EXAM FX (PROPERTY & CASUALTY)
QUESTIONS ALL PASSED RATED
100% CORRECT
Law of Large Numbers - Correct Answer ✔✔ The larger the number of people with a
similar exposure to loss, the more predictable actual losses will be.
Insurance - Correct Answer ✔✔ Transfers the risk of loss from an individual or business
entity to an insurance company
The three elements of insurable risk are - Correct Answer ✔✔ 1) Financial 2) Blood
(relative) 3) Business
Risk - Correct Answer ✔✔ The uncertainty or chance of a loss occurring
Types of risks are - Correct Answer ✔✔ 1) Pure risk 2) Speculative risk
What type of risk does insurance cover? - Correct Answer ✔✔ Pure risk
What is pure risk? - Correct Answer ✔✔ It can only result in a loss or no change
What type of risk is not insurable? - Correct Answer ✔✔ speculative risk
What is speculative risk? - Correct Answer ✔✔ Opportunity for loss or gain. For
example, gambling.
What is a peril? - Correct Answer ✔✔ a specific cause of loss
What is a hazard? - Correct Answer ✔✔ conditions or situations that increase the
probability of a loss occurring
What is a loss? - Correct Answer ✔✔ reduction, decrease or disappearance of value of
the person or property insured.
What is indemnity? - Correct Answer ✔✔ provision in an insurance policy that states
that in the event of loss, an insured can only collect to the extent of the financial loss.
The insured is not allowed to gain financially.
Subrogation - Correct Answer ✔✔ insurer's legal right to seek damages from third
parties after it has reimbursed the insured.
, Accident - Correct Answer ✔✔ The sudden, unplanned and unexpected event not under
the control of the insured. Neither expected or intended.
Occurrence - Correct Answer ✔✔ losses caused by continuous or repeated exposure to
conditions neither intended or expected.
Direct loss - Correct Answer ✔✔ direct, physical damage to buildings and/or personal
property
Indirect Loss (consequential) - Correct Answer ✔✔ results of a direct loss
What is the most prevalent indirect loss for homeowners? - Correct Answer ✔✔ Extra
living expense that may be incurred by the insured while the home is being repaired.
What is the primary type of indirect loss for commercial property? - Correct Answer ✔✔
The loss of profits a business may suffer from closing business while repaired.
General damages - Correct Answer ✔✔ compensates an injured person for pain &
suffering, mental anguish and disfigurement
Open Peril - Correct Answer ✔✔ ANY risk of loss not specifically excluded
Named Peril - Correct Answer ✔✔ Specific covered perils. There is no coverage for
unlisted perils
Special damages - Correct Answer ✔✔ specific out-of-pocket expenses for medical,
miscellaneous and loss of wages
Property damage loss - Correct Answer ✔✔ value of property and loss of use
Punitive damages - Correct Answer ✔✔ form of punishment for extreme, outrageous
behavior, gross negligence or willful intent
Negligence - Correct Answer ✔✔ failure to use the care that a reasonable, prudent
person would have taken under similar circumstances
Burglary - Correct Answer ✔✔ forced entry into or out of the premises of another with
felonious intent. *Must have visible signs of forced entry or exit*
Robbery - Correct Answer ✔✔ taking of property from care or custody of a person
through threatening or causing bodily harm.
Mysterious disappearance - Correct Answer ✔✔ disappearance of property without
knowledge of how it disappeared. *Excluded from most policies*
QUESTIONS ALL PASSED RATED
100% CORRECT
Law of Large Numbers - Correct Answer ✔✔ The larger the number of people with a
similar exposure to loss, the more predictable actual losses will be.
Insurance - Correct Answer ✔✔ Transfers the risk of loss from an individual or business
entity to an insurance company
The three elements of insurable risk are - Correct Answer ✔✔ 1) Financial 2) Blood
(relative) 3) Business
Risk - Correct Answer ✔✔ The uncertainty or chance of a loss occurring
Types of risks are - Correct Answer ✔✔ 1) Pure risk 2) Speculative risk
What type of risk does insurance cover? - Correct Answer ✔✔ Pure risk
What is pure risk? - Correct Answer ✔✔ It can only result in a loss or no change
What type of risk is not insurable? - Correct Answer ✔✔ speculative risk
What is speculative risk? - Correct Answer ✔✔ Opportunity for loss or gain. For
example, gambling.
What is a peril? - Correct Answer ✔✔ a specific cause of loss
What is a hazard? - Correct Answer ✔✔ conditions or situations that increase the
probability of a loss occurring
What is a loss? - Correct Answer ✔✔ reduction, decrease or disappearance of value of
the person or property insured.
What is indemnity? - Correct Answer ✔✔ provision in an insurance policy that states
that in the event of loss, an insured can only collect to the extent of the financial loss.
The insured is not allowed to gain financially.
Subrogation - Correct Answer ✔✔ insurer's legal right to seek damages from third
parties after it has reimbursed the insured.
, Accident - Correct Answer ✔✔ The sudden, unplanned and unexpected event not under
the control of the insured. Neither expected or intended.
Occurrence - Correct Answer ✔✔ losses caused by continuous or repeated exposure to
conditions neither intended or expected.
Direct loss - Correct Answer ✔✔ direct, physical damage to buildings and/or personal
property
Indirect Loss (consequential) - Correct Answer ✔✔ results of a direct loss
What is the most prevalent indirect loss for homeowners? - Correct Answer ✔✔ Extra
living expense that may be incurred by the insured while the home is being repaired.
What is the primary type of indirect loss for commercial property? - Correct Answer ✔✔
The loss of profits a business may suffer from closing business while repaired.
General damages - Correct Answer ✔✔ compensates an injured person for pain &
suffering, mental anguish and disfigurement
Open Peril - Correct Answer ✔✔ ANY risk of loss not specifically excluded
Named Peril - Correct Answer ✔✔ Specific covered perils. There is no coverage for
unlisted perils
Special damages - Correct Answer ✔✔ specific out-of-pocket expenses for medical,
miscellaneous and loss of wages
Property damage loss - Correct Answer ✔✔ value of property and loss of use
Punitive damages - Correct Answer ✔✔ form of punishment for extreme, outrageous
behavior, gross negligence or willful intent
Negligence - Correct Answer ✔✔ failure to use the care that a reasonable, prudent
person would have taken under similar circumstances
Burglary - Correct Answer ✔✔ forced entry into or out of the premises of another with
felonious intent. *Must have visible signs of forced entry or exit*
Robbery - Correct Answer ✔✔ taking of property from care or custody of a person
through threatening or causing bodily harm.
Mysterious disappearance - Correct Answer ✔✔ disappearance of property without
knowledge of how it disappeared. *Excluded from most policies*
