2025 Newest Property and Casualty Exam Prep Test Bank with Questions and Correct
Answers/ Property and Casualty License Test / P & C Exam
First party in the contract - (answer)The insured (customer)
Peril - (answer)A tornado damaged the insured's home
Reduction as a risk management technique - (answer)Wearing a seat belt in a car
Type of hazard - (answer)Morale
Flood - (answer)A peril
Insurance - (answer)______ is a contract that transfers the risk of financial loss from an individual or
business to an insurance company.
Types of risk - (answer)Speculative risk and pure risk.
Types of hazards - (answer)Physical hazards, moral hazards, and morale hazards.
Examples of a peril - (answer)Fire, lightning, theft, and car accident.
Ways of managing risk - (answer)Sharing, transfer, avoidance, retention, and reduction.
Law of large numbers - (answer)The principle that makes insurance possible; the larger the group, the
more accurately losses can be predicted.
Adverse selection - (answer)The tendency for higher-risk individuals to get and keep insurance as
compared to individuals that represent an average level of risk.
,2025 Newest Property and Casualty Exam Prep Test Bank with Questions and Correct
Answers/ Property and Casualty License Test / P & C Exam
Reinsurance - (answer)Reinsurance is insurance for insurers, transferring risk from one insurer to
another.
Elements of an insurable risk - (answer)Calculable, affordable, non-catastrophic, homogeneous,
accidental, and measurable.
Private vs government insurers - (answer)________ are owned by private entities, _______insurers are
operated by the state or federal government to provide insurance not available from private insurers.
Elements of a legal insurance contract - (answer)Consideration, legal purpose, offer, acceptance, and
competent parties.
Consideration in insurance contracts - (answer)______ refers to an exchange of value; the insured
provides payment and truthful statements, and the insurer promises to pay for covered losses.
Difference between offer and acceptance - (answer)An offer is a proposal made by one party, and
acceptance must be unconditional and unqualified.
Competent parties in insurance contracts - (answer)Both parties must have the legal capacity to make a
contract, meaning they must be of legal age and mentally competent.
Adhesion in insurance contracts - (answer)Adhesion means the contract is written by one party (the
insurer) and the other party (the insured) must adhere to it.
Aleatory contract - (answer)An aleatory contract is one where the value received by each party is
unequal, depending on an uncertain event.
Utmost good faith - (answer)Each party is entitled to a reasonable expectation that the other party will
not try to conceal pertinent information or act deceptively.
, 2025 Newest Property and Casualty Exam Prep Test Bank with Questions and Correct
Answers/ Property and Casualty License Test / P & C Exam
Unilateral in insurance contracts - (answer)Only one party (the insurer) is legally bound to perform
under the contract.
Indemnity - (answer)Indemnity means restoring the insured to the financial state they were in before
the loss, without profit.
Difference between representations and warranties - (answer)Representations are statements believed
to be true, while warranties are guaranteed to be true.
Difference between property insurance and casualty insurance - (answer)Property insurance covers
personal belongings and real property, while casualty insurance covers liability for negligent acts or
omissions that cause injury or property damage to others.
Declarations section of a policy - (answer)The name of the insured(s), a current address, a legal
description of the insured property, the policy deductibles, and the term of the coverage.
Insuring Agreement - (answer)The covered perils or risks assumed by the insurer and the contractual
agreement between the insurer and insured.
Conditions Section of a Policy - (answer)Policy provisions, rules of conduct, duties, and obligations
required for coverage.
Endorsement - (answer)An endorsement adds, modifies, or takes away coverage and is attached to the
policy as part of the legal contract.
Deductible - (answer)To prevent small insurance claims and overuse of insurance claims by requiring the
policy owner to pay a portion of the loss out of pocket.
Insurable Interest - (answer)Legitimate risk of financial loss in the person or thing being insured.
Answers/ Property and Casualty License Test / P & C Exam
First party in the contract - (answer)The insured (customer)
Peril - (answer)A tornado damaged the insured's home
Reduction as a risk management technique - (answer)Wearing a seat belt in a car
Type of hazard - (answer)Morale
Flood - (answer)A peril
Insurance - (answer)______ is a contract that transfers the risk of financial loss from an individual or
business to an insurance company.
Types of risk - (answer)Speculative risk and pure risk.
Types of hazards - (answer)Physical hazards, moral hazards, and morale hazards.
Examples of a peril - (answer)Fire, lightning, theft, and car accident.
Ways of managing risk - (answer)Sharing, transfer, avoidance, retention, and reduction.
Law of large numbers - (answer)The principle that makes insurance possible; the larger the group, the
more accurately losses can be predicted.
Adverse selection - (answer)The tendency for higher-risk individuals to get and keep insurance as
compared to individuals that represent an average level of risk.
,2025 Newest Property and Casualty Exam Prep Test Bank with Questions and Correct
Answers/ Property and Casualty License Test / P & C Exam
Reinsurance - (answer)Reinsurance is insurance for insurers, transferring risk from one insurer to
another.
Elements of an insurable risk - (answer)Calculable, affordable, non-catastrophic, homogeneous,
accidental, and measurable.
Private vs government insurers - (answer)________ are owned by private entities, _______insurers are
operated by the state or federal government to provide insurance not available from private insurers.
Elements of a legal insurance contract - (answer)Consideration, legal purpose, offer, acceptance, and
competent parties.
Consideration in insurance contracts - (answer)______ refers to an exchange of value; the insured
provides payment and truthful statements, and the insurer promises to pay for covered losses.
Difference between offer and acceptance - (answer)An offer is a proposal made by one party, and
acceptance must be unconditional and unqualified.
Competent parties in insurance contracts - (answer)Both parties must have the legal capacity to make a
contract, meaning they must be of legal age and mentally competent.
Adhesion in insurance contracts - (answer)Adhesion means the contract is written by one party (the
insurer) and the other party (the insured) must adhere to it.
Aleatory contract - (answer)An aleatory contract is one where the value received by each party is
unequal, depending on an uncertain event.
Utmost good faith - (answer)Each party is entitled to a reasonable expectation that the other party will
not try to conceal pertinent information or act deceptively.
, 2025 Newest Property and Casualty Exam Prep Test Bank with Questions and Correct
Answers/ Property and Casualty License Test / P & C Exam
Unilateral in insurance contracts - (answer)Only one party (the insurer) is legally bound to perform
under the contract.
Indemnity - (answer)Indemnity means restoring the insured to the financial state they were in before
the loss, without profit.
Difference between representations and warranties - (answer)Representations are statements believed
to be true, while warranties are guaranteed to be true.
Difference between property insurance and casualty insurance - (answer)Property insurance covers
personal belongings and real property, while casualty insurance covers liability for negligent acts or
omissions that cause injury or property damage to others.
Declarations section of a policy - (answer)The name of the insured(s), a current address, a legal
description of the insured property, the policy deductibles, and the term of the coverage.
Insuring Agreement - (answer)The covered perils or risks assumed by the insurer and the contractual
agreement between the insurer and insured.
Conditions Section of a Policy - (answer)Policy provisions, rules of conduct, duties, and obligations
required for coverage.
Endorsement - (answer)An endorsement adds, modifies, or takes away coverage and is attached to the
policy as part of the legal contract.
Deductible - (answer)To prevent small insurance claims and overuse of insurance claims by requiring the
policy owner to pay a portion of the loss out of pocket.
Insurable Interest - (answer)Legitimate risk of financial loss in the person or thing being insured.
