PROPERTY AND CASUALTY INSURANCE EXAM
Specific insurance - Answer -This type of insurance designates a particular item to be
insured
Blanket insurance - Answer -This type of insurance covers more than one item of
property at a single location or one more items of property at multiple locations.
Speculative - Answer -possibility of both gain and loss. Not insurable.
Pure - Answer -only the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk? - Answer -avoid, control, retain,
and transfer risk.
Hazard - Answer -A condition or situation which increases the chance for loss
Physical Hazards - Answer -a hazard that arises from the condition, occupancy, or use
of the property itself.
ex: skateboard left on the steps
Moral Hazards - Answer -when an individual through carelessness or by irresponsible
actions can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
Morale Hazards - Answer -when a person might create a loss situation on purpose just
to collect from the insurance company.
ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance
payout to buy a new vehicle.
Replacement Cost - Answer -The amount of money it would take to replace a damaged
or destroyed item with one of like kind and quality AT THE TIME OF LOSS. No
deduction for depreciation.
Actual Cash Value (ACV) - Answer -Replacement Cost, minus depreciation.
Pair and Set Clause - Answer -Loss to one item of a pair or set does not constitute loss
to the entire pair or set.
Appraisal - Answer -A method of resolving disputes between insurers and insureds
over the amount owed on a covered loss.
,-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
Subrogation - Answer -An insurer's right to recover the amount of its loss payment from
the third party who is legally responsible for the loss.
Arbitration - Answer -this condition is similar to the Appraisal Condition but it is not
limited to disputes over the value of the loss. It may also be used to resolve other areas
of disagreement between the insured and the insurance company.
What does WC SHAVVER stand for? - Answer -Windstorm, Civil commotion, Smoke,
Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
What does BIG AFFECT stand for? - Answer -Burglar damage, Ice & snow weight,
Glass breakage, Accidental discharge, Falling objects, Freezing of pipes, Electrical
damage, Collapse, Tearing apart.
Insolvency - Answer -A financial state that occurs if liabilities are greater than assets.
Law of Agency - Answer -Knowledge of the Agents is Knowledge of the Principal
(Insurance Company)
Principal - Answer -Insurance Company
What is the ISO? - Answer -Insurance Services Office which is an organization
established for the benefit of its member insurance companies. This organization
gathers statistics, provides loss costs, drafts policy forms and coverage provisions and
conducts inspections for rate making purposes.
Coinsurance Clause - Answer -Requires the insured to carry a minimum specified
amount (generally 80%) of the replacement cost value of the insured property in order
for partial losses to be paid in full.
Estoppel - Answer -A legal bar to changing or denying a fact because of one's own
previous actions or words to the contrary.
ex: If an insurance company representative intentionally or unintentionally gives the
impression that a specific fact exists when it does not and a client relies on that
impression and is damaged a result.
Binder - Answer -A temporary contract of insurance, oral or written, offered by an
insurer pending issuance of the policy. Usually written for a period of 30-60 days and
, remains in force for that period or until a permanent policy is either issued or denied by
the insurer.
Warranty - Answer -A provision in a policy that pledges that a condition does exist or
will exist at some time in the future.
Punitive Damages - Answer -type of damages intended to punish the defendant and
make an example out of her to discourage others from behaving the same way.
Proximate Cause - Answer -An act, through an uniterrupted chain of events, that can
be determined to be the immediate or actual cause of a loss.
4 elements of negligence - Answer -1. The existence of a DUTY to act in a certain way
2. A FAILURE to live up to this duty
3. An actual INJURY must occur
4. The failure in duty must be the PROXIMATE CAUSE of the injury.
Negligence - Answer -An unreasonable or prudent act, A thoughtless or careless act or
one committed out of ignorance. It may be a non-act or omission, but it is NEVER an
intentional act.
Casualty Insurance - Answer -Refers to coverage designed to address the liability of
individuals and organizations resulting from negligent acts in their personal, business, or
professional roles.
Overinsurance - Answer -Exists if a property or an insurable interest in property is
insured by one or more insurance contracts against the same hazard in excess of the
fair value of the property or of such interest.
Specific Insurance - Answer -Coverage on ONE type of property (real or personal) in
ONE location.
Blanket Insurance - Answer -A single policy written on an insured's interest for 2 or
more different types of property (dwelling/building and contents) at the same location, or
at different locations.
Uninsured Motor Vehicle - Answer -A motor vehicle or trailer to which:
- No liability coverage at the time of accident
-has liability coverage but not enough to meet the state's financial responsibility
requirement
- Operated by a hit and run driver
- Has invalid liability insurance at the time of the accident because the insurer is
insolvent or denies coverage
Specific insurance - Answer -This type of insurance designates a particular item to be
insured
Blanket insurance - Answer -This type of insurance covers more than one item of
property at a single location or one more items of property at multiple locations.
