General Lines Property and Casualty Insurance Past Exam QUESTIONS AND ANSWERS 100% score (reupdated 2025)
Basic Terms and Concepts (BTC): Insurance - Correct
Answers ✅The transfer of risk through a legal contract - From insured (customer) - 1st party.-to insurer (insurance company) 2nd party Based upon principle of indemnity - to restore to pre-loss condition, no better, no worse (BTC) Property Insurance - Correct Answers ✅Covers insured's real property (structures) and personal property
- moveable stuff) against damage or loss resulting from
covered causes of loss called perils (BTC) Casualty insurance - Correct Answers ✅covers insured's non-property losses.Legal liability to others- 3rd party.covers injury to other people and damage to other peoples property.(BTC) Personal Lines - Correct Answers ✅Insurance for
families and individuals:
auto, homeowners, boats, recreational vehicles (BTC) Commercial Lines - Correct Answers ✅Insurance for
businesses: 1 / 2
General Lines Property and Casualty Insurance Past Exam QUESTIONS AND ANSWERS 100% score (reupdated 2025) commercial auto, commercial property, commercial liability, workers compensation (BTC) Risk - Correct Answers ✅Uncertainty of financial loss, pure risk and speculative risk (BTC) Pure risk - Correct Answers ✅chance of loss only (BTC) Speculative risk - Correct Answers ✅Chance of loss or gain
INSURANCE COVERS PURE RISK ONLY
"Buying insurance does not eliminate the risk, but it reduces the financial loss exposure to the insured" (BTC) Law of Large Numbers - Correct Answers ✅insurers employ people called actuaries to estimate claims using a mathematical concept known as the law of large numbers as the law of homogeneous (similar) loss exposures increases, the more accurate the claims can be predicted from the group.Perils - Correct Answers ✅A peril causes a loss -commonn causes of a loss include fire, wind, lightning, and so on.
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