sure to read each question and understand what the question is really asking. There are many questions that are meant to trick you-to catch you if you aren't paying attention.)
Make sure you answer the question that is asked
Which of the following is not an unfair claims practice?
A. Attempting to settle a claim on the basis of an altered application
B. Rebating *
C. Failure to affirm or deny coverage within a reasonable period of time
D. Requiring the submission of a preliminary claim report
(Rebating is an Unfair Trade Practice, not an Unfair Claims Practice)
Which one of the following is not covered by Bodily Injury and Property Damage in the Commercial General Liability policy?
A. Premises and Operations
B. Contingent Liability
C. Manufactures and Contractors
D. A customer falls down some stairs on the company's premises and breaks a leg. *
(This is covered by Medical Expense coverage, not by Bodily Injury and Property Damage.)