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NC Personal Lines Licensing Exam Part 1
Terms and Concepts EXAM 2025 TEST!!
Graded A+ | 2025|2026 EXAM UPDATE
Risk - (answers)The uncertainty or chance of a loss occurring.
Pure- Insurable, only a chance of loss, no financial gain
Speculative- Not insurable, chance of loss or gain (ex: gambling)
Hazard - (answers)Conditions or situations that increase the probability of an
insured loss occurring
Types:
Physical (individual characteristics increase chances of the cause of loss)
Moral (lying on application)
Morale (indifference)
Peril - (answers)The cause of a loss (loss is the basis of a claim)
Economic Loss - (answers)The estimated total cost (both insured and uninsured)
of an accident.
Indemnity - (answers)Reimbursement to the extent of the financial loss, not profit
, 2
Insurable Interest - (answers)The insured must be in a position to lose financially
if a covered loss occurs, must exist at the time of the loss
Deductible - (answers)Amount you must pay before you begin receiving any
benefits from your insurance company, higher deductible usually lowers the
amount of the premium
Direct Loss - (answers)direct physical damage to buildings and/or personal
property
includes other damage where the insured peril was the proximate cause of loss
(ex: water damage from putting out building fire)
Indirect Loss - (answers)Consequential losses, considered a result of a direct loss
(extra living expense incurred while home is being repaired)
Types of Perils - (answers)Named peril- lists specifically covered perils
Open (all-risk) peril- everything not specifically listed in exclusions
Specific Coverage - (answers)a policy that covers a specific kind of property for a
specified amount of insurance
Blanket Coverage - (answers)"Blankets" more than one property, type of
property, or coverage under a single limit.
NC Personal Lines Licensing Exam Part 1
Terms and Concepts EXAM 2025 TEST!!
Graded A+ | 2025|2026 EXAM UPDATE
Risk - (answers)The uncertainty or chance of a loss occurring.
Pure- Insurable, only a chance of loss, no financial gain
Speculative- Not insurable, chance of loss or gain (ex: gambling)
Hazard - (answers)Conditions or situations that increase the probability of an
insured loss occurring
Types:
Physical (individual characteristics increase chances of the cause of loss)
Moral (lying on application)
Morale (indifference)
Peril - (answers)The cause of a loss (loss is the basis of a claim)
Economic Loss - (answers)The estimated total cost (both insured and uninsured)
of an accident.
Indemnity - (answers)Reimbursement to the extent of the financial loss, not profit
, 2
Insurable Interest - (answers)The insured must be in a position to lose financially
if a covered loss occurs, must exist at the time of the loss
Deductible - (answers)Amount you must pay before you begin receiving any
benefits from your insurance company, higher deductible usually lowers the
amount of the premium
Direct Loss - (answers)direct physical damage to buildings and/or personal
property
includes other damage where the insured peril was the proximate cause of loss
(ex: water damage from putting out building fire)
Indirect Loss - (answers)Consequential losses, considered a result of a direct loss
(extra living expense incurred while home is being repaired)
Types of Perils - (answers)Named peril- lists specifically covered perils
Open (all-risk) peril- everything not specifically listed in exclusions
Specific Coverage - (answers)a policy that covers a specific kind of property for a
specified amount of insurance
Blanket Coverage - (answers)"Blankets" more than one property, type of
property, or coverage under a single limit.
