Property and Casualty Insurance Test Question Notes Already Graded A+
1. What is a peril? ✅A peril is a cause of loss or harm.
2. What is a hazard? ✅A hazard is something that increases the likelihood of a loss or harm.
3. What is the distinction between moral hazard and morale hazard? ✅Moral hazard refers to
dishonesty or illegal behavior, while morale hazard refers to carelessness or recklessness.
4. What method of handling risk involves a deductible? ✅Retention involves paying a portion of the loss
or damage.
5. What is the term for a fire that causes damage to a building? ✅A fire that causes damage to a
building is considered a peril.
6. What are the essential elements of an insurable risk? ✅An insurable risk must be calculable,
affordable, non-catastrophic, homogeneous, accidental, and measurable.
7. What type of insurer is one headquartered in Tennessee? ✅A domestic insurer is one headquartered
in Tennessee.
8. What type of insurer is one incorporated in Wisconsin but conducting business in Minnesota? ✅A
foreign insurer is one incorporated in Wisconsin but conducting business in Minnesota.
9. What does "express authority" refer to in insurance contracts? ✅"Express authority" refers to
authorities written into an agent's contract.
10. What term is often used to describe an insurance agent? ✅An insurance agent is often referred to
as a fiduciary, meaning they have a position of financial trust.
11. What is an insurance policy used for? ✅An insurance policy is a contract used to transfer risk from
an individual, business, or organization to an insurance company.
, 12. What is reinsurance? ✅Reinsurance is when insurance companies purchase insurance coverage for
their own potential losses.
13. What is the role of a fiduciary in insurance? ✅A fiduciary has a position of financial trust and
responsibility in an insurance relationship.
14. What type of policy provision allows little to no input from the insured? ✅A contract of adhesion is a
policy provision written by the insurer with little to no input from the insured.
15. Where can you find the premium payment information on an insurance policy? ✅The premium
payment information can be found on the declarations page of an insurance policy.
16. What are the duties of the insured after a loss? ✅After a loss, the insured must notify the insurer,
protect property from further damage, provide proof of loss, make property available for inspection,
cooperate with the insurer if needed, and provide examination under oath if required.
17. What does the FCRA stand for? ✅The FCRA stands for Fair Credit Reporting Act, which requires
insurers to inform policyholders if they use credit information.
18. What are the main components of an insurance contract? ✅The main components of an insurance
contract include declarations, conditions, insuring agreements, and exclusions.
19. How are unearned premiums returned when an insured cancels a policy early? ✅Unearned
premiums are returned on a short-rate basis when an insured cancels a policy early.
20. What are the three basic perils covered by standard homeowners' insurance policies? ✅The three
basic perils covered by standard homeowners' insurance policies are fire, lightning, and internal
explosion.
21. What are some examples of extended coverage perils? ✅Examples of extended coverage perils
include wind, civil commotion, smoke, hail, aircraft, vehicles, volcanic eruption, explosion, riot,
vandalism, and malicious mischief.
1. What is a peril? ✅A peril is a cause of loss or harm.
2. What is a hazard? ✅A hazard is something that increases the likelihood of a loss or harm.
3. What is the distinction between moral hazard and morale hazard? ✅Moral hazard refers to
dishonesty or illegal behavior, while morale hazard refers to carelessness or recklessness.
4. What method of handling risk involves a deductible? ✅Retention involves paying a portion of the loss
or damage.
5. What is the term for a fire that causes damage to a building? ✅A fire that causes damage to a
building is considered a peril.
6. What are the essential elements of an insurable risk? ✅An insurable risk must be calculable,
affordable, non-catastrophic, homogeneous, accidental, and measurable.
7. What type of insurer is one headquartered in Tennessee? ✅A domestic insurer is one headquartered
in Tennessee.
8. What type of insurer is one incorporated in Wisconsin but conducting business in Minnesota? ✅A
foreign insurer is one incorporated in Wisconsin but conducting business in Minnesota.
9. What does "express authority" refer to in insurance contracts? ✅"Express authority" refers to
authorities written into an agent's contract.
10. What term is often used to describe an insurance agent? ✅An insurance agent is often referred to
as a fiduciary, meaning they have a position of financial trust.
11. What is an insurance policy used for? ✅An insurance policy is a contract used to transfer risk from
an individual, business, or organization to an insurance company.
, 12. What is reinsurance? ✅Reinsurance is when insurance companies purchase insurance coverage for
their own potential losses.
13. What is the role of a fiduciary in insurance? ✅A fiduciary has a position of financial trust and
responsibility in an insurance relationship.
14. What type of policy provision allows little to no input from the insured? ✅A contract of adhesion is a
policy provision written by the insurer with little to no input from the insured.
15. Where can you find the premium payment information on an insurance policy? ✅The premium
payment information can be found on the declarations page of an insurance policy.
16. What are the duties of the insured after a loss? ✅After a loss, the insured must notify the insurer,
protect property from further damage, provide proof of loss, make property available for inspection,
cooperate with the insurer if needed, and provide examination under oath if required.
17. What does the FCRA stand for? ✅The FCRA stands for Fair Credit Reporting Act, which requires
insurers to inform policyholders if they use credit information.
18. What are the main components of an insurance contract? ✅The main components of an insurance
contract include declarations, conditions, insuring agreements, and exclusions.
19. How are unearned premiums returned when an insured cancels a policy early? ✅Unearned
premiums are returned on a short-rate basis when an insured cancels a policy early.
20. What are the three basic perils covered by standard homeowners' insurance policies? ✅The three
basic perils covered by standard homeowners' insurance policies are fire, lightning, and internal
explosion.
21. What are some examples of extended coverage perils? ✅Examples of extended coverage perils
include wind, civil commotion, smoke, hail, aircraft, vehicles, volcanic eruption, explosion, riot,
vandalism, and malicious mischief.
