NJ Property and Casualty
Insurance Exam Questions and
Answers 100% PASS
risk—ANSWER-the possibility that a loss will occur
speculative risk—ANSWER-possibility of loss or gain
pure risk—ANSWER-only possibility of loss
exposure—ANSWER-the potential for accidents and other losses
insurance—ANSWER-contract that transfers the risk of financial loss
peril—ANSWER-cause of a loss
direct loss—ANSWER-physical loss to a property with no intervening cause
indirect loss—ANSWER-consequential loss as a result of a direct loss
hazard—ANSWER-anything that increases the chance of a loss occurring
3 types of hazards—ANSWER-physical - identifiable factors
moral - individual's character
morale - careless attitude
, methods of handling risk (STARR)—ANSWER-Sharing, Transfer, Avoidance,
Reduction, Retention
1st party—ANSWER-insured (customer)
2nd party—ANSWER-insurer (company)
elements of insurable risk (CANHAM)—ANSWER-Calculable
Affordable
Non-catastrophic
Homogeneous
Accidental
Measurable
adverse selection—ANSWER-The tendency for higher-risk individuals to get
and keep insurance as compared to individuals that represent an average
level of risk
reinsurance—ANSWER-transfers risk from one insurer to another
company reducing risk = ceding
company assuming risk = reinsurer
facultative reinsurance—ANSWER-The reinsurer considers each risk before
allowing the transfer from the ceding company
treaty reinsurance—ANSWER-the reinsurer accepts all risks of a certain
type from the ceding company
types of insurers—ANSWER-Stock
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Katelyn Whitman
Insurance Exam Questions and
Answers 100% PASS
risk—ANSWER-the possibility that a loss will occur
speculative risk—ANSWER-possibility of loss or gain
pure risk—ANSWER-only possibility of loss
exposure—ANSWER-the potential for accidents and other losses
insurance—ANSWER-contract that transfers the risk of financial loss
peril—ANSWER-cause of a loss
direct loss—ANSWER-physical loss to a property with no intervening cause
indirect loss—ANSWER-consequential loss as a result of a direct loss
hazard—ANSWER-anything that increases the chance of a loss occurring
3 types of hazards—ANSWER-physical - identifiable factors
moral - individual's character
morale - careless attitude
, methods of handling risk (STARR)—ANSWER-Sharing, Transfer, Avoidance,
Reduction, Retention
1st party—ANSWER-insured (customer)
2nd party—ANSWER-insurer (company)
elements of insurable risk (CANHAM)—ANSWER-Calculable
Affordable
Non-catastrophic
Homogeneous
Accidental
Measurable
adverse selection—ANSWER-The tendency for higher-risk individuals to get
and keep insurance as compared to individuals that represent an average
level of risk
reinsurance—ANSWER-transfers risk from one insurer to another
company reducing risk = ceding
company assuming risk = reinsurer
facultative reinsurance—ANSWER-The reinsurer considers each risk before
allowing the transfer from the ceding company
treaty reinsurance—ANSWER-the reinsurer accepts all risks of a certain
type from the ceding company
types of insurers—ANSWER-Stock
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Katelyn Whitman
