PROPERTY AND CASUALTY INSURANCE
STUDY GUIDE 2026 EXAM Q&A FULL
SOLUTION GRADED A+
• HO-4. Answer: Renters Policy-- coverage for personal property as
well as liability coverage
• HO-3. Answer: Homeowners Insurance Coverage - it covers real
and personal property of homeowners, but is the most common and
most extensive protection
• HO-2. Answer: broad form; broad coverage for dwelling and
personal property; covered perils similar to DP-1 (includes
breakage of glass and theft)
• Minimum Insurance Limits for Auto Coverage. Answer:
$30,000/$60,000/$25,000
• loss. Answer: Unintentional decline in or dissapperance of value
• Risk. Answer: uncertainty or chance of a loss occuring
• Speculative Risk. Answer: uncertanty or chance of a loss occuring
in a situation that involvse the option for either LOSS OR GAIN
,• Pure Risk. Answer: Refers to situations that can ONLY result in a
loss or no change....NO GAIN
• Indemnity. Answer: Compensation to insured that restores them to
same financial positation that they enjoyed prior to the loss
• Subrogation. Answer: Insure's legal right to seek damages from
3rd party after it has reimbursed the insured for the loss
• Insurable Interest. Answer: Any interest an insured may have in
property that is a subject of insurance so that damage or destruction
of the property would cause the insured financial loss. - "You have to
have something worth loosing"
• Law of Large #'s. Answer: the # of people with simular exposure to
loss, makes it more predictable to figure out what the actual loss will
be
• Peril. Answer: The cause of a possible loss
• Physical Hazards. Answer: Come from structural, material or
operational characteristics of a risk
, • Morale Hazards. Answer: Comes from human carelessness or
indifference to potential losses - EX: forgetting to set your home
alarm knowing your home could get broken into
• Hazards. Answer: conditions or situations that increase the
probability of an insured loss occuring
• Moral Hazards. Answer: Insured's dishonesty or lying - EX: A
failing business owner might want to burn his building down in
order to collect from the insurance proceeds
• Legal Hazards. Answer: Comes from lawsuits which can result in
very large payouts - Potential of getting sued
• REinsurance. Answer: An insurance contract by primary insurer
from a 3rd party to transfer part of the liability to the 3rd party -
"Insurance for the insurance company"
• Contract Law. Answer: States that a contract must meet 4 required
elements to be valid - Agreement, Competent Parties, Valuable
Consideration and Legal purpose
• Tort Law. Answer: Compensating people for their losses/Injuries
that are caused by wrongful acts of others - NOT CRIMINAL
STUDY GUIDE 2026 EXAM Q&A FULL
SOLUTION GRADED A+
• HO-4. Answer: Renters Policy-- coverage for personal property as
well as liability coverage
• HO-3. Answer: Homeowners Insurance Coverage - it covers real
and personal property of homeowners, but is the most common and
most extensive protection
• HO-2. Answer: broad form; broad coverage for dwelling and
personal property; covered perils similar to DP-1 (includes
breakage of glass and theft)
• Minimum Insurance Limits for Auto Coverage. Answer:
$30,000/$60,000/$25,000
• loss. Answer: Unintentional decline in or dissapperance of value
• Risk. Answer: uncertainty or chance of a loss occuring
• Speculative Risk. Answer: uncertanty or chance of a loss occuring
in a situation that involvse the option for either LOSS OR GAIN
,• Pure Risk. Answer: Refers to situations that can ONLY result in a
loss or no change....NO GAIN
• Indemnity. Answer: Compensation to insured that restores them to
same financial positation that they enjoyed prior to the loss
• Subrogation. Answer: Insure's legal right to seek damages from
3rd party after it has reimbursed the insured for the loss
• Insurable Interest. Answer: Any interest an insured may have in
property that is a subject of insurance so that damage or destruction
of the property would cause the insured financial loss. - "You have to
have something worth loosing"
• Law of Large #'s. Answer: the # of people with simular exposure to
loss, makes it more predictable to figure out what the actual loss will
be
• Peril. Answer: The cause of a possible loss
• Physical Hazards. Answer: Come from structural, material or
operational characteristics of a risk
, • Morale Hazards. Answer: Comes from human carelessness or
indifference to potential losses - EX: forgetting to set your home
alarm knowing your home could get broken into
• Hazards. Answer: conditions or situations that increase the
probability of an insured loss occuring
• Moral Hazards. Answer: Insured's dishonesty or lying - EX: A
failing business owner might want to burn his building down in
order to collect from the insurance proceeds
• Legal Hazards. Answer: Comes from lawsuits which can result in
very large payouts - Potential of getting sued
• REinsurance. Answer: An insurance contract by primary insurer
from a 3rd party to transfer part of the liability to the 3rd party -
"Insurance for the insurance company"
• Contract Law. Answer: States that a contract must meet 4 required
elements to be valid - Agreement, Competent Parties, Valuable
Consideration and Legal purpose
• Tort Law. Answer: Compensating people for their losses/Injuries
that are caused by wrongful acts of others - NOT CRIMINAL
