Property and Casualty Insurance Test Question
Notes | Preparation For Exam
What is a peril? - ANSW A Peril is a cause of loss
What is a hazard? - ANSW Something that increases the chance of a loss
What is the difference between a Moral hazard and a Morale Hazard? - ANSW Moral
Hazard - dishonesty, against the law
Morale Hazard - carelessness
What is the method of handling risk that involves a deductible? - ANSW Retention (loss
or portion of loss)
If a fire causes damage to a building, what is the fire considered? - ANSW A Peril
What are the elements of an insurable risk? - ANSW CANHAM
Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable
If an insurance company is housed in Tennessee, what type of insurer are they
considered? - ANSW Domestic
An insurance company incorporated in Wisconsin and conducting business in
Minnesota is know as what type of insurer? - ANSW Foreign
What is it meant by "Express Authority"? - ANSW Authorities are written in agent
contract
What is a term that is typically used to describe an Insurance Agent? - ANSW Fiduciary
- a person in a position of financial trust
What is a contract or device for transferring risk from a persons, business, or
organization to an insurance company? - ANSW Insurance
What is Reinsurance? - ANSW When insurance companies purchase insurance to
cover their own exposures to loss
What is a fiduciary? - ANSW A person in a position of financial trust
What is it meant by a contract of adhesion? - ANSW Policy written by the insurer with
the insured having no input
, What part of the insurance policy shows the premium payment? - ANSW Declarations
page
What are the duties of the insured after a loss? - ANSW Notice to insurer, protect
property from further damage, Proof of loss, property available for inspection,
examination under oath if needed, cooperate with insurer
What is the FCRA? - ANSW Fair Credit Reporting Act - If the insurer uses credit, must
inform insured
What are the parts to an insurance contract? - ANSW Declarations, Conditions,
Insuring Agreements, and Exclusions
When an insured decides to cancel an insurance policy before the expiration date, how
is the unearned premium returned? - ANSW Short-Rate basis
What are the three basic perils? - ANSW Fire, Lightning, and Internal Explosion
What are the extended coverage perils? - ANSW WCSHAVVER and V&MM -Wind,
Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot,
Vandalism and malicious mischef
What is the difference between a direct loss and an indirect loss? - ANSW Direct -
immediate damage caused by peril
Indirect - loss over time as a result of the direct loss
How is ACV calculated? - ANSW Replacement Cost - depreciation =
What is the coinsurance clause and what is the percentage required by the insurer? -
ANSW Requires the insured to carry the standard coinsurance amount of the insurance
policy; 80%
What is the method called when the insured and insurance company cannot agree on a
settlement? - ANSW Appraisal method
What is a bailee? - ANSW A person or organization that has temporary possession of
someone else's personal property
What is a tort? - ANSW A civil wrong that causes someone else to suffer a loss
What is Vicarious Liability? - ANSW Liability for the actions of another
What are the five property coverages and associated lettering? - ANSW A - Dwelling
B - Other structured (detached, appurtenant)
C - Insured's personal property (off-premises covered up to 10% of C)
D - Fair Rental Value
Notes | Preparation For Exam
What is a peril? - ANSW A Peril is a cause of loss
What is a hazard? - ANSW Something that increases the chance of a loss
What is the difference between a Moral hazard and a Morale Hazard? - ANSW Moral
Hazard - dishonesty, against the law
Morale Hazard - carelessness
What is the method of handling risk that involves a deductible? - ANSW Retention (loss
or portion of loss)
If a fire causes damage to a building, what is the fire considered? - ANSW A Peril
What are the elements of an insurable risk? - ANSW CANHAM
Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable
If an insurance company is housed in Tennessee, what type of insurer are they
considered? - ANSW Domestic
An insurance company incorporated in Wisconsin and conducting business in
Minnesota is know as what type of insurer? - ANSW Foreign
What is it meant by "Express Authority"? - ANSW Authorities are written in agent
contract
What is a term that is typically used to describe an Insurance Agent? - ANSW Fiduciary
- a person in a position of financial trust
What is a contract or device for transferring risk from a persons, business, or
organization to an insurance company? - ANSW Insurance
What is Reinsurance? - ANSW When insurance companies purchase insurance to
cover their own exposures to loss
What is a fiduciary? - ANSW A person in a position of financial trust
What is it meant by a contract of adhesion? - ANSW Policy written by the insurer with
the insured having no input
, What part of the insurance policy shows the premium payment? - ANSW Declarations
page
What are the duties of the insured after a loss? - ANSW Notice to insurer, protect
property from further damage, Proof of loss, property available for inspection,
examination under oath if needed, cooperate with insurer
What is the FCRA? - ANSW Fair Credit Reporting Act - If the insurer uses credit, must
inform insured
What are the parts to an insurance contract? - ANSW Declarations, Conditions,
Insuring Agreements, and Exclusions
When an insured decides to cancel an insurance policy before the expiration date, how
is the unearned premium returned? - ANSW Short-Rate basis
What are the three basic perils? - ANSW Fire, Lightning, and Internal Explosion
What are the extended coverage perils? - ANSW WCSHAVVER and V&MM -Wind,
Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot,
Vandalism and malicious mischef
What is the difference between a direct loss and an indirect loss? - ANSW Direct -
immediate damage caused by peril
Indirect - loss over time as a result of the direct loss
How is ACV calculated? - ANSW Replacement Cost - depreciation =
What is the coinsurance clause and what is the percentage required by the insurer? -
ANSW Requires the insured to carry the standard coinsurance amount of the insurance
policy; 80%
What is the method called when the insured and insurance company cannot agree on a
settlement? - ANSW Appraisal method
What is a bailee? - ANSW A person or organization that has temporary possession of
someone else's personal property
What is a tort? - ANSW A civil wrong that causes someone else to suffer a loss
What is Vicarious Liability? - ANSW Liability for the actions of another
What are the five property coverages and associated lettering? - ANSW A - Dwelling
B - Other structured (detached, appurtenant)
C - Insured's personal property (off-premises covered up to 10% of C)
D - Fair Rental Value
