Property and Casualty Insurance Exam: 2026/2027
ACTUAL TEST BANK WITH CORRECT ANSWERS
• HO-8 -✓✓ Modified coverage form (for older homes) provides coverage for market
value
• HO-6 -✓✓ Condominium Owners Policy - Is better in worth than an HO-4
• HO-5 -✓✓ comprehensive form; open peril coverage for dwelling and other structures
and personal property losses paid on replacement for dwelling and ACV for contents
• HO-4 -✓✓ Renters Policy-- coverage for personal property as well as liability coverage
• HO-3 -✓✓ Homeowners Insurance Coverage - it covers real and personal property of
homeowners, but is the most common and most extensive protection
• HO-2 -✓✓ broad form; broad coverage for dwelling and personal property; covered
perils similar to DP-1 (includes breakage of glass and theft)
• Minimum Insurance Limits for Auto Coverage -✓✓ $30,000/$60,000/$25,000
• loss -✓✓ Unintentional decline in or dissapperance of value
• Risk -✓✓ uncertainty or chance of a loss occuring
• Speculative Risk -✓✓ uncertanty or chance of a loss occuring in a situation that
involvse the option for either LOSS OR GAIN
• Pure Risk -✓✓ Refers to situations that can ONLY result in a loss or no change....NO
GAIN
• Indemnity -✓✓ Compensation to insured that restores them to same financial
positation that they enjoyed prior to the loss
• Subrogation -✓✓ Insure's legal right to seek damages from 3rd party after it has
reimbursed the insured for the loss
• Insurable Interest -✓✓ Any interest an insured may have in property that is a subject of
insurance so that damage or destruction of the property would cause the insured
financial loss. - "You have to have something worth loosing"
• Law of Large #'s -✓✓ the # of people with simular exposure to loss, makes it more
predictable to figure out what the actual loss will be
, • Peril -✓✓ The cause of a possible loss
• Physical Hazards -✓✓ Come from structural, material or operational characteristics of
a risk
• Morale Hazards -✓✓ Comes from human carelessness or indifference to potential
losses - EX: forgetting to set your home alarm knowing your home could get broken into
• Hazards -✓✓ conditions or situations that increase the probability of an insured loss
occuring
• Moral Hazards -✓✓ Insured's dishonesty or lying - EX: A failing business owner might
want to burn his building down in order to collect from the insurance proceeds
• Legal Hazards -✓✓ Comes from lawsuits which can result in very large payouts -
Potential of getting sued
• REinsurance -✓✓ An insurance contract by primary insurer from a 3rd party to transfer
part of the liability to the 3rd party - "Insurance for the insurance company"
• Contract Law -✓✓ States that a contract must meet 4 required elements to be valid -
Agreement, Competent Parties, Valuable Consideration and Legal purpose
• Tort Law -✓✓ Compensating people for their losses/Injuries that are caused by
wrongful acts of others - NOT CRIMINAL
• Waiver -✓✓ Giving up or intentional relinquish (voluntary) abandonment of a
contractual, known right of advantage
• Estoppel -✓✓ The part waiving the right is prevented (estopped) from reasserting that
right if it will harm the person who relieved the waiver
• Representation -✓✓ Oral or written statment by the applicant before or at the time the
policy goes into effect
• Misrepresentation -✓✓ Repersentation that is false when the facts fail to correspond
assertions
• Concealment -✓✓ Failure to communicate what one knows and ought to communicate
• Material -✓✓ Something is material if the information would effect the outcome of the
contract
ACTUAL TEST BANK WITH CORRECT ANSWERS
• HO-8 -✓✓ Modified coverage form (for older homes) provides coverage for market
value
• HO-6 -✓✓ Condominium Owners Policy - Is better in worth than an HO-4
• HO-5 -✓✓ comprehensive form; open peril coverage for dwelling and other structures
and personal property losses paid on replacement for dwelling and ACV for contents
• HO-4 -✓✓ Renters Policy-- coverage for personal property as well as liability coverage
• HO-3 -✓✓ Homeowners Insurance Coverage - it covers real and personal property of
homeowners, but is the most common and most extensive protection
• HO-2 -✓✓ broad form; broad coverage for dwelling and personal property; covered
perils similar to DP-1 (includes breakage of glass and theft)
• Minimum Insurance Limits for Auto Coverage -✓✓ $30,000/$60,000/$25,000
• loss -✓✓ Unintentional decline in or dissapperance of value
• Risk -✓✓ uncertainty or chance of a loss occuring
• Speculative Risk -✓✓ uncertanty or chance of a loss occuring in a situation that
involvse the option for either LOSS OR GAIN
• Pure Risk -✓✓ Refers to situations that can ONLY result in a loss or no change....NO
GAIN
• Indemnity -✓✓ Compensation to insured that restores them to same financial
positation that they enjoyed prior to the loss
• Subrogation -✓✓ Insure's legal right to seek damages from 3rd party after it has
reimbursed the insured for the loss
• Insurable Interest -✓✓ Any interest an insured may have in property that is a subject of
insurance so that damage or destruction of the property would cause the insured
financial loss. - "You have to have something worth loosing"
• Law of Large #'s -✓✓ the # of people with simular exposure to loss, makes it more
predictable to figure out what the actual loss will be
, • Peril -✓✓ The cause of a possible loss
• Physical Hazards -✓✓ Come from structural, material or operational characteristics of
a risk
• Morale Hazards -✓✓ Comes from human carelessness or indifference to potential
losses - EX: forgetting to set your home alarm knowing your home could get broken into
• Hazards -✓✓ conditions or situations that increase the probability of an insured loss
occuring
• Moral Hazards -✓✓ Insured's dishonesty or lying - EX: A failing business owner might
want to burn his building down in order to collect from the insurance proceeds
• Legal Hazards -✓✓ Comes from lawsuits which can result in very large payouts -
Potential of getting sued
• REinsurance -✓✓ An insurance contract by primary insurer from a 3rd party to transfer
part of the liability to the 3rd party - "Insurance for the insurance company"
• Contract Law -✓✓ States that a contract must meet 4 required elements to be valid -
Agreement, Competent Parties, Valuable Consideration and Legal purpose
• Tort Law -✓✓ Compensating people for their losses/Injuries that are caused by
wrongful acts of others - NOT CRIMINAL
• Waiver -✓✓ Giving up or intentional relinquish (voluntary) abandonment of a
contractual, known right of advantage
• Estoppel -✓✓ The part waiving the right is prevented (estopped) from reasserting that
right if it will harm the person who relieved the waiver
• Representation -✓✓ Oral or written statment by the applicant before or at the time the
policy goes into effect
• Misrepresentation -✓✓ Repersentation that is false when the facts fail to correspond
assertions
• Concealment -✓✓ Failure to communicate what one knows and ought to communicate
• Material -✓✓ Something is material if the information would effect the outcome of the
contract
