Property/Casualty Illinois for State EXAM
2025 QUESTIONS AND ANSWERS
ISO (Insurance Services Office) - ANS ISO creates standardized property and casualty
insurance policies that are approved by states and used as a standard policy for insurers.
-they can be modified to comply with state regulations
-may be modified to a degree for insurance companies to create their own policy form
define insurance - ANS Insurance transfers the risk of loss from an individual or business
entity to an insurance company, which in turn spreads the costs of unexpected losses to many
individuals
define risk - ANS uncertainty concerning the occurrence of a loss
What are the 2 types of risk? - ANS Pure and Speculative
What is the difference between pure and speculative risk? - ANS only pure risk is insurable
since it can only result in a loss or no change
speculative risk is not insurable since it can result in a loss or gain (like gambling)
What are the 3 types of hazards? - ANS 1) Physical - hazards arising from the material,
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structural, or operational features
@COPYRIGHT BRAINBARTER 2025/2026
, 2) Moral - refers to applicants that may lie on their application
3) Morale - increase the hazard presented by a risk arising from the insured's indifference to
loss because of the existence of insurance (combustible material near a furnace)
peril - ANS causes of loss
hazards - ANS conditions/circumstances that increase the probability of an insured loss
occurring
there are 3 types
direct loss - ANS direct physical damage to buildings/personal property
*this includes proximate cause: chain of events resulting from a covered peril
indirect loss/consequential losses - ANS losses considered a result of direct loss; this usually
results from when repairs begin so it could be additional living expenses for homeowners or
loss of profits for businesses
named peril - ANS lists of specific perils; no coverage for unlisted perils
open perils (all risk) - ANS insures against any risk of loss that is not excluded
Explain the difference between vacancy and unoccupied - ANS vacancy refers to a property
that has no people or personal property in it for 60 days
unoccupied refers to a property that has no people in it but there is personal property in it
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, 3 elements of insurable risk - ANS 1. Financial (a monetary interest)
2. Blood (a relative)
3. Business (a business partner)
indemnity - ANS to reimburse or make whole; permitted to collect only to the extent of
financial loss (cannot gain)
subrogation - ANS The process by which an insurer can, after it has paid a loss under the
policy, recover the amount paid from any party (other than the insured) who caused the loss or
is otherwise legally liable for the loss.
Accident vs. Occurrence - ANS an accident is a sudden, unplanned and unexpected event not
under the control of the insured and results in injury/damage that is not intended/expected
an occurrence includes losses caused by continuous or repeated exposure to conditions
resulting in injury to persons or damage to property that is neither intended nor expected
BLANKET VS SPECIFIC - ANS BLANKET COVERAGE-provides coverage for different classes of
property under one policy
SPECIFIC INSURANCE-is when you insure a specific item or specific kind of property
actual cash value - ANS recognizes the reduction of value of property as it ages and becomes
subject to wear and tear and obsolescence
calculated by: (current replacement cost) - (depreciation)
replacement cost - ANS The cost to replace damaged property with like kind and quality at
current price, without any deduction for depreciation
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@COPYRIGHT BRAINBARTER 2025/2026
2025 QUESTIONS AND ANSWERS
ISO (Insurance Services Office) - ANS ISO creates standardized property and casualty
insurance policies that are approved by states and used as a standard policy for insurers.
-they can be modified to comply with state regulations
-may be modified to a degree for insurance companies to create their own policy form
define insurance - ANS Insurance transfers the risk of loss from an individual or business
entity to an insurance company, which in turn spreads the costs of unexpected losses to many
individuals
define risk - ANS uncertainty concerning the occurrence of a loss
What are the 2 types of risk? - ANS Pure and Speculative
What is the difference between pure and speculative risk? - ANS only pure risk is insurable
since it can only result in a loss or no change
speculative risk is not insurable since it can result in a loss or gain (like gambling)
What are the 3 types of hazards? - ANS 1) Physical - hazards arising from the material,
1
Page
structural, or operational features
@COPYRIGHT BRAINBARTER 2025/2026
, 2) Moral - refers to applicants that may lie on their application
3) Morale - increase the hazard presented by a risk arising from the insured's indifference to
loss because of the existence of insurance (combustible material near a furnace)
peril - ANS causes of loss
hazards - ANS conditions/circumstances that increase the probability of an insured loss
occurring
there are 3 types
direct loss - ANS direct physical damage to buildings/personal property
*this includes proximate cause: chain of events resulting from a covered peril
indirect loss/consequential losses - ANS losses considered a result of direct loss; this usually
results from when repairs begin so it could be additional living expenses for homeowners or
loss of profits for businesses
named peril - ANS lists of specific perils; no coverage for unlisted perils
open perils (all risk) - ANS insures against any risk of loss that is not excluded
Explain the difference between vacancy and unoccupied - ANS vacancy refers to a property
that has no people or personal property in it for 60 days
unoccupied refers to a property that has no people in it but there is personal property in it
2
Page
@COPYRIGHT BRAINBARTER 2025/2026
, 3 elements of insurable risk - ANS 1. Financial (a monetary interest)
2. Blood (a relative)
3. Business (a business partner)
indemnity - ANS to reimburse or make whole; permitted to collect only to the extent of
financial loss (cannot gain)
subrogation - ANS The process by which an insurer can, after it has paid a loss under the
policy, recover the amount paid from any party (other than the insured) who caused the loss or
is otherwise legally liable for the loss.
Accident vs. Occurrence - ANS an accident is a sudden, unplanned and unexpected event not
under the control of the insured and results in injury/damage that is not intended/expected
an occurrence includes losses caused by continuous or repeated exposure to conditions
resulting in injury to persons or damage to property that is neither intended nor expected
BLANKET VS SPECIFIC - ANS BLANKET COVERAGE-provides coverage for different classes of
property under one policy
SPECIFIC INSURANCE-is when you insure a specific item or specific kind of property
actual cash value - ANS recognizes the reduction of value of property as it ages and becomes
subject to wear and tear and obsolescence
calculated by: (current replacement cost) - (depreciation)
replacement cost - ANS The cost to replace damaged property with like kind and quality at
current price, without any deduction for depreciation
3
Page
@COPYRIGHT BRAINBARTER 2025/2026