Speculative - Answer -possibility of both gain and loss. Not insurable.
Pure - Answer -only the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk? - Answer -avoid, control, retain,
and transfer risk.
Hazard - Answer -A condition or situation which increases the chance for loss
Physical Hazards - Answer -a hazard that arises from the condition, occupancy, or use
of the property itself.
ex: skateboard left on the steps
Moral Hazards - Answer -when an individual through carelessness or by irresponsible
actions can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
Morale Hazards - Answer -when a person might create a loss situation on purpose just
to collect from the insurance company.
ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance
payout to buy a new vehicle.
Replacement Cost - Answer -The amount of money it would take to replace a damaged
or destroyed item with one of like kind and quality AT THE TIME OF LOSS. No
deduction for depreciation.
Actual Cash Value (ACV) - Answer -Replacement Cost, minus depreciation.
Pair and Set Clause - Answer -Loss to one item of a pair or set does not constitute loss
to the entire pair or set.
Appraisal - Answer -A method of resolving disputes between insurers and insureds
over the amount owed on a covered loss.
,-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
Subrogation - Answer -An insurer's right to recover the amount of its loss payment from
the third party who is legally responsible for the loss.
Arbitration - Answer -this condition is similar to the Appraisal Condition but it is not
limited to disputes over the value of the loss. It may also be used to resolve other areas
of disagreement between the insured and the insurance company.
What does WC SHAVVER stand for? - Answer -Windstorm, Civil commotion, Smoke,
Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
What does BIG AFFECT stand for? - Answer -Burglar damage, Ice & snow weight,
Glass breakage, Accidental discharge, Falling objects, Freezing of pipes, Electrical
damage, Collapse, Tearing apart.
Insolvency - Answer -A financial state that occurs if liabilities are greater than assets.
Law of Agency - Answer -Knowledge of the Agents is Knowledge of the Principal
(Insurance Company)
Principal - Answer -Insurance Company
What is the ISO? - Answer -Insurance Services Office which is an organization
established for the benefit of its member insurance companies. This organization
gathers statistics, provides loss costs, drafts policy forms and coverage provisions and
conducts inspections for rate making purposes.
Coinsurance Clause - Answer -Requires the insured to carry a minimum specified
amount (generally 80%) of the replacement cost value of the insured property in order
for partial losses to be paid in full.
Estoppel - Answer -A legal bar to changing or denying a fact because of one's own
previous actions or words to the contrary.
ex: If an insurance company representative intentionally or unintentionally gives the
impression that a specific fact exists when it does not and a client relies on that
impression and is damaged a result.
Binder - Answer -A temporary contract of insurance, oral or written, offered by an
insurer pending issuance of the policy. Usually written for a period of 30-60 days and
, remains in force for that period or until a permanent policy is either issued or denied by
the insurer.
Warranty - Answer -A provision in a policy that pledges that a condition does exist or
will exist at some time in the future.
Punitive Damages - Answer -type of damages intended to punish the defendant and
make an example out of her to discourage others from behaving the same way.
Proximate Cause - Answer -An act, through an uniterrupted chain of events, that can
be determined to be the immediate or actual cause of a loss.
4 elements of negligence - Answer -1. The existence of a DUTY to act in a certain way
2. A FAILURE to live up to this duty
3. An actual INJURY must occur
4. The failure in duty must be the PROXIMATE CAUSE of the injury.
Negligence - Answer -An unreasonable or prudent act, A thoughtless or careless act or
one committed out of ignorance. It may be a non-act or omission, but it is NEVER an
intentional act.
Casualty Insurance - Answer -Refers to coverage designed to address the liability of
individuals and organizations resulting from negligent acts in their personal, business, or
professional roles.
Overinsurance - Answer -Exists if a property or an insurable interest in property is
insured by one or more insurance contracts against the same hazard in excess of the
fair value of the property or of such interest.
Specific Insurance - Answer -Coverage on ONE type of property (real or personal) in
ONE location.
Blanket Insurance - Answer -A single policy written on an insured's interest for 2 or
more different types of property (dwelling/building and contents) at the same location, or
at different locations.
Uninsured Motor Vehicle - Answer -A motor vehicle or trailer to which:
- No liability coverage at the time of accident
-has liability coverage but not enough to meet the state's financial responsibility
requirement
- Operated by a hit and run driver
- Has invalid liability insurance at the time of the accident because the insurer is
insolvent or denies coverage
