Washington State Property & Casualty Insurance
Exam Question and Answer | Verified Questions
with Clear Explanations | A+ Verified
• Building & Personal Property (BPP) -✓✓The commercial property policy for
larger businesses.
• Business Income Policy -✓✓A commercial policy covering the indirect loss of
income following a loss.
• Cancellation -✓✓Termination of a policy during the policy period.
• Casualty Insurance -✓✓A broad term which includes all of the policy types that
may be sold with a Casualty License - in most states this includes auto, liability,
work comp, commercial crime, and surety bonds.
• Claims Made Form -✓✓A policy that pays according to the coverage in effect in
the year the claim is made rather than according to the coverage in effect at the
time of the loss. Professional Liability policies are usually written on a Claims
Made basis, while other Liability Policies are written on an Occurrence Basis.
• Coinsurance Clause -✓✓The policy provision which sates that if the Insured has
less than a specified amount of coverage (usually 80%), the Insurer will not fully
cover a partial loss.
• Commercial Package Policy (CPP) -✓✓A bundling of commercial policies
,• Competent Party -✓✓A person who is capable of entering into an insurance
contract. Such a person must be sane, sober, and of age of majority (age 15 in most
states).
• Employers Liability -✓✓The section of a Work Comp policy covering the
employer for claims made by the injured worker's family members.
• Fair Credit Reporting Act -✓✓What an item would sell for in the marketplace.
• Fidelity Bond -✓✓A contract sold by a Surety Producer to cover employee theft.
• Gramm-Leach-Bliley Act -✓✓A federal law which protects consumer privacy
and which encourages the states to adopt uniform licensing standards.
• Hazzard -✓✓Any factor that increases the likelihood that a peril will occur.
• Twisting -✓✓Is the illegal and means that no person can, by misrepresentations
or misleading comparisons, induce, or tend to induce any insured to lapse,
terminate, forfeit, surrender, retain or convert any insurance policy.
• Law of Large Numbers -✓✓The maximum the policy will pay for any one loss -
this amount will be stated on the Declarations.
• Medical Payments -✓✓A liability insurance term which refers to payment for a
victim's medical bills without regard to fault. The policy will have a specified
Limit of Liability for "med pay." Medical payments are never made to the Insured.
,• Morale Hazzard -✓✓An Insured's carelessness or indifference which will make a
loss more likely to occur.
• Moral Hazzard -✓✓Refer to the fact that we all act differently when we have
insurance. We are simply less likely to prevent a loss if we know that the Insurer
will pay the claim. Moral Hazzard may also refer to a thief or arsonist who
intentionally causes a loss.
• Mutual Insurer -✓✓An insurance company owned by the policy holders.
• Inherent Vice -✓✓A loss caused by natural deterioration. Insurers will not pay
claims for inherent vice.
• Extra Expense Policy -✓✓Commercial property coverage to pay for the extra
cost of continuing a business after a loss.
• Business Income Policy -✓✓A commercial policy covering the indirect loss of
income following a loss.
• Comprehension Coverage -✓✓Physical damage insurance that covers all property
losses except collision. Also known as "Other than Collision."
• Concealment -✓✓Intentionally hiding the truth or intentionally telling only a
partial truth.
• Conditions Section -✓✓The part of the policy containing the details of the policy,
including the duties of the Insured.
, • Consent to Settle Provision -✓✓The provision in an E&O policy or Employment
Practices Liability Policy requiring the Insured's consent prior to any claim
settlement.
• Consideration -✓✓Something of value given by each party in a contract.
• Declarations -✓✓The "Dec Sheet" is the first page of the policy and includes the
"fill-in-the blanks" information obtained by the Producer, including the names of
the parties, the description of the covered property, the policy's limit of liability,
the duration of the policy, the amount of the premium, and the amount of the
deductible.
• Deductible -✓✓The amount of loss that the insured must pay before the policy
will begin to pay.
• Direct Loss -✓✓Damage to property from a covered peril. Property policies
typically cover Direct Losses and exclude Indirect Losses.
• Stock Insurer -✓✓An insurer owned by investors, as opposed to a mutual insurer
which is owned by the policy holders.
• Uninsured Motor Vehicle -✓✓A vehicle driven by one who has the state required
amount of liability insurance but who does not have adequate insurance, or who is
a hit and run driver.
• Unilateral Contract -✓✓A contract which contains only one promise. Insurance
policies are unilateral because they contain the Insurer's promise to pay a claim but
do not contain a promise by the Insured to pay future premiums.
