KENTUCKY PROPERTY AND CASUALTY
INSURANCE LICENSING. EXAM
2025/2026 QUESTIONS AND ANSWERS
100% PASS.
Risk - ANS Chance or uncertainty of loss
Managing Risk - ANS STARR: Share, Transfer, Avoid, Reduce, Retain
Purpose of Insurance - ANS Transfer risk and responsibility in exchange for payment of a
premium
Law of Large Numbers - ANS The more examples used to develop any statistic, the more
reliable that statistic will be.
Elements of Insurability - ANS Insurable interest, definite risk of loss, accidental risk,
calculable loss, affordable cost to the insured, predictable losses due to large number of persons
with similar potential loss available, loss must be spread
Parts of a Policy - ANS Declarations, Insuring Agreements, Conditions, Exclusions, Definitions
Declarations - ANS Contain name, address, amount of coverage provided, property
description, cost of policy
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Insuring Agreements - ANS Contains losses for which the insured will be indemnified, type of
property covered, perils against which the property is insured
Conditions - ANS "Ground rules" for the policy, responsibilities and obligations of both the
insurance company and the insured
Exclusions - ANS Describes the losses for which the insured is not covered.
Definitions - ANS Clarifies the meanings of terms in the policy.
Policy Jacket/Skeleton Policy - ANS Contains general conditions and the Declarations
Reciprocal Company - ANS Members insure each other and share the losses with each other,
managed by an attorney-in-fact
Lloyds Association - ANS Made up of syndicates who voluntarily agree to share in insurance
contracts
Risk Retention Groups - ANS Protects against product liability exposures (ex. multimillion
dollar lawsuits)
Self-Insurance - ANS Part or all of the risk of loss is borne without the benefit of insurance
coverage to fall back on if a loss occurs
Residual Market Insurance - ANS Government provides insurance that is not readily available
from private insurers. Federal: Flood, War Risk, Nuclear Energy Liability, Federal Crop
State: Workers compensation, unemployment
Mono-Line Company - ANS Writes only one kind of insurance
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Multi-Line Company - ANS An insurance company that writes more than one line of insurance
Property Insurance - ANS Covers risks that we will suffer financial loss over because
something we own is damaged or destroyed, first-party coverage
Casualty Insurance - ANS Covers risk that we will suffer financial loss as a result of our actions
towards others
Personal Lines - ANS property-casualty coverages that protect an individual or family
Commercial Lines - ANS Coverages designed for businesses
Countersigning - ANS The agent signs each new policy prepared by the company before
delivering it to the insured
Field Underwriting - ANS using preestablished criteria to seek out the type of business that is
likely to be acceptable to the company
Quotation - ANS Shows the prospect what the premium for the proposed coverage will be
Suspense/Diary System - ANS Alerts the agent prior to the time of the policy renewal
Service Needs - ANS Name change, change in the method of premium payment,
maintenance of accurate records
Errors and Omissions Insurance - ANS Purchased by gets to protect themselves against legal
liability from inadvertent errors or omissions
Captive Agency System - ANS The insurance company contracts with agencies, which are
independent businesses, to represent and sell insurance only for that insurance company
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
INSURANCE LICENSING. EXAM
2025/2026 QUESTIONS AND ANSWERS
100% PASS.
Risk - ANS Chance or uncertainty of loss
Managing Risk - ANS STARR: Share, Transfer, Avoid, Reduce, Retain
Purpose of Insurance - ANS Transfer risk and responsibility in exchange for payment of a
premium
Law of Large Numbers - ANS The more examples used to develop any statistic, the more
reliable that statistic will be.
Elements of Insurability - ANS Insurable interest, definite risk of loss, accidental risk,
calculable loss, affordable cost to the insured, predictable losses due to large number of persons
with similar potential loss available, loss must be spread
Parts of a Policy - ANS Declarations, Insuring Agreements, Conditions, Exclusions, Definitions
Declarations - ANS Contain name, address, amount of coverage provided, property
description, cost of policy
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Insuring Agreements - ANS Contains losses for which the insured will be indemnified, type of
property covered, perils against which the property is insured
Conditions - ANS "Ground rules" for the policy, responsibilities and obligations of both the
insurance company and the insured
Exclusions - ANS Describes the losses for which the insured is not covered.
Definitions - ANS Clarifies the meanings of terms in the policy.
Policy Jacket/Skeleton Policy - ANS Contains general conditions and the Declarations
Reciprocal Company - ANS Members insure each other and share the losses with each other,
managed by an attorney-in-fact
Lloyds Association - ANS Made up of syndicates who voluntarily agree to share in insurance
contracts
Risk Retention Groups - ANS Protects against product liability exposures (ex. multimillion
dollar lawsuits)
Self-Insurance - ANS Part or all of the risk of loss is borne without the benefit of insurance
coverage to fall back on if a loss occurs
Residual Market Insurance - ANS Government provides insurance that is not readily available
from private insurers. Federal: Flood, War Risk, Nuclear Energy Liability, Federal Crop
State: Workers compensation, unemployment
Mono-Line Company - ANS Writes only one kind of insurance
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Multi-Line Company - ANS An insurance company that writes more than one line of insurance
Property Insurance - ANS Covers risks that we will suffer financial loss over because
something we own is damaged or destroyed, first-party coverage
Casualty Insurance - ANS Covers risk that we will suffer financial loss as a result of our actions
towards others
Personal Lines - ANS property-casualty coverages that protect an individual or family
Commercial Lines - ANS Coverages designed for businesses
Countersigning - ANS The agent signs each new policy prepared by the company before
delivering it to the insured
Field Underwriting - ANS using preestablished criteria to seek out the type of business that is
likely to be acceptable to the company
Quotation - ANS Shows the prospect what the premium for the proposed coverage will be
Suspense/Diary System - ANS Alerts the agent prior to the time of the policy renewal
Service Needs - ANS Name change, change in the method of premium payment,
maintenance of accurate records
Errors and Omissions Insurance - ANS Purchased by gets to protect themselves against legal
liability from inadvertent errors or omissions
Captive Agency System - ANS The insurance company contracts with agencies, which are
independent businesses, to represent and sell insurance only for that insurance company
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
