NYS Personal Lines-Property and Casualty
Basics UPDATED ACTUAL Exam
Questions and CORRECT Answers
Insurable Interest - CORRECT ANSWER - any interest an insured may have in property
that is the subject of insurance, so that the damage or destruction of that property would cause
the insured financial loss
Underwriting - CORRECT ANSWER - the process of reviewing, accepting or rejecting
applications for insurance
Loss ratio - CORRECT ANSWER - A calculation used by insurance companies to relate
income from loss expenses: Loss Ratio=incurred losses+loss adjusted expenses/earned premium.
Class Rating - CORRECT ANSWER - the practice of computing a price per unit of
insurance that applies to all applicants possessing a given insurance
Judgement Rating - CORRECT ANSWER - an approach used when credible statistics are
lacking or when the exposure units are so varied that it is impossible to construct a class.
Experience Rating - CORRECT ANSWER - method of determining the premium based on
the insured own past loss experience
Negligence - CORRECT ANSWER - the failure to use the care that a reasonable prudent
person would use
Absolute Liability - CORRECT ANSWER - a type of liability that occurs due to extremely
dangerous operations, such as the use of explosives or working at extreme heights.
, Bodily Injury Liability - CORRECT ANSWER - Legal liability arising from death or
physical trauma to a person as a result of a negligent or purposeful act and omissions by an
insured
Property Damage Liability - CORRECT ANSWER - Legal liability arising from physical
damage to tangible property of others caused by the negligence of an insured
Named Peril - CORRECT ANSWER - the cause of loss specifically covered by the
insurance policy. No coverage is provided for unlisted perils
Open Peril (All-Risk) - CORRECT ANSWER - termed used in property insurance to
describe the breadth of coverage provided under an insurance policy form that insures against
"any risk of loss" that is not specifically excluded.
Direct Loss - CORRECT ANSWER - Physical damage to buildings and or personal
property as a result of direct consequence of a particular peril
Indirect loss - CORRECT ANSWER - Losses resulting from a peril but not directly caused
by it. Indirect losses my include rent insurance, extra expenses and other consequences that occur
over time
Actual Cash Value - CORRECT ANSWER - the required amount to pay damages for
property loss which is calculated based on the property's current replacement value minus
depreciation (RC-Depreciation)
Replacement Cost (RC) - CORRECT ANSWER - the cost to replace damaged property
with like kind and quality at current price without any deduction for depreciation
Functional Replacement Cost - CORRECT ANSWER - the cost to replace damaged
property with less expensive and more modern construction or equipment
Basics UPDATED ACTUAL Exam
Questions and CORRECT Answers
Insurable Interest - CORRECT ANSWER - any interest an insured may have in property
that is the subject of insurance, so that the damage or destruction of that property would cause
the insured financial loss
Underwriting - CORRECT ANSWER - the process of reviewing, accepting or rejecting
applications for insurance
Loss ratio - CORRECT ANSWER - A calculation used by insurance companies to relate
income from loss expenses: Loss Ratio=incurred losses+loss adjusted expenses/earned premium.
Class Rating - CORRECT ANSWER - the practice of computing a price per unit of
insurance that applies to all applicants possessing a given insurance
Judgement Rating - CORRECT ANSWER - an approach used when credible statistics are
lacking or when the exposure units are so varied that it is impossible to construct a class.
Experience Rating - CORRECT ANSWER - method of determining the premium based on
the insured own past loss experience
Negligence - CORRECT ANSWER - the failure to use the care that a reasonable prudent
person would use
Absolute Liability - CORRECT ANSWER - a type of liability that occurs due to extremely
dangerous operations, such as the use of explosives or working at extreme heights.
, Bodily Injury Liability - CORRECT ANSWER - Legal liability arising from death or
physical trauma to a person as a result of a negligent or purposeful act and omissions by an
insured
Property Damage Liability - CORRECT ANSWER - Legal liability arising from physical
damage to tangible property of others caused by the negligence of an insured
Named Peril - CORRECT ANSWER - the cause of loss specifically covered by the
insurance policy. No coverage is provided for unlisted perils
Open Peril (All-Risk) - CORRECT ANSWER - termed used in property insurance to
describe the breadth of coverage provided under an insurance policy form that insures against
"any risk of loss" that is not specifically excluded.
Direct Loss - CORRECT ANSWER - Physical damage to buildings and or personal
property as a result of direct consequence of a particular peril
Indirect loss - CORRECT ANSWER - Losses resulting from a peril but not directly caused
by it. Indirect losses my include rent insurance, extra expenses and other consequences that occur
over time
Actual Cash Value - CORRECT ANSWER - the required amount to pay damages for
property loss which is calculated based on the property's current replacement value minus
depreciation (RC-Depreciation)
Replacement Cost (RC) - CORRECT ANSWER - the cost to replace damaged property
with like kind and quality at current price without any deduction for depreciation
Functional Replacement Cost - CORRECT ANSWER - the cost to replace damaged
property with less expensive and more modern construction or equipment
