Property & Casualty Basics

Question 1

What is the responsibility of the Insurance Services Office (ISO)?

Answer 1

making sure polices are quality, understandable products, and rates are reasonable. the advisory organization that develops forms for the standard market

Question 2

_____ insurance pays for losses to belongings, possessions, or assets, in which the insured has a financial interest

Answer 2

property

Question 3

What is liability and casualty insurance?

Answer 3

Pays for damages to 3rd party for reasons such as bodily injury, property damage, personal injury, or advertising injury.

Question 4

What is the difference between accident and occurrence?

Answer 4

Accident: sudden, unplanned, unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended
Occurrence: broader definition of loss than accident because it includes those losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended or expected

Question 5

____ is defined as the reduction, decrease, or disappearance of value to the person or property insured in a policy, caused by a named peril

Answer 5

Loss

Question 6

What type of loss is also known as “consequential loss”?

Answer 6

Indirect

Question 7

What statement about direct loss is false? (a) property insurance covers direct loss and indirect loss (b) indirect losses are a result of direct losses (c) direct losses also includes other damage where the insured peril was the proximate cause of loss

Answer 7

(a)

Correction: property insurance only covers direct losses

Question 8

“All-risk” is also known as _____ peril.

Answer 8

open

Question 9

_____ peril is the breadth of coverage provided under an insurance policy form that lists specific covered perils

Answer 9

Named

Question 10

What is an open peril?

Answer 10

breadth of coverage provided under an insurance policy form that insures against any risk of loss that is not specifically excluded

Question 11

A predominant legal rule that if a loss is caused by both an insured peril and uninsured peril, coverage is deemed to apply

Answer 11

concurrent causation

Question 12

What is classified as an expense for an insurer?

Answer 12

costs of operations including overhead, marketing, and commissions

Question 13

_____ is the act of revoking or terminating one’s insurance policy

Answer 13

cancellation

Question 14

A policy that is terminated because of nonpayment of premiums is known as what?

Answer 14

a lapsed policy