PROPERTY AND CASUALTY FINAL PAPER
2026 EXAM Q AND A STUDY GUIDE
COMPLETE QUESTIONS AND ANSWERS
●● The purpose of insurance is to:.
Answer: transfer risk
●● Which hazard can be described as a careless attitude or general
indifference on the part of the insured toward the occurrence of loss?.
Answer: morale
●● Which risk is insurable?.
Answer: pure
●● With regard to insurance, risk can be defined as:.
Answer: uncertainty regarding loss
●● Treating risk by purchasing insurance is an example of what type of
risk management?.
Answer: transfer
,●● Robert and Carolyn live in a busy city and decide that not owning a
car is the solution to not experience having a car stolen. What method
describes this philosophy?.
Answer: avoidance
●● Dishonesty on the part of an insured is an example of what?.
Answer: a moral hazard
●● What is an example of reduction as a method of handling risk?.
Answer: Installing a burglar alarm
●● Driving too fast and not wearing a seat belt are examples of?.
Answer: morale hazard
●● The risk that involves the chance of both loss and gain is?.
Answer: speculative risk
●● Self-insurance is an example of what kind of risk treatment?.
Answer: Retention
●● If John's father transfers ownership of a house to John, can John buy
insurance?.
Answer: Yes because he has an insurable interest.
,●● Fire would be an example of a what?.
Answer: peril
●● What is the actual cause of a loss?.
Answer: peril
●● What kind of risk is the stock market?.
Answer: speculative risk
●● A ____ is a condition that increases the chance of loss..
Answer: hazard
●● Faulty wiring causes a fire that destroys a building. The faulty wiring
is considered to be a(n):.
Answer: hazard
●● A chance, possibility, or uncertainty of loss is known as?.
Answer: risk
●● Examples of perils are_____?.
Answer: fire, wind and lightning
, ●● Indemnity insurance will _____?.
Answer: restores insured to pre-loss condition
●● The types of hazards are_____?.
Answer: moral, morale, and physical
●● ________ is when people with a greater than average exposure to
loss to purchase insurance..
Answer: Adverse selection
●● Methods of handling risk are avoidance, reduction, retention, transfer
and _____..
Answer: Sharing (ARRTS)
●● Elements of insurable risk are calculable, affordable, non-
catastrophic, homogenous, accidental and _____..
Answer: Measurable (CANHAM)
●● Myron, who is 16, signs a contract to lease a car. This would
probably not be considered a valid contract under the law because
_____..
Answer: He is not competent at 16.
2026 EXAM Q AND A STUDY GUIDE
COMPLETE QUESTIONS AND ANSWERS
●● The purpose of insurance is to:.
Answer: transfer risk
●● Which hazard can be described as a careless attitude or general
indifference on the part of the insured toward the occurrence of loss?.
Answer: morale
●● Which risk is insurable?.
Answer: pure
●● With regard to insurance, risk can be defined as:.
Answer: uncertainty regarding loss
●● Treating risk by purchasing insurance is an example of what type of
risk management?.
Answer: transfer
,●● Robert and Carolyn live in a busy city and decide that not owning a
car is the solution to not experience having a car stolen. What method
describes this philosophy?.
Answer: avoidance
●● Dishonesty on the part of an insured is an example of what?.
Answer: a moral hazard
●● What is an example of reduction as a method of handling risk?.
Answer: Installing a burglar alarm
●● Driving too fast and not wearing a seat belt are examples of?.
Answer: morale hazard
●● The risk that involves the chance of both loss and gain is?.
Answer: speculative risk
●● Self-insurance is an example of what kind of risk treatment?.
Answer: Retention
●● If John's father transfers ownership of a house to John, can John buy
insurance?.
Answer: Yes because he has an insurable interest.
,●● Fire would be an example of a what?.
Answer: peril
●● What is the actual cause of a loss?.
Answer: peril
●● What kind of risk is the stock market?.
Answer: speculative risk
●● A ____ is a condition that increases the chance of loss..
Answer: hazard
●● Faulty wiring causes a fire that destroys a building. The faulty wiring
is considered to be a(n):.
Answer: hazard
●● A chance, possibility, or uncertainty of loss is known as?.
Answer: risk
●● Examples of perils are_____?.
Answer: fire, wind and lightning
, ●● Indemnity insurance will _____?.
Answer: restores insured to pre-loss condition
●● The types of hazards are_____?.
Answer: moral, morale, and physical
●● ________ is when people with a greater than average exposure to
loss to purchase insurance..
Answer: Adverse selection
●● Methods of handling risk are avoidance, reduction, retention, transfer
and _____..
Answer: Sharing (ARRTS)
●● Elements of insurable risk are calculable, affordable, non-
catastrophic, homogenous, accidental and _____..
Answer: Measurable (CANHAM)
●● Myron, who is 16, signs a contract to lease a car. This would
probably not be considered a valid contract under the law because
_____..
Answer: He is not competent at 16.
