Property and Casualty Insurance
Exam Kentucky 2025 - 2026
Risk - -Chance or uncertainty of loss
- Manage the Risk - -Share
Transfer
Avoid
Reduce
Retain
- Risk Reduction - -lowers the chance of loss by taking measures to lessen
the frequency or severity of losses that may occur.
Reduce is always better than control
- Law of Large numbers - -the larger the number of individuals that are
randomly drawn from a population, the more representative the resulting
group will be of the entire population
- Pure Risk - -involves only the chance of loss and is insurable
Speculative Risk is NOT insurable
- Insurable Risk - -Must have financial interest in the property. Must exist at
the time of loss to collect.
- Inherent Vice - -A quality of or condition within a particular type of
property that tends to make the property destroy itself. (suitcase)
Uninsurable.
- Unexpected RIsk - -Accidental
- Elements of Insurable Risk - -- Definite
- Unexpected
- Risk must create financial hardship
- Loss must be calculable
- Cost must be affordable
- Must be large number of persons with similar potential loss, so it is
predictable
- must not happen to large number of insured at the same time(spread of
risk)
- Peril - -What we insure against, cause of loss
, - Hazard - -INCREASES the chance of loss
- Physical Hazard - -a physical condition that increases the chance of loss
(deals with altitude), tree branch, bridge, slippery leaves
- Morale Hazard - -irresponsible/careless actions can cause loss
- Moral Hazard - -Take a loss just to collect from insurance company - lying
on purpose on an application, allowing something to burn to get a payout
- Contract - -Oral contract are binders, policies are in writing
Must include:
- competent parties
- legal purpose
- offer and acceptance
- consideration
- Elements of Valid Contract - -Those who are legally capable of entering
into contracts.
C - competent parties
L - legal purpose
O - offer and acceptance (agreement)
C - consideration
- Characteristics of Insurance Contract PG16 - -Indemnity
Personal contract
Aleatory
Adhesion
Unilateral
Contract of Utmost Good Faith
Conditional
PG 16
- Parts of the Contract - -D - declarations
I - insuring agreements
C - conclusions
E - exclusions
D - definitions
- Policy Jacket/Skeleton Policy - -Contains general conditions and the
Declarations
- Endorsement - -attached to the policy to modify
Exam Kentucky 2025 - 2026
Risk - -Chance or uncertainty of loss
- Manage the Risk - -Share
Transfer
Avoid
Reduce
Retain
- Risk Reduction - -lowers the chance of loss by taking measures to lessen
the frequency or severity of losses that may occur.
Reduce is always better than control
- Law of Large numbers - -the larger the number of individuals that are
randomly drawn from a population, the more representative the resulting
group will be of the entire population
- Pure Risk - -involves only the chance of loss and is insurable
Speculative Risk is NOT insurable
- Insurable Risk - -Must have financial interest in the property. Must exist at
the time of loss to collect.
- Inherent Vice - -A quality of or condition within a particular type of
property that tends to make the property destroy itself. (suitcase)
Uninsurable.
- Unexpected RIsk - -Accidental
- Elements of Insurable Risk - -- Definite
- Unexpected
- Risk must create financial hardship
- Loss must be calculable
- Cost must be affordable
- Must be large number of persons with similar potential loss, so it is
predictable
- must not happen to large number of insured at the same time(spread of
risk)
- Peril - -What we insure against, cause of loss
, - Hazard - -INCREASES the chance of loss
- Physical Hazard - -a physical condition that increases the chance of loss
(deals with altitude), tree branch, bridge, slippery leaves
- Morale Hazard - -irresponsible/careless actions can cause loss
- Moral Hazard - -Take a loss just to collect from insurance company - lying
on purpose on an application, allowing something to burn to get a payout
- Contract - -Oral contract are binders, policies are in writing
Must include:
- competent parties
- legal purpose
- offer and acceptance
- consideration
- Elements of Valid Contract - -Those who are legally capable of entering
into contracts.
C - competent parties
L - legal purpose
O - offer and acceptance (agreement)
C - consideration
- Characteristics of Insurance Contract PG16 - -Indemnity
Personal contract
Aleatory
Adhesion
Unilateral
Contract of Utmost Good Faith
Conditional
PG 16
- Parts of the Contract - -D - declarations
I - insuring agreements
C - conclusions
E - exclusions
D - definitions
- Policy Jacket/Skeleton Policy - -Contains general conditions and the
Declarations
- Endorsement - -attached to the policy to modify
