Kentucky Property and Casualty Insurance
Licensing Exam |193 Questions with Solutions
Risk - -Chance or uncertainty of loss
- Managing Risk - -STARR: Share, Transfer, Avoid, Reduce, Retain
- Purpose of Insurance - -Transfer risk and responsibility in exchange for
payment of a premium
- Law of Large Numbers - -The more examples used to develop any statistic,
the more reliable that statistic will be.
- Elements of Insurability - -Insurable interest, definite risk of loss,
accidental risk, calculable loss, affordable cost to the insured, predictable
losses due to large number of persons with similar potential loss available,
loss must be spread
- Parts of a Policy - -Declarations, Insuring Agreements, Conditions,
Exclusions, Definitions
- Declarations - -Contain name, address, amount of coverage provided,
property description, cost of policy
- Insuring Agreements - -Contains losses for which the insured will be
indemnified, type of property covered, perils against which the property is
insured
- Conditions - -"Ground rules" for the policy, responsibilities and obligations
of both the insurance company and the insured
- Exclusions - -Describes the losses for which the insured is not covered.
- Definitions - -Clarifies the meanings of terms in the policy.
- Policy Jacket/Skeleton Policy - -Contains general conditions and the
Declarations
- Reciprocal Company - -Members insure each other and share the losses
with each other, managed by an attorney-in-fact
- Lloyds Association - -Made up of syndicates who voluntarily agree to share
in insurance contracts
, - Risk Retention Groups - -Protects against product liability exposures (ex.
multimillion dollar lawsuits)
- Self-Insurance - -Part or all of the risk of loss is borne without the benefit
of insurance coverage to fall back on if a loss occurs
- Residual Market Insurance - -Government provides insurance that is not
readily available from private insurers. Federal: Flood, War Risk, Nuclear
Energy Liability, Federal Crop
State: Workers compensation, unemployment
- Mono-Line Company - -Writes only one kind of insurance
- Multi-Line Company - -An insurance company that writes more than one
line of insurance
- Property Insurance - -Covers risks that we will suffer financial loss over
because something we own is damaged or destroyed, first-party coverage
- Casualty Insurance - -Covers risk that we will suffer financial loss as a
result of our actions towards others
- Personal Lines - -property-casualty coverages that protect an individual or
family
- Commercial Lines - -Coverages designed for businesses
- Countersigning - -The agent signs each new policy prepared by the
company before delivering it to the insured
- Field Underwriting - -using preestablished criteria to seek out the type of
business that is likely to be acceptable to the company
- Quotation - -Shows the prospect what the premium for the proposed
coverage will be
- Suspense/Diary System - -Alerts the agent prior to the time of the policy
renewal
- Service Needs - -Name change, change in the method of premium
payment, maintenance of accurate records
- Errors and Omissions Insurance - -Purchased by gets to protect
themselves against legal liability from inadvertent errors or omissions
Licensing Exam |193 Questions with Solutions
Risk - -Chance or uncertainty of loss
- Managing Risk - -STARR: Share, Transfer, Avoid, Reduce, Retain
- Purpose of Insurance - -Transfer risk and responsibility in exchange for
payment of a premium
- Law of Large Numbers - -The more examples used to develop any statistic,
the more reliable that statistic will be.
- Elements of Insurability - -Insurable interest, definite risk of loss,
accidental risk, calculable loss, affordable cost to the insured, predictable
losses due to large number of persons with similar potential loss available,
loss must be spread
- Parts of a Policy - -Declarations, Insuring Agreements, Conditions,
Exclusions, Definitions
- Declarations - -Contain name, address, amount of coverage provided,
property description, cost of policy
- Insuring Agreements - -Contains losses for which the insured will be
indemnified, type of property covered, perils against which the property is
insured
- Conditions - -"Ground rules" for the policy, responsibilities and obligations
of both the insurance company and the insured
- Exclusions - -Describes the losses for which the insured is not covered.
- Definitions - -Clarifies the meanings of terms in the policy.
- Policy Jacket/Skeleton Policy - -Contains general conditions and the
Declarations
- Reciprocal Company - -Members insure each other and share the losses
with each other, managed by an attorney-in-fact
- Lloyds Association - -Made up of syndicates who voluntarily agree to share
in insurance contracts
, - Risk Retention Groups - -Protects against product liability exposures (ex.
multimillion dollar lawsuits)
- Self-Insurance - -Part or all of the risk of loss is borne without the benefit
of insurance coverage to fall back on if a loss occurs
- Residual Market Insurance - -Government provides insurance that is not
readily available from private insurers. Federal: Flood, War Risk, Nuclear
Energy Liability, Federal Crop
State: Workers compensation, unemployment
- Mono-Line Company - -Writes only one kind of insurance
- Multi-Line Company - -An insurance company that writes more than one
line of insurance
- Property Insurance - -Covers risks that we will suffer financial loss over
because something we own is damaged or destroyed, first-party coverage
- Casualty Insurance - -Covers risk that we will suffer financial loss as a
result of our actions towards others
- Personal Lines - -property-casualty coverages that protect an individual or
family
- Commercial Lines - -Coverages designed for businesses
- Countersigning - -The agent signs each new policy prepared by the
company before delivering it to the insured
- Field Underwriting - -using preestablished criteria to seek out the type of
business that is likely to be acceptable to the company
- Quotation - -Shows the prospect what the premium for the proposed
coverage will be
- Suspense/Diary System - -Alerts the agent prior to the time of the policy
renewal
- Service Needs - -Name change, change in the method of premium
payment, maintenance of accurate records
- Errors and Omissions Insurance - -Purchased by gets to protect
themselves against legal liability from inadvertent errors or omissions
