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Insurance Exam Questions – How To Read Them

One of the important things for an insurance exam includes how to read the exam questions. This article will help you in this regard.

One of the hardest things to do – aside from memorizing and understanding all of the material – is to understand how to read the questions on your insurance exam.  Hopefully, this article will help.


Depending on which insurance exam you take, you will have definitions, multiple choice and short answer questions.  When it comes to the multiple choice questions, they use 3 main tricks:

  • They will use double negatives.  For example, they might ask you “what is NOT excluded” or “all of the following statements are true except…”.
  • They will include details that seem like they don’t matter but are actually very important (& vice versa).  For example, they might bring up the length of a boat when asking about watercraft liability.
  • When there are 4 options in the multiple choice, 2 choices will be obviously wrong but 2 choices will be somewhat correct.  Your job will be to pick the “best” answer.


#1 A fire recently damaged the building owned by your client. The loss is estimated at $50,000. The building was valued at $500,000; however, your client has insured it for $300,000. The coinsurance requirement is 80%. Using the co-insurance formula, how much of this loss is the insured required to absorb?
a) $37,500
b) $50,000
c) $12,500
d) $25,000

Comment: In the above question, they are asking about how much the insured is required to absorb; NOT how much the insurer will pay (which would be the most “natural” way of asking the question).  Pay attention to details when reading the question but be able to filter unimportant details from important ones.

#2 Under the Contributory Negligence Act, all of the following statements are true except one.
a) The at fault parties are considered severally liable
b) If the percentage of fault is difficult to determine, the defendants usually pay an equal proportion of the loss
c) The at fault parties are considered jointly liable
d) All of the above are false

#3 They can also put double negatives inside the multiple choice options.  For example, they might be asking you to “find the statement that is not true”.  And one of the options could say: “losses or damage to outdoor plants by windstorm are not excluded”.  So you have to think to yourself – is it NOT true that damage to plants caused by windstorm is NOT excluded.

The trick for solving these mental puzzles is to convert the the phrases “not true” and “not excluded” into “false” and “covered”.  In this case: “is it ‘false’ that damage to plants caused by windstorm is ‘covered'”.  Then you can see that the real question you have to answer is whether plants damaged by windstorm is covered.


I hope this helps some of you out there reading this.  If you still find this sort of thing a challenge, be sure to let me know.  I’ll either add to this post or work with you to really break down these ideas.