Knowledge Exam Flashcards
7 cards from real PSI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Knowledge Exam flashcards as text
Which insurance principle states that a policyholder should not profit from an insurance claim?
Answer: Principle of indemnity
The principle of indemnity holds that insurance should restore the insured to their pre-loss financial position, not allow them to profit from a loss.
A real estate listing agreement in which the seller must pay a commission regardless of who sells the property is called a(n):
Answer: Exclusive right-to-sell listing
An exclusive right-to-sell listing guarantees the listing broker a commission if the property sells during the listing period, regardless of who procures the buyer.
In the context of contractor licensing, what does 'surety bond' protect?
Answer: The public and clients if the contractor fails to fulfill contractual obligations
A surety bond protects consumers and project owners by providing financial compensation if a contractor fails to complete work or meet contractual terms.
Which type of life insurance policy builds cash value over time?
Answer: Whole life
Whole life insurance is a permanent policy that accumulates a guaranteed cash value over the life of the policy in addition to providing a death benefit.
When a licensed real estate agent fails to disclose a known material defect, they may be liable for:
Answer: Misrepresentation or fraud
Failing to disclose a known material defect exposes a licensee to claims of misrepresentation or fraud, which can result in license suspension, fines, or lawsuits.
What does 'occurrence-based' coverage mean in a liability insurance policy?
Answer: Coverage applies to incidents that occur during the policy period, regardless of when the claim is filed
An occurrence-based policy covers losses that happen during the policy period, even if the claim is reported or filed years after the policy has expired.
A property manager who collects rents and security deposits must typically hold those funds in a:
Answer: Separate trust or escrow account
Real estate license laws require property managers to keep client funds in a separate trust or escrow account to prevent commingling with personal or operating funds.