P&C License UPDATED EXAM QUESTIONS AND
CORRECT ANSWERS
Insurer - CORRECT ANSWERS The insurance company or other entity offering protection
(insurance/coverage) to the insured. AKA- Carrier
Insured - CORRECT ANSWERS The party (person, business, organization) covered by the
insurance policy
Named Insured - CORRECT ANSWERS The party named on the declarations page and it is
their policy. They must have an insurable interest in the property being insured
Peril - CORRECT ANSWERS The cause of loss. Named peril policies name the specific perils
they cover. Special peril policies only name exclusions. If it is not specifically excluded, a special
peril policy will cover it. (special = open peril)
Coinsurance - CORRECT ANSWERS A requirement that a certain amount of insurance be
carried for the insured to be fully compensated for a loss
Coinsurance Formula - CORRECT ANSWERS (insurance carried (did)/insurance
required(should)) x loss - deductible = claim payment
Cancellation - CORRECT ANSWERS Terminating insurance DURING THE POLICY PERIOD
Non-Renewal - CORRECT ANSWERS Terminating insurance AFTER THE POLICY PERIOD
ENDS
Domestic Insurer - CORRECT ANSWERS Headquartered in the State
,Foreign Insurer - CORRECT ANSWERS Headquartered in another state
Alien Insurer - CORRECT ANSWERS Headquartered in another country
Admitted (Authorized) Insurer - CORRECT ANSWERS Licensed to do business in this state
Stock Insurer - CORRECT ANSWERS Company owned by stockholders (share holders)
Mutual Insurer - CORRECT ANSWERS Company owned by its policy holders
Essential Contract Elements - CORRECT ANSWERS -Offer and acceptance (Agreement)
-Consideration (premium- insured; policy- insurer)
-Legal purpose
-Competent parties (sane, sober, sound, 15 yrs old)
Power and Authority of Agents - CORRECT ANSWERS -Express: You were told or read what
you could do
-Implied: You were expected to do something even though it was not written in the contract
-Apparent: No one stopped the agent from doing something they should not have done
Pro Rata Refund - CORRECT ANSWERS Insurer cancels a policy sending unearned premium
back
Short Rate Refund - CORRECT ANSWERS Insured cancels policy and gets unearned
premium back less and administrative fee
, Floater Policy - CORRECT ANSWERS Covers personal property as it moves. Only names
exclusions. Inland marine.
Essential Elements of an Insurable Risk - CORRECT ANSWERS -Definite in terms of time
and place and measurable financially
-Must be an accidental loss
-Must be calculable
-The Law of large numbers should apply
-Must create an economic hardship and be available at a reasonable cost
-Must not be catastrophic
Insurable Interest - CORRECT ANSWERS You must have your name listed as "named
insured" and have a "kin or business" (blood or money) relationship to be compensated. A
named insured can't receive more than their share of ownership. INSURABLE INTEREST MUST
EXIST AT THE TIME OF LOSS (CLAIM)
Direct Loss - CORRECT ANSWERS Caused by a covered peril. Direct losses have a
deductible
Indirect Loss - CORRECT ANSWERS Caused by the direct loss to property which causes
another loss (income, place to live, vehicle) until the property is rebuilt or repaired. Indirect
losses do not have a deductible
Actual Cash Value (ACV) - CORRECT ANSWERS Todays replacement cost - depreciation
Replacement Cost - CORRECT ANSWERS Replacing like kind and like quality at today's
price
CORRECT ANSWERS
Insurer - CORRECT ANSWERS The insurance company or other entity offering protection
(insurance/coverage) to the insured. AKA- Carrier
Insured - CORRECT ANSWERS The party (person, business, organization) covered by the
insurance policy
Named Insured - CORRECT ANSWERS The party named on the declarations page and it is
their policy. They must have an insurable interest in the property being insured
Peril - CORRECT ANSWERS The cause of loss. Named peril policies name the specific perils
they cover. Special peril policies only name exclusions. If it is not specifically excluded, a special
peril policy will cover it. (special = open peril)
Coinsurance - CORRECT ANSWERS A requirement that a certain amount of insurance be
carried for the insured to be fully compensated for a loss
Coinsurance Formula - CORRECT ANSWERS (insurance carried (did)/insurance
required(should)) x loss - deductible = claim payment
Cancellation - CORRECT ANSWERS Terminating insurance DURING THE POLICY PERIOD
Non-Renewal - CORRECT ANSWERS Terminating insurance AFTER THE POLICY PERIOD
ENDS
Domestic Insurer - CORRECT ANSWERS Headquartered in the State
,Foreign Insurer - CORRECT ANSWERS Headquartered in another state
Alien Insurer - CORRECT ANSWERS Headquartered in another country
Admitted (Authorized) Insurer - CORRECT ANSWERS Licensed to do business in this state
Stock Insurer - CORRECT ANSWERS Company owned by stockholders (share holders)
Mutual Insurer - CORRECT ANSWERS Company owned by its policy holders
Essential Contract Elements - CORRECT ANSWERS -Offer and acceptance (Agreement)
-Consideration (premium- insured; policy- insurer)
-Legal purpose
-Competent parties (sane, sober, sound, 15 yrs old)
Power and Authority of Agents - CORRECT ANSWERS -Express: You were told or read what
you could do
-Implied: You were expected to do something even though it was not written in the contract
-Apparent: No one stopped the agent from doing something they should not have done
Pro Rata Refund - CORRECT ANSWERS Insurer cancels a policy sending unearned premium
back
Short Rate Refund - CORRECT ANSWERS Insured cancels policy and gets unearned
premium back less and administrative fee
, Floater Policy - CORRECT ANSWERS Covers personal property as it moves. Only names
exclusions. Inland marine.
Essential Elements of an Insurable Risk - CORRECT ANSWERS -Definite in terms of time
and place and measurable financially
-Must be an accidental loss
-Must be calculable
-The Law of large numbers should apply
-Must create an economic hardship and be available at a reasonable cost
-Must not be catastrophic
Insurable Interest - CORRECT ANSWERS You must have your name listed as "named
insured" and have a "kin or business" (blood or money) relationship to be compensated. A
named insured can't receive more than their share of ownership. INSURABLE INTEREST MUST
EXIST AT THE TIME OF LOSS (CLAIM)
Direct Loss - CORRECT ANSWERS Caused by a covered peril. Direct losses have a
deductible
Indirect Loss - CORRECT ANSWERS Caused by the direct loss to property which causes
another loss (income, place to live, vehicle) until the property is rebuilt or repaired. Indirect
losses do not have a deductible
Actual Cash Value (ACV) - CORRECT ANSWERS Todays replacement cost - depreciation
Replacement Cost - CORRECT ANSWERS Replacing like kind and like quality at today's
price
