Insurance: Property & Casualty UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Accident - CORRECT ANSWER -A sudden and unexpected event which occurs at a
specific time and place.
Actual Cash Value (ACV) - CORRECT ANSWER -The cost to replace an item of
property at the time of loss, less an allowance for depreciation. Often used to determine amount
of reimbursement for a loss.
Additional Living Expense - CORRECT ANSWER -A coverage designed to reimburse the
insured for an increase in living expenses necessitated by loss to the dwelling. This indirect loss
must be the result of a direct loss by a covered peril.
Adhesion - CORRECT ANSWER -A characteristic of insurance policies that means the
contract is prepared by the insurer and is non-negotiable or "one-sided".
Admitted Company - CORRECT ANSWER -A company which meets the state insurance
department's standards and is authorized to do business in the state.
Agent - CORRECT ANSWER -The state-licensed professional who represents the
insurance company in the sale and servicing of insurance. The direct link between the insurance
company and the policyholder.
Aggregate Limit - CORRECT ANSWER -A type of policy limit found in liability policies
which limits coverage to a specified total amount for all losses occurring within the policy
period.
Aleatory - CORRECT ANSWER -A characteristic of insurance contracts, meaning a
contract in which equal value is not given by both parties to the contract.
,Alien Company - CORRECT ANSWER -An insurance company incorporated in a country
other than the United States.
Allied Lines - CORRECT ANSWER -Used to insure additional types of losses to property
and sold in conjunction with fire insurance.
All-Risk - CORRECT ANSWER -A term used to indicate that property is covered against
all perils except those specifically excluded.
Apportionment - CORRECT ANSWER -A method determining how much will be
contributed by each company toward a loss covered under more than one policy.
Appurtenant Structures - CORRECT ANSWER -A structure belonging to the insured and
associated with the insured property. (another name for "other structures")
Appraisal Clause - CORRECT ANSWER -A clause which provides a specific procedure
when the insured and the insurer are in disagreement regarding the amount of a loss.
Binder - CORRECT ANSWER -An acknowledgment (or receipt), usually from the agent,
that insurance applied for is in force regardless of any premium settlement.
Blanket Position Bond - CORRECT ANSWER -Fidelity bond which specifies a single
limit of liability applicable to each employee involved in a loss.
Bodily Injury - CORRECT ANSWER -__________ coverage pays for injuries, sickness,
disease, or required care for death that the policyholder is found legally liable for.
Boiler and Machinery Policy - CORRECT ANSWER -Insurance which covers the insured
against loss (liability and physical damage) arising out of the use of scheduled commercial
equipment.
, Broker - CORRECT ANSWER -An individual who represents the prospect, instead of the
insurance company, in the insurance transaction. Frequently involved in the placement of very
large or unusual risks.
Burglary - CORRECT ANSWER -The unlawful taking of property by forced entry into
the premises while the premises is closed for business (must be visible evidence of forced entry
or exit).
Business Interruption Insurance - CORRECT ANSWER -A Time-Element coverage
which reimburses the insured for loss of earnings due to the inability to operate caused by a
covered peril.
Casualty Insurance - CORRECT ANSWER -A broad category of coverage against loss of
property, damage, or other liabilities. Includes auto, liability, theft, elevator, glass, aviation,
boiler and machinery, worker's comp, bonds, and many other types of insurance.
Causes of Loss Form - CORRECT ANSWER -Commercial property insurance forms that
establish and define the perils for which coverage is provided and is combined with one or more
coverage forms, the commercial property conditions form, the common policy conditions form,
and the declarations to make up an ISO commercial property policy. ex: Basic, Broad, Special
Claims-Made Coverage Form - CORRECT ANSWER -Part of the Commercial General
Liability coverage part of the CPP. Provides coverage for bodily injury and property damage if a
written claim is made during the policy period, regardless of when the injury or damage actually
occurred.
Coinsurance Clause - CORRECT ANSWER -A clause that requires an insured to pay part
of a loss if the coverage provided under the policy limits is less than a specific percentage of the
value of the property at the time of loss.
Collision - CORRECT ANSWER -A type of physical damage insurance which covers loss
due to the insured object striking another object. Always written with a deductible, and includes
overturning of a vehicle.
