PROPERTY AND CASUALTY INSURANCE TEST
QUESTION & ANSWERS
What is a peril? - Answer -A Peril is a cause of loss
What is a hazard? - Answer -Something that increases the chance of a loss
What is the difference between a Moral hazard and a Morale Hazard? - Answer -Moral
Hazard - dishonesty, against the law
Morale Hazard - carelessness
What is the method of handling risk that involves a deductible? - Answer -Retention
(loss or portion of loss)
If a fire causes damage to a building, what is the fire considered? - Answer -A Peril
What are the elements of an insurable risk? - Answer -CANHAM
Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable
If an insurance company is housed in Tennessee, what type of insurer are they
considered? - Answer -Domestic
An insurance company incorporated in Wisconsin and conducting business in
Minnesota is know as what type of insurer? - Answer -Foreign
What is it meant by "Express Authority"? - Answer -Authorities are written in agent
contract
What is a term that is typically used to describe an Insurance Agent? - Answer -
Fiduciary - a person in a position of financial trust
What is a contract or device for transferring risk from a persons, business, or
organization to an insurance company? - Answer -Insurance
What is Reinsurance? - Answer -When insurance companies purchase insurance to
cover their own exposures to loss
What is a fiduciary? - Answer -A person in a position of financial trust
What is it meant by a contract of adhesion? - Answer -Policy written by the insurer with
the insured having no input
, What part of the insurance policy shows the premium payment? - Answer -Declarations
page
What are the duties of the insured after a loss? - Answer -Notice to insurer, protect
property from further damage, Proof of loss, property available for inspection,
examination under oath if needed, cooperate with insurer
What is the FCRA? - Answer -Fair Credit Reporting Act - If the insurer uses credit, must
inform insured
What are the parts to an insurance contract? - Answer -Declarations, Conditions,
Insuring Agreements, and Exclusions
When an insured decides to cancel an insurance policy before the expiration date, how
is the unearned premium returned? - Answer -Short-Rate basis
What are the three basic perils? - Answer -Fire, Lightning, and Internal Explosion
What are the extended coverage perils? - Answer -WCSHAVVER and V&MM -Wind,
Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot,
Vandalism and malicious mischef
What is the difference between a direct loss and an indirect loss? - Answer -Direct -
immediate damage caused by peril
Indirect - loss over time as a result of the direct loss
How is ACV calculated? - Answer -Replacement Cost - depreciation =
What is the coinsurance clause and what is the percentage required by the insurer? -
Answer -Requires the insured to carry the standard coinsurance amount of the
insurance policy; 80%
What is the method called when the insured and insurance company cannot agree on a
settlement? - Answer -Appraisal method
What is a bailee? - Answer -A person or organization that has temporary possession of
someone else's personal property
What is a tort? - Answer -A civil wrong that causes someone else to suffer a loss
What is Vicarious Liability? - Answer -Liability for the actions of another
What are the five property coverages and associated lettering? - Answer -A - Dwelling
B - Other structured (detached, appurtenant)
C - Insured's personal property (off-premises covered up to 10% of C)
D - Fair Rental Value
QUESTION & ANSWERS
What is a peril? - Answer -A Peril is a cause of loss
What is a hazard? - Answer -Something that increases the chance of a loss
What is the difference between a Moral hazard and a Morale Hazard? - Answer -Moral
Hazard - dishonesty, against the law
Morale Hazard - carelessness
What is the method of handling risk that involves a deductible? - Answer -Retention
(loss or portion of loss)
If a fire causes damage to a building, what is the fire considered? - Answer -A Peril
What are the elements of an insurable risk? - Answer -CANHAM
Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable
If an insurance company is housed in Tennessee, what type of insurer are they
considered? - Answer -Domestic
An insurance company incorporated in Wisconsin and conducting business in
Minnesota is know as what type of insurer? - Answer -Foreign
What is it meant by "Express Authority"? - Answer -Authorities are written in agent
contract
What is a term that is typically used to describe an Insurance Agent? - Answer -
Fiduciary - a person in a position of financial trust
What is a contract or device for transferring risk from a persons, business, or
organization to an insurance company? - Answer -Insurance
What is Reinsurance? - Answer -When insurance companies purchase insurance to
cover their own exposures to loss
What is a fiduciary? - Answer -A person in a position of financial trust
What is it meant by a contract of adhesion? - Answer -Policy written by the insurer with
the insured having no input
, What part of the insurance policy shows the premium payment? - Answer -Declarations
page
What are the duties of the insured after a loss? - Answer -Notice to insurer, protect
property from further damage, Proof of loss, property available for inspection,
examination under oath if needed, cooperate with insurer
What is the FCRA? - Answer -Fair Credit Reporting Act - If the insurer uses credit, must
inform insured
What are the parts to an insurance contract? - Answer -Declarations, Conditions,
Insuring Agreements, and Exclusions
When an insured decides to cancel an insurance policy before the expiration date, how
is the unearned premium returned? - Answer -Short-Rate basis
What are the three basic perils? - Answer -Fire, Lightning, and Internal Explosion
What are the extended coverage perils? - Answer -WCSHAVVER and V&MM -Wind,
Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot,
Vandalism and malicious mischef
What is the difference between a direct loss and an indirect loss? - Answer -Direct -
immediate damage caused by peril
Indirect - loss over time as a result of the direct loss
How is ACV calculated? - Answer -Replacement Cost - depreciation =
What is the coinsurance clause and what is the percentage required by the insurer? -
Answer -Requires the insured to carry the standard coinsurance amount of the
insurance policy; 80%
What is the method called when the insured and insurance company cannot agree on a
settlement? - Answer -Appraisal method
What is a bailee? - Answer -A person or organization that has temporary possession of
someone else's personal property
What is a tort? - Answer -A civil wrong that causes someone else to suffer a loss
What is Vicarious Liability? - Answer -Liability for the actions of another
What are the five property coverages and associated lettering? - Answer -A - Dwelling
B - Other structured (detached, appurtenant)
C - Insured's personal property (off-premises covered up to 10% of C)
D - Fair Rental Value
