PROPERTY AND CASUALTY
INSURANCE LICENSE TEST COMPLETE
QUESTION BANK ANSWER KEY
◉ What does BIG AFFECT stand for. Answer: Burglar damage, Ice &
snow weight, Glass breakage, Accidental discharge, Falling objects,
Freezing of pipes, Electrical damage, Collapse, Tearing apart.
◉ Insolvency. Answer: A financial state that occurs if liabilities are
greater than assets.
◉ Law of Agency. Answer: Knowledge of the Agents is Knowledge of
the Principal (Insurance Company)
◉ Principal. Answer: Insurance Company
◉ What is the ISO?. Answer: Insurance Services Office which is an
organization established for the benefit of its member insurance
companies. This organization gathers statistics, provides loss costs,
drafts policy forms and coverage provisions and conducts
inspections for rate making purposes.
,◉ Coinsurance Clause. Answer: Requires the insured to carry a
minimum specified amount (generally 80%) of the replacement cost
value of the insured property in order for partial losses to be paid in
full.
◉ Estoppel. Answer: A legal bar to changing or denying a fact
because of one's own previous actions or words to the contrary.
ex: If an insurance company representative intentionally or
unintentionally gives the impression that a specific fact exists when
it does not and a client relies on that impression and is damaged a
result.
◉ Binder. Answer: A temporary contract of insurance, oral or
written, offered by an insurer pending issuance of the policy. Usually
written for a period of 30-60 days and remains in force for that
period or until a permanent policy is either issued or denied by the
insurer.
◉ Warranty. Answer: A provision in a policy that pledges that a
condition does exist or will exist at some time in the future.
◉ Deposit Premium. Answer: Tentative charge made at the
beginning of certain policies and reinsurance agreements to be
adjusted when the actual earned charge has been later determined.
,◉ Audit. Answer: Verification of books or accounts to determine
their accuracy.
◉ Occurrence. Answer: An accident, including continuous or
repeated exposure to the same harmful conditions, which result in
bodily injury or property damage.
◉ Special Damages. Answer: type of compensatory damages that
reimburse the injured part for direct and specific expenses involved
in the loss. Such as medical expenses, funeral expenses and loss
wages.
◉ General Damages. Answer: type of compensatory damages that
reimburse the injured party for such things as pain and suffering
and disfigurement.
◉ Punitive Damages. Answer: type of damages intended to punish
the defendant and make an example out of her to discourage others
from behaving the same way.
◉ Proximate Cause. Answer: An act, through an uniterrupted chain
of events, that can be determined to be the immediate or actual
cause of a loss.
, ◉ 4 elements of negligence. Answer: 1. The existence of a DUTY to
act in a certain way
2. A FAILURE to live up to this duty
3. An actual INJURY must occur
4. The failure in duty must be the PROXIMATE CAUSE of the injury.
◉ Negligence. Answer: An unreasonable or prudent act, A
thoughtless or careless act or one committed out of ignorance. It
may be a non-act or omission, but it is NEVER an intentional act.
◉ Casualty Insurance. Answer: Refers to coverage designed to
address the liability of individuals and organizations resulting from
negligent acts in their personal, business, or professional roles.
◉ Overinsurance. Answer: Exists if a property or an insurable
interest in property is insured by one or more insurance contracts
against the same hazard in excess of the fair value of the property or
of such interest.
◉ Specific Insurance. Answer: Coverage on ONE type of property
(real or personal) in ONE location.
◉ Blanket Insurance. Answer: A single policy written on an insured's
interest for 2 or more different types of property (dwelling/building
and contents) at the same location, or at different locations.
INSURANCE LICENSE TEST COMPLETE
QUESTION BANK ANSWER KEY
◉ What does BIG AFFECT stand for. Answer: Burglar damage, Ice &
snow weight, Glass breakage, Accidental discharge, Falling objects,
Freezing of pipes, Electrical damage, Collapse, Tearing apart.
◉ Insolvency. Answer: A financial state that occurs if liabilities are
greater than assets.
◉ Law of Agency. Answer: Knowledge of the Agents is Knowledge of
the Principal (Insurance Company)
◉ Principal. Answer: Insurance Company
◉ What is the ISO?. Answer: Insurance Services Office which is an
organization established for the benefit of its member insurance
companies. This organization gathers statistics, provides loss costs,
drafts policy forms and coverage provisions and conducts
inspections for rate making purposes.
,◉ Coinsurance Clause. Answer: Requires the insured to carry a
minimum specified amount (generally 80%) of the replacement cost
value of the insured property in order for partial losses to be paid in
full.
◉ Estoppel. Answer: A legal bar to changing or denying a fact
because of one's own previous actions or words to the contrary.
ex: If an insurance company representative intentionally or
unintentionally gives the impression that a specific fact exists when
it does not and a client relies on that impression and is damaged a
result.
◉ Binder. Answer: A temporary contract of insurance, oral or
written, offered by an insurer pending issuance of the policy. Usually
written for a period of 30-60 days and remains in force for that
period or until a permanent policy is either issued or denied by the
insurer.
◉ Warranty. Answer: A provision in a policy that pledges that a
condition does exist or will exist at some time in the future.
◉ Deposit Premium. Answer: Tentative charge made at the
beginning of certain policies and reinsurance agreements to be
adjusted when the actual earned charge has been later determined.
,◉ Audit. Answer: Verification of books or accounts to determine
their accuracy.
◉ Occurrence. Answer: An accident, including continuous or
repeated exposure to the same harmful conditions, which result in
bodily injury or property damage.
◉ Special Damages. Answer: type of compensatory damages that
reimburse the injured part for direct and specific expenses involved
in the loss. Such as medical expenses, funeral expenses and loss
wages.
◉ General Damages. Answer: type of compensatory damages that
reimburse the injured party for such things as pain and suffering
and disfigurement.
◉ Punitive Damages. Answer: type of damages intended to punish
the defendant and make an example out of her to discourage others
from behaving the same way.
◉ Proximate Cause. Answer: An act, through an uniterrupted chain
of events, that can be determined to be the immediate or actual
cause of a loss.
, ◉ 4 elements of negligence. Answer: 1. The existence of a DUTY to
act in a certain way
2. A FAILURE to live up to this duty
3. An actual INJURY must occur
4. The failure in duty must be the PROXIMATE CAUSE of the injury.
◉ Negligence. Answer: An unreasonable or prudent act, A
thoughtless or careless act or one committed out of ignorance. It
may be a non-act or omission, but it is NEVER an intentional act.
◉ Casualty Insurance. Answer: Refers to coverage designed to
address the liability of individuals and organizations resulting from
negligent acts in their personal, business, or professional roles.
◉ Overinsurance. Answer: Exists if a property or an insurable
interest in property is insured by one or more insurance contracts
against the same hazard in excess of the fair value of the property or
of such interest.
◉ Specific Insurance. Answer: Coverage on ONE type of property
(real or personal) in ONE location.
◉ Blanket Insurance. Answer: A single policy written on an insured's
interest for 2 or more different types of property (dwelling/building
and contents) at the same location, or at different locations.
