KY Property and Casualty Exam
Practice Questions with Detailed
Solutions
Which of the following creates an insurable interest? - -House you own but
have rented to a tenant, Car on which you are still paying
- What is the primary purpose of insurance? - -Transferring risk
- Which of the following is an insurable risk? - -Hail damage to the roof of a
car
- Define peril in insurance terms. - -The cause of loss
- Explain a morale hazard. - -Arises through an individual's carelessness or
irresponsible actions
- Identify the part that is NOT included in an insurance contract. - -Floater
- Why is an insurance contract considered a contract of indemnity? - -
Insured may collect no more than the amount required to restore to pre-loss
financial condition
- Which element of a legal contract does an insurance premium payment
represent? - -Consideration
- Why is an insurance policy considered a unilateral contract? - -Insurance
company is the only party legally obligated to perform
- What constitutes an agreement to enter into a valid contract? - -A specific
offer by one party and acceptance by the other
- A nonexclusive agent - -Represents more than one insurance company
- In prior approval states, the rates and policy forms insurance companies
use must be approved by - -The insurance department of the state where
they will be used
- A mutual insurance company is owned by - -Its policyholders
- A binder - -None of the above
Practice Questions with Detailed
Solutions
Which of the following creates an insurable interest? - -House you own but
have rented to a tenant, Car on which you are still paying
- What is the primary purpose of insurance? - -Transferring risk
- Which of the following is an insurable risk? - -Hail damage to the roof of a
car
- Define peril in insurance terms. - -The cause of loss
- Explain a morale hazard. - -Arises through an individual's carelessness or
irresponsible actions
- Identify the part that is NOT included in an insurance contract. - -Floater
- Why is an insurance contract considered a contract of indemnity? - -
Insured may collect no more than the amount required to restore to pre-loss
financial condition
- Which element of a legal contract does an insurance premium payment
represent? - -Consideration
- Why is an insurance policy considered a unilateral contract? - -Insurance
company is the only party legally obligated to perform
- What constitutes an agreement to enter into a valid contract? - -A specific
offer by one party and acceptance by the other
- A nonexclusive agent - -Represents more than one insurance company
- In prior approval states, the rates and policy forms insurance companies
use must be approved by - -The insurance department of the state where
they will be used
- A mutual insurance company is owned by - -Its policyholders
- A binder - -None of the above
