Property and Casualty Insurance EXAM
Property and Casualty Insurance Licensing
Exam (301 Questions and Answers) Latest
Update 2024 GRADED A+
Specific insurance - CORRECT ANSWERS This type of insurance designates a particular item
to be insured
Blanket insurance - CORRECT ANSWERS This type of insurance covers more than one item
of property at a single location or one more items of property at multiple locations.
Speculative - CORRECT ANSWERS possibility of both gain and loss. Not insurable.
Pure - CORRECT ANSWERS only the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk? - CORRECT ANSWERS avoid, control,
retain, and transfer risk.
Hazard - CORRECT ANSWERS A condition or situation which increases the chance for loss
Physical Hazards - CORRECT ANSWERS a hazard that arises from the condition, occupancy,
or use of the property itself.
ex: skateboard left on the steps
Moral Hazards - CORRECT ANSWERS when an individual through carelessness or by
irresponsible actions can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
Morale Hazards - CORRECT ANSWERS when a person might create a loss situation on
purpose just to collect from the insurance company.
,ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance payout to
buy a new vehicle.
Replacement Cost - CORRECT ANSWERS The amount of money it would take to replace a
damaged or destroyed item with one of like kind and quality AT THE TIME OF LOSS. No
deduction for depreciation.
Actual Cash Value (ACV) - CORRECT ANSWERS Replacement Cost, minus depreciation.
Pair and Set Clause - CORRECT ANSWERS Loss to one item of a pair or set does not
constitute loss to the entire pair or set.
Appraisal - CORRECT ANSWERS A method of resolving disputes between insurers and
insureds over the amount owed on a covered loss.
-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
Subrogation - CORRECT ANSWERS An insurer's right to recover the amount of its loss
payment from the third party who is legally responsible for the loss.
Arbitration - CORRECT ANSWERS this condition is similar to the Appraisal Condition but it is
not limited to disputes over the value of the loss. It may also be used to resolve other areas of
disagreement between the insured and the insurance company.
What does WC SHAVVER stand for? - CORRECT ANSWERS Windstorm, Civil commotion,
Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
What does BIG AFFECT stand for? - CORRECT ANSWERS Burglar damage, Ice & snow
weight, Glass breakage, Accidental discharge, Falling objects, Freezing of pipes, Electrical
damage, Collapse, Tearing apart.
,Insolvency - CORRECT ANSWERS A financial state that occurs if liabilities are greater than
assets.
Law of Agency - CORRECT ANSWERS Knowledge of the Agents is Knowledge of the Principal
(Insurance Company)
Principal - CORRECT ANSWERS Insurance Company
What is the ISO? - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS A provision in a policy that pledges that a condition does
exist or will exist at some time in the future.
Deposit Premium - CORRECT ANSWERS 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 - CORRECT ANSWERS Verification of books or accounts to determine their accuracy.
Occurrence - CORRECT ANSWERS An accident, including continuous or repeated exposure
to the same harmful conditions, which result in bodily injury or property damage.
Special Damages - CORRECT ANSWERS 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 - CORRECT ANSWERS type of compensatory damages that reimburse the
injured party for such things as pain and suffering and disfigurement.
Punitive Damages - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS Refers to coverage designed to address the
liability of individuals and organizations resulting from negligent acts in their personal, business,
or professional roles.
Property and Casualty Insurance Licensing
Exam (301 Questions and Answers) Latest
Update 2024 GRADED A+
Specific insurance - CORRECT ANSWERS This type of insurance designates a particular item
to be insured
Blanket insurance - CORRECT ANSWERS This type of insurance covers more than one item
of property at a single location or one more items of property at multiple locations.
Speculative - CORRECT ANSWERS possibility of both gain and loss. Not insurable.
Pure - CORRECT ANSWERS only the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk? - CORRECT ANSWERS avoid, control,
retain, and transfer risk.
Hazard - CORRECT ANSWERS A condition or situation which increases the chance for loss
Physical Hazards - CORRECT ANSWERS a hazard that arises from the condition, occupancy,
or use of the property itself.
ex: skateboard left on the steps
Moral Hazards - CORRECT ANSWERS when an individual through carelessness or by
irresponsible actions can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
Morale Hazards - CORRECT ANSWERS when a person might create a loss situation on
purpose just to collect from the insurance company.
,ex: Prearranged, faked theft of someone's old vehicle so they can get an insurance payout to
buy a new vehicle.
Replacement Cost - CORRECT ANSWERS The amount of money it would take to replace a
damaged or destroyed item with one of like kind and quality AT THE TIME OF LOSS. No
deduction for depreciation.
Actual Cash Value (ACV) - CORRECT ANSWERS Replacement Cost, minus depreciation.
Pair and Set Clause - CORRECT ANSWERS Loss to one item of a pair or set does not
constitute loss to the entire pair or set.
Appraisal - CORRECT ANSWERS A method of resolving disputes between insurers and
insureds over the amount owed on a covered loss.
-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
Subrogation - CORRECT ANSWERS An insurer's right to recover the amount of its loss
payment from the third party who is legally responsible for the loss.
Arbitration - CORRECT ANSWERS this condition is similar to the Appraisal Condition but it is
not limited to disputes over the value of the loss. It may also be used to resolve other areas of
disagreement between the insured and the insurance company.
What does WC SHAVVER stand for? - CORRECT ANSWERS Windstorm, Civil commotion,
Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
What does BIG AFFECT stand for? - CORRECT ANSWERS Burglar damage, Ice & snow
weight, Glass breakage, Accidental discharge, Falling objects, Freezing of pipes, Electrical
damage, Collapse, Tearing apart.
,Insolvency - CORRECT ANSWERS A financial state that occurs if liabilities are greater than
assets.
Law of Agency - CORRECT ANSWERS Knowledge of the Agents is Knowledge of the Principal
(Insurance Company)
Principal - CORRECT ANSWERS Insurance Company
What is the ISO? - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS A provision in a policy that pledges that a condition does
exist or will exist at some time in the future.
Deposit Premium - CORRECT ANSWERS 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 - CORRECT ANSWERS Verification of books or accounts to determine their accuracy.
Occurrence - CORRECT ANSWERS An accident, including continuous or repeated exposure
to the same harmful conditions, which result in bodily injury or property damage.
Special Damages - CORRECT ANSWERS 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 - CORRECT ANSWERS type of compensatory damages that reimburse the
injured party for such things as pain and suffering and disfigurement.
Punitive Damages - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS Refers to coverage designed to address the
liability of individuals and organizations resulting from negligent acts in their personal, business,
or professional roles.
