Louisiana Property and Casualty Insurance Exam/ 2025-2026
Verified Questions With Answers.
C
Terms in this set (340)
Not all risks are insurable. Only those that meet six insurability criteria
Insurable Risk
qualify as an
_ __ risk.
Loss must be definite as to time, cause,
and location. The value of the loss must
be measurable.
Insurable Risk (6 criteria)
The covered peril must be accidental or outside the
insured's control. The risk must be shared by a
large group of similar risks.
The loss must not be catastrophic.
The risk must be pure (not speculative).
Independent Agency System An insurance distribution system in which the manager and
producers are fully independent and are not affiliated with
Independent agents typically any single insurer.
represent multiple companies.
Managers of independent agents,
sometimes called personal
producing general agents
(PPGAs), are solely responsible
for hiring, dismissing, and
managing producers (brokers).
National Flood Insurance A federally funded insurance program that makes flood insurance
Program (NFIP) NFIP exists available at a reasonable cost for properties located in
because flood insurance, due participating communities.
to its catastrophic nature, does
not meet the ideal
characteristics of an insurable
risk. It is available only for
direct damage to buildings and
contents; there is no time
element coverage.
,Risk A basic insurance term referring to the chance of incurring a loss.
Pure risk: untimely
death, fire loss
Speculative risk:
gambling, stock
investments
With insurance, risk means the
"chance of loss." There are two
types: pure risk (loss only) and
speculative risk (loss or gain).
Only pure risk is insurable.
Direct Loss The immediate result of an event caused by a covered peril.
The damage to an insured home
from a fire is a direct loss
resulting from the fire.
Indemnity Contract Any type of insurance contract in which policy benefits are based on actual
Because they reimburse actual losses.
losses, property and casualty
insurance policies are
indemnity contracts. In
contrast, life insurance policies
are valued contracts that
guarantee payment of a stated
sum regardless of the perceived
“worth” of the insured.
Errors & Omissions (E&O) A type of insurance coverage, purchased by insurance
Insurance producers, that covers losses resulting from the producer
The purchase of E&O rendering (or not rendering) professional service.
insurance does not excuse a
producer from the duty to act
exclusively in the client's best
interest. It covers losses that
occur despite the producer's
best intentions (e.g., a producer
simply forgets to process a
customer's change of
beneficiary request, resulting in
a claim paid to the unintended
beneficiary). This coverage
, includes a large deductible.
Rescission An insurer's act of declaring that an insurance policy was
Rescission usually occurs never in effect. An insurance company that rescinds a policy
when the applicant knew of a states that it provides no coverage for a claim.
potential claim and
intentionally concealed it from
the insurer, or an important
document attached to an
application contains
information that is materially
false, so that if the insurer
knew the truth, the insurer
would not agree to insure the
risk.
Exposure The state of being subject to loss because of some hazard or contingency.
Insurers measure exposure by
assigning exposure units to the
person, property, or event for
which insurance is being
sought. In general, the more
exposure units assigned to an
insured item, the greater its
premium.
Mutual Insurance Company A form of insurance company owned by policyowners.
While structured in many
ways like a corporation, a
mutual insurance company does
not issue stock and is owned
by policyowners, whose
evidence of ownership is the
policy. Mutual companies may
distribute policy dividends
(non- taxable).
Verified Questions With Answers.
C
Terms in this set (340)
Not all risks are insurable. Only those that meet six insurability criteria
Insurable Risk
qualify as an
_ __ risk.
Loss must be definite as to time, cause,
and location. The value of the loss must
be measurable.
Insurable Risk (6 criteria)
The covered peril must be accidental or outside the
insured's control. The risk must be shared by a
large group of similar risks.
The loss must not be catastrophic.
The risk must be pure (not speculative).
Independent Agency System An insurance distribution system in which the manager and
producers are fully independent and are not affiliated with
Independent agents typically any single insurer.
represent multiple companies.
Managers of independent agents,
sometimes called personal
producing general agents
(PPGAs), are solely responsible
for hiring, dismissing, and
managing producers (brokers).
National Flood Insurance A federally funded insurance program that makes flood insurance
Program (NFIP) NFIP exists available at a reasonable cost for properties located in
because flood insurance, due participating communities.
to its catastrophic nature, does
not meet the ideal
characteristics of an insurable
risk. It is available only for
direct damage to buildings and
contents; there is no time
element coverage.
,Risk A basic insurance term referring to the chance of incurring a loss.
Pure risk: untimely
death, fire loss
Speculative risk:
gambling, stock
investments
With insurance, risk means the
"chance of loss." There are two
types: pure risk (loss only) and
speculative risk (loss or gain).
Only pure risk is insurable.
Direct Loss The immediate result of an event caused by a covered peril.
The damage to an insured home
from a fire is a direct loss
resulting from the fire.
Indemnity Contract Any type of insurance contract in which policy benefits are based on actual
Because they reimburse actual losses.
losses, property and casualty
insurance policies are
indemnity contracts. In
contrast, life insurance policies
are valued contracts that
guarantee payment of a stated
sum regardless of the perceived
“worth” of the insured.
Errors & Omissions (E&O) A type of insurance coverage, purchased by insurance
Insurance producers, that covers losses resulting from the producer
The purchase of E&O rendering (or not rendering) professional service.
insurance does not excuse a
producer from the duty to act
exclusively in the client's best
interest. It covers losses that
occur despite the producer's
best intentions (e.g., a producer
simply forgets to process a
customer's change of
beneficiary request, resulting in
a claim paid to the unintended
beneficiary). This coverage
, includes a large deductible.
Rescission An insurer's act of declaring that an insurance policy was
Rescission usually occurs never in effect. An insurance company that rescinds a policy
when the applicant knew of a states that it provides no coverage for a claim.
potential claim and
intentionally concealed it from
the insurer, or an important
document attached to an
application contains
information that is materially
false, so that if the insurer
knew the truth, the insurer
would not agree to insure the
risk.
Exposure The state of being subject to loss because of some hazard or contingency.
Insurers measure exposure by
assigning exposure units to the
person, property, or event for
which insurance is being
sought. In general, the more
exposure units assigned to an
insured item, the greater its
premium.
Mutual Insurance Company A form of insurance company owned by policyowners.
While structured in many
ways like a corporation, a
mutual insurance company does
not issue stock and is owned
by policyowners, whose
evidence of ownership is the
policy. Mutual companies may
distribute policy dividends
(non- taxable).
