Property & Casualty Insurance
PREPARATION TEST 2026 QUESTIONS AND
CORRECT ANSWERS GRADED A+
● Occurrence. Answer: A broader definition of loss than accident,
including losses caused by continuous or repeated exposure to
conditions resulting in injury to persons or damage to property that is
neither intended nor expected.
● Two types of property losses. Answer: Individual or business may be
exposed to direct or indirect loss. Property insurance only covers direct
losses. However, indirect losses are related to the direct loss, and
insurance coverage to protect against these indirect losses often is added
to property insurance policies. Direct losses mean direct physical
damage to buildings and/or personal property.
● Direct Loss. Answer: Direct physical damage to buildings and/or
personal property.
Direct loss also includes other damage where the insured peril was the
proximate cause of loss. For example, an insured building catches fire.
When the fire department applies water to put out the fire, the wall and
floor coverings suffer water damage. Although water damage is not an
insured peril, the damage is paid under the peril of fire because fire was
the proximate cause.
, ● Indirect Loss. Answer: also known as consequential losses, are losses
considered a result of direct loss. Such losses usually result from the
time it takes to repair or replace damaged property. The most prevalent
type of indirect loss for individual homeowners is the extra living
expense that may be incurred by the insured while the home is being
repaired. For commercial risks, the primary type of indirect or
consequential loss is the loss of profits a business may suffer because of
having to close down until the business is repaired.
● Named Peril. Answer: is a term used in property insurance to describe
the breadth of coverage provided under an insurance policy form that
lists specific covered perils. No coverage is provided for unlisted perils.
● Open Peril. Answer: is a term used in property insurance to describe
the breadth of coverage provided under an insurance policy form that
insures against any risk of loss that is not specifically excluded. (This
term replaced the use of the term "all risks.")
● Damages. Answer: Injury to another that may result in bodily injury
and property damage.
● Property damage. Answer: the extent of the loss is usually simple to
determine; it is measured by the actual monetary loss the injured party
suffered, which is measured by the value of the property damaged or
destroyed and the loss of use of that asset.
PREPARATION TEST 2026 QUESTIONS AND
CORRECT ANSWERS GRADED A+
● Occurrence. Answer: A broader definition of loss than accident,
including losses caused by continuous or repeated exposure to
conditions resulting in injury to persons or damage to property that is
neither intended nor expected.
● Two types of property losses. Answer: Individual or business may be
exposed to direct or indirect loss. Property insurance only covers direct
losses. However, indirect losses are related to the direct loss, and
insurance coverage to protect against these indirect losses often is added
to property insurance policies. Direct losses mean direct physical
damage to buildings and/or personal property.
● Direct Loss. Answer: Direct physical damage to buildings and/or
personal property.
Direct loss also includes other damage where the insured peril was the
proximate cause of loss. For example, an insured building catches fire.
When the fire department applies water to put out the fire, the wall and
floor coverings suffer water damage. Although water damage is not an
insured peril, the damage is paid under the peril of fire because fire was
the proximate cause.
, ● Indirect Loss. Answer: also known as consequential losses, are losses
considered a result of direct loss. Such losses usually result from the
time it takes to repair or replace damaged property. The most prevalent
type of indirect loss for individual homeowners is the extra living
expense that may be incurred by the insured while the home is being
repaired. For commercial risks, the primary type of indirect or
consequential loss is the loss of profits a business may suffer because of
having to close down until the business is repaired.
● Named Peril. Answer: is a term used in property insurance to describe
the breadth of coverage provided under an insurance policy form that
lists specific covered perils. No coverage is provided for unlisted perils.
● Open Peril. Answer: is a term used in property insurance to describe
the breadth of coverage provided under an insurance policy form that
insures against any risk of loss that is not specifically excluded. (This
term replaced the use of the term "all risks.")
● Damages. Answer: Injury to another that may result in bodily injury
and property damage.
● Property damage. Answer: the extent of the loss is usually simple to
determine; it is measured by the actual monetary loss the injured party
suffered, which is measured by the value of the property damaged or
destroyed and the loss of use of that asset.
