Pearson VUE: Property & Casualty
Insurance (FL) 150 Exam Q&A
Latest 2025/2026 Update | Guaranteed Pass Study Guide
SECTION 1: INSURANCE BASICS & TERMINOLOGY (Q1–Q25)
Keyword: Risk
Q1: The uncertainty or chance of a loss occurring is called:
Answer: Risk
Explanation: Risk is the possibility of a loss. Pure risk involves only the chance of loss (no
opportunity for gain) and is insurable.
Keyword: Peril
Q2: A fire burning down a building is an example of a:
Answer: Peril
Explanation: A peril is the actual cause of a loss (fire, wind, theft). A hazard increases the
chance of a loss.
Keyword: Hazard
Q3: A condition that increases the probability of a loss is a:
Answer: Hazard
Explanation: Hazards can be physical (icy stairs), moral (dishonesty), or morale (carelessness).
Keyword: Moral Hazard
Q4: An insured intentionally sets fire to their own building to collect insurance proceeds. This is
a:
Answer: Moral hazard
Explanation: Moral hazard involves dishonesty or intentional acts that increase the chance of
loss.
Keyword: Morale Hazard
Q5: A driver leaves their keys in an unlocked car overnight. This is a:
Answer: Morale hazard
Explanation: Morale hazard (attitudinal hazard) is carelessness or indifference because
insurance exists.
Keyword: Physical Hazard
Q6: A house with old, faulty electrical wiring presents a:
Answer: Physical hazard
Explanation: Physical hazards are tangible conditions that increase the likelihood of loss.
,Keyword: Indemnity
Q7: The principle that an insured should not profit from a loss, only be restored to prior financial
condition, is:
Answer: Indemnity
Explanation: Indemnity prevents unjust enrichment. Actual Cash Value (ACV) is often used to
achieve indemnity.
Keyword: Insurable Interest
Q8: An insured must experience financial loss if the property is damaged. This is called:
Answer: Insurable interest
Explanation: Insurable interest must exist at the time of loss for property insurance.
Keyword: Utmost Good Faith
Q9: The principle requiring both parties to an insurance contract to be honest and not conceal
material facts is:
Answer: Utmost good faith (uberrimae fidei)
Explanation: The insured must disclose known facts; the insurer must clearly explain policy
terms.
Keyword: Representation
Q10: A statement made by an applicant that is believed to be true but not guaranteed is a:
Answer: Representation
Explanation: Representations are not warranties. If false but innocent, the policy may still be
valid.
Keyword: Warranty
Q11: A statement guaranteed to be true, which if false can void the policy, is a:
Answer: Warranty
Explanation: Warranties are strictly enforced. A false warranty, even if innocent, voids coverage.
Keyword: Concealment
Q12: Intentionally failing to disclose a material fact to an insurer is called:
Answer: Concealment
Explanation: Concealment can void the policy if the fact would have changed underwriting.
Keyword: Aleatory Contract
Q13: An insurance contract is aleatory. This means:
Answer: There is an unequal exchange of value
Explanation: The premium paid is small compared to the potential loss the insurer may pay.
Keyword: Unilateral Contract
Q14: An insurance contract is unilateral because:
Answer: Only the insurer makes an enforceable promise
, Explanation: The insured can cancel but cannot be forced to pay premiums; the insurer must
pay covered losses.
Keyword: Conditional Contract
Q15: An insurance policy is conditional because:
Answer: The insured must comply with policy conditions (e.g., timely claim notice)
Explanation: Failure to meet conditions may void coverage.
Keyword: Adhesion
Q16: An insurance contract is one of adhesion, meaning:
Answer: The insured has no bargaining power and must accept the policy as written
Explanation: Ambiguities are interpreted in favor of the insured.
Keyword: Declarations Page
Q17: The section of a policy containing the insured’s name, address, property location, and
coverage limits is the:
Answer: Declarations
Explanation: The "dec page" is specific to each insured and policy period.
Keyword: Insuring Agreement
Q18: The part of a policy stating what perils are covered and the insurer’s promise to pay is the:
Answer: Insuring agreement
Explanation: This is the core promise of coverage.
Keyword: Exclusions
Q19: Flood, earthquake, and wear and tear are typically found in which policy section?
Answer: Exclusions
Explanation: Exclusions remove coverage for certain perils, property, or losses.
Keyword: Conditions
Q20: The section requiring the insured to provide prompt notice of loss and protect property
after a loss is the:
Answer: Conditions
Explanation: Conditions are duties of the insured. Failure to comply can reduce or void
coverage.
Keyword: Endorsement
Q21: A written amendment to an insurance policy is called an:
Answer: Endorsement (or rider)
Explanation: Endorsements add, delete, or modify coverage.
