Comprehensive Property & Casualty Insurance
Exam Prep Guide | Questions with 100% Correct
Answers | Verified | Latest Update 2026
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Terms in this set (281)
What is insurance? A financial tool for dealing with risk.
How is 'risk' defined in insurance? The chance of loss.
What can 'risk' refer to in insurance? The person, property, or activity that is insured.
What is risk in insurance? Chance of loss
What is loss in insurance? Unplanned reduction in economic value
What is exposure in insurance? The state of being subject to possible loss
What does high exposure mean? High risk
What is a peril? The cause of a loss
What are common covered perils? Fire, explosion, windstorm, flood, theft, collision
What is a hazard? A condition that increases the chance of a peril
What are the types of hazards? Moral, morale, physical
, What is risk management? Process to manage life's risks
What is risk transfer? The risk management role played by insurance
What are the basic elements of an Loss must be definable, measurable, outside of
insurable risk? applicant's control, not catastrophic
What is adverse selection? Tendency of high risks to seek insurance
What is the Law of Large Numbers? Mathematical principle of probability underlying
insurance
What is the difference between a Peril is the cause of loss; hazard increases the
peril and a hazard? chance of peril
What are mutual companies? Owned by policyowners and issue participating
policies
What are stock companies? Do not issue participating policies and pay stock
dividends
What are county mutuals? Mutual companies operating in a limited
geographical area
What are reciprocal insurers? Groups of members that insure each other through
contracts of indemnity
What are fraternal insurers? Sell insurance to members of a fraternal benefit
society
What are major federal government NFIP, Crop Insurance, Social Security, Medicare
insurance programs?
Exam Prep Guide | Questions with 100% Correct
Answers | Verified | Latest Update 2026
Save
Terms in this set (281)
What is insurance? A financial tool for dealing with risk.
How is 'risk' defined in insurance? The chance of loss.
What can 'risk' refer to in insurance? The person, property, or activity that is insured.
What is risk in insurance? Chance of loss
What is loss in insurance? Unplanned reduction in economic value
What is exposure in insurance? The state of being subject to possible loss
What does high exposure mean? High risk
What is a peril? The cause of a loss
What are common covered perils? Fire, explosion, windstorm, flood, theft, collision
What is a hazard? A condition that increases the chance of a peril
What are the types of hazards? Moral, morale, physical
, What is risk management? Process to manage life's risks
What is risk transfer? The risk management role played by insurance
What are the basic elements of an Loss must be definable, measurable, outside of
insurable risk? applicant's control, not catastrophic
What is adverse selection? Tendency of high risks to seek insurance
What is the Law of Large Numbers? Mathematical principle of probability underlying
insurance
What is the difference between a Peril is the cause of loss; hazard increases the
peril and a hazard? chance of peril
What are mutual companies? Owned by policyowners and issue participating
policies
What are stock companies? Do not issue participating policies and pay stock
dividends
What are county mutuals? Mutual companies operating in a limited
geographical area
What are reciprocal insurers? Groups of members that insure each other through
contracts of indemnity
What are fraternal insurers? Sell insurance to members of a fraternal benefit
society
What are major federal government NFIP, Crop Insurance, Social Security, Medicare
insurance programs?
