Missouri Property and Casualty Insurance
EXAM 2025 QUESTIONS AND ANSWERS
Risk - ANS The chance or uncertainty of loss.
Exposure - ANS A condition or situation that presents a possibility of loss.
Ways to manage risk - ANS Avoid Risk
control risk
retain a risk
transfer a risk
control risk - ANS techniques that limit loss severity come under the heading of risk
reduction
retain a risk - ANS if any loss occurs, they will pay for it themselves
can be intentional or unintentional
Transfer a risk - ANS Insurance
hold harmless agreement
hold harmless agreement - ANS a contractual arrangement where one party assumes the
liability of a situation and relieves the other party of responsibility.
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, Purpose of Insurance - ANS to transfer risk
insurance - ANS a contract or device for transferring risk from a person, business, or
organization to an insurance company that agrees, in exchange for a premium, to pay for losses
through an accumulation of premiums
Elements of Insurability - ANS Pure Risk
Insurable Interest
Definite
Unexpected
Financial Hardship
Calculable
Affordable
Losses are Predictable
Adequate Spread of Risk
Speculative risks - ANS risks in which there exists both the possibility of gain and the
possibility of loss
pure risks - ANS involve only the possibility of loss
insurable interest - ANS before you can benefit from insurance, you must have a chance of
financial loss or a financial interest in the property
Definite - ANS Risk of loss must be defined as to time and loss and be difficult to counterfeit
or falsify
Unexpected - ANS If results are expected then it doesn't qualify as a risk.
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, Financial Hardship - ANS Risk must be large enough for financial hardship for the individual
involved.
Calculable - ANS Must be able to be assigned a financial value.
Affordable - ANS The cost of the insurance must be affordable to the consumer and be able
to cover an unexpected loss.
Losses are Predictable - ANS There must be a large number of persons with similar potential
loss available for the losses to become predictable.
Adequate spread of risk - ANS Must not happen to a large number of the insured at the same
time. Not insuring every person that would be effected by the same risk.
Peril - ANS the cause of loss
Hazard - ANS anything that increases the chance of loss
physical hazard - ANS a hazard that arises from the condition, occupancy, or use of the
property itself
morale hazard - ANS an individual, through carelessness or by irresponsible actions, can
increase the possibility for a loss
moral hazard - ANS a person might create a loss situation on purpose just to collect from the
insurance company
contract - ANS legal agreement between two competent parties that promises a certain
performance in exchange for a certain consideration
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@COPYRIGHT BRAINBARTER 2025/2026
EXAM 2025 QUESTIONS AND ANSWERS
Risk - ANS The chance or uncertainty of loss.
Exposure - ANS A condition or situation that presents a possibility of loss.
Ways to manage risk - ANS Avoid Risk
control risk
retain a risk
transfer a risk
control risk - ANS techniques that limit loss severity come under the heading of risk
reduction
retain a risk - ANS if any loss occurs, they will pay for it themselves
can be intentional or unintentional
Transfer a risk - ANS Insurance
hold harmless agreement
hold harmless agreement - ANS a contractual arrangement where one party assumes the
liability of a situation and relieves the other party of responsibility.
1
Page
@COPYRIGHT BRAINBARTER 2025/2026
, Purpose of Insurance - ANS to transfer risk
insurance - ANS a contract or device for transferring risk from a person, business, or
organization to an insurance company that agrees, in exchange for a premium, to pay for losses
through an accumulation of premiums
Elements of Insurability - ANS Pure Risk
Insurable Interest
Definite
Unexpected
Financial Hardship
Calculable
Affordable
Losses are Predictable
Adequate Spread of Risk
Speculative risks - ANS risks in which there exists both the possibility of gain and the
possibility of loss
pure risks - ANS involve only the possibility of loss
insurable interest - ANS before you can benefit from insurance, you must have a chance of
financial loss or a financial interest in the property
Definite - ANS Risk of loss must be defined as to time and loss and be difficult to counterfeit
or falsify
Unexpected - ANS If results are expected then it doesn't qualify as a risk.
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Page
@COPYRIGHT BRAINBARTER 2025/2026
, Financial Hardship - ANS Risk must be large enough for financial hardship for the individual
involved.
Calculable - ANS Must be able to be assigned a financial value.
Affordable - ANS The cost of the insurance must be affordable to the consumer and be able
to cover an unexpected loss.
Losses are Predictable - ANS There must be a large number of persons with similar potential
loss available for the losses to become predictable.
Adequate spread of risk - ANS Must not happen to a large number of the insured at the same
time. Not insuring every person that would be effected by the same risk.
Peril - ANS the cause of loss
Hazard - ANS anything that increases the chance of loss
physical hazard - ANS a hazard that arises from the condition, occupancy, or use of the
property itself
morale hazard - ANS an individual, through carelessness or by irresponsible actions, can
increase the possibility for a loss
moral hazard - ANS a person might create a loss situation on purpose just to collect from the
insurance company
contract - ANS legal agreement between two competent parties that promises a certain
performance in exchange for a certain consideration
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Page
@COPYRIGHT BRAINBARTER 2025/2026
