Texas Property & Casualty Insurance Exam
Questions With Correct Answers
A condition or situation that presents a possibility of loss is a (an): - CORRECT
| | | | | | | | | | | | | | |
ANSWER✔✔-exposure
The purpose of insurance is to: - CORRECT ANSWER✔✔-transfer risk
| | | | | | | | |
Which hazard can be described as a careless attitude or general indifference on
| | | | | | | | | | | | |
the part of the insured toward the occurrence of loss? - CORRECT ANSWER✔✔-
| | | | | | | | | | | |
morale
Which risk is insurable? - CORRECT ANSWER✔✔-pure
| | | | | |
With regard to insurance, risk can be defined as: - CORRECT ANSWER✔✔-
| | | | | | | | | | |
uncertainty regarding loss| |
Treating risk by purchasing insurance is an example of what type of risk
| | | | | | | | | | | | |
management? - CORRECT ANSWER✔✔-transfer | | |
Robert and Carolyn live in a busy city and decide that not owning a car is the
| | | | | | | | | | | | | | | | |
solution to not experience having a car stolen. What method describes this
| | | | | | | | | | | |
philosophy? - CORRECT ANSWER✔✔-avoidance
| | |
,Dishonesty on the part of an insured is an example of what? - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-a moral hazard | |
What is an example of reduction as a method of handling risk? - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-Installing a burglar alarm | | |
Driving too fast and not wearing a seat belt are examples of? - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-morale hazard |
The risk that involves the chance of both loss and gain is? - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-speculative risk |
Self-insurance is an example of what kind of risk treatment? - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-Retention
If John's father transfers ownership of a house to John, can John buy insurance? -
| | | | | | | | | | | | | | |
CORRECT ANSWER✔✔-Yes because he has an insurable interest.
| | | | | | |
Fire would be an example of a what? - CORRECT ANSWER✔✔-peril
| | | | | | | | | |
What is the actual cause of a loss? - CORRECT ANSWER✔✔-peril
| | | | | | | | | |
What kind of risk is the stock market? - CORRECT ANSWER✔✔-speculative risk
| | | | | | | | | | |
,A ____ is a condition that increases the chance of loss. - CORRECT ANSWER✔✔-
| | | | | | | | | | | | |
hazard
Faulty wiring causes a fire that destroys a building. The faulty wiring is considered
| | | | | | | | | | | | |
to be a(n): - CORRECT ANSWER✔✔-hazard
| | | | | |
A chance, possibility, or uncertainty of loss is known as? - CORRECT ANSWER✔✔-
| | | | | | | | | | | |
risk
Examples of perils are_____? - CORRECT ANSWER✔✔-fire, wind and lightning
| | | | | | | | |
Indemnity insurance will _____? - CORRECT ANSWER✔✔-restores insured to pre-
| | | | | | | | |
loss condition
|
The types of hazards are_____? - CORRECT ANSWER✔✔-moral, morale, and
| | | | | | | | | |
physical
________ is when people with a greater than average exposure to loss to
| | | | | | | | | | | | |
purchase insurance. - CORRECT ANSWER✔✔-Adverse selection
| | | | |
Methods of handling risk are avoidance, reduction, retention, transfer and _____.
| | | | | | | | | |
- CORRECT ANSWER✔✔-Sharing (ARRTS)
| | | |
Elements of insurable risk are calculable, affordable, non-catastrophic,
| | | | | | | |
homogenous, accidental and _____. - CORRECT ANSWER✔✔-Measurable
| | | | | | |
(CANHAM)
, Myron, who is 16, signs a contract to lease a car. This would probably not be
| | | | | | | | | | | | | | | |
considered a valid contract under the law because _____. - CORRECT
| | | | | | | | | | |
ANSWER✔✔-He is not competent at 16. | | | | |
Ben bought an automobile four years ago for $15,000. Today it is worth $6,000.
