Property and Casualty Insurance Exam – 2026/2027
ULTIMATE REVIEW WITH DETAILED SOLUTIONS
• Crime Peril -✓✓ A range of perils associated with crime insurance policies, including
theft, burglary, robbery, mysterious disappearance, and vandalism.
• Coinsurance Provision -✓✓ Requires insured to maintain coverage equal to a certain
percentage of the property value or be penalized if a loss occurs
• Peril and Hazard -✓✓ Two related basic insurance terms, the first of which is the
immediate cause of a loss and the second of which is any condition that increases the
risk of incurring a loss.
Peril- Event that is insured against fire, theft
hazard- moral, morale, physical
• Punitive Damages -✓✓ Amount a defendant is required to pay as a punishment
• McCarran Act- Ferguson
Act of 1945 -✓✓ Federal Law That exempts insurance from federal regulations as a
form of interstate commerce thus permitting it to be regulated primarily the individual
states
• Loss Ratio -✓✓ A ratio, expressed as a percentage, that compares the insurer's
incurred losses to its earned premiums.
• liability insurance -✓✓ a basis category of insurance that protects insured for losses
arising out of their legal liability to others
• Proof of loss -✓✓ A formal statement made by the insured and provided to the insurer
regarding a claim which provides evidence of the loss
• Secondary insurable interest -✓✓ An insurable interest in property by someone other
than the property owner.
• exclusion -✓✓ an insurance policy section that divides hazards, perils, circumstances ,
or property not covered by the policy
• combined ratio -✓✓ A ratio, expressed as a percentage, that indicates an insurer's
profitability after losses and expenses are considered.
• declaration -✓✓ front page of a policy that specifies the named insured , address ,
policy period , location of premises , policy limits , and other key policy info
, • Policy Limits -✓✓ The maximum amount described in the policy that and insurer will
pay for a covered loss
• expense ratio -✓✓ A ratio, expressed as a percentage, that compares the insurer's
incurred expenses to its written premiums.
• Compensatory Damages -✓✓ A sum of money the court imposes on a defendant as
compensation for the plaintiff because the defendant has injured the plaintiff by breach
of a legal duty
• Policy Nonrenewal -✓✓ The action an insurance company takes at the policy
anniversary date to not renew the policy for another term.
• Real Property -✓✓ Land and everything permanently attached to it ( Buildings as well)
• Comparative Negligence -✓✓ a method by which injuries determine the percentage of
fault each party bears in an injury - producing accident
• Fair Credit Reporting Act (FCRA) -✓✓ Federal law that sets forth procedures that
credit reporting companies must follow to ensure confidentiality, accuracy of reporting,
and proper use of credit information.
• Loss Valuation -✓✓ The process by which insurers, using any of several different
methods, measure the value of a loss.
The most commonly used violation methods:
Replacement Cost
Actual Cash Value
Functional replacement cost
Market Value
Stated Amount
Agreed Value
• salvage -✓✓ Property after it has been partially damaged by and insured peril
• Named Insured -✓✓ The person or organization that is named in the declarations as
the insured party.
• Insurable Interest -✓✓ an insurance policy owner financial interest in the person or
property being insured
• Rescission -✓✓ An insurers act of declaring that an insurance policy was never in
effect an insurance company that rescinds a policy states that it provides no coverage
for a claim
ULTIMATE REVIEW WITH DETAILED SOLUTIONS
• Crime Peril -✓✓ A range of perils associated with crime insurance policies, including
theft, burglary, robbery, mysterious disappearance, and vandalism.
• Coinsurance Provision -✓✓ Requires insured to maintain coverage equal to a certain
percentage of the property value or be penalized if a loss occurs
• Peril and Hazard -✓✓ Two related basic insurance terms, the first of which is the
immediate cause of a loss and the second of which is any condition that increases the
risk of incurring a loss.
Peril- Event that is insured against fire, theft
hazard- moral, morale, physical
• Punitive Damages -✓✓ Amount a defendant is required to pay as a punishment
• McCarran Act- Ferguson
Act of 1945 -✓✓ Federal Law That exempts insurance from federal regulations as a
form of interstate commerce thus permitting it to be regulated primarily the individual
states
• Loss Ratio -✓✓ A ratio, expressed as a percentage, that compares the insurer's
incurred losses to its earned premiums.
• liability insurance -✓✓ a basis category of insurance that protects insured for losses
arising out of their legal liability to others
• Proof of loss -✓✓ A formal statement made by the insured and provided to the insurer
regarding a claim which provides evidence of the loss
• Secondary insurable interest -✓✓ An insurable interest in property by someone other
than the property owner.
• exclusion -✓✓ an insurance policy section that divides hazards, perils, circumstances ,
or property not covered by the policy
• combined ratio -✓✓ A ratio, expressed as a percentage, that indicates an insurer's
profitability after losses and expenses are considered.
• declaration -✓✓ front page of a policy that specifies the named insured , address ,
policy period , location of premises , policy limits , and other key policy info
, • Policy Limits -✓✓ The maximum amount described in the policy that and insurer will
pay for a covered loss
• expense ratio -✓✓ A ratio, expressed as a percentage, that compares the insurer's
incurred expenses to its written premiums.
• Compensatory Damages -✓✓ A sum of money the court imposes on a defendant as
compensation for the plaintiff because the defendant has injured the plaintiff by breach
of a legal duty
• Policy Nonrenewal -✓✓ The action an insurance company takes at the policy
anniversary date to not renew the policy for another term.
• Real Property -✓✓ Land and everything permanently attached to it ( Buildings as well)
• Comparative Negligence -✓✓ a method by which injuries determine the percentage of
fault each party bears in an injury - producing accident
• Fair Credit Reporting Act (FCRA) -✓✓ Federal law that sets forth procedures that
credit reporting companies must follow to ensure confidentiality, accuracy of reporting,
and proper use of credit information.
• Loss Valuation -✓✓ The process by which insurers, using any of several different
methods, measure the value of a loss.
The most commonly used violation methods:
Replacement Cost
Actual Cash Value
Functional replacement cost
Market Value
Stated Amount
Agreed Value
• salvage -✓✓ Property after it has been partially damaged by and insured peril
• Named Insured -✓✓ The person or organization that is named in the declarations as
the insured party.
• Insurable Interest -✓✓ an insurance policy owner financial interest in the person or
property being insured
• Rescission -✓✓ An insurers act of declaring that an insurance policy was never in
effect an insurance company that rescinds a policy states that it provides no coverage
for a claim
