PA APPRAISER EXAM QUESTIONS
& ANSWERS(RATED A+)
Principle of Indemnity - ANSWER restoration to approximate previous financial
condition; no more, no less
Insurable Interest - ANSWER direct financial interest in protecting something or
someone
Lender Interest - ANSWER protects a lender who loans money to a buyer
Risk - ANSWER potential for financial loss or an insured item
Exposure - ANSWER is openness to loss or damage
hazard - ANSWER thing that increases the possibility to loss
moral hazard - ANSWER results from policyholder's conscious decision
physical hazard - ANSWER conditions that increase the chance of loss
Peril - ANSWER the actual cause of loss or damage
Loss - ANSWER financial loss due to an occurrence or accident
Proximate cause - ANSWER the primary event or series of events that directly leads to
an insured loss
Direct loss - ANSWER physical harm to tangible property caused by a peril. Ex: Tree
falls on car
Indirect loss - ANSWER added expenses or lost income because of physical damages.
Ex: rental car
Occurrence - ANSWER an event, incident, or condition that causes damage
ACV (Actual Cash Value) - ANSWER Replacement cost - depreciation
replacement cost - ANSWER method of valuation based on cost of replacing an item at
current market prices, regardless of depreciation
Functional replacement cost - ANSWER pays to replace an outdated, obsolete item with
a functionally equivalent item
, Stated amount - ANSWER property value is stated by the insured when applying for
insurance
insurance policy - ANSWER the legal contract b/w the insurer and the insured
cancellation and nonrenewal - ANSWER insured may cancel at any time, but the insurer
is much more restricted
declarations page - ANSWER names of both parties
policy #
location and description of insured item
deductible
premium
first named insured - ANSWER the 1st person or organization listed on the dec page
additional insured - ANSWER person or org. that is added to the policy at the request of
the first named insured and benefits from policy, but is not allowed to make changed
Loss Payable Clause - ANSWER lender listed as loss payee if a loss occurs
policy limits - ANSWER establish the max payout value of an insurance policy
salvage - ANSWER the portion or value of property that remains after a loss
abandonment clause - ANSWER insured is prohibited from forcing the insurer to take
possession of damaged property for the purpose of repair or disposal
subrogation - ANSWER transfer of rights that allows the insurer to recover its losses
after it has indemnified a policyholder
full release settlement - ANSWER all damaged paid at once
no release settlement - ANSWER signing and cashing a check substitutes for the
release form
appraiser - ANSWER writes damage estimates for insurance claims
adjuster - ANSWER investigates claims and prepares claimant statements
duties of the insured after a loss - ANSWER -report all accidents
-cooperate with insurer's investigation, settlement, and any court proceedings
-promptly send the insurer copies of all pertinent legal papers
-submit to a physical examination if insurer requests
-submit to examination under oath and verify that your statements are true and accurate
-authorize the insurer to obtain medical reports
& ANSWERS(RATED A+)
Principle of Indemnity - ANSWER restoration to approximate previous financial
condition; no more, no less
Insurable Interest - ANSWER direct financial interest in protecting something or
someone
Lender Interest - ANSWER protects a lender who loans money to a buyer
Risk - ANSWER potential for financial loss or an insured item
Exposure - ANSWER is openness to loss or damage
hazard - ANSWER thing that increases the possibility to loss
moral hazard - ANSWER results from policyholder's conscious decision
physical hazard - ANSWER conditions that increase the chance of loss
Peril - ANSWER the actual cause of loss or damage
Loss - ANSWER financial loss due to an occurrence or accident
Proximate cause - ANSWER the primary event or series of events that directly leads to
an insured loss
Direct loss - ANSWER physical harm to tangible property caused by a peril. Ex: Tree
falls on car
Indirect loss - ANSWER added expenses or lost income because of physical damages.
Ex: rental car
Occurrence - ANSWER an event, incident, or condition that causes damage
ACV (Actual Cash Value) - ANSWER Replacement cost - depreciation
replacement cost - ANSWER method of valuation based on cost of replacing an item at
current market prices, regardless of depreciation
Functional replacement cost - ANSWER pays to replace an outdated, obsolete item with
a functionally equivalent item
, Stated amount - ANSWER property value is stated by the insured when applying for
insurance
insurance policy - ANSWER the legal contract b/w the insurer and the insured
cancellation and nonrenewal - ANSWER insured may cancel at any time, but the insurer
is much more restricted
declarations page - ANSWER names of both parties
policy #
location and description of insured item
deductible
premium
first named insured - ANSWER the 1st person or organization listed on the dec page
additional insured - ANSWER person or org. that is added to the policy at the request of
the first named insured and benefits from policy, but is not allowed to make changed
Loss Payable Clause - ANSWER lender listed as loss payee if a loss occurs
policy limits - ANSWER establish the max payout value of an insurance policy
salvage - ANSWER the portion or value of property that remains after a loss
abandonment clause - ANSWER insured is prohibited from forcing the insurer to take
possession of damaged property for the purpose of repair or disposal
subrogation - ANSWER transfer of rights that allows the insurer to recover its losses
after it has indemnified a policyholder
full release settlement - ANSWER all damaged paid at once
no release settlement - ANSWER signing and cashing a check substitutes for the
release form
appraiser - ANSWER writes damage estimates for insurance claims
adjuster - ANSWER investigates claims and prepares claimant statements
duties of the insured after a loss - ANSWER -report all accidents
-cooperate with insurer's investigation, settlement, and any court proceedings
-promptly send the insurer copies of all pertinent legal papers
-submit to a physical examination if insurer requests
-submit to examination under oath and verify that your statements are true and accurate
-authorize the insurer to obtain medical reports