Exam Question and Answer | Verified Questions
with Clear Explanations | A+ Verified
• Building & Personal Property (BPP) -✓✓The commercial property policy for
larger businesses.
• Business Income Policy -✓✓A commercial policy covering the indirect loss of
income following a loss.
• Cancellation -✓✓Termination of a policy during the policy period.
• Casualty Insurance -✓✓A broad term which includes all of the policy types that
may be sold with a Casualty License - in most states this includes auto, liability,
work comp, commercial crime, and surety bonds.
• Claims Made Form -✓✓A policy that pays according to the coverage in effect in
the year the claim is made rather than according to the coverage in effect at the
time of the loss. Professional Liability policies are usually written on a Claims
Made basis, while other Liability Policies are written on an Occurrence Basis.
• Coinsurance Clause -✓✓The policy provision which sates that if the Insured has
less than a specified amount of coverage (usually 80%), the Insurer will not fully
cover a partial loss.
• Commercial Package Policy (CPP) -✓✓A bundling of commercial policies
,• Competent Party -✓✓A person who is capable of entering into an insurance
contract. Such a person must be sane, sober, and of age of majority (age 15 in most
states).
• Employers Liability -✓✓The section of a Work Comp policy covering the
employer for claims made by the injured worker's family members.
• Fair Credit Reporting Act -✓✓What an item would sell for in the marketplace.
• Fidelity Bond -✓✓A contract sold by a Surety Producer to cover employee theft.
• Gramm-Leach-Bliley Act -✓✓A federal law which protects consumer privacy
and which encourages the states to adopt uniform licensing standards.
• Hazzard -✓✓Any factor that increases the likelihood that a peril will occur.
• Twisting -✓✓Is the illegal and means that no person can, by misrepresentations
or misleading comparisons, induce, or tend to induce any insured to lapse,
terminate, forfeit, surrender, retain or convert any insurance policy.
• Law of Large Numbers -✓✓The maximum the policy will pay for any one loss -
this amount will be stated on the Declarations.
• Medical Payments -✓✓A liability insurance term which refers to payment for a
victim's medical bills without regard to fault. The policy will have a specified
Limit of Liability for "med pay." Medical payments are never made to the Insured.
,• Morale Hazzard -✓✓An Insured's carelessness or indifference which will make a
loss more likely to occur.
• Moral Hazzard -✓✓Refer to the fact that we all act differently when we have
insurance. We are simply less likely to prevent a loss if we know that the Insurer
will pay the claim. Moral Hazzard may also refer to a thief or arsonist who
intentionally causes a loss.
• Mutual Insurer -✓✓An insurance company owned by the policy holders.
• Inherent Vice -✓✓A loss caused by natural deterioration. Insurers will not pay
claims for inherent vice.
• Extra Expense Policy -✓✓Commercial property coverage to pay for the extra
cost of continuing a business after a loss.
• Business Income Policy -✓✓A commercial policy covering the indirect loss of
income following a loss.
• Comprehension Coverage -✓✓Physical damage insurance that covers all property
losses except collision. Also known as "Other than Collision."
• Concealment -✓✓Intentionally hiding the truth or intentionally telling only a
partial truth.
• Conditions Section -✓✓The part of the policy containing the details of the policy,
including the duties of the Insured.
, • Consent to Settle Provision -✓✓The provision in an E&O policy or Employment
Practices Liability Policy requiring the Insured's consent prior to any claim
settlement.
• Consideration -✓✓Something of value given by each party in a contract.
• Declarations -✓✓The "Dec Sheet" is the first page of the policy and includes the
"fill-in-the blanks" information obtained by the Producer, including the names of
the parties, the description of the covered property, the policy's limit of liability,
the duration of the policy, the amount of the premium, and the amount of the
deductible.
• Deductible -✓✓The amount of loss that the insured must pay before the policy
will begin to pay.
• Direct Loss -✓✓Damage to property from a covered peril. Property policies
typically cover Direct Losses and exclude Indirect Losses.
• Stock Insurer -✓✓An insurer owned by investors, as opposed to a mutual insurer
which is owned by the policy holders.
• Uninsured Motor Vehicle -✓✓A vehicle driven by one who has the state required
amount of liability insurance but who does not have adequate insurance, or who is
a hit and run driver.
• Unilateral Contract -✓✓A contract which contains only one promise. Insurance
policies are unilateral because they contain the Insurer's promise to pay a claim but
do not contain a promise by the Insured to pay future premiums.
