Property and Casualty Insurance Test Question Notes with 100% Correct Answers

Property and Casualty Insurance Test Question Notes with 100% Correct Answers What is a peril? - Correct Answer ️️ -A Peril is a cause of loss What is a hazard? - Correct Answer ️️ -Something that increases the chance of a loss What is the difference between a Moral hazard and a Morale Hazard? - Correct Answer ️️ -Moral Hazard - dishonesty, against the law Morale Hazard - carelessness What is the method of handling risk that involves a deductible? - Correct Answer ️️ - Retention (loss or portion of loss) If a fire causes damage to a building, what is the fire considered? - Correct Answer ️️ - A Peril What are the elements of an insurable risk? - Correct Answer ️️ -CANHAM Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable If an insurance company is housed in Tennessee, what type of insurer are they considered? - Correct Answer ️️ -Domestic An insurance company incorporated in Wisconsin and conducting business in Minnesota is know as what type of insurer? - Correct Answer ️️ -Foreign What is it meant by "Express Authority"? - Correct Answer ️️ -Authorities are written in agent contract What is a term that is typically used to describe an Insurance Agent? - Correct Answer ️️ -Fiduciary - a person in a position of financial trust What is a contract or device for transferring risk from a persons, business, or organization to an insurance company? - Correct Answer ️️ -Insurance What is Reinsurance? - Correct Answer ️️ -When insurance companies purchase insurance to cover their own exposures to loss What is a fiduciary? - Correct Answer ️️ -A person in a position of financial trust What is it meant by a contract of adhesion? - Correct Answer ️️ -Policy written by the insurer with the insured having no input What part of the insurance policy shows the premium payment? - Correct Answer ️️ - Declarations page What are the duties of the insured after a loss? - Correct Answer ️️ -Notice to insurer, protect property from further damage, Proof of loss, property available for inspection, examination under oath if needed, cooperate with insurer What is the FCRA? - Correct Answer ️️ -Fair Credit Reporting Act - If the insurer uses credit, must inform insured What are the parts to an insurance contract? - Correct Answer ️️ -Declarations, Conditions, Insuring Agreements, and Exclusions When an insured decides to cancel an insurance policy before the expiration date, how is the unearned premium returned? - Correct Answer ️️ -Short-Rate basis What are the three basic perils? - Correct Answer ️️ -Fire, Lightning, and Internal Explosion What are the extended coverage perils? - Correct Answer ️️ -WCSHAVVER and V&MM -Wind, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot, Vandalism and malicious mischef What is the difference between a direct loss and an indirect loss? - Correct Answer ️️ - Direct - immediate damage caused by peril Indirect - loss over time as a result of the direct loss How is ACV calculated? - Correct Answer ️️ -Replacement Cost - depreciation = What is the coinsurance clause and what is the percentage required by the insurer? - Correct Answer ️️ -Requires the insured to carry the standard coinsurance amount of the insurance policy; 80% What is the method called when the insured and insuran