Property and Casualty Insurance EXAM |
COMPLETE QUESTIONS AND ANSWERS |
2025/26 LATEST UPDATED | ALREADY
GRADED A+
Specific insurance - Correct answerThis type of insurance designates a particular
item to be insured
Blanket insurance - Correct answerThis 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 answerpossibility of both gain and loss. Not insurable.
Pure - Correct answeronly the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk? - Correct answeravoid,
control, retain, and transfer risk.
Hazard - Correct answerA condition or situation which increases the chance for loss
Physical Hazards - Correct answera hazard that arises from the condition,
occupancy, or use of the property itself.
ex: skateboard left on the steps
Moral Hazards - Correct answerwhen 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 answerwhen 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 answerThe 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 answerReplacement Cost, minus depreciation.
,Pair and Set Clause - Correct answerLoss to one item of a pair or set does not
constitute loss to the entire pair or set.
Appraisal - Correct answerA 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 answerAn insurer's right to recover the amount of its loss
payment from the third party who is legally responsible for the loss.
Arbitration - Correct answerthis 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 answerWindstorm, Civil commotion,
Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
What does BIG AFFECT stand for? - Correct answerBurglar damage, Ice & snow
weight, Glass breakage, Accidental discharge, Falling objects, Freezing of pipes,
Electrical damage, Collapse, Tearing apart.
Insolvency - Correct answerA financial state that occurs if liabilities are greater than
assets.
Law of Agency - Correct answerKnowledge of the Agents is Knowledge of the
Principal (Insurance Company)
Principal - Correct answerInsurance Company
What is the ISO? - Correct answerInsurance 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 answerRequires 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 answerA 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 answerA 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 answerA provision in a policy that pledges that a condition does
exist or will exist at some time in the future.
Deposit Premium - Correct answerTentative 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 answerVerification of books or accounts to determine their accuracy.
Occurrence - Correct answerAn accident, including continuous or repeated
exposure to the same harmful conditions, which result in bodily injury or property
damage.
Special Damages - Correct answertype 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 answertype of compensatory damages that reimburse
the injured party for such things as pain and suffering and disfigurement.
Punitive Damages - Correct answertype 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 answerAn 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 answer1. 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.
COMPLETE QUESTIONS AND ANSWERS |
2025/26 LATEST UPDATED | ALREADY
GRADED A+
Specific insurance - Correct answerThis type of insurance designates a particular
item to be insured
Blanket insurance - Correct answerThis 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 answerpossibility of both gain and loss. Not insurable.
Pure - Correct answeronly the possibility of loss. Insurable.
What are the 5 methods of managing or handling risk? - Correct answeravoid,
control, retain, and transfer risk.
Hazard - Correct answerA condition or situation which increases the chance for loss
Physical Hazards - Correct answera hazard that arises from the condition,
occupancy, or use of the property itself.
ex: skateboard left on the steps
Moral Hazards - Correct answerwhen 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 answerwhen 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 answerThe 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 answerReplacement Cost, minus depreciation.
,Pair and Set Clause - Correct answerLoss to one item of a pair or set does not
constitute loss to the entire pair or set.
Appraisal - Correct answerA 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 answerAn insurer's right to recover the amount of its loss
payment from the third party who is legally responsible for the loss.
Arbitration - Correct answerthis 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 answerWindstorm, Civil commotion,
Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, Riot
What does BIG AFFECT stand for? - Correct answerBurglar damage, Ice & snow
weight, Glass breakage, Accidental discharge, Falling objects, Freezing of pipes,
Electrical damage, Collapse, Tearing apart.
Insolvency - Correct answerA financial state that occurs if liabilities are greater than
assets.
Law of Agency - Correct answerKnowledge of the Agents is Knowledge of the
Principal (Insurance Company)
Principal - Correct answerInsurance Company
What is the ISO? - Correct answerInsurance 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 answerRequires 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 answerA 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 answerA 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 answerA provision in a policy that pledges that a condition does
exist or will exist at some time in the future.
Deposit Premium - Correct answerTentative 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 answerVerification of books or accounts to determine their accuracy.
Occurrence - Correct answerAn accident, including continuous or repeated
exposure to the same harmful conditions, which result in bodily injury or property
damage.
Special Damages - Correct answertype 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 answertype of compensatory damages that reimburse
the injured party for such things as pain and suffering and disfigurement.
Punitive Damages - Correct answertype 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 answerAn 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 answer1. 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.
