INSURANCE PROPERTY AND CASUALTY |
COMPREHENSIVE EXAM PREP, PRACTICE
QUESTIONS, CORRECT ANSWERS AND
STUDY GUIDE
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
,Peril a cause of loss
Direct loss physical loss
Indirect loss consequence of the direct loss
Physical hazard the hazard can be seen
Moral hazard dishonesty
Morale hazard carelessness
Sharing Two or more individuals agree to pay a portion of any loss incurred by a member of the
group
Risk transfer The insurer agrees to pay if an insured has a loss
Risk avoidance Eliminating a particular risk by not engaging in certain activities
Risk retention The individual or business will pay for the loss if it occurs or a portion of the loss via a
deductible
Risk Reduction Lessening the chance a loss will occur
STARR Sharing
Transfer
Avoidance
Retention
Reduction
CANHAM Calculable
Affordable
Non-catastrophic
Homogeneous
Accidental
Measurable
, Calculable risk Premiums must be calculable based upon prior loss statistics for that particular risk in
order to predict future losses.
Affordable risk The premium for transferring the risk should be affordable for the average consumer.
non-catastrophic risk The risk must be non-catastrophic for the insurance company
Homogeneous risk The risk must be similar in nature, so the same factors affect the chance of loss
Accidental risk the loss must have been caused due to chance
Measurable risk A definite (time and place) and measurable loss means that proof of loss must be
established with numbers and dollar amounts, not just casual references.
Contract an agreement between the insured and the insurer
1st party insured
2nd party insurance company
Law of large numbers The larger the group, the more accurately future losses can be predicted
Adverse selection Risks that have a greater than average chance of loss
Reinsurance A form of insurance whereby one insurance company (the reinsurer) in consideration of a
premium paid to it, agrees to indemnify another insurance company (the ceding
company) for part or all of its liabilities from insurance policies it has issued.
Stock insurer An insurer that is owned by its stockholders and formed as a corporation for the purpose
of earning a profit for the stockholders.
Mutual insurers An insurer that is owned by its policyholders and formed as a corporation for the
purpose of providing insurance to them.
Fraternal insurer provides insurance and other benefits
must be a member of the society to get the benefits
COMPREHENSIVE EXAM PREP, PRACTICE
QUESTIONS, CORRECT ANSWERS AND
STUDY GUIDE
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
,Peril a cause of loss
Direct loss physical loss
Indirect loss consequence of the direct loss
Physical hazard the hazard can be seen
Moral hazard dishonesty
Morale hazard carelessness
Sharing Two or more individuals agree to pay a portion of any loss incurred by a member of the
group
Risk transfer The insurer agrees to pay if an insured has a loss
Risk avoidance Eliminating a particular risk by not engaging in certain activities
Risk retention The individual or business will pay for the loss if it occurs or a portion of the loss via a
deductible
Risk Reduction Lessening the chance a loss will occur
STARR Sharing
Transfer
Avoidance
Retention
Reduction
CANHAM Calculable
Affordable
Non-catastrophic
Homogeneous
Accidental
Measurable
, Calculable risk Premiums must be calculable based upon prior loss statistics for that particular risk in
order to predict future losses.
Affordable risk The premium for transferring the risk should be affordable for the average consumer.
non-catastrophic risk The risk must be non-catastrophic for the insurance company
Homogeneous risk The risk must be similar in nature, so the same factors affect the chance of loss
Accidental risk the loss must have been caused due to chance
Measurable risk A definite (time and place) and measurable loss means that proof of loss must be
established with numbers and dollar amounts, not just casual references.
Contract an agreement between the insured and the insurer
1st party insured
2nd party insurance company
Law of large numbers The larger the group, the more accurately future losses can be predicted
Adverse selection Risks that have a greater than average chance of loss
Reinsurance A form of insurance whereby one insurance company (the reinsurer) in consideration of a
premium paid to it, agrees to indemnify another insurance company (the ceding
company) for part or all of its liabilities from insurance policies it has issued.
Stock insurer An insurer that is owned by its stockholders and formed as a corporation for the purpose
of earning a profit for the stockholders.
Mutual insurers An insurer that is owned by its policyholders and formed as a corporation for the
purpose of providing insurance to them.
Fraternal insurer provides insurance and other benefits
must be a member of the society to get the benefits
