Kentucky Property and Casualty Insurance Licensing Questions and Correct Answers/ Latest Update / Already Graded

Risk Ans: Chance or uncertainty of loss Managing Risk Ans: STARR: Share, Transfer, Avoid, Reduce, Retain Purpose of Insurance Ans: Transfer risk and responsibility in exchange for payment of a premium Law of Large Numbers Ans: The more examples used to develop any statistic, the more reliable that statistic will be. Elements of Insurability Page | 2 All rights reserved © 2025/ 2026 | Ans: Insurable interest, definite risk of loss, accidental risk, calculable loss, affordable cost to the insured, predictable losses due to large number of persons with similar potential loss available, loss must be spread Parts of a Policy Ans: Declarations, Insuring Agreements, Conditions, Exclusions, Definitions Declarations Ans: Contain name, address, amount of coverage provided, property description, cost of policy Insuring Agreements Ans: Contains losses for which the insured will be indemnified, type of property covered, perils against which the property is insured Conditions Ans: "Ground rules" for the policy, responsibilities and obligations of both the insurance company and the insured Page | 3 Exclusions Ans: Describes the losses for which the insured is not covered. Definitions Ans: Clarifies the meanings of terms in the policy. Policy Jacket/Skeleton Policy Ans: Contains general conditions and the Declarations Reciprocal Company Ans: Members insure each other and share the losses with each other, managed by an attorney-in-fact Lloyds Association Ans: Made up of syndicates who voluntarily agree to share in insurance contracts Risk Retention Groups Ans: Protects against product liability exposures (ex. multimillion dollar lawsuits) All righ