CHAPTER 2 PROPERTY AND CASUALTY
INSURANCE BASICS | COMPREHENSIVE
STUDY GUIDE, KEY CONCEPTS, PRACTICE
QUESTIONS AND ANSWERS
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
, What does the conditions section of the policy define? The general rules or procedures that the insurer and insured agree to follow under the
terms of the policy
What is the calculation for the actual cash value (ACV) method Current replacement cost minus depreciation (reduction in value of an asset over time)
of valuation?
What sublimit in a liability policy puts a ceiling on the payment Per occurrence
for all claims that arise from a single accident?
When does an excess policy pay for a loss? Only after the primary policy has paid up to its limits / policy has exhausted its limits
In property insurance, what is the actual cash value? Replacement cost at the time of loss, minus depreciation (reduction in value of an asset
over time)
In property and casualty insurance, what is required to make Prior written consent of the insurer
policy assignments valid?
What provision in a property policy applies when the insurer Liberalization -allows policyholders to automatically benefit from favorable changes to
broadens coverage but does not increase the premium? their policy coverage without paying additional premiums.
What is the process that insurers use to determine whether a Underwriting
policy should be issued and on what terms and conditions?
Which method of valuation will most likely be used for a Functional replacement cost
property that cannot be restored with the original materials or
methods of construction?
INSURANCE BASICS | COMPREHENSIVE
STUDY GUIDE, KEY CONCEPTS, PRACTICE
QUESTIONS AND ANSWERS
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
, What does the conditions section of the policy define? The general rules or procedures that the insurer and insured agree to follow under the
terms of the policy
What is the calculation for the actual cash value (ACV) method Current replacement cost minus depreciation (reduction in value of an asset over time)
of valuation?
What sublimit in a liability policy puts a ceiling on the payment Per occurrence
for all claims that arise from a single accident?
When does an excess policy pay for a loss? Only after the primary policy has paid up to its limits / policy has exhausted its limits
In property insurance, what is the actual cash value? Replacement cost at the time of loss, minus depreciation (reduction in value of an asset
over time)
In property and casualty insurance, what is required to make Prior written consent of the insurer
policy assignments valid?
What provision in a property policy applies when the insurer Liberalization -allows policyholders to automatically benefit from favorable changes to
broadens coverage but does not increase the premium? their policy coverage without paying additional premiums.
What is the process that insurers use to determine whether a Underwriting
policy should be issued and on what terms and conditions?
Which method of valuation will most likely be used for a Functional replacement cost
property that cannot be restored with the original materials or
methods of construction?
