PROPERTY AND CASUALTY EXAM
QUESTIONS AND ANSWERS WITH
VERIFIED SOLUTIONS 100% CORRECT
RATED A+
Q: Bailee
✔✔ A: An individual or organization who has taken into its care, custody, and/or
control the property of another for servicing, repair, or storage
Q: Hazard
✔✔ A: Something that increases the chance or likelihood of a loss occurring.
(Includes physical, moral, or morale hazards)
Q: Market Value
✔✔ A: A property policy valuation method where reimbursement is based on the
price a willing buyer would pay a willing seller, not replacement or ACV.
Q: Insurable Interest (limit of liability)
✔✔ A: The insurer is not responsible for more than the insured’s financial interest
in the property, or the policy’s limit of liability shown in the Declarations.
Q: Actual Cash Value (ACV)
✔✔ A: Pays the cost to repair or replace damaged property at the time of loss,
minus depreciation.
Q: Deductible
✔✔ A: The portion of a covered loss that the insured must pay before insurance
benefits apply.
,Q: Vacancy
✔✔ A: A property is considered vacant when it has no occupants and no personal
property inside.
Q: Right of Salvage
✔✔ A: After paying for a loss, the insurer has the right to take possession of the
damaged property. The salvage becomes the insurer’s property.
Q: Inherent Vice
✔✔ A: A built-in defect or condition within property that causes it to deteriorate or
damage itself over time. Typically excluded from coverage.
Example: Paint fading due to its own chemical composition.
Q: Aircraft Hull Insurance
✔✔ A: Covers physical loss or damage to the insured aircraft, whether on the
ground or in flight, on an open peril basis.
“In flight” is from takeoff roll to end of landing run.
Q: Motor Carrier Act of 1980
✔✔ A: Requires motor carriers to meet minimum financial responsibility standards
set by the Department of Transportation (DOT) for public liability, property
damage, and environmental restoration.
-Motor carrier must carry an insurance policy of certain minimum limits, or
-Post a surety bond representing certain financial stability criteria when
transporting passengers or cargo.
, Contribution by Equal Shares - ANSWER✔✔Under this concept, when 2 or more
insurers' policies cover at the same level (Primary or Excess), each insurer
contributes an equal amount to the loss settlement until the loss is paid, or until
each insurer has exhausted its limits of insurance, whichever comes first.
Example: If there are 3 insurers participating, each would pay 33 1/3 percent of the
loss; if 4 insurers participating, each would pay 25 percent of the loss; or if 5
insurers participating, each would pay 20 percent of the loss.
Certified Act of Terrorism - ANSWER✔✔Any act, certified jointly as terrorism by
the Secretary of Treasury, State and Attorney General which is at least one of the
following:
-Violent/dangerous to human life/property/infrastructure.
-Damaging within the U.S. or on U.S. air carrier/vessel/mission.
-Committed by persons on behalf of any foreign person/interest to coerce/influence
the U.S. civilian/government policy.
Nationwide Marine Definition - ANSWER✔✔Wet insurance and Dry insurance
are terms that the Nationwide Marine Definition uses in specifying risks that may
be written under marine insurance. The National Association of Insurance
Commissioners adopted the Nationwide Marine Definition that defines 6 broad
classes of property that may be insured under marine contract
The classes are:
1. Imports
2. Exports
QUESTIONS AND ANSWERS WITH
VERIFIED SOLUTIONS 100% CORRECT
RATED A+
Q: Bailee
✔✔ A: An individual or organization who has taken into its care, custody, and/or
control the property of another for servicing, repair, or storage
Q: Hazard
✔✔ A: Something that increases the chance or likelihood of a loss occurring.
(Includes physical, moral, or morale hazards)
Q: Market Value
✔✔ A: A property policy valuation method where reimbursement is based on the
price a willing buyer would pay a willing seller, not replacement or ACV.
Q: Insurable Interest (limit of liability)
✔✔ A: The insurer is not responsible for more than the insured’s financial interest
in the property, or the policy’s limit of liability shown in the Declarations.
Q: Actual Cash Value (ACV)
✔✔ A: Pays the cost to repair or replace damaged property at the time of loss,
minus depreciation.
Q: Deductible
✔✔ A: The portion of a covered loss that the insured must pay before insurance
benefits apply.
,Q: Vacancy
✔✔ A: A property is considered vacant when it has no occupants and no personal
property inside.
Q: Right of Salvage
✔✔ A: After paying for a loss, the insurer has the right to take possession of the
damaged property. The salvage becomes the insurer’s property.
Q: Inherent Vice
✔✔ A: A built-in defect or condition within property that causes it to deteriorate or
damage itself over time. Typically excluded from coverage.
Example: Paint fading due to its own chemical composition.
Q: Aircraft Hull Insurance
✔✔ A: Covers physical loss or damage to the insured aircraft, whether on the
ground or in flight, on an open peril basis.
“In flight” is from takeoff roll to end of landing run.
Q: Motor Carrier Act of 1980
✔✔ A: Requires motor carriers to meet minimum financial responsibility standards
set by the Department of Transportation (DOT) for public liability, property
damage, and environmental restoration.
-Motor carrier must carry an insurance policy of certain minimum limits, or
-Post a surety bond representing certain financial stability criteria when
transporting passengers or cargo.
, Contribution by Equal Shares - ANSWER✔✔Under this concept, when 2 or more
insurers' policies cover at the same level (Primary or Excess), each insurer
contributes an equal amount to the loss settlement until the loss is paid, or until
each insurer has exhausted its limits of insurance, whichever comes first.
Example: If there are 3 insurers participating, each would pay 33 1/3 percent of the
loss; if 4 insurers participating, each would pay 25 percent of the loss; or if 5
insurers participating, each would pay 20 percent of the loss.
Certified Act of Terrorism - ANSWER✔✔Any act, certified jointly as terrorism by
the Secretary of Treasury, State and Attorney General which is at least one of the
following:
-Violent/dangerous to human life/property/infrastructure.
-Damaging within the U.S. or on U.S. air carrier/vessel/mission.
-Committed by persons on behalf of any foreign person/interest to coerce/influence
the U.S. civilian/government policy.
Nationwide Marine Definition - ANSWER✔✔Wet insurance and Dry insurance
are terms that the Nationwide Marine Definition uses in specifying risks that may
be written under marine insurance. The National Association of Insurance
Commissioners adopted the Nationwide Marine Definition that defines 6 broad
classes of property that may be insured under marine contract
The classes are:
1. Imports
2. Exports
