Property and Casualty Insurance
Exam with Guaranteed Pass Solutions
2026 Edition.
Specific insurance - Answer This type of insurance designates a particular item to be insured
Blanket insurance - Answer This type of insurance covers more than one item of property at
a single location or one more item of property at multiple locations.
Speculative - Answer possibility of both gain and loss. Not insurable.
Pure - Answer only the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk? - Answer avoid, control, retain, and
transfer risk.
Hazard - Answer A condition or situation which increases the chance for loss
Physical Hazards - Answer a hazard that arises from the condition, occupancy, or use of the
property itself.
ex: skateboard left on the steps
Moral Hazards - Answer when an individual through carelessness or by irresponsible actions
can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
Morale Hazards - Answer when a person might create a loss situation on purpose just to
collect from the insurance company.
ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance payout to
buy a new vehicle.
,Actual Cash Value (ACV) - Answer Replacement Cost, minus depreciation.
Pair and Set Clause - Answer Loss to one item of a pair or set does not constitute loss to the
entire pair or set.
Appraisal - Answer A method of resolving disputes between insurers and insureds over the
amount owed on a covered loss.
-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
Subrogation - Answer An insurer's right to recover the amount of its loss payment from the
third party who is legally responsible for the loss.
Arbitration - Answer this condition is similar to the Appraisal Condition but it is not limited to
disputes over the value of the loss. It may also be used to resolve other areas of disagreement
between the insured and the insurance company.
What does WC SHAVVER stand for? - Answer Windstorm, Civil commotion, Smoke, Hail,
Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
What does BIG AFFECT stand for? - Answer Burglar damage, Ice & snow weight, Glass
breakage, Accidental discharge, Falling objects, Freezing of pipes, Electrical damage, Collapse,
Tearing apart.
Insolvency - Answer A financial state that occurs if liabilities are greater than assets.
Law of Agency - Answer Knowledge of the Agents is Knowledge of the Principal (Insurance
Company)
Principal - Answer Insurance Company
,Coinsurance Clause - Answer Requires the insured to carry a minimum specified amount
(generally 80%) of the replacement cost value of the insured property in order for partial losses
to be paid in full.
Estoppel - Answer A legal bar to changing or denying a fact because of one's own previous
actions or words to the contrary.
ex: If an insurance company representative intentionally or unintentionally gives the impression
that a specific fact exists when it does not and a client relies on that impression and is damaged
a result.
Binder - Answer A temporary contract of insurance, oral or written, offered by an insurer
pending issuance of the policy. Usually written for a period of 30-60 days and remains in force
for that period or until a permanent policy is either issued or denied by the insurer.
Warranty - Answer A provision in a policy that pledges that a condition does exist or will exist
at some time in the future.
Deposit Premium - Answer Tentative charge made at the beginning of certain policies and
reinsurance agreements to be adjusted when the actual earned charge has been later
determined.
Audit - Answer Verification of books or accounts to determine their accuracy.
Occurrence - Answer An accident, including continuous or repeated exposure to the same
harmful conditions, which result in bodily injury or property damage.
Special Damages - Answer type of compensatory damages that reimburse the injured part
for direct and specific expenses involved in the loss. Such as medical expenses, funeral expenses
and loss wages.
General Damages - Answer type of compensatory damages that reimburse the injured party
for such things as pain and suffering and disfigurement.
Punitive Damages - Answer type of damages intended to punish the defendant and make an
, 4 elements of negligence - Answer 1. The existence of a DUTY to act in a certain way
2. A FAILURE to live up to this duty
3. An actual INJURY must occur
4. The failure in duty must be the PROXIMATE CAUSE of the injury.
Negligence - Answer An unreasonable or prudent act, A thoughtless or careless act or one
committed out of ignorance. It may be a non-act or omission, but it is NEVER an intentional act.
Casualty Insurance - Answer Refers to coverage designed to address the liability of
individuals and organizations resulting from negligent acts in their personal, business, or
professional roles.
Overinsurance - Answer Exists if a property or an insurable interest in property is insured by
one or more insurance contracts against the same hazard in excess of the fair value of the
property or of such interest.
Specific Insurance - Answer Coverage on ONE type of property (real or personal) in ONE
location.
Blanket Insurance - Answer A single policy written on an insured's interest for 2 or more
different types of property (dwelling/building and contents) at the same location, or at different
locations.
Uninsured Motor Vehicle - Answer A motor vehicle or trailer to which:
- No liability coverage at the time of accident
-has liability coverage but not enough to meet the state's financial responsibility requirement
- Operated by a hit and run driver
- Has invalid liability insurance at the time of the accident because the insurer is insolvent or
denies coverage
Part C: Uninsured Motorist Coverage - Answer this coverage compensates the insured for
bodily injury ONLY as a result of an accident with an uninsured motorist.