| | | | | | | | | | | | | |
According to the principle of indemnity, how much should Ben receive if the car is
| | | | | | | | | | | | | |
totally demolished? - CORRECT ANSWER✔✔-$6,000
| | | | |
Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry
| | | | | | | | | | | | | |
purchases $160,000 of insurance on the home. If it burns to the ground, how
| | | | | | | | | | | | | |
much would Harry collect? - CORRECT ANSWER✔✔-$80,000
| | | | | |
Under a unilateral contract, which parties are legally bound to perform under the
| | | | | | | | | | | | |
contract? - CORRECT ANSWER✔✔-Insurer only
| | | |
Which part of an insurance policy describes the responsibilities and obligations of
| | | | | | | | | | |
both the insurance company and the insured under the policy? - CORRECT
| | | | | | | | | | | | |
ANSWER✔✔-Conditions
The insuring agreement section of a policy describes the ____ you are insured
| | | | | | | | | | | | |
against. - CORRECT ANSWER✔✔-perils
| | |
The elements of a valid contract are legal purpose, consideration, competent
| | | | | | | | | | |
parties, and _____. - CORRECT ANSWER✔✔-Offer and acceptance
| | | | | | |
Questions With Correct Answers
A condition or situation that presents a possibility of loss is a (an): - CORRECT
| | | | | | | | | | | | | | |
ANSWER✔✔-exposure
The purpose of insurance is to: - CORRECT ANSWER✔✔-transfer risk
| | | | | | | | |
Which hazard can be described as a careless attitude or general indifference on
| | | | | | | | | | | | |
the part of the insured toward the occurrence of loss? - CORRECT ANSWER✔✔-
| | | | | | | | | | | |
morale
Which risk is insurable? - CORRECT ANSWER✔✔-pure
| | | | | |
With regard to insurance, risk can be defined as: - CORRECT ANSWER✔✔-
| | | | | | | | | | |
uncertainty regarding loss| |
Treating risk by purchasing insurance is an example of what type of risk
| | | | | | | | | | | | |
management? - CORRECT ANSWER✔✔-transfer | | |
Robert and Carolyn live in a busy city and decide that not owning a car is the
| | | | | | | | | | | | | | | | |
solution to not experience having a car stolen. What method describes this
| | | | | | | | | | | |
philosophy? - CORRECT ANSWER✔✔-avoidance
| | |
,Dishonesty on the part of an insured is an example of what? - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-a moral hazard | |
What is an example of reduction as a method of handling risk? - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-Installing a burglar alarm | | |
Driving too fast and not wearing a seat belt are examples of? - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-morale hazard |
The risk that involves the chance of both loss and gain is? - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-speculative risk |
Self-insurance is an example of what kind of risk treatment? - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-Retention
If John's father transfers ownership of a house to John, can John buy insurance? -
| | | | | | | | | | | | | | |
CORRECT ANSWER✔✔-Yes because he has an insurable interest.
| | | | | | |
Fire would be an example of a what? - CORRECT ANSWER✔✔-peril
| | | | | | | | | |
What is the actual cause of a loss? - CORRECT ANSWER✔✔-peril
| | | | | | | | | |
What kind of risk is the stock market? - CORRECT ANSWER✔✔-speculative risk
| | | | | | | | | | |
,A ____ is a condition that increases the chance of loss. - CORRECT ANSWER✔✔-
| | | | | | | | | | | | |
hazard
Faulty wiring causes a fire that destroys a building. The faulty wiring is considered
| | | | | | | | | | | | |
to be a(n): - CORRECT ANSWER✔✔-hazard
| | | | | |
A chance, possibility, or uncertainty of loss is known as? - CORRECT ANSWER✔✔-
| | | | | | | | | | | |
risk
Examples of perils are_____? - CORRECT ANSWER✔✔-fire, wind and lightning
| | | | | | | | |
Indemnity insurance will _____? - CORRECT ANSWER✔✔-restores insured to pre-
| | | | | | | | |
loss condition
|
The types of hazards are_____? - CORRECT ANSWER✔✔-moral, morale, and
| | | | | | | | | |
physical
________ is when people with a greater than average exposure to loss to
| | | | | | | | | | | | |
purchase insurance. - CORRECT ANSWER✔✔-Adverse selection
| | | | |
Methods of handling risk are avoidance, reduction, retention, transfer and _____.
| | | | | | | | | |
- CORRECT ANSWER✔✔-Sharing (ARRTS)
| | | |
Elements of insurable risk are calculable, affordable, non-catastrophic,
| | | | | | | |
homogenous, accidental and _____. - CORRECT ANSWER✔✔-Measurable
| | | | | | |
(CANHAM)
, Myron, who is 16, signs a contract to lease a car. This would probably not be
| | | | | | | | | | | | | | | |
considered a valid contract under the law because _____. - CORRECT
| | | | | | | | | | |
ANSWER✔✔-He is not competent at 16. | | | | |
Ben bought an automobile four years ago for $15,000. Today it is worth $6,000.
| | | | | | | | | | | | | |
According to the principle of indemnity, how much should Ben receive if the car is
| | | | | | | | | | | | | |
totally demolished? - CORRECT ANSWER✔✔-$6,000
| | | | |
Harry Arne and his cousin each own 50% of a $160,000 duplex. Suppose Harry
| | | | | | | | | | | | | |
purchases $160,000 of insurance on the home. If it burns to the ground, how
| | | | | | | | | | | | | |
much would Harry collect? - CORRECT ANSWER✔✔-$80,000
| | | | | |
Under a unilateral contract, which parties are legally bound to perform under the
| | | | | | | | | | | | |
contract? - CORRECT ANSWER✔✔-Insurer only
| | | |
Which part of an insurance policy describes the responsibilities and obligations of
| | | | | | | | | | |
both the insurance company and the insured under the policy? - CORRECT
| | | | | | | | | | | | |
ANSWER✔✔-Conditions
The insuring agreement section of a policy describes the ____ you are insured
| | | | | | | | | | | | |
against. - CORRECT ANSWER✔✔-perils
| | |
The elements of a valid contract are legal purpose, consideration, competent
| | | | | | | | | | |
parties, and _____. - CORRECT ANSWER✔✔-Offer and acceptance
| | | | | | |
