KY PROPERTY AND CASUALTY EXAM
PRACTICE 2025/2026 QUESTIONS AND
ANSWERS 100% PASS.
Which of the following creates an insurable interest? - ANS House you own but have rented
to a tenant, Car on which you are still paying
What is the primary purpose of insurance? - ANS Transferring risk
Which of the following is an insurable risk? - ANS Hail damage to the roof of a car
Define peril in insurance terms. - ANS The cause of loss
Explain a morale hazard. - ANS Arises through an individual's carelessness or irresponsible
actions
Identify the part that is NOT included in an insurance contract. - ANS Floater
Why is an insurance contract considered a contract of indemnity? - ANS Insured may collect
no more than the amount required to restore to pre-loss financial condition
Which element of a legal contract does an insurance premium payment represent? -
ANS Consideration
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Why is an insurance policy considered a unilateral contract? - ANS Insurance company is the
only party legally obligated to perform
What constitutes an agreement to enter into a valid contract? - ANS A specific offer by one
party and acceptance by the other
A nonexclusive agent - ANS Represents more than one insurance company
In prior approval states, the rates and policy forms insurance companies use must be approved
by - ANS The insurance department of the state where they will be used
A mutual insurance company is owned by - ANS Its policyholders
A binder - ANS None of the above
The tendency for people with a greater-than-average exposure to loss to purchase insurance is
called - ANS Adverse selection
The Fair Credit Reporting Act applies to applicants who are rejected for insurance coverage on
the basis of - ANS A credit report
It will cost Gary 5000 to put a new roof on his home to replace a roof destroyed in a wind-
storm. Assume the original roof which Gary paid 3,500 for 10 years ago, depreciated 300 per
year. What was the actual cash value of the roof that was destroyed? - ANS 2,000
The insured has 20,000 insurance with Company A and 40,000 with Company B. Assume both
policies contain another insurance clause specifying pro rata. What would company A pay if
there was 24,000 loss? - ANS 8,000
The right to request an appraisal belongs to - ANS Both the insured and the insurance
company
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
PRACTICE 2025/2026 QUESTIONS AND
ANSWERS 100% PASS.
Which of the following creates an insurable interest? - ANS House you own but have rented
to a tenant, Car on which you are still paying
What is the primary purpose of insurance? - ANS Transferring risk
Which of the following is an insurable risk? - ANS Hail damage to the roof of a car
Define peril in insurance terms. - ANS The cause of loss
Explain a morale hazard. - ANS Arises through an individual's carelessness or irresponsible
actions
Identify the part that is NOT included in an insurance contract. - ANS Floater
Why is an insurance contract considered a contract of indemnity? - ANS Insured may collect
no more than the amount required to restore to pre-loss financial condition
Which element of a legal contract does an insurance premium payment represent? -
ANS Consideration
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Why is an insurance policy considered a unilateral contract? - ANS Insurance company is the
only party legally obligated to perform
What constitutes an agreement to enter into a valid contract? - ANS A specific offer by one
party and acceptance by the other
A nonexclusive agent - ANS Represents more than one insurance company
In prior approval states, the rates and policy forms insurance companies use must be approved
by - ANS The insurance department of the state where they will be used
A mutual insurance company is owned by - ANS Its policyholders
A binder - ANS None of the above
The tendency for people with a greater-than-average exposure to loss to purchase insurance is
called - ANS Adverse selection
The Fair Credit Reporting Act applies to applicants who are rejected for insurance coverage on
the basis of - ANS A credit report
It will cost Gary 5000 to put a new roof on his home to replace a roof destroyed in a wind-
storm. Assume the original roof which Gary paid 3,500 for 10 years ago, depreciated 300 per
year. What was the actual cash value of the roof that was destroyed? - ANS 2,000
The insured has 20,000 insurance with Company A and 40,000 with Company B. Assume both
policies contain another insurance clause specifying pro rata. What would company A pay if
there was 24,000 loss? - ANS 8,000
The right to request an appraisal belongs to - ANS Both the insured and the insurance
company
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