Exam with Guaranteed Pass Solutions
2026 Edition.
Specific insurance - Answer This type of insurance designates a particular item to be insured
Blanket insurance - Answer This type of insurance covers more than one item of property at
a single location or one more item of property at multiple locations.
Speculative - Answer possibility of both gain and loss. Not insurable.
Pure - Answer only the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk? - Answer avoid, control, retain, and
transfer risk.
Hazard - Answer A condition or situation which increases the chance for loss
Physical Hazards - Answer a hazard that arises from the condition, occupancy, or use of the
property itself.
ex: skateboard left on the steps
Moral Hazards - Answer when an individual through carelessness or by irresponsible actions
can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
Morale Hazards - Answer when a person might create a loss situation on purpose just to
collect from the insurance company.
ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance payout to
buy a new vehicle.
,Actual Cash Value (ACV) - Answer Replacement Cost, minus depreciation.
Pair and Set Clause - Answer Loss to one item of a pair or set does not constitute loss to the
entire pair or set.
Appraisal - Answer A method of resolving disputes between insurers and insureds over the
amount owed on a covered loss.
-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
Subrogation - Answer An insurer's right to recover the amount of its loss payment from the
third party who is legally responsible for the loss.
Arbitration - Answer this condition is similar to the Appraisal Condition but it is not limited to
disputes over the value of the loss. It may also be used to resolve other areas of disagreement
between the insured and the insurance company.
What does WC SHAVVER stand for? - Answer Windstorm, Civil commotion, Smoke, Hail,
Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
What does BIG AFFECT stand for? - Answer Burglar damage, Ice & snow weight, Glass
breakage, Accidental discharge, Falling objects, Freezing of pipes, Electrical damage, Collapse,
Tearing apart.
Insolvency - Answer A financial state that occurs if liabilities are greater than assets.
Law of Agency - Answer Knowledge of the Agents is Knowledge of the Principal (Insurance
Company)
Principal - Answer Insurance Company
,Coinsurance Clause - Answer Requires the insured to carry a minimum specified amount
(generally 80%) of the replacement cost value of the insured property in order for partial losses
to be paid in full.
Estoppel - Answer A legal bar to changing or denying a fact because of one's own previous
actions or words to the contrary.
ex: If an insurance company representative intentionally or unintentionally gives the impression
that a specific fact exists when it does not and a client relies on that impression and is damaged
a result.
Binder - Answer A temporary contract of insurance, oral or written, offered by an insurer
pending issuance of the policy. Usually written for a period of 30-60 days and remains in force
for that period or until a permanent policy is either issued or denied by the insurer.
Warranty - Answer A provision in a policy that pledges that a condition does exist or will exist
at some time in the future.
Deposit Premium - Answer Tentative charge made at the beginning of certain policies and
reinsurance agreements to be adjusted when the actual earned charge has been later
determined.
Audit - Answer Verification of books or accounts to determine their accuracy.
Occurrence - Answer An accident, including continuous or repeated exposure to the same
harmful conditions, which result in bodily injury or property damage.
Special Damages - Answer type of compensatory damages that reimburse the injured part
for direct and specific expenses involved in the loss. Such as medical expenses, funeral expenses
and loss wages.
General Damages - Answer type of compensatory damages that reimburse the injured party
for such things as pain and suffering and disfigurement.
Punitive Damages - Answer type of damages intended to punish the defendant and make an
, 4 elements of negligence - Answer 1. The existence of a DUTY to act in a certain way
2. A FAILURE to live up to this duty
3. An actual INJURY must occur
4. The failure in duty must be the PROXIMATE CAUSE of the injury.
Negligence - Answer An unreasonable or prudent act, A thoughtless or careless act or one
committed out of ignorance. It may be a non-act or omission, but it is NEVER an intentional act.
Casualty Insurance - Answer Refers to coverage designed to address the liability of
individuals and organizations resulting from negligent acts in their personal, business, or
professional roles.
Overinsurance - Answer Exists if a property or an insurable interest in property is insured by
one or more insurance contracts against the same hazard in excess of the fair value of the
property or of such interest.
Specific Insurance - Answer Coverage on ONE type of property (real or personal) in ONE
location.
Blanket Insurance - Answer A single policy written on an insured's interest for 2 or more
different types of property (dwelling/building and contents) at the same location, or at different
locations.
Uninsured Motor Vehicle - Answer A motor vehicle or trailer to which:
- No liability coverage at the time of accident
-has liability coverage but not enough to meet the state's financial responsibility requirement
- Operated by a hit and run driver
- Has invalid liability insurance at the time of the accident because the insurer is insolvent or
denies coverage
Part C: Uninsured Motorist Coverage - Answer this coverage compensates the insured for
bodily injury ONLY as a result of an accident with an uninsured motorist.
