Property and Casualty Insurance Exam SCRIPT
2026/2027 WITH EXPERT-VERIFIED ANSWERS
RATED A+
• Personal Property -✓✓ Contents refers to personal property, including items inside
and outside the building. Personal property includes transportable items like appliances,
unattached outdoor items, and items on the land.
• Real Property -✓✓ Real property includes the building and its attached components,
such as doors, windows, sinks, and toilets.
• Insurable Interest -✓✓ Interest someone has in a person or property that is subject to
a financial loss if injured or damaged. Must exist at the time of loss in P&C insurance.
• Elements of Insurable Interest -✓✓ There are 3 elements of insurable interest:
Financial (Mortgage company and borrower), Blood (Family), Business (Business
partners over a company).
• Actual Cash Value -✓✓ Replacement cost less than depreciation (RC-
Depreciation=Amount Paid). Reinforces the principal of indemnity.
• Replacement Cost -✓✓ What it cost to replace the property at today's price without
depreciation. Contrary to the principal of indemnity.
• Functional Replacement Cost -✓✓ Replacing a property with a more modern and less
expensive property.
• Market Value -✓✓ What a willing buyer is willing to pay a willing seller.
• Agreed Value -✓✓ The amount agreed upon by the insured and insurer. Amount is
stated in the policy.
• Stated Amount -✓✓ The amount the insurer says for a particular property. Amount is
written in the policy.
• Proximate Cause of Loss -✓✓ A loss is covered only if a covered peril is the proximate
cause. Proximate cause is the event initiating an unbroken chain of events leading to
the loss.
• Named Peril Policy -✓✓ A policy that specifies the perils covered. If it is not listed, it's
not covered.
, • Theft -✓✓ Taking of property.
• Burglary -✓✓ Taking of property using forced entry and exit.
• Robbery -✓✓ Taking of property using threatening tactics.
• Mysterious Disappearance -✓✓ Not knowing, when, where or how a property was
taken. Not covered in most insurance policies.
• Vandalism -✓✓ Malicious damage to a building without theft.
• SOAR (Special, Open, All Risk) -✓✓ Covers everything except what is excluded.
• Negligence -✓✓ The failure to act as a reasonable and prudent person. Includes these
4 elements: Legal Duty, Standard of care, Proximate Cause, Actual Damage
• Contributory Negligence -✓✓ If the plaintiff is even slightly responsible for their injury,
they lose their claim, and the defendant is not liable.
• Comparative Negligence -✓✓ This doctrine compares the plaintiff's negligence to the
defendant's, assigning fault percentages to each party.
• Absolute Liability -✓✓ Automatically imposed on the individual who owns hazardous
property. Negligence does not need to be proven.
• Strict Liability -✓✓ Applied in product liability cases when a product is faulty.
• Vicarious Liability -✓✓ Transferring the liability to someone who has greater ability to
pay.
• Application for Insurance -✓✓ Applying for insurance begins with the applicant (buyer)
completing and signing an application ('app'), usually with the producer's assistance.
• Certificate of Insurance -✓✓ Issued by the insurer, it proves that the required
insurance is in place and is often required in construction contracts.
• Deposit Premium -✓✓ Found in commercial and professional liability policies; pay the
estimated premium in full in advance.
• Deposit Premium Audit -✓✓ insurer may audit insured's books and records to
determine if adequate premium was charged
• Declarations -✓✓ First page of the policy that has the Who, What, When, Where, and
How much (Basic underwriting information).
2026/2027 WITH EXPERT-VERIFIED ANSWERS
RATED A+
• Personal Property -✓✓ Contents refers to personal property, including items inside
and outside the building. Personal property includes transportable items like appliances,
unattached outdoor items, and items on the land.
• Real Property -✓✓ Real property includes the building and its attached components,
such as doors, windows, sinks, and toilets.
• Insurable Interest -✓✓ Interest someone has in a person or property that is subject to
a financial loss if injured or damaged. Must exist at the time of loss in P&C insurance.
• Elements of Insurable Interest -✓✓ There are 3 elements of insurable interest:
Financial (Mortgage company and borrower), Blood (Family), Business (Business
partners over a company).
• Actual Cash Value -✓✓ Replacement cost less than depreciation (RC-
Depreciation=Amount Paid). Reinforces the principal of indemnity.
• Replacement Cost -✓✓ What it cost to replace the property at today's price without
depreciation. Contrary to the principal of indemnity.
• Functional Replacement Cost -✓✓ Replacing a property with a more modern and less
expensive property.
• Market Value -✓✓ What a willing buyer is willing to pay a willing seller.
• Agreed Value -✓✓ The amount agreed upon by the insured and insurer. Amount is
stated in the policy.
• Stated Amount -✓✓ The amount the insurer says for a particular property. Amount is
written in the policy.
• Proximate Cause of Loss -✓✓ A loss is covered only if a covered peril is the proximate
cause. Proximate cause is the event initiating an unbroken chain of events leading to
the loss.
• Named Peril Policy -✓✓ A policy that specifies the perils covered. If it is not listed, it's
not covered.
, • Theft -✓✓ Taking of property.
• Burglary -✓✓ Taking of property using forced entry and exit.
• Robbery -✓✓ Taking of property using threatening tactics.
• Mysterious Disappearance -✓✓ Not knowing, when, where or how a property was
taken. Not covered in most insurance policies.
• Vandalism -✓✓ Malicious damage to a building without theft.
• SOAR (Special, Open, All Risk) -✓✓ Covers everything except what is excluded.
• Negligence -✓✓ The failure to act as a reasonable and prudent person. Includes these
4 elements: Legal Duty, Standard of care, Proximate Cause, Actual Damage
• Contributory Negligence -✓✓ If the plaintiff is even slightly responsible for their injury,
they lose their claim, and the defendant is not liable.
• Comparative Negligence -✓✓ This doctrine compares the plaintiff's negligence to the
defendant's, assigning fault percentages to each party.
• Absolute Liability -✓✓ Automatically imposed on the individual who owns hazardous
property. Negligence does not need to be proven.
• Strict Liability -✓✓ Applied in product liability cases when a product is faulty.
• Vicarious Liability -✓✓ Transferring the liability to someone who has greater ability to
pay.
• Application for Insurance -✓✓ Applying for insurance begins with the applicant (buyer)
completing and signing an application ('app'), usually with the producer's assistance.
• Certificate of Insurance -✓✓ Issued by the insurer, it proves that the required
insurance is in place and is often required in construction contracts.
• Deposit Premium -✓✓ Found in commercial and professional liability policies; pay the
estimated premium in full in advance.
• Deposit Premium Audit -✓✓ insurer may audit insured's books and records to
determine if adequate premium was charged
• Declarations -✓✓ First page of the policy that has the Who, What, When, Where, and
How much (Basic underwriting information).
