PROPERTY AND CASUALTY
INSURANCE BASICS EXAM QUESTIONS
WITH COMPLETE SOLUTIONS
liability - Answer- a legal obligation to pay for damages that were incurred for which you
may be responsible due to negligence
third party - Answer- Liability insurance does not pay the policy owner, but pays a _____
______ instead
absolute liability - Answer- A type of liability that occurs due to extremely dangerous
operations, such as the use of explosives or working at extreme heights.
strict liability - Answer- A liability that refers to damages caused by defective products
even though the manufacturer's fault or negligence cannot be proven.
Vicarious Liability - Answer- A type of liability in which one person is responsible for the
acts of another. For example, employers may be vicariously liable for the actions of their
employees, and parents may be held responsible for negligent acts of their children.
negligence - Answer- the failure to use the care that a reasonable, prudent person
would have taken under the same or similar circumstances
Legal Duty
Standard of care
Unbroken chain of events
Actual loss or damage - Answer- Elements of a Negligent Act
Comparative Negligence - Answer- A rule in tort law that reduces the plaintiff's recovery
in proportion to the plaintiff's degree of fault, rather than barring recovery completely;
used in the majority of states.
Contributory Negligence - Answer- the injured party must be completely free of fault in
order to collect
Intervening Cause Doctrine - Answer- a doctrine that bars or reduces recovery to an
injured person if an intervening cause interrupted the chain of events and set in motion
a new chain of events.
measured by the actual monetary loss the injured party suffered, which is measured by
the value of the property damaged and the loss of use of that asset - Answer- how is
property damage and the extent of the loss determined?
, Special damages - Answer- what type of damages are the specific out-of-pocket
expenses for medical, miscellaneous expenses, and loss of wages
general damages - Answer- what type of damages compensate the injured person for
pain and suffering, mental anguish, disfigurement, and other similar types of losses
punitive damage - Answer- a form of punishment for extreme outrageous behavior,
gross negligence or willful intent
intentional tort - Answer- a deliberate act that causes harm to another person regardless
of whether the offending party intended to injure the aggrieved party; breach of contract
is not considered this
libel - Answer- any written or printed untrue statement that injures a person's or
company's reputation; provides grounds for litigation against the offending party
slander - Answer- any oral or verbal untrue statement that injures a person's or
company's reputation; provides grounds for litigation against the offending party
false arrest - Answer- the unjustified physical restraint of another person's freedom and
the subsequent inconvenience such detention causes; provides grounds for litigation
against the offending party
blanket insurance - Answer- a single property insurance policy that provides coverage
for multiple classes of property at one location, or provides coverages for one or more
classes of property at multiple locations.
specific insurance - Answer- a property insurance policy that covers a specific kind or
unity of property for a specific amount of insurance
loss valuation - Answer- a factor in determining the premium charged and the amount of
insurance required; determined at the time the policy is written
current replacement cost - depreciation = Actual Cash Value - Answer- formula for the
ACV (actual cash value)
replacement cost - Answer- the cost to replace damaged property with like kind and
quality at today's price, without any deduction for depreciation
depreciation - Answer- the lessening of value of real and personal property due to age
and wear and tear
valued policy - Answer- this type of policy is used when it is difficult to establish the
value of insured property after a loss occurs, or when it is desirable to agree on a
specific value in advance
INSURANCE BASICS EXAM QUESTIONS
WITH COMPLETE SOLUTIONS
liability - Answer- a legal obligation to pay for damages that were incurred for which you
may be responsible due to negligence
third party - Answer- Liability insurance does not pay the policy owner, but pays a _____
______ instead
absolute liability - Answer- A type of liability that occurs due to extremely dangerous
operations, such as the use of explosives or working at extreme heights.
strict liability - Answer- A liability that refers to damages caused by defective products
even though the manufacturer's fault or negligence cannot be proven.
Vicarious Liability - Answer- A type of liability in which one person is responsible for the
acts of another. For example, employers may be vicariously liable for the actions of their
employees, and parents may be held responsible for negligent acts of their children.
negligence - Answer- the failure to use the care that a reasonable, prudent person
would have taken under the same or similar circumstances
Legal Duty
Standard of care
Unbroken chain of events
Actual loss or damage - Answer- Elements of a Negligent Act
Comparative Negligence - Answer- A rule in tort law that reduces the plaintiff's recovery
in proportion to the plaintiff's degree of fault, rather than barring recovery completely;
used in the majority of states.
Contributory Negligence - Answer- the injured party must be completely free of fault in
order to collect
Intervening Cause Doctrine - Answer- a doctrine that bars or reduces recovery to an
injured person if an intervening cause interrupted the chain of events and set in motion
a new chain of events.
measured by the actual monetary loss the injured party suffered, which is measured by
the value of the property damaged and the loss of use of that asset - Answer- how is
property damage and the extent of the loss determined?
, Special damages - Answer- what type of damages are the specific out-of-pocket
expenses for medical, miscellaneous expenses, and loss of wages
general damages - Answer- what type of damages compensate the injured person for
pain and suffering, mental anguish, disfigurement, and other similar types of losses
punitive damage - Answer- a form of punishment for extreme outrageous behavior,
gross negligence or willful intent
intentional tort - Answer- a deliberate act that causes harm to another person regardless
of whether the offending party intended to injure the aggrieved party; breach of contract
is not considered this
libel - Answer- any written or printed untrue statement that injures a person's or
company's reputation; provides grounds for litigation against the offending party
slander - Answer- any oral or verbal untrue statement that injures a person's or
company's reputation; provides grounds for litigation against the offending party
false arrest - Answer- the unjustified physical restraint of another person's freedom and
the subsequent inconvenience such detention causes; provides grounds for litigation
against the offending party
blanket insurance - Answer- a single property insurance policy that provides coverage
for multiple classes of property at one location, or provides coverages for one or more
classes of property at multiple locations.
specific insurance - Answer- a property insurance policy that covers a specific kind or
unity of property for a specific amount of insurance
loss valuation - Answer- a factor in determining the premium charged and the amount of
insurance required; determined at the time the policy is written
current replacement cost - depreciation = Actual Cash Value - Answer- formula for the
ACV (actual cash value)
replacement cost - Answer- the cost to replace damaged property with like kind and
quality at today's price, without any deduction for depreciation
depreciation - Answer- the lessening of value of real and personal property due to age
and wear and tear
valued policy - Answer- this type of policy is used when it is difficult to establish the
value of insured property after a loss occurs, or when it is desirable to agree on a
specific value in advance
