EXAM FX (PROPERTY & CASUALTY)
2025 QUESTIONS AND ANSWERS
Law of Large Numbers - ANS The larger the number of people with a similar exposure to loss,
the more predictable actual losses will be.
Insurance - ANS Transfers the risk of loss from an individual or business entity to an
insurance company
The three elements of insurable risk are - ANS 1) Financial 2) Blood (relative) 3) Business
Risk - ANS The uncertainty or chance of a loss occurring
Types of risks are - ANS 1) Pure risk 2) Speculative risk
What type of risk does insurance cover? - ANS Pure risk
What is pure risk? - ANS It can only result in a loss or no change
What type of risk is not insurable? - ANS speculative risk
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, What is speculative risk? - ANS Opportunity for loss or gain. For example, gambling.
What is a peril? - ANS a specific cause of loss
What is a hazard? - ANS conditions or situations that increase the probability of a loss
occurring
What is a loss? - ANS reduction, decrease or disappearance of value of the person or
property insured.
What is indemnity? - ANS provision in an insurance policy that states that in the event of
loss, an insured can only collect to the extent of the financial loss. The insured is not allowed to
gain financially.
Subrogation - ANS insurer's legal right to seek damages from third parties after it has
reimbursed the insured.
Accident - ANS The sudden, unplanned and unexpected event not under the control of the
insured. Neither expected or intended.
Occurrence - ANS losses caused by continuous or repeated exposure to conditions neither
intended or expected.
Direct loss - ANS direct, physical damage to buildings and/or personal property
Indirect Loss (consequential) - ANS results of a direct loss
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, What is the most prevalent indirect loss for homeowners? - ANS Extra living expense that
may be incurred by the insured while the home is being repaired.
What is the primary type of indirect loss for commercial property? - ANS The loss of profits a
business may suffer from closing business while repaired.
General damages - ANS compensates an injured person for pain & suffering, mental anguish
and disfigurement
Open Peril - ANS ANY risk of loss not specifically excluded
Named Peril - ANS Specific covered perils. There is no coverage for unlisted perils
Special damages - ANS specific out-of-pocket expenses for medical, miscellaneous and loss of
wages
Property damage loss - ANS value of property and loss of use
Punitive damages - ANS form of punishment for extreme, outrageous behavior, gross
negligence or willful intent
Negligence - ANS failure to use the care that a reasonable, prudent person would have taken
under similar circumstances
Burglary - ANS forced entry into or out of the premises of another with felonious intent.
*Must have visible signs of forced entry or exit*
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2025 QUESTIONS AND ANSWERS
Law of Large Numbers - ANS The larger the number of people with a similar exposure to loss,
the more predictable actual losses will be.
Insurance - ANS Transfers the risk of loss from an individual or business entity to an
insurance company
The three elements of insurable risk are - ANS 1) Financial 2) Blood (relative) 3) Business
Risk - ANS The uncertainty or chance of a loss occurring
Types of risks are - ANS 1) Pure risk 2) Speculative risk
What type of risk does insurance cover? - ANS Pure risk
What is pure risk? - ANS It can only result in a loss or no change
What type of risk is not insurable? - ANS speculative risk
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@COPYRIGHT SIRJOEL 2025/2026
, What is speculative risk? - ANS Opportunity for loss or gain. For example, gambling.
What is a peril? - ANS a specific cause of loss
What is a hazard? - ANS conditions or situations that increase the probability of a loss
occurring
What is a loss? - ANS reduction, decrease or disappearance of value of the person or
property insured.
What is indemnity? - ANS provision in an insurance policy that states that in the event of
loss, an insured can only collect to the extent of the financial loss. The insured is not allowed to
gain financially.
Subrogation - ANS insurer's legal right to seek damages from third parties after it has
reimbursed the insured.
Accident - ANS The sudden, unplanned and unexpected event not under the control of the
insured. Neither expected or intended.
Occurrence - ANS losses caused by continuous or repeated exposure to conditions neither
intended or expected.
Direct loss - ANS direct, physical damage to buildings and/or personal property
Indirect Loss (consequential) - ANS results of a direct loss
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Page
@COPYRIGHT SIRJOEL 2025/2026
, What is the most prevalent indirect loss for homeowners? - ANS Extra living expense that
may be incurred by the insured while the home is being repaired.
What is the primary type of indirect loss for commercial property? - ANS The loss of profits a
business may suffer from closing business while repaired.
General damages - ANS compensates an injured person for pain & suffering, mental anguish
and disfigurement
Open Peril - ANS ANY risk of loss not specifically excluded
Named Peril - ANS Specific covered perils. There is no coverage for unlisted perils
Special damages - ANS specific out-of-pocket expenses for medical, miscellaneous and loss of
wages
Property damage loss - ANS value of property and loss of use
Punitive damages - ANS form of punishment for extreme, outrageous behavior, gross
negligence or willful intent
Negligence - ANS failure to use the care that a reasonable, prudent person would have taken
under similar circumstances
Burglary - ANS forced entry into or out of the premises of another with felonious intent.
*Must have visible signs of forced entry or exit*
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Page
@COPYRIGHT SIRJOEL 2025/2026
