PROPERTY & CASUALTY INSURANCE
EXAM| CORRECT ANSWERS WITH
RATIONALES. A+ GUARANTEED
SUCCESS
1. What is the primary purpose of property and casualty
insurance?
A. To protect against financial loss from property damage or
liability
B. To provide health benefits
C. To replace income lost due to disability
D. To fund retirement accounts
Answer: A
Rationale: Property & Casualty (P&C) insurance covers
damage to property and liability for injuries or damages to
others.
2. Which term refers to the likelihood that a loss will occur?
A. Risk
B. Premium
C. Deductible
D. Indemnity
,Answer: A
Rationale: Risk is the uncertainty of loss, which insurance
seeks to manage.
3. Which principle states that insurance policies should
return the insured to their original financial position before
the loss?
A. Principle of Indemnity
B. Principle of Utmost Good Faith
C. Principle of Subrogation
D. Principle of Contribution
Answer: A
Rationale: Indemnity prevents the insured from profiting
from a loss.
4. Which insurance term refers to an insured’s share of a
loss?
A. Deductible
B. Premium
C. Limit
D. Endorsement
Answer: A
,Rationale: Deductible is the amount paid by the insured
before the insurance coverage applies.
5. Which type of property insurance covers damage caused
by fire, wind, theft, and vandalism?
A. Homeowners insurance
B. Life insurance
C. Disability insurance
D. Health insurance
Answer: A
Rationale: Homeowners P&C policies cover physical
property damage and related risks.
6. Which term describes the maximum amount an insurer
will pay for a covered loss?
A. Policy limit
B. Premium
C. Deductible
D. Endorsement
Answer: A
Rationale: Policy limits define the insurer’s maximum liability
under the contract.
, 7. What is the purpose of liability insurance?
A. To protect against legal responsibility for injury or
property damage
B. To replace lost income
C. To cover medical bills for the insured
D. To invest in securities
Answer: A
Rationale: Liability coverage protects the insured against
claims by third parties.
8. Which type of auto coverage pays for damage to the
insured’s vehicle regardless of fault?
A. Collision coverage
B. Liability coverage
C. Comprehensive coverage
D. Uninsured motorist coverage
Answer: A
Rationale: Collision covers vehicle damage from accidents,
regardless of fault.
9. Which type of insurance protects against loss from perils
like fire, wind, hail, and theft but not collision?
A. Comprehensive auto coverage
EXAM| CORRECT ANSWERS WITH
RATIONALES. A+ GUARANTEED
SUCCESS
1. What is the primary purpose of property and casualty
insurance?
A. To protect against financial loss from property damage or
liability
B. To provide health benefits
C. To replace income lost due to disability
D. To fund retirement accounts
Answer: A
Rationale: Property & Casualty (P&C) insurance covers
damage to property and liability for injuries or damages to
others.
2. Which term refers to the likelihood that a loss will occur?
A. Risk
B. Premium
C. Deductible
D. Indemnity
,Answer: A
Rationale: Risk is the uncertainty of loss, which insurance
seeks to manage.
3. Which principle states that insurance policies should
return the insured to their original financial position before
the loss?
A. Principle of Indemnity
B. Principle of Utmost Good Faith
C. Principle of Subrogation
D. Principle of Contribution
Answer: A
Rationale: Indemnity prevents the insured from profiting
from a loss.
4. Which insurance term refers to an insured’s share of a
loss?
A. Deductible
B. Premium
C. Limit
D. Endorsement
Answer: A
,Rationale: Deductible is the amount paid by the insured
before the insurance coverage applies.
5. Which type of property insurance covers damage caused
by fire, wind, theft, and vandalism?
A. Homeowners insurance
B. Life insurance
C. Disability insurance
D. Health insurance
Answer: A
Rationale: Homeowners P&C policies cover physical
property damage and related risks.
6. Which term describes the maximum amount an insurer
will pay for a covered loss?
A. Policy limit
B. Premium
C. Deductible
D. Endorsement
Answer: A
Rationale: Policy limits define the insurer’s maximum liability
under the contract.
, 7. What is the purpose of liability insurance?
A. To protect against legal responsibility for injury or
property damage
B. To replace lost income
C. To cover medical bills for the insured
D. To invest in securities
Answer: A
Rationale: Liability coverage protects the insured against
claims by third parties.
8. Which type of auto coverage pays for damage to the
insured’s vehicle regardless of fault?
A. Collision coverage
B. Liability coverage
C. Comprehensive coverage
D. Uninsured motorist coverage
Answer: A
Rationale: Collision covers vehicle damage from accidents,
regardless of fault.
9. Which type of insurance protects against loss from perils
like fire, wind, hail, and theft but not collision?
A. Comprehensive auto coverage
