PA Appraiser Exam Questions
and Complete Solutions
Graded A+
Principle of Indemnity - Answer: restoration to approximate previous financial condition; no more, no
less
Insurable Interest - Answer: direct financial interest in protecting something or someone
Lender Interest - Answer: protects a lender who loans money to a buyer
Risk - Answer: potential for financial loss or an insured item
Exposure - Answer: is openness to loss or damage
hazard - Answer: thing that increases the possibility to loss
moral hazard - Answer: results from policyholder's conscious decision
physical hazard - Answer: conditions that increase the chance of loss
Peril - Answer: the actual cause of loss or damage
Loss - Answer: financial loss due to an occurrence or accident
Proximate cause - Answer: the primary event or series of events that directly leads to an insured loss
Direct loss - Answer: physical harm to tangible property caused by a peril. Ex: Tree falls on car
,Indirect loss - Answer: added expenses or lost income because of physical damages. Ex: rental car
Occurrence - Answer: an event, incident, or condition that causes damage
ACV (Actual Cash Value) - Answer: Replacement cost - depreciation
replacement cost - Answer: method of valuation based on cost of replacing an item at current market
prices, regardless of depreciation
Functional replacement cost - Answer: pays to replace an outdated, obsolete item with a functionally
equivalent item
Stated amount - Answer: property value is stated by the insured when applying for insurance
insurance policy - Answer: the legal contract b/w the insurer and the insured
cancellation and nonrenewal - Answer: insured may cancel at any time, but the insurer is much more
restricted
declarations page - Answer: names of both parties
policy #
location and description of insured item
deductible
premium
first named insured - Answer: the 1st person or organization listed on the dec page
additional insured - Answer: person or org. that is added to the policy at the request of the first named
insured and benefits from policy, but is not allowed to make changed
, Loss Payable Clause - Answer: lender listed as loss payee if a loss occurs
policy limits - Answer: establish the max payout value of an insurance policy
salvage - Answer: the portion or value of property that remains after a loss
abandonment clause - Answer: insured is prohibited from forcing the insurer to take possession of
damaged property for the purpose of repair or disposal
subrogation - Answer: transfer of rights that allows the insurer to recover its losses after it has
indemnified a policyholder
full release settlement - Answer: all damaged paid at once
no release settlement - Answer: signing and cashing a check substitutes for the release form
appraiser - Answer: writes damage estimates for insurance claims
adjuster - Answer: investigates claims and prepares claimant statements
duties of the insured after a loss - Answer: -report all accidents
-cooperate with insurer's investigation, settlement, and any court proceedings
-promptly send the insurer copies of all pertinent legal papers
-submit to a physical examination if insurer requests
-submit to examination under oath and verify that your statements are true and accurate
-authorize the insurer to obtain medical reports
-provide proof of loss if insurer requests
and Complete Solutions
Graded A+
Principle of Indemnity - Answer: restoration to approximate previous financial condition; no more, no
less
Insurable Interest - Answer: direct financial interest in protecting something or someone
Lender Interest - Answer: protects a lender who loans money to a buyer
Risk - Answer: potential for financial loss or an insured item
Exposure - Answer: is openness to loss or damage
hazard - Answer: thing that increases the possibility to loss
moral hazard - Answer: results from policyholder's conscious decision
physical hazard - Answer: conditions that increase the chance of loss
Peril - Answer: the actual cause of loss or damage
Loss - Answer: financial loss due to an occurrence or accident
Proximate cause - Answer: the primary event or series of events that directly leads to an insured loss
Direct loss - Answer: physical harm to tangible property caused by a peril. Ex: Tree falls on car
,Indirect loss - Answer: added expenses or lost income because of physical damages. Ex: rental car
Occurrence - Answer: an event, incident, or condition that causes damage
ACV (Actual Cash Value) - Answer: Replacement cost - depreciation
replacement cost - Answer: method of valuation based on cost of replacing an item at current market
prices, regardless of depreciation
Functional replacement cost - Answer: pays to replace an outdated, obsolete item with a functionally
equivalent item
Stated amount - Answer: property value is stated by the insured when applying for insurance
insurance policy - Answer: the legal contract b/w the insurer and the insured
cancellation and nonrenewal - Answer: insured may cancel at any time, but the insurer is much more
restricted
declarations page - Answer: names of both parties
policy #
location and description of insured item
deductible
premium
first named insured - Answer: the 1st person or organization listed on the dec page
additional insured - Answer: person or org. that is added to the policy at the request of the first named
insured and benefits from policy, but is not allowed to make changed
, Loss Payable Clause - Answer: lender listed as loss payee if a loss occurs
policy limits - Answer: establish the max payout value of an insurance policy
salvage - Answer: the portion or value of property that remains after a loss
abandonment clause - Answer: insured is prohibited from forcing the insurer to take possession of
damaged property for the purpose of repair or disposal
subrogation - Answer: transfer of rights that allows the insurer to recover its losses after it has
indemnified a policyholder
full release settlement - Answer: all damaged paid at once
no release settlement - Answer: signing and cashing a check substitutes for the release form
appraiser - Answer: writes damage estimates for insurance claims
adjuster - Answer: investigates claims and prepares claimant statements
duties of the insured after a loss - Answer: -report all accidents
-cooperate with insurer's investigation, settlement, and any court proceedings
-promptly send the insurer copies of all pertinent legal papers
-submit to a physical examination if insurer requests
-submit to examination under oath and verify that your statements are true and accurate
-authorize the insurer to obtain medical reports
-provide proof of loss if insurer requests