Keyword: Binder
Q22: Temporary proof of insurance until the policy is issued is a:
Answer: Binder
Insurance (FL) 150 Exam Q&A
Latest 2025/2026 Update | Guaranteed Pass Study Guide
SECTION 1: INSURANCE BASICS & TERMINOLOGY (Q1–Q25)
Keyword: Risk
Q1: The uncertainty or chance of a loss occurring is called:
Answer: Risk
Explanation: Risk is the possibility of a loss. Pure risk involves only the chance of loss (no
opportunity for gain) and is insurable.
Keyword: Peril
Q2: A fire burning down a building is an example of a:
Answer: Peril
Explanation: A peril is the actual cause of a loss (fire, wind, theft). A hazard increases the
chance of a loss.
Keyword: Hazard
Q3: A condition that increases the probability of a loss is a:
Answer: Hazard
Explanation: Hazards can be physical (icy stairs), moral (dishonesty), or morale (carelessness).
Keyword: Moral Hazard
Q4: An insured intentionally sets fire to their own building to collect insurance proceeds. This is
a:
Answer: Moral hazard
Explanation: Moral hazard involves dishonesty or intentional acts that increase the chance of
loss.
Keyword: Morale Hazard
Q5: A driver leaves their keys in an unlocked car overnight. This is a:
Answer: Morale hazard
Explanation: Morale hazard (attitudinal hazard) is carelessness or indifference because
insurance exists.
Keyword: Physical Hazard
Q6: A house with old, faulty electrical wiring presents a:
Answer: Physical hazard
Explanation: Physical hazards are tangible conditions that increase the likelihood of loss.
,Keyword: Indemnity
Q7: The principle that an insured should not profit from a loss, only be restored to prior financial
condition, is:
Answer: Indemnity
Explanation: Indemnity prevents unjust enrichment. Actual Cash Value (ACV) is often used to
achieve indemnity.
Keyword: Insurable Interest
Q8: An insured must experience financial loss if the property is damaged. This is called:
Answer: Insurable interest
Explanation: Insurable interest must exist at the time of loss for property insurance.
Keyword: Utmost Good Faith
Q9: The principle requiring both parties to an insurance contract to be honest and not conceal
material facts is:
Answer: Utmost good faith (uberrimae fidei)
Explanation: The insured must disclose known facts; the insurer must clearly explain policy
terms.
Keyword: Representation
Q10: A statement made by an applicant that is believed to be true but not guaranteed is a:
Answer: Representation
Explanation: Representations are not warranties. If false but innocent, the policy may still be
valid.
Keyword: Warranty
Q11: A statement guaranteed to be true, which if false can void the policy, is a:
Answer: Warranty
Explanation: Warranties are strictly enforced. A false warranty, even if innocent, voids coverage.
Keyword: Concealment
Q12: Intentionally failing to disclose a material fact to an insurer is called:
Answer: Concealment
Explanation: Concealment can void the policy if the fact would have changed underwriting.
Keyword: Aleatory Contract
Q13: An insurance contract is aleatory. This means:
Answer: There is an unequal exchange of value
Explanation: The premium paid is small compared to the potential loss the insurer may pay.
Keyword: Unilateral Contract
Q14: An insurance contract is unilateral because:
Answer: Only the insurer makes an enforceable promise
, Explanation: The insured can cancel but cannot be forced to pay premiums; the insurer must
pay covered losses.
Keyword: Conditional Contract
Q15: An insurance policy is conditional because:
Answer: The insured must comply with policy conditions (e.g., timely claim notice)
Explanation: Failure to meet conditions may void coverage.
Keyword: Adhesion
Q16: An insurance contract is one of adhesion, meaning:
Answer: The insured has no bargaining power and must accept the policy as written
Explanation: Ambiguities are interpreted in favor of the insured.
Keyword: Declarations Page
Q17: The section of a policy containing the insured’s name, address, property location, and
coverage limits is the:
Answer: Declarations
Explanation: The "dec page" is specific to each insured and policy period.
Keyword: Insuring Agreement
Q18: The part of a policy stating what perils are covered and the insurer’s promise to pay is the:
Answer: Insuring agreement
Explanation: This is the core promise of coverage.
Keyword: Exclusions
Q19: Flood, earthquake, and wear and tear are typically found in which policy section?
Answer: Exclusions
Explanation: Exclusions remove coverage for certain perils, property, or losses.
Keyword: Conditions
Q20: The section requiring the insured to provide prompt notice of loss and protect property
after a loss is the:
Answer: Conditions
Explanation: Conditions are duties of the insured. Failure to comply can reduce or void
coverage.
Keyword: Endorsement
Q21: A written amendment to an insurance policy is called an:
Answer: Endorsement (or rider)
Explanation: Endorsements add, delete, or modify coverage.
Keyword: Binder
Q22: Temporary proof of insurance until the policy is issued is a:
Answer: Binder
