PROPERTY AND CASUALTY INSURANCE
LICENSE EXAM AZ | COMPREHENSIVE
EXAM PREP, PRACTICE QUESTIONS,
CORRECT ANSWERS AND STUDY GUIDE
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
,Pure risk situations that can only result in a loss or no change. There is no opportunity for financial
gain.
Speculative risk involves the opportunity for either loss or gain. Example is gambling. These risks are not
insurable.
essential elements of an insurance contract offer and acceptance, consideration, competent parties, legal purpose
alien insurer an insurer formed under the laws of another country
warranty statement guaranteed to be true
peril cause of loss insured against in an insurance policy
risk retention group liability insurance company owned by its members
agent a person who acts for another person or entity known as the principal with regard to
contractual arrangements with third parties
express authority authority granted to an agent through the agents contract
direct response marketing bypasses the insurance agent. business is conducted through the mail, or online, and is a
perfectly legal approach to selling insurance.
law of large numbers the larger a group becomes, the easier it is to predict losses
the basis for statistical prediction of loss upon which insurance rates are calculated
loss the reduction, decrease, or disappearance of value of the person or property insured in a
policy by a peril insured against.
unilateral contract only one of the parties is legally bound to the contract
the insured is not legally bound to do anything
waiver giving up one's known rught or privilege
captive insurer owned by a corporation to serve that organization's needs at lower rates than would
otherwise be available with commercial insurance
, lloyds association does not issue insurance policies of provide insurance protection.
provide a meeting facility for individual underwriters to conduct the business of
insurance.
mutual companies owned by the policy owners and issue participating policies. policy owners are entitled
to dividends, which are a return of excess premiums and are nontaxable.
apparent authority AKA perceived authority, is the appearance or assumption of authority based on the
actions, words, or deeds of the principal
implied authority not written in the agents contract, but is required in order for the agent to conduct
business
reinsurance insurers use this to protect themselves from catastrophic losses
an agreement between a ceding insurer and an assuming insurer
open peril policies cover everything except what they say they don't
exclusions section of an insurance policy that details what perils are not insured against and what
persons are not insured
direct loss physical damage to buildings and/or personal property
also includes other damage where the insured peril was the proximate cause of loss
conditions part of an insurance policy that sets forth the obligations and duties of the insurer and the
insured
reciprocal insurance based on mutual agreements among subscribers
risk retention results from three basic desires of the insured: reduce expenses and improve cash flow,
increase control of claim reserving and claims settlements, to fund losses that cannot be
insured
concealment withholding of information that will result in an imprecise underwriting decision
principle of indemnity stipulates that the insured can only collect for the amount of the loss even if the policy is
written with greater benefit limits
LICENSE EXAM AZ | COMPREHENSIVE
EXAM PREP, PRACTICE QUESTIONS,
CORRECT ANSWERS AND STUDY GUIDE
| GRADED A+ | GUARANTEED SUCCESS
Updated 2026 Questions and Answers
100% Verified Exam Prep
,Pure risk situations that can only result in a loss or no change. There is no opportunity for financial
gain.
Speculative risk involves the opportunity for either loss or gain. Example is gambling. These risks are not
insurable.
essential elements of an insurance contract offer and acceptance, consideration, competent parties, legal purpose
alien insurer an insurer formed under the laws of another country
warranty statement guaranteed to be true
peril cause of loss insured against in an insurance policy
risk retention group liability insurance company owned by its members
agent a person who acts for another person or entity known as the principal with regard to
contractual arrangements with third parties
express authority authority granted to an agent through the agents contract
direct response marketing bypasses the insurance agent. business is conducted through the mail, or online, and is a
perfectly legal approach to selling insurance.
law of large numbers the larger a group becomes, the easier it is to predict losses
the basis for statistical prediction of loss upon which insurance rates are calculated
loss the reduction, decrease, or disappearance of value of the person or property insured in a
policy by a peril insured against.
unilateral contract only one of the parties is legally bound to the contract
the insured is not legally bound to do anything
waiver giving up one's known rught or privilege
captive insurer owned by a corporation to serve that organization's needs at lower rates than would
otherwise be available with commercial insurance
, lloyds association does not issue insurance policies of provide insurance protection.
provide a meeting facility for individual underwriters to conduct the business of
insurance.
mutual companies owned by the policy owners and issue participating policies. policy owners are entitled
to dividends, which are a return of excess premiums and are nontaxable.
apparent authority AKA perceived authority, is the appearance or assumption of authority based on the
actions, words, or deeds of the principal
implied authority not written in the agents contract, but is required in order for the agent to conduct
business
reinsurance insurers use this to protect themselves from catastrophic losses
an agreement between a ceding insurer and an assuming insurer
open peril policies cover everything except what they say they don't
exclusions section of an insurance policy that details what perils are not insured against and what
persons are not insured
direct loss physical damage to buildings and/or personal property
also includes other damage where the insured peril was the proximate cause of loss
conditions part of an insurance policy that sets forth the obligations and duties of the insurer and the
insured
reciprocal insurance based on mutual agreements among subscribers
risk retention results from three basic desires of the insured: reduce expenses and improve cash flow,
increase control of claim reserving and claims settlements, to fund losses that cannot be
insured
concealment withholding of information that will result in an imprecise underwriting decision
principle of indemnity stipulates that the insured can only collect for the amount of the loss even if the policy is
written with greater benefit limits
