Property Casualty Insurance Basics
questions with 100 accurate answers
Insurable interest - answers(principles & concepts) amy financial interest in property
when damage or destruction to the property would result in financial loss to the owner or
party with interest
Function - answers(underwriting) risk the company wants to insure; risk selection
Loss ratio - answers(underwriting) divide the losses by the earned premium for the
period
Rates - answers(principles & concepts) price for each unit of exposure that should
generated a premium sufficient to cover anticipated losses, expenses, and reasonable
profit
Components of a rate - answers(principles & concepts) the type of risk and loss costs
contribute to rates that are charged for insurance policies.
Lost cost - answers(principles & concepts) include all cost associated in settling and
paying of a claim including loss reserves and legal interest
Class rates - answers(rate) apply to all members of a large group
Manual rates - answers(rate) those listed in a rating manual
Individual rates - answers(rate) modifications to class rates lowered for positive factors
or raised for negative factors
Merit rates - answers(rate) modifications to class rates based on past loss experience
Schedule rates - answers(rate) compares the individual risk with others in the same
class either increasing or decreasing rates due to characteristics of the risk
Retrospective - answers(rate) insurance company looks at the loss experience for the
policy year just ended. the rate is then adjusted up or down according to a formula for
policy period that just expired, subject to minimums and maximums
Judgement rates - answers(rate) based on the judgment of the underwriter; intuitive
underwriting
Hazards - answers(principles & concepts)
Negligence - answers(principles & concepts)
Compensatory - answers(damages) compensate for an incurred expense, restore to pre
injury status
-special: expected medical expenses, loss of income
-general: pain
Punitive - answers(damages) beyond compensatory
Res Ipsa Loquitor: the facts speck for themselves
Absolute/Strict liability - answers(principles & concepts) a legal concept imposed on
those engaged in certain activities and going beyond the concept of negligence. The
person is doing something inherently dangerous
Vicarious liability - answers(principles & concepts) one person may be held responsible
for the acts of another
Causes of loss - answers(principles & concepts) direct:
indirect:
questions with 100 accurate answers
Insurable interest - answers(principles & concepts) amy financial interest in property
when damage or destruction to the property would result in financial loss to the owner or
party with interest
Function - answers(underwriting) risk the company wants to insure; risk selection
Loss ratio - answers(underwriting) divide the losses by the earned premium for the
period
Rates - answers(principles & concepts) price for each unit of exposure that should
generated a premium sufficient to cover anticipated losses, expenses, and reasonable
profit
Components of a rate - answers(principles & concepts) the type of risk and loss costs
contribute to rates that are charged for insurance policies.
Lost cost - answers(principles & concepts) include all cost associated in settling and
paying of a claim including loss reserves and legal interest
Class rates - answers(rate) apply to all members of a large group
Manual rates - answers(rate) those listed in a rating manual
Individual rates - answers(rate) modifications to class rates lowered for positive factors
or raised for negative factors
Merit rates - answers(rate) modifications to class rates based on past loss experience
Schedule rates - answers(rate) compares the individual risk with others in the same
class either increasing or decreasing rates due to characteristics of the risk
Retrospective - answers(rate) insurance company looks at the loss experience for the
policy year just ended. the rate is then adjusted up or down according to a formula for
policy period that just expired, subject to minimums and maximums
Judgement rates - answers(rate) based on the judgment of the underwriter; intuitive
underwriting
Hazards - answers(principles & concepts)
Negligence - answers(principles & concepts)
Compensatory - answers(damages) compensate for an incurred expense, restore to pre
injury status
-special: expected medical expenses, loss of income
-general: pain
Punitive - answers(damages) beyond compensatory
Res Ipsa Loquitor: the facts speck for themselves
Absolute/Strict liability - answers(principles & concepts) a legal concept imposed on
those engaged in certain activities and going beyond the concept of negligence. The
person is doing something inherently dangerous
Vicarious liability - answers(principles & concepts) one person may be held responsible
for the acts of another
Causes of loss - answers(principles & concepts) direct:
indirect:
