Property and Casualty ExamFx Key Facts Questions With Complete Solutions

Risk is correct answer: uncertainty of loss. Insurance is correct answer: a transfer of risk from the insured to the insurer. Pure risk means correct answer: there is no chance of gain. Pure risk is correct answer: insurable. Speculative risk means correct answer: you could lose or gain. You cannot insure correct answer: speculative risk. A hazard is correct answer: something that increases the risk. The principle of indemnity correct answer: governs property and casualty policies. It states that the purpose of the policy is correct answer: to restore the insured financially to where they were prior to their loss. Insurable interest must correct answer: exist on a casualty policy at time of loss in order for the policy to provide coverage. The law of large numbers is correct answer: used to predict the likelihood of loss. Actual cash value is correct answer: replacement cost minus depreciation.