NC Personal Lines Licensing Exam Part 1 Terms and Concepts
EXAM !! Graded A+ | 2026 EXAM UPDATE
Risk - (ANSWERS)The uncertainty or chance of a loss occurring.
Pure- Insurable, only a chance of loss, no financial gain
Speculative- Not insurable, chance of loss or gain (ex: gambling)
Hazard - (ANSWERS)Conditions or situations that increase the probability
of an insured loss occurring
Types:
Physical (individual characteristics increase chances of the cause of loss)
Moral (lying on application)
Morale (indifference)
Peril - (ANSWERS)The cause of a loss (loss is the basis of a claim)
Economic Loss - (ANSWERS)The estimated total cost (both insured and
uninsured) of an accident.
Indemnity - (ANSWERS)Reimbursement to the extent of the financial loss,
not profit
Insurable Interest - (ANSWERS)The insured must be in a position to lose
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, NC Personal Lines Licensing Exam Part 1 Terms and Concepts
EXAM !! Graded A+ | 2026 EXAM UPDATE
financially if a covered loss occurs, must exist at the time of the loss
Deductible - (ANSWERS)Amount you must pay before you begin receiving
any benefits from your insurance company, higher deductible usually
lowers the amount of the premium
Direct Loss - (ANSWERS)direct physical damage to buildings and/or
personal property
Includes other damage where the insured peril was the proximate cause of
loss (ex: water damage from putting out building fire)
Indirect Loss - (ANSWERS)Consequential losses, considered a result of a
direct loss (extra living expense incurred while home is being repaired)
Types of Perils - (ANSWERS)Named peril- lists specifically covered perils
Open (all-risk) peril- everything not specifically listed in exclusions
Specific Coverage - (ANSWERS)a policy that covers a specific kind of
property for a specified amount of insurance
2/9
EXAM !! Graded A+ | 2026 EXAM UPDATE
Risk - (ANSWERS)The uncertainty or chance of a loss occurring.
Pure- Insurable, only a chance of loss, no financial gain
Speculative- Not insurable, chance of loss or gain (ex: gambling)
Hazard - (ANSWERS)Conditions or situations that increase the probability
of an insured loss occurring
Types:
Physical (individual characteristics increase chances of the cause of loss)
Moral (lying on application)
Morale (indifference)
Peril - (ANSWERS)The cause of a loss (loss is the basis of a claim)
Economic Loss - (ANSWERS)The estimated total cost (both insured and
uninsured) of an accident.
Indemnity - (ANSWERS)Reimbursement to the extent of the financial loss,
not profit
Insurable Interest - (ANSWERS)The insured must be in a position to lose
1/9
, NC Personal Lines Licensing Exam Part 1 Terms and Concepts
EXAM !! Graded A+ | 2026 EXAM UPDATE
financially if a covered loss occurs, must exist at the time of the loss
Deductible - (ANSWERS)Amount you must pay before you begin receiving
any benefits from your insurance company, higher deductible usually
lowers the amount of the premium
Direct Loss - (ANSWERS)direct physical damage to buildings and/or
personal property
Includes other damage where the insured peril was the proximate cause of
loss (ex: water damage from putting out building fire)
Indirect Loss - (ANSWERS)Consequential losses, considered a result of a
direct loss (extra living expense incurred while home is being repaired)
Types of Perils - (ANSWERS)Named peril- lists specifically covered perils
Open (all-risk) peril- everything not specifically listed in exclusions
Specific Coverage - (ANSWERS)a policy that covers a specific kind of
property for a specified amount of insurance
2/9
