Florida P&C Personal Lines- Insurance
Terms & Related Concepts Best Exam
Questions & Answers Newest Version
Depreciation - CORRECT ANSWER-Reduction in value, particularly due to wear and
tear.
Exposure - CORRECT ANSWER-Susceptibility to risk.
Implied Warranty - CORRECT ANSWER-A legal term meaning that a product is suitable
for its intended purpose and that it fits an ordinary buyer's expectations.
Insurance Policy - CORRECT ANSWER-a contract between a policyowner (and/or
insured) and an insurance company which agrees to pay the insured or the beneficiary
for loss caused by specific events
Insurer (principal) - CORRECT ANSWER-The company who issues an insurance policy
Obsolescence - CORRECT ANSWER-Depreciation in the value of a property due to
becoming outdated
Premium - CORRECT ANSWER-The money paid to the insurance company for the
insurance policy
Insurance is - CORRECT ANSWER-The transfer of risk of loss. The cost of an insured's
loss is transferred over to the insurer and spread among other insureds.
Insurance - CORRECT ANSWER-is a transfer of risk of loss from an individual or a
business entity to an insurance company, which, in turn, spreads the costs of
unexpected losses to many individuals. If there were no insurance mechanism, the cost
of a loss would have to be borne soley by the individual who suffered the loss.
, The Law of Large Numbers states that - CORRECT ANSWER-the larger the number of
people with a similar exposure to loss, the more predictable actual losses will be. This is
the statistical prediction of loss upon which insurance rates are calculated.
As the number of people in a risk pool increases, future losses become more- -
CORRECT ANSWER-predictable.
The 3 elements of insurable risk are: - CORRECT ANSWER-1. Financial (a monetary
interest)
2. Blood (a relative)
3. Business (a business partner)
In property and casualty insurance, insurable interest must exit at what time? -
CORRECT ANSWER-At the time of the loss.
The insured must have what in the person or property covered by an insurance policy? -
CORRECT ANSWER-Insurable Interest
____ is the uncertainty or chance of a loss occurring. - CORRECT ANSWER-Risk
How many types of Risk are there and which one(s) are insurable? - CORRECT
ANSWER-Two. Pure & Speculative Risk. Only Pure Risk is insurable because it is the
only type of risk that offers no opportunity for financial gain.
What is the difference between Pure Risk and Speculative Risk? - CORRECT
ANSWER-Pure Risk refers to situations that can only result in a loss or no change.
There is no opportunity for financial gain. This is the only type of risk that insurance
companies are willing to accept. Speculative Risk involves the opportunity for either loss
or gain. An example of this is gambling. This type of risk is not insurable.
_______ are conditions or situations that increase the probability of an insured loss
occurring. - CORRECT ANSWER-Hazards
Terms & Related Concepts Best Exam
Questions & Answers Newest Version
Depreciation - CORRECT ANSWER-Reduction in value, particularly due to wear and
tear.
Exposure - CORRECT ANSWER-Susceptibility to risk.
Implied Warranty - CORRECT ANSWER-A legal term meaning that a product is suitable
for its intended purpose and that it fits an ordinary buyer's expectations.
Insurance Policy - CORRECT ANSWER-a contract between a policyowner (and/or
insured) and an insurance company which agrees to pay the insured or the beneficiary
for loss caused by specific events
Insurer (principal) - CORRECT ANSWER-The company who issues an insurance policy
Obsolescence - CORRECT ANSWER-Depreciation in the value of a property due to
becoming outdated
Premium - CORRECT ANSWER-The money paid to the insurance company for the
insurance policy
Insurance is - CORRECT ANSWER-The transfer of risk of loss. The cost of an insured's
loss is transferred over to the insurer and spread among other insureds.
Insurance - CORRECT ANSWER-is a transfer of risk of loss from an individual or a
business entity to an insurance company, which, in turn, spreads the costs of
unexpected losses to many individuals. If there were no insurance mechanism, the cost
of a loss would have to be borne soley by the individual who suffered the loss.
, The Law of Large Numbers states that - CORRECT ANSWER-the larger the number of
people with a similar exposure to loss, the more predictable actual losses will be. This is
the statistical prediction of loss upon which insurance rates are calculated.
As the number of people in a risk pool increases, future losses become more- -
CORRECT ANSWER-predictable.
The 3 elements of insurable risk are: - CORRECT ANSWER-1. Financial (a monetary
interest)
2. Blood (a relative)
3. Business (a business partner)
In property and casualty insurance, insurable interest must exit at what time? -
CORRECT ANSWER-At the time of the loss.
The insured must have what in the person or property covered by an insurance policy? -
CORRECT ANSWER-Insurable Interest
____ is the uncertainty or chance of a loss occurring. - CORRECT ANSWER-Risk
How many types of Risk are there and which one(s) are insurable? - CORRECT
ANSWER-Two. Pure & Speculative Risk. Only Pure Risk is insurable because it is the
only type of risk that offers no opportunity for financial gain.
What is the difference between Pure Risk and Speculative Risk? - CORRECT
ANSWER-Pure Risk refers to situations that can only result in a loss or no change.
There is no opportunity for financial gain. This is the only type of risk that insurance
companies are willing to accept. Speculative Risk involves the opportunity for either loss
or gain. An example of this is gambling. This type of risk is not insurable.
_______ are conditions or situations that increase the probability of an insured loss
occurring. - CORRECT ANSWER-Hazards
