Property/Casualty Illinois for State Exam / Actual
Exam Questions with Certified Solutions / Newest
ISO (Insurance Services Office) - (ANSWER)ISO creates standardized property and
casualty insurance policies that are approved by states and used as a standard
policy for insurers.
-they can be modified to comply with state regulations
-may be modified to a degree for insurance companies to create their own policy
form
define insurance - (ANSWER)Insurance transfers the risk of loss from an
individual or business entity to an insurance company, which in turn spreads the
costs of unexpected losses to many individuals
define risk - (ANSWER)uncertainty concerning the occurrence of a loss
What are the 2 types of risk? - (ANSWER)Pure and Speculative
What is the difference between pure and speculative risk? - (ANSWER)only pure
risk is insurable since it can only result in a loss or no change
speculative risk is not insurable since it can result in a loss or gain (like gambling)
,What are the 3 types of hazards? - (ANSWER)1) Physical - hazards arising from
the material, structural, or operational features
2) Moral - refers to applicants that may lie on their application
3) Morale - increase the hazard presented by a risk arising from the insured's
indifference to loss because of the existence of insurance (combustible material
near a furnace)
peril - (ANSWER)causes of loss
hazards - (ANSWER)conditions/circumstances that increase the probability of an
insured loss occurring
there are 3 types
direct loss - (ANSWER)direct physical damage to buildings/personal property
*this includes proximate cause: chain of events resulting from a covered peril
indirect loss/consequential losses - (ANSWER)losses considered a result of direct
loss; this usually results from when repairs begin so it could be additional living
expenses for homeowners or loss of profits for businesses
, named peril - (ANSWER)lists of specific perils; no coverage for unlisted perils
open perils (all risk) - (ANSWER)insures against any risk of loss that is not
excluded
Explain the difference between vacancy and unoccupied - (ANSWER)vacancy
refers to a property that has no people or personal property in it for 60 days
unoccupied refers to a property that has no people in it but there is personal
property in it
3 elements of insurable risk - (ANSWER)1. Financial (a monetary interest)
2. Blood (a relative)
3. Business (a business partner)
indemnity - (ANSWER)to reimburse or make whole; permitted to collect only to
the extent of financial loss (cannot gain)
subrogation - (ANSWER)The process by which an insurer can, after it has paid a
loss under the policy, recover the amount paid from any party (other than the
insured) who caused the loss or is otherwise legally liable for the loss.
Exam Questions with Certified Solutions / Newest
ISO (Insurance Services Office) - (ANSWER)ISO creates standardized property and
casualty insurance policies that are approved by states and used as a standard
policy for insurers.
-they can be modified to comply with state regulations
-may be modified to a degree for insurance companies to create their own policy
form
define insurance - (ANSWER)Insurance transfers the risk of loss from an
individual or business entity to an insurance company, which in turn spreads the
costs of unexpected losses to many individuals
define risk - (ANSWER)uncertainty concerning the occurrence of a loss
What are the 2 types of risk? - (ANSWER)Pure and Speculative
What is the difference between pure and speculative risk? - (ANSWER)only pure
risk is insurable since it can only result in a loss or no change
speculative risk is not insurable since it can result in a loss or gain (like gambling)
,What are the 3 types of hazards? - (ANSWER)1) Physical - hazards arising from
the material, structural, or operational features
2) Moral - refers to applicants that may lie on their application
3) Morale - increase the hazard presented by a risk arising from the insured's
indifference to loss because of the existence of insurance (combustible material
near a furnace)
peril - (ANSWER)causes of loss
hazards - (ANSWER)conditions/circumstances that increase the probability of an
insured loss occurring
there are 3 types
direct loss - (ANSWER)direct physical damage to buildings/personal property
*this includes proximate cause: chain of events resulting from a covered peril
indirect loss/consequential losses - (ANSWER)losses considered a result of direct
loss; this usually results from when repairs begin so it could be additional living
expenses for homeowners or loss of profits for businesses
, named peril - (ANSWER)lists of specific perils; no coverage for unlisted perils
open perils (all risk) - (ANSWER)insures against any risk of loss that is not
excluded
Explain the difference between vacancy and unoccupied - (ANSWER)vacancy
refers to a property that has no people or personal property in it for 60 days
unoccupied refers to a property that has no people in it but there is personal
property in it
3 elements of insurable risk - (ANSWER)1. Financial (a monetary interest)
2. Blood (a relative)
3. Business (a business partner)
indemnity - (ANSWER)to reimburse or make whole; permitted to collect only to
the extent of financial loss (cannot gain)
subrogation - (ANSWER)The process by which an insurer can, after it has paid a
loss under the policy, recover the amount paid from any party (other than the
insured) who caused the loss or is otherwise legally liable for the loss.
