KY PROPERTY & CASUALTY ASSESSMENT
MATERIALS 2026 VERIFIED SOLUTIONS
GRADED A+
⫸ What is the primary purpose of insurance? Answer: Transferring
risk
⫸ Which of the following is an insurable risk? Answer: Hail damage
to the roof of a car
⫸ Define peril in insurance terms. Answer: The cause of loss
⫸ Explain a morale hazard. Answer: Arises through an individual's
carelessness or irresponsible actions
⫸ Identify the part that is NOT included in an insurance contract.
Answer: Floater
⫸ Why is an insurance contract considered a contract of indemnity?
Answer: Insured may collect no more than the amount required to
restore to pre-loss financial condition
⫸ Which element of a legal contract does an insurance premium
payment represent? Answer: Consideration
, ⫸ Why is an insurance policy considered a unilateral contract?
Answer: Insurance company is the only party legally obligated to
perform
⫸ What constitutes an agreement to enter into a valid contract?
Answer: A specific offer by one party and acceptance by the other
⫸ A nonexclusive agent Answer: Represents more than one
insurance company
⫸ In prior approval states, the rates and policy forms insurance
companies use must be approved by Answer: The insurance
department of the state where they will be used
⫸ A mutual insurance company is owned by Answer: Its
policyholders
⫸ A binder Answer: None of the above
⫸ The tendency for people with a greater-than-average exposure to
loss to purchase insurance is called Answer: Adverse selection
⫸ The Fair Credit Reporting Act applies to applicants who are
rejected for insurance coverage on the basis of Answer: A credit
report
MATERIALS 2026 VERIFIED SOLUTIONS
GRADED A+
⫸ What is the primary purpose of insurance? Answer: Transferring
risk
⫸ Which of the following is an insurable risk? Answer: Hail damage
to the roof of a car
⫸ Define peril in insurance terms. Answer: The cause of loss
⫸ Explain a morale hazard. Answer: Arises through an individual's
carelessness or irresponsible actions
⫸ Identify the part that is NOT included in an insurance contract.
Answer: Floater
⫸ Why is an insurance contract considered a contract of indemnity?
Answer: Insured may collect no more than the amount required to
restore to pre-loss financial condition
⫸ Which element of a legal contract does an insurance premium
payment represent? Answer: Consideration
, ⫸ Why is an insurance policy considered a unilateral contract?
Answer: Insurance company is the only party legally obligated to
perform
⫸ What constitutes an agreement to enter into a valid contract?
Answer: A specific offer by one party and acceptance by the other
⫸ A nonexclusive agent Answer: Represents more than one
insurance company
⫸ In prior approval states, the rates and policy forms insurance
companies use must be approved by Answer: The insurance
department of the state where they will be used
⫸ A mutual insurance company is owned by Answer: Its
policyholders
⫸ A binder Answer: None of the above
⫸ The tendency for people with a greater-than-average exposure to
loss to purchase insurance is called Answer: Adverse selection
⫸ The Fair Credit Reporting Act applies to applicants who are
rejected for insurance coverage on the basis of Answer: A credit
report
