Exam FX- Property and Casualty
Glossary Exam 2026 Questions and
Answers
Abandonment - Correct answer-The abdication of insured property into the hands
of another, or into the possession of no one in particular.
Absolute Liability - Correct answer-A type of liability that occurs due to extremely
dangerous operations, such as the use of explosives or working at extreme heights.
Accident - Correct answer-An unplanned, unforeseen event which occurs suddenly
and at a specific place.
Actual Cash Value (ACV) - Correct answer-The required amount to pay damages
or for property loss, which is calculated based on the property's current
replacement value minus depreciation.
Additional Coverage - Correct answer-A provision in an insurance policy that
allows for more coverage for specific loss expense without increase in premium.
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,Additional Insureds - Correct answer-Individuals or business that are not named as
insured on the declaration page, but are protected by the policy, usually in regard to
a specific interest.
Adhesion - Correct answer-A contract offered on a "take-it-or-leave-it" basis by an
insurer, in which the insured's only option is to accept or reject the contract. Any
ambiguities in the contract will be settled in favor of the insured.
Admitted Insurer - Correct answer-An insurance company authorized and licensed
to transact business in a particular state.
Adverse Selection - Correct answer-The tendency of risks with higher probability
of loss to purchase and maintain insurance more often than the risks who present
lower probability.
Agent - Correct answer-An individual who is licensed to sell, negotiate, or effect
insurance contracts on behalf of an insurer.
Aggregate Limit - Correct answer-The maximum limit of coverage available under
a liability policy during a policy year regardless of the number of claims that may
be made or the number of accidents that may occur.
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, Agreed Value - Correct answer-A property policy with a provision agreed upon by
the insurer and insured as to the amount of insurance that represents a fair
valuation for property at the time the insurance is written.
Aleatory - Correct answer-A contract in which the participating parties agree to
exchange unequal amounts. Insurance contracts are ________ in that the amount
the insured will pay in premiums is unequal to the amount the insurer will pay in
the event of a loss.
Alien Insurer - Correct answer-An insurance company that is incorporated outside
of the United States.
Apparent Authority - Correct answer-The appearance or the assumption of
authority based on the actions, words, or deeds of the principal or because of
circumstances the principal created.
Appraisal - Correct answer-An assessment of property to determine either the
correct amount of insurance to be written or the amount of loss to paid.
Arbitration - Correct answer-Method of claim settlement used when the insured
and insurer cannot agree upon the amount of the loss.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Glossary Exam 2026 Questions and
Answers
Abandonment - Correct answer-The abdication of insured property into the hands
of another, or into the possession of no one in particular.
Absolute Liability - Correct answer-A type of liability that occurs due to extremely
dangerous operations, such as the use of explosives or working at extreme heights.
Accident - Correct answer-An unplanned, unforeseen event which occurs suddenly
and at a specific place.
Actual Cash Value (ACV) - Correct answer-The required amount to pay damages
or for property loss, which is calculated based on the property's current
replacement value minus depreciation.
Additional Coverage - Correct answer-A provision in an insurance policy that
allows for more coverage for specific loss expense without increase in premium.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Additional Insureds - Correct answer-Individuals or business that are not named as
insured on the declaration page, but are protected by the policy, usually in regard to
a specific interest.
Adhesion - Correct answer-A contract offered on a "take-it-or-leave-it" basis by an
insurer, in which the insured's only option is to accept or reject the contract. Any
ambiguities in the contract will be settled in favor of the insured.
Admitted Insurer - Correct answer-An insurance company authorized and licensed
to transact business in a particular state.
Adverse Selection - Correct answer-The tendency of risks with higher probability
of loss to purchase and maintain insurance more often than the risks who present
lower probability.
Agent - Correct answer-An individual who is licensed to sell, negotiate, or effect
insurance contracts on behalf of an insurer.
Aggregate Limit - Correct answer-The maximum limit of coverage available under
a liability policy during a policy year regardless of the number of claims that may
be made or the number of accidents that may occur.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Agreed Value - Correct answer-A property policy with a provision agreed upon by
the insurer and insured as to the amount of insurance that represents a fair
valuation for property at the time the insurance is written.
Aleatory - Correct answer-A contract in which the participating parties agree to
exchange unequal amounts. Insurance contracts are ________ in that the amount
the insured will pay in premiums is unequal to the amount the insurer will pay in
the event of a loss.
Alien Insurer - Correct answer-An insurance company that is incorporated outside
of the United States.
Apparent Authority - Correct answer-The appearance or the assumption of
authority based on the actions, words, or deeds of the principal or because of
circumstances the principal created.
Appraisal - Correct answer-An assessment of property to determine either the
correct amount of insurance to be written or the amount of loss to paid.
Arbitration - Correct answer-Method of claim settlement used when the insured
and insurer cannot agree upon the amount of the loss.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
