TN Property and Casualty Exam
Questions and Answers Graded A+
Insurance - Correct answer-Social device used for transferring risk from
individuals or business to an insurance company
Law of Large Numbers - Correct answer-The larger the group the less uncertainty
Insurable Interest - Correct answer-must have a legitimate interest in the
property/subject that is to be insured
risk - Correct answer-Uncertainty or chance of possible loss
Property risk are called - Correct answer-perils
Casualty risk are called - Correct answer-Liability and Accident Losses
What kind of risk are insurable - Correct answer-Pure risk
What are speculative risk? - Correct answer-provide the chance of a gain and are
NOT insurable. Example: gambing
Hazard - Correct answer-Anything that would increase the likelihood that a loss
might occur or increase the seriousness of the loss
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,What are the three types of Hazards - Correct answer-1) Physical
2)Moral
3)Morale
Physical Hazard - Correct answer-Structural, material or proximity to
Moral Hazard - Correct answer-Has to do with the insureds habits (dishonest)
Morale Hazards - Correct answer-The insureds carelessness
Peril - Correct answer-Cause of a possible loss
What are examples of a peril - Correct answer-Flood
Fire
Accident
Explosion
Loss - Correct answer-Decrease in value, Property, quality of life or liability owed
What are the two types of losses - Correct answer-Direct
indirect
Direct Loss - Correct answer-Actual Physical damage to the property
Indirect loss- - Correct answer-Loss resulting from a peril but not directly
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,Actual Cash Value (ACV) - Correct answer-Replacement cost (cost new)-less
depreciation
Replacement Cost - Correct answer-Cost new ( no deduction for deprication)
Market Value - Correct answer-What it can be sold for at the time of loss
Stated Value - Correct answer-Value that meets coinsurance value
Salvage value - Correct answer-Insurer takes damaged property after payment for a
total loss and sells it to reduce their loss
Proximate Clause - Correct answer-Resulting cause of loss or damage. The
unbroken chain of cause and edict between the occurrence of an insured peril or a
negligent act resulting in injury or damage
Decuctible - Correct answer-The dollar amount that must be paid by the insured
before any benefits are payable by the insurer.
Standard Deductible for Homeowners - Correct answer-$250
Standard Deductible for commercial Property - Correct answer-$250
What are the 4 reasons for a deductible - Correct answer-1) To keep premiums
affordable and reduce small claims
2) To increase profits of company
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, 3) To make premiums excessive
4) increase the number insured
indemnity - Correct answer-Restores the insured to the position enjoyed prior to a
loss
Limits of Liability - Correct answer-The maximum the insurer will pay on a claim
Coinsurance - Correct answer-Offers the insured a reduced rate if they keep a
certain amount of insurance
What is the minimum amount an insured must carry? - Correct answer-80%
How is a insured paid? - Correct answer-Insurance carried/insurance required x
Amount of loss= The amount the insurer will pay - Deductible
Pair and Set Clause - Correct answer-When insured the items are worth more as a
set, if an item of the set is damaged or destroyed the insurance company has the
option of finding a replacement, repairing the item or paying the difference
difference in the value of the set before and after the loss
Extensions of coverage: - Correct answer-No charge to the insured (11 total)
Removal Coverage dp - Correct answer-property moved fringe premises to protect
it from a covered peril.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Questions and Answers Graded A+
Insurance - Correct answer-Social device used for transferring risk from
individuals or business to an insurance company
Law of Large Numbers - Correct answer-The larger the group the less uncertainty
Insurable Interest - Correct answer-must have a legitimate interest in the
property/subject that is to be insured
risk - Correct answer-Uncertainty or chance of possible loss
Property risk are called - Correct answer-perils
Casualty risk are called - Correct answer-Liability and Accident Losses
What kind of risk are insurable - Correct answer-Pure risk
What are speculative risk? - Correct answer-provide the chance of a gain and are
NOT insurable. Example: gambing
Hazard - Correct answer-Anything that would increase the likelihood that a loss
might occur or increase the seriousness of the loss
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,What are the three types of Hazards - Correct answer-1) Physical
2)Moral
3)Morale
Physical Hazard - Correct answer-Structural, material or proximity to
Moral Hazard - Correct answer-Has to do with the insureds habits (dishonest)
Morale Hazards - Correct answer-The insureds carelessness
Peril - Correct answer-Cause of a possible loss
What are examples of a peril - Correct answer-Flood
Fire
Accident
Explosion
Loss - Correct answer-Decrease in value, Property, quality of life or liability owed
What are the two types of losses - Correct answer-Direct
indirect
Direct Loss - Correct answer-Actual Physical damage to the property
Indirect loss- - Correct answer-Loss resulting from a peril but not directly
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,Actual Cash Value (ACV) - Correct answer-Replacement cost (cost new)-less
depreciation
Replacement Cost - Correct answer-Cost new ( no deduction for deprication)
Market Value - Correct answer-What it can be sold for at the time of loss
Stated Value - Correct answer-Value that meets coinsurance value
Salvage value - Correct answer-Insurer takes damaged property after payment for a
total loss and sells it to reduce their loss
Proximate Clause - Correct answer-Resulting cause of loss or damage. The
unbroken chain of cause and edict between the occurrence of an insured peril or a
negligent act resulting in injury or damage
Decuctible - Correct answer-The dollar amount that must be paid by the insured
before any benefits are payable by the insurer.
Standard Deductible for Homeowners - Correct answer-$250
Standard Deductible for commercial Property - Correct answer-$250
What are the 4 reasons for a deductible - Correct answer-1) To keep premiums
affordable and reduce small claims
2) To increase profits of company
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, 3) To make premiums excessive
4) increase the number insured
indemnity - Correct answer-Restores the insured to the position enjoyed prior to a
loss
Limits of Liability - Correct answer-The maximum the insurer will pay on a claim
Coinsurance - Correct answer-Offers the insured a reduced rate if they keep a
certain amount of insurance
What is the minimum amount an insured must carry? - Correct answer-80%
How is a insured paid? - Correct answer-Insurance carried/insurance required x
Amount of loss= The amount the insurer will pay - Deductible
Pair and Set Clause - Correct answer-When insured the items are worth more as a
set, if an item of the set is damaged or destroyed the insurance company has the
option of finding a replacement, repairing the item or paying the difference
difference in the value of the set before and after the loss
Extensions of coverage: - Correct answer-No charge to the insured (11 total)
Removal Coverage dp - Correct answer-property moved fringe premises to protect
it from a covered peril.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