ACTUAL Exam Questions and CORRECT
Answers
Accident - CORRECT ANSWER -A sudden and unexpected event which occurs at a
specific time and place.
Actual Cash Value (ACV) - CORRECT ANSWER -The cost to replace an item of
property at the time of loss, less an allowance for depreciation. Often used to determine amount
of reimbursement for a loss.
Additional Living Expense - CORRECT ANSWER -A coverage designed to reimburse the
insured for an increase in living expenses necessitated by loss to the dwelling. This indirect loss
must be the result of a direct loss by a covered peril.
Adhesion - CORRECT ANSWER -A characteristic of insurance policies that means the
contract is prepared by the insurer and is non-negotiable or "one-sided".
Admitted Company - CORRECT ANSWER -A company which meets the state insurance
department's standards and is authorized to do business in the state.
Agent - CORRECT ANSWER -The state-licensed professional who represents the
insurance company in the sale and servicing of insurance. The direct link between the insurance
company and the policyholder.
Aggregate Limit - CORRECT ANSWER -A type of policy limit found in liability policies
which limits coverage to a specified total amount for all losses occurring within the policy
period.
Aleatory - CORRECT ANSWER -A characteristic of insurance contracts, meaning a
contract in which equal value is not given by both parties to the contract.
,Alien Company - CORRECT ANSWER -An insurance company incorporated in a country
other than the United States.
Allied Lines - CORRECT ANSWER -Used to insure additional types of losses to property
and sold in conjunction with fire insurance.
All-Risk - CORRECT ANSWER -A term used to indicate that property is covered against
all perils except those specifically excluded.
Apportionment - CORRECT ANSWER -A method determining how much will be
contributed by each company toward a loss covered under more than one policy.
Appurtenant Structures - CORRECT ANSWER -A structure belonging to the insured and
associated with the insured property. (another name for "other structures")
Appraisal Clause - CORRECT ANSWER -A clause which provides a specific procedure
when the insured and the insurer are in disagreement regarding the amount of a loss.
Binder - CORRECT ANSWER -An acknowledgment (or receipt), usually from the agent,
that insurance applied for is in force regardless of any premium settlement.
Blanket Position Bond - CORRECT ANSWER -Fidelity bond which specifies a single
limit of liability applicable to each employee involved in a loss.
Bodily Injury - CORRECT ANSWER -__________ coverage pays for injuries, sickness,
disease, or required care for death that the policyholder is found legally liable for.
Boiler and Machinery Policy - CORRECT ANSWER -Insurance which covers the insured
against loss (liability and physical damage) arising out of the use of scheduled commercial
equipment.
, Broker - CORRECT ANSWER -An individual who represents the prospect, instead of the
insurance company, in the insurance transaction. Frequently involved in the placement of very
large or unusual risks.
Burglary - CORRECT ANSWER -The unlawful taking of property by forced entry into
the premises while the premises is closed for business (must be visible evidence of forced entry
or exit).
Business Interruption Insurance - CORRECT ANSWER -A Time-Element coverage
which reimburses the insured for loss of earnings due to the inability to operate caused by a
covered peril.
Casualty Insurance - CORRECT ANSWER -A broad category of coverage against loss of
property, damage, or other liabilities. Includes auto, liability, theft, elevator, glass, aviation,
boiler and machinery, worker's comp, bonds, and many other types of insurance.
Causes of Loss Form - CORRECT ANSWER -Commercial property insurance forms that
establish and define the perils for which coverage is provided and is combined with one or more
coverage forms, the commercial property conditions form, the common policy conditions form,
and the declarations to make up an ISO commercial property policy. ex: Basic, Broad, Special
Claims-Made Coverage Form - CORRECT ANSWER -Part of the Commercial General
Liability coverage part of the CPP. Provides coverage for bodily injury and property damage if a
written claim is made during the policy period, regardless of when the injury or damage actually
occurred.
Coinsurance Clause - CORRECT ANSWER -A clause that requires an insured to pay part
of a loss if the coverage provided under the policy limits is less than a specific percentage of the
value of the property at the time of loss.
Collision - CORRECT ANSWER -A type of physical damage insurance which covers loss
due to the insured object striking another object. Always written with a deductible, and includes
overturning of a vehicle.
